New South Wales Supreme Court CITATION : John R Keith Pty Limited v Multiplex Constructions (NSW) Pty Limited & Anor [2002] NSWSC 43 revised - 3/12/2002 FILE NUMBER(S) : SC 3387/00 HEARING DATE(S) : 30/01/02, 31/01/02, 1/02/02, 5/02/02, 6/02/02, 7/02/02, 8/02/02 JUDGMENT DATE : 14 February 2002 John R Keith Pty Limited (Plaintiff) PARTIES : Multiplex Constructions (NSW) Pty Limited (First Defendant) Multiplex Constructions Pty Limited (Second Defendant) JUDGMENT OF : Einstein J COUNSEL : Mr V Gray (Plaintiff) Mr F Corsaro SC, Ms R Rana (Defendants) SOLICITORS : Gye & Associates Lawyers (Plaintiff) Minter Ellison (Defendants) CATCHWORDS : Contract - Formation of contract - Ongoing negotiations - Intention to contract - Masters v Cameron classes - Whether binding and enforceable subcontract formed between the plaintiff and second defendant - If a contract is found, an arbitration clause requires proceedings to be stayed pursuant to s53 (1) of the Commercial Arbitration Act 1984 (NSW) - Invitation made by defendant to plaintiff to tender for the design and construction of hydraulics services for the Stadium Australia project - Request to tender contained documents including standard subcontract agreement - Plaintiff submitted tender proposal based on tender documents - Plaintiff issued series of revised proposals modifying both tender price and scope of work - Plaintiff notified as being preferred tenderer - Plaintiff commenced work - Plaintiff sent letter outlining total tender price and scope of work which letter was negotiated, amended and resent by consensus - Plaintiff sent subsequent letter referring to total contract price - Second subcontract agreement sent to plaintiff in terms different from original standard subcontract agreement - Subsequent negotiations ensued between parties over terms of second subcontract agreement - Whether binding contract was formed at any time during ongoing negotiations between parties - No formal signed agreement entered into by parties - Fourth class of Masters v Cameron - Existence of informal contract with further terms to be negotiated and included in a formal document - Relevance of prior negotiation and subsequent conduct - Objective determination of the intention of the parties - Classical theory of contract formation - Relevance of the subjective intention of the parties - Admissibility of post-contractual conduct - Whether parties arrived at a consensus capable of forming a contract - Whether alternative proposal put forth by plaintiff constituted an abandonment of the terms of the original subcontract - Whether second subcontract negotiations supports or mandates inference that parties did not intend to make concluded bargain Commercial Arbitration Act 1984 LEGISLATION CITED : Evidence Act 1995 ss60,70 Supreme Court Rules Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Allen v Carbone (1975) 132 CLR 528 Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 Baulkham Hills Private Hospital Pty Ltd v G R. Securities Pty Ltd (1986) 40 NSWLR 622 Brambles Holdings Ltd v Bathurst City Council (Unreported, 2001, NSWCA, Mason P, Heydon JA and Ipp AJA) Brunninghausen v Galvanics (1999) 46 NSWLR 538 B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR [97011] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343 Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 Godecke v Kirwan (1973) 129 CLR 629 Graham Evans Pty Ltd v Stencraft Pty Ltd 16 BCL 335 G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 63 CASES CITED : Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 Heysham Properties Pty Limited v Action Motor Group Pty Limited & Ors (1996) 14 BCL 145 Inland Revenue Commissioners v Raphael [1935] AC 96 Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97326 Integrated Computer Services Pty Limited v Digital Equipment Corporation (Australia) Pty Limited (unreported, NSWCA, McHugh, Mahoney and Hope JJA, 23 December 1988) Love & Stewart Ltd v S Instone & Co Ltd (1917) 33 TLR 475 Masters v Cameron 1954 91 CLR 353 Pobije Agencies Pty Ltd v Vinidex Tubemakers Pty Ltd [2000] NSWCA 105 Raguz v Sullivan (2000) 50 NSWLR 236 Reardon -Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 Revenue Commissioners v Raphael [1935] AC 96 at 142 Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 Sinclair Scott Co Ltd v Naughton (1929) 43 CLR 310 Telstra Corporation Limited v Australis Media Holdings (1997) 24 ACSR 55 Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486 Thompson (1933) 49 CLR DECISION : Short minutes to be brought in. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Einstein J Thursday 14 February 2002 3387/00 JOHN R KEITH PTY LIMITED v MULTIPLEX CONSTRUCTIONS (NSW) PTY LIMITED JUDGMENT The questions for determination 1 There are before the Court a number of questions for determination following an order made on 30 January 2002 pursuant to Part 31 of the Supreme Court Rules for the determination of these questions before the determination of any other question in the proceedings. The questions for determination are as follows: "(a) whether a binding and enforceable subcontract between the second defendant and the plaintiff was formed on or about 18 July 1997 when the second defendant accepted the plaintiff's tender for the hydraulic services design and construction package ('Works') for the Stadium Australia Project pursuant to the second defendant's request for tender dated 5 December 1996; (b) whether a binding subcontract between Multiplex and JRK in respect of the Works was formed sometime after 18 July 1997 as a result of the conduct of the parties ('second July subcontract'); (c) whether a binding subcontract between Multiplex and JRK was formed on or about 27 November 1997 when Multiplex submitted to JRK a form of subcontract which was consistent with the agreement reached on or about 18 July 1997 although containing modifications to the wording of Multiplex's standard subcontract agreement which was the basis of the July subcontract or the second July subcontract ('November 1997 Subcontract'); (d) in the alternative to (a) – (c) above, whether a binding and enforceable subcontract between the second defendant and the plaintiff was formed on or about 18 July 1997 on terms that the parties agreed to be immediately bound for the plaintiff to perform the scope of work which had been agreed for the total price of $12,408,020.00 and otherwise on the terms included in the second defendant's standard subcontract agreement whilst expecting to make a further contract in substitution for that contract, containing, by consent, additional terms consistent with the agreement reached on or about 18 July 1997; (e) if the answer to (a), (b), (c) and (d) above is no then in the alternative, whether a binding and enforceable subcontract between the second defendant and the plaintiff was formed on or about 27 November 1997 by the second defendant submitting to the plaintiff for execution a form of subcontract ('Subcontract') purporting to record the terms of the tender made by the plaintiff and accepted by the second defendant on or about 18 July 1997, and the terms of the Subcontract being accepted by the plaintiff by its conduct or representations; (f) in the further alternative, whether a binding subcontract between Multiplex and JRK was formed sometime after 27 November 1997 when JRK by its conduct accepted the terms of the November 1997 Subcontract ; (g) in the alternative to each of the above, whether a binding and enforceable subcontract between the second defendant and the plaintiff was formed on or before 2 November 1998 by the second defendant submitting to the plaintiff for execution the Subcontract and the terms of the Sub-Contract were varied in a meeting on 2 November 1998, but only to the extent of the amendments to the Subcontract that the second defendant was there and then prepared to accept; (h) further and in the alternative, whether the plaintiff is estopped from denying that there was a binding and enforceable subcontract on any of the terms referred to in (a) – (g) above between the second defendant and the plaintiff; and (i) if any of the above questions are answered in the affirmative, what are the terms of the subcontract?" 2 The parties have agreed that if the Court finds that there is a binding and enforceable subcontract between the parties, a term of which is an arbitration clause, then the proceedings must be stayed pursuant to section 53 (1) of the Commercial Arbitration Act. 3 The form of estoppel relied upon although opened as an estoppel by convention is now put in final submissions as alternatively an estoppel by representation. The Dispute 4 The proceedings involve a dispute between the parties concerning the hydraulics works carried out at the Stadium Australia project which project was the centrepoint of the Olympic Games in Sydney held in September 2000. As the chronology will disclose a considerable degree of urgency surrounded the dealings between the parties during the period covering the years 1997 and 1998. The desired completion date recorded on a tender program in respect of the plaintiff's works was 3 August 1998 [transcript page 127]. 5 Multiplex Constructions Pty Ltd ("Multiplex") which is the first defendant named in the amended summons, was a party to a design and construction agreement dated 31 August 1996 by which Multiplex agreed to plan, design and construct Stadium Australia at Homebush. The Olympic Coordination Authority ["OCA"] had entered into a contract agreement with a trustee to finance, plan, design and commission the Stadium. OCA in turn entered into a construction contract with Obayashi Corporation ["Obayashi"] to plan, design and construct the works. Obayashi entered into a construction agreement with Multiplex and by that agreement Obayashi passed on its procurement and performance requirements to Multiplex which then became concerned to engage subcontractors to perform parts of the principal works in order for it to comply with its own obligations under that series of arrangements. 6 Multiplex Constructions (NSW) Pty Ltd ("Constructions (NSW)") (which had been the only defendant in the original summons filed on 28 July 2000 and is presently recorded on the Amended Summons as the second defendant) is essentially irrelevant to any issue presently separating the parties. The original invitation to tender made plain that for the purposes of any tender, Multiplex may be represented by Constructions (NSW). As the transcript will record, the parties are agreed that the Multiplex is the relevant entity which dealt with the plaintiff at all material times so that all relevant legal obligations or rights which the dealings and communications between relevant entity's throw up, will be legal obligations or rights held by the plaintiff against Multiplex or by Multiplex against the plaintiff. For those reasons I proceed to disregard Constructions (NSW). 7 In broad overview the chronology involves an initial subcontract agreement entered into during October 1996 between the plaintiff, John R Keith Pty Ltd ("JRK") and Multiplex for the provision by the plaintiff of temporary plumbing services ("temporary works") at the Stadium Australia site for a contract sum of $250,000. This contract was later replaced by a further written subcontract dated 31 January 1997 in respect of the temporary works. 8 In a letter dated 5 December 1996 Multiplex invited JRK to tender for the hydraulic services and design and construction package ("the works") for the Stadium Australia project. The request for tender letter had enclosed, amongst other documents, a copy of Multiplex's standard subcontract agreement ("the 5 December subcontract version" or "the 5 December version" or "the original subcontract"). There then followed over a considerable period running up to July/August 1997, a series of communications between JRK and Multiplex during the course of which tender proposals and revised tender proposals, and in particular revised tender prices were submitted by JRK to Multiplex. At the same time Multiplex proceeded to a substantial extent with aspects of the works. Through all of this time and notwithstanding such arrangements or understandings or agreements, if any, as may arguably have been reached by dint of these communications, no subcontract was submitted by Multiplex to JRK for execution. The issues litigated raise for decision the question of the status in law of the inter-partes communications. A particularly important letter of 18 July 1997 from JRK to Multiplex was followed by careful discussions between the parties resulting in an annotated copy of the letter reflecting those discussions being sent by JRK. The letter was followed shortly thereafter by a further letter from JRK to Multiplex of 12 August 1997, neither party having addressed submissions suggesting that there were any material differences as between the annotated 18 July 1997 letter and the 12 August 1997 letter. Importantly up to 12 August 1997 JRK had submitted numerous Progress Claims to Multiplex which had specified the "Original Contract Value" as being $250,000 (as per the subcontract agreement for temporary works). Progress Claim No 9 submitted on 15 August 1997 however specified the "Original Contract Value" as being $12,408,020.00 Ultimately on 27 November 1997 Multiplex did forward a form of subcontract to JRK for execution ("the 27 November subcontract version" or "the 27 November version"). However Multiplex concedes that albeit that the 27 November version in fact annexed a copy of the annotated 18 July 1997 letter, the form of subcontract so submitted in fact in some ways departed from the 5 December version. To shortly continue this overview chronology, the evidence discloses that the 27 November version apparently did not receive attention from JRK over a number of months whilst it remained upon the desk of Mr Twiss of JRK. Ultimately on 8 May 1998 JRK returned to Multiplex an executed subcontract in a form ("the 8 May 98 amended version") which now in some respects departed from even the terms of the 27 November version. 9 Some subsequent meetings took place between representatives of the parties. The significant meeting was on 2 November 1998 when Mr Cooksley met with Mr Twiss and Mr Johnson. A number of clauses were closely examined and the contending positions of both parties the subject of close discussion. Under cross-examination Mr Cooksley agreed that the November 1998 meeting was the only meeting at which there was a detailed consideration of the terms of the proposed subcontract; that at the end of the meeting there were a number of points upon which he and Mr Johnson had failed to agree; that it was common ground that nothing ever transpired after then by which they reached agreement and that as far as he was concerned, at least some of the areas on which he and Mr Johnson were in disagreement were important questions so far as Multiplex was concerned. Mr Cooksley gave evidence to the following effect: "Q. And the fact that you failed to reach agreement was a reflection of your insistence on behalf of Multiplex that you were not prepared to change the position that you were expressing in relation to those items, is that right? A. At the end of the meeting, yes, I said I had changed as much as I could. Q. In other words, you had drawn your line on the sand, or whatever expression you would like to use, and that was as far as you were going? A. Yes" [Transcript page 298-299] 10 Mr Cooksley also gave evidence in relation to the standard site subcontract prepared by Multiplex's solicitors for this project that it contained a lot of provisions covering all sorts of things including scope of work, variations, specifications, name, procedure, extension of time, disputes and other things and that, as far as he was concerned as the contract manager for Multiplex, these were important matters. His evidence was that they needed to be resolved in that Multiplex and the subcontractor had to have reached agreement on those things as part of their subcontract dealings. As far as he was concerned "the signing of a subcontract by a subcontractor was an essential part of the subcontract relationship… it was an essential requirement for all Multiplex subcontractors to sign a subcontract agreement…." He accepted that as far as he was concerned it was not overstating the position to say that signing a subcontract agreement was indispensable to subcontractors. [See transcript page 299-300] The Defendants' final position litigated 11 During the course of the hearing the court drew counsel for the defendant's attention to the seeming plethora of documents [see defendants narrative, and amended defence and the detailed questions for separate determination] in which the defendants sought to set out their case. A request was made that the produce a firm position on the way in which they put their case. This resulted in the defendants producing a document entitled "statement of defendants position on the existence of a contract" [MFI D5]. This document is in the following terms: ' STATEMENT OF DEFENDANT'S POSITION ON THE EXISTENCE OF A CONTRACT 1. Multiplex contends that a binding and enforceable agreement exists between the parties. Insofar as the agreement is in writing it is comprised of the following documents: (a) Multiplex's Invitation to Tender dated 5 December 1996, including the documents incorporated by reference [Ex DY, vol 1, tab 3], namely: (i) The Multiplex Subcontract Deed of Agreement; (ii) Annexures A to O; (ii) Hydraulics Specification Revision 0 dated November 1996; (iv) Documentation Register; (v) Special Conditions; (vi) Site Safety Instructions; (vii) Design Brief; and (b) JRK's 18 July 1997 letter, as amended, incorporating by express or implied reference the plans and documents [Ex DY, vol 2, tab 20], namely: (i) JRK's letter dated 10 March 1997, which incorporates other documents and plans by reference [Ex DY, vol 2, tab 7]; (ii) JRK's letter dated 4 June 1997, which incorporates expressly plans and specifications [Ex DY, vol 2, tab 12]; (iii) JRK's letter dated 27 June 1997 [Ex DY, vol 2, tab 14] 2. The agreement alleged was formed between the parties in one of the following ways, each contention being in the alternative: (a) on or about 18 July 1997, but before 12 August 1997, when Multiplex accepted JRK's final tender price in the sum of $12,408,020 for the Works contained in JRK's letter dated 18 July 1997 as amended (Masters v Cameron class 1 or 2 type of agreement); (b) some time after 18 July 1997 as a result of the conduct of the parties; (c) on or about 18 July 1997, but before 12 August 1997, when Multiplex accepted JRK's final tender price of $12,408,020 as contained in JRK's letter dated 18 July as amended in the contemplation that the parties would make a further contract containing additional or other terms in substitution (Masters v Cameron class four type of agreement); (d) On or about 27 November 1997 by Multiplex submitting to JRK a form of subcontract [Ex DY, vol 2, tab 22], which was consistent with the agreement reached on or about 18 July 1997 although containing modifications to the wording of Multiplex's standard subcontract agreement which was the basis of the subcontract formed in either (a) or (b) or (c) above; (e) sometime after 27 November 1997 when JRK accepted, by conduct, the terms of the subcontract formed in (d) above; (f) the subcontract formed in any of the alternatives referred to in (a) –(e) above was varied in the meeting on 2 November 1998, but only to the extent of the amendments that Multiplex was prepared to accept. 2. Each of the forms of the subcontract referred to in sub-paragraphs (a) – (f) above contained an arbitration clause (Clause 16). 3. In the alternative, Multiplex contends that JRK is now estopped from denying the existence of a subcontract." 12 I proceed upon the basis that the final statement is to be regarded as the defendants' central stance. The multiplicity of alternative ways of putting the defendants case points up the difficulties in pointing in an ongoing relationship to the precise moment when the legal criteria of a contract may have been fulfilled cf Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 97326 at 11,117 – 11,118 per McHugh JA. The Arbitration Clause 13 Of particular importance to Multiplex is it's submission that the arbitration clause comprised an essential term forming part of whatever form of enforceable subcontract or agreement the court upholds as having been entered into between Multiplex and JRK. Multiplex has always reserved its position in relation to these proceedings as it maintains that the issues between the parties require to be adjudicated upon pursuant to the arbitration clause as opposed to by curial process. The clause in question was in the following terms: "16 DISPUTE RESOLUTION 16.1 In case any dispute or difference shall arise between the Subcontractor and Multiplex, either during the progress of the works or after the determination, abandonment or breach of this Agreement as to the construction of this Agreement or as to any matter or thing of whatsoever nature arising thereunder or in connection therewith then subject to clause 22.1(f), either party shall give to the other notice in writing of such dispute or difference and at the expiration of three (3) days, unless otherwise settled, such dispute or difference shall be submitted to arbitration in accordance with and subject to the Institute of Arbitrators Australia Rules for the Conduct of Commercial Arbitration, expect that Multiplex may require replacement of any arbitrator nominated whom it considers unsuitable for the dispute in question or any aspect thereof. In the event of the Subcontractor submitting a dispute to arbitration it shall, within 14 days of the submission, deposit on trust with a solicitor (nominated by the Subcontractor and approved by Multiplex) a sum of money equal to 10% of the amount in dispute as security for the costs of arbitration proceedings. Pending resolution of any dispute the Subcontractor will without delay, continue to perform this Agreement and to execute any of the Works (including variations) remaining to be executed and comply with all instructions of Multiplex." The confined pleadings 14 Certainly it is to be borne in mind that the Defendants having always approached the proceedings upon the basis that their participation in the proceedings is without prejudice to their alleged entitlement to have the proceedings stayed pursuant to section 53 (1) of the Commercial Arbitration Act 1984, the amended defence only pleads by way of denying paragraph C1 of the amended summons so that the only issues thrown up by the post amended summons pleadings (i.e. by the amended defence filed on 31 January 2002 and by the amended reply filed on 1st February 2002] are the issues concerning determination of the separate questions. The plaintiff's case 15 JRK shortly adopts the stance that the series of negotiations between the parties never resulted in a consensus by way of a relevant meeting of minds. The contention is that no concluded enforceable agreement was ever reached between the parties in respect of the work which JRK carried out at Stadium Australia. In particular the contention is that there was never a meeting of minds and therefore never an enforceable agreement incorporating the Multiplex Standard Terms of Contract, which Standard Terms (in whatever form) had included the arbitration clause. 16 JRK accepted that there was no argument but that throughout the history of their relationship both parties assumed or expected that they would have a concluded contract regulating their relationship. JRK's contention was that both parties approached this transaction on the basis that a formal written instrument regulating their mutual contractual rights and obligations was a fundamental requirement for both of them. JRK accepts that nobody in the industry in 1997 would contemplate having a $12 million contract otherwise than in writing. Problems arose between the assumed industry position that contracts of this nature and magnitude should be in writing on the one hand and the practical aspect of the building works having to be undertaken and completed on the other hand. The negotiation processes were continued throughout. The result on JRK's case is that the parties succeeded in the building of what was necessary but never succeeded in reducing the terms of the relevant contract to writing. Dramatis personae Mr John Keith 17 Mr Keith is a director of JRK Pty Ltd. JRK is a company which carries out plumbing works on large development projects. JRK is one of the largest contracting firms in NSW. [Transcript page186] Mr Peter Johnson 18 Mr Johnson holds the position of Contracts Manager at JRK, and one of his primary roles is responsibility for documenting subcontracts entered into by JRK for hydraulic plumbing works. 19 Mr Johnson was not involved in the dealings between JRK and Multiplex until he made amendments to the second subcontract (sent to JRK on 27 November 1997), signed it and sent it back to Mr Cooksley on 8 May 1998. He was thereafter involved in meetings with representatives from Multiplex in regard to the terms of the subcontract. Mr Keith Parslow 20 Mr Parslow is employed as the Services Manager for Multiplex. In March 1996, he commenced work on the Stadium Australia Project; his title being "Design Manager – Services". [Mr Parslow's Statement, 12 April 2001, paragraphs 1, 4] 21 Some of his duties in this role included: (a) managing the design of all the services (including hydraulics) for the project; (b) the resolution of any technical services issues with subcontractors and Multiplex's consultants; (c) ensuring that all tenderers were fully aware of the scope of the works and ensuring that all tenders submitted complied with Multiplex's scope for any particular service; (d) ensuring that the scope of works for which Multiplex was responsible was complied with by the subcontractor; (e) reviewing Design Briefs for each service (f) ensuring that Mulitplex's design and construct obligations were passed on to the subcontractor to price; (g) putting together tender documents to be sent out (h) Mr Parslow had authority to negotiate the technical requirements of the subcontract and to advise Mr Cooksley on the reasonableness of the costing presented by the subcontractor (it was Mr Cooksley's role to deal with subcontractors with a view to finalising contractual terms); and (i) attending meetings with tenderers and reviewing tenders. [Mr Parslow's Statement, 12 April 2001, paragraphs 4-10] 22 Mr Parslow attended a number of meetings with JRK during which there were various discussions in relation to technical matters, scope, problems with authorities, alternatives and proposals of method and materials. [Mr Parslow's Statement, 12 April 2001, paragraphs 18-23] Mr James Twiss 23 Mr Twiss was the site manager employed by JRK on the Stadium Australia site. Mr Twiss was involved in designing drawings and receiving drawings and drawing schedules from Multiplex. [T280] Mr David Cooksley 24 During the period 1991 to 1999, Mr Cooksley was employed by Multiplex as Contracts Manager, and specifically worked on the Stadium Australia project between February 1996 and July 1999. [Mr Cooksley's Statement, 12 April 2001, paragraph 4] 25 In this role, Mr Cooksley was responsible for administering all subcontract agreements between Multiplex and its subcontractors. His responsibilities included: "(a) contract negotiation; (b) issuing and signing subcontracts on behalf of Multiplex; (c) managing variations; (d) dealing with progress payments and final accounts; (e) general administration of the subcontract once it had been let." [Mr Cooksley's Statement, 12 April 2001, paragraph 5] Mr Leonard Hutton 26 Mr Hutton is an associate in the firm Sinclair Knight Merz Pty Ltd ("SKM") and holds the position of Senior Hydraulics and Fire Engineer. 27 SKM was engaged by Multiplex as hydraulic design consultants for the Stadium Australia project. SKM's role was to design a set of tender documentation which Multiplex could use to seek tenders for the hydraulic services design and construct contract. SKM's ongoing role was design overview. Mr Hutton's role was to review the design created by the hydraulic subcontractor and provide quality control advice to Multiplex. [Mr Hutton's Statement, 4 February 2002, paragraphs 1-3] The facts 28 The convenient course is to set out the facts. In doing so from time to time it may be helpful to set out some aspects of the submissions of the parties in relation to particular documents or events. The tender process 29 It was Mr Keith's practice to have meetings with staff from time to time for the purposes of understanding what everyone in the office was doing. Mr Keith, Mr Johnson and Mr Twiss (who worked at the office part-time) worked within close proximity to each other. [T187] 30 It was Mr Keith's evidence that prior to the commencement of construction on or around 18 March 1997, a substantial part of the hydraulic works to be completed by JRK on the Stadium Australia Project had not been designed. According to Mr Keith, JRK's brief was for the design, development and installation of the words. [Multiplex submitted numerous architectural drawings to JRK] [Admitted subject to relevance] for the purposes of JRK developing the designs to a stage where they could be submitted to Multiplex for approval prior to being issued for construction. [He says that the works were designed in a "staged" manner because of the urgency of the deadline to be met.] [Admitted subject to relevance] [Mr Keith's Affidavit, 11 September 2001, paras 40, 41] 31 [According to Mr Keith, when JRK received each set of drawings and where they constituted a variation to the scope of the JRK original works (see below for definition), JRK would submit a Variation Notice claiming payment over and above the sum of $12,408,020 tendered by JRK.] [Admitted subject to relevance] [Mr Keith's Statement, 11 September 2001, paragraph 43] 32 Mr Keith did recall seeing some of the documents included with the letter of 5 December 1996 (Exhibit DY1, behind tab 3). He gave evidence that he had seen the front page of the "Tender Conditions" but had never read the document. [Transcript page 201] 33 Mr Keith also gave evidence that Mr Twiss had responsibility for administering the payment process and that whilst Progress Claims came into the JRK office, they did not cross Mr Keith's desk and he did not see all of them. [Transcript page 203] 34 Mr Keith was unaware of Special Condition 2(c) of the original subcontract which required JRK to submit statutory declarations. Despite this, he signed statutory declarations such as those of 14 August 1997 and 20 May 1997 (MFI DX, Volume 1B, PAB.01.644, PAB.01.664). Mr Keith explained that declarations such as these were required on every project. [Transcript page 205 - 207] 35 Mr Keith explained that he had never read the subcontract, and that when he swore the statutory declarations which refer to the "subcontract agreement" he merely considered the declaration to be a standard form which went with each monthly progress claim. The following exchange took place during Mr Keith's cross examination: "Q. Now at the time you signed that piece of paper as a statutory declaration did you have in mind any understanding yourself of which subcontract agreement, if any, was being referred to using those words? A. No, I don't. Q. You mean no you didn't? A. I didn't at the time." [Transcript page 224] 31 August 1996 36 Multiplex became a party to a design and construction agreement by which they agreed to plan, design and construct Stadium Australia for the Sydney 2000 Olympic Games. October 1996 37 JRK executed a subcontract agreement with Multiplex to provide temporary plumbing services ("the temporary works") at the Stadium Australia site for a sum of $250,000. The temporary works were primarily associated with transporting water to the site for the purposes of construction. 5 December 1996 38 Multiplex sent JRK a request for tender letter (Exhibit DY1, tab 3, JK02-078). The request invited JRK to tender for the design and construction of the permanent hydraulic services package ("the works") for the Stadium Australia project. 39 The letter included the following: "You are invited to submit a tender to Multiplex Constructions Pty Limited (ACN 008 687 063) ("Multiplex") for the Hydraulic Services Package for the above project ("the Project"), all in accordance with Specifications and Drawings and the following Tender Condition. The Drawings, Specifications, and copy of the Multiplex Design and Construction Agreement and our Project Standard Form of Subcontract Agreement for the Proposed Works and Standard Form of Project Supply Agreement for the Materials may be examined in our Project office at Level 1, 55 Clarence Street, Sydney, NSW, 2000 ("Project Office") by prior arrangement." 40 The tender letter sent to JRK enclosed a number of documents ("the tender documents"), some of which included: (a) Tender Conditions (Exhibit DY1, tab 3, JK02-079); (b) Multiplex's Project Standard Form of Subcontract Agreement (Exhibit DY1, tab 3, JK02-001); (c) Form of Tender document (Exhibit DY1, tab 3, JK02-085); (d) Tender Constructions Programme (Exhibit DY1, tab 3, JK02-093); (e) Hydraulics Specification Revision 0 (Exhibit DY1, tab 3, JK04-001); (f) Documentation Register (Exhibit DY1, tab 3, JK02-106); (g) Site Safety Instructions (Exhibit DY1, tab 3, JK02-112); (h) All or parts (there is an issue as to whether this is an issue available to be pursued by the plaintiff) of an Australia Stadium Design Brief (All of Exhibit D6 (1)) or all of it excluding sections "E" and "F". 41 The parties were in dispute as to: (a) The extent to which the question of which documents were sent with the invitation to tender was permissible to be litigated (on the pleadings, particulars and opening addresses); and (b) Depending upon the answer to (a), as to what the complete set of documents comprised. 42 Mr Gray submitted that Mr Parslow's original statement was in fact accurate and that the incomplete document was the version actually sent to JRK on 5 December 1996. [Transcript page 262] 43 During cross examination, Mr Parslow gave evidence that he believed that the complete version of the "Design Brief" was sent to JRK (as found in Exhibit D6 (1)), but could not guarantee that it was actually sent as he did not himself put the documents together. He accepted that the incomplete document (as found in Exhibit DY1) could have been sent to JRK and that he had not verified precisely what had been sent to JRK. The basis for his belief was that to send out the brief would have been to send out the complete document, as it was part of Multiplex's head contract document. [Transcript pages 264 - 265; 269] 44 Mr Cooksley gave evidence that he was involved in putting these tender documents together, signing them and telling the subcontractors to pick them up. He states that he did not personally put the Design Brief in but recalls that one was given to JRK in the tender documents. Mr Cooksley did not claim to be able to contradict the proposition that JRK was not given a complete document of the Design Brief. [Transcript pages 293 - 294] He did however give evidence that all Parts were available for inspection from 5 December 1997. [Transcript page 294.10] 45 During cross examination, Mr Keith gave evidence that he could not recall seeing the letter of 5 December 1996 prior to seeing it in the witness box, as it would have been sent to Mr Twiss. This was despite the fact that Mr Keith referred to this document in his affidavit of 11 September 2001 at paragraph 33. Mr Keith stated that it was likely that Mr Twiss would have brought this letter to his attention when receiving it from Multiplex but he cannot recall either way. [Transcript pages 191 - 197; 201] The Tender Conditions 46 Clause 2.1 of the Tender Conditions stated: "Subject to Section 4 below, the successful tenderer for the Proposed Works shall enter into Multiplex's Project Standard Form of Subcontract Agreement with any applicable special conditions…including applicable Annexures, and be bound by all conditions and restrictions, applying to the Project included in the Head Contract. Copies of the Multiplex Design and Construction Agreement and Multiplex's Standard Form of Subcontract Agreement are available for inspection by the tenderer in the Project Office." 47 4.2 of the Tender Conditions stated: "The tenderer agrees that Multiplex will be entitled to conduct negotiations with any or all tenderers after the date of close of tenders to take account of the state of Multiplex's then and anticipated contractual obligations under documents forming part of the Stadium Australia project documentation." [see transcript 53.35] The Standard Subcontract Agreement ("the original subcontract") 48 A part of clause 1 of the Standard Subcontract Agreement sent to JRK on 5 December 96 ("the original subcontract") stated: "…Nothing in this clause shall oblige Multiplex to disclose the contract sum under the Contract Documents or provisions indicating its components or other benefits to the Contract Documents. Notwithstanding this clause and clause 22.1(a), no term of this Agreement shall be interpreted as having more than one meaning. The subcontractor agrees that the limitation period for Multiplex to bring any claim against the Subcontractor under this Agreement shall be determined as if this Agreement was a deed." 49 Clause 16 of the original subcontract contained an arbitration clause earlier set out. 50 Schedule 5 of the original subcontract required the subcontractor to submit a number of items with each progress claim in respect of the works, one of which was: "…a statutory declaration by the Subcontractor that no monies are due and payable to its sub-subcontractors and certified copies of claims from subcontractors in order to substantiate the claim." 51 Part 2 of the Special Conditions of the original subcontract required the subcontractor to provide a detailed description of safety systems and procedures that it intended to apply. 52 Part 10 required the subcontractor to implement a Quality System and perform various tasks in relation to this obligation. 53 The original subcontract form also placed Design Obligations on the subcontractor (see Exhibit DY1, tab 3, JK02-048). Importantly this Part obliges the subcontractor to prepare and submit its Quality Manual for approval by Multiplex. The Design Brief 54 Mr Parslow originally gave evidence in his affidavit that the document in Exhibit DY1, tab 3 JRK04-083 to JK04-277 entitled "Design Brief" was the document sent out to JRK on this date. Later, in the witness box, Mr Parslow told the Court that he wished to correct this as he subsequently realised that this document had pages missing and that a complete version of this document could be found in Exhibit D6 (1). [Transcript page 239] 55 Mr Cooksley gave the following evidence during cross examination in relation to his reading of the standard site subcontract prepared by Multiplex's solicitors for this project: "Q: Can I get to the point, Mr Cooksley? If you need to refer to the document, if you want to, please say so. The document contains a lot of provisions covering all sorts of things, scope of work, variations, specifications, name, procedure, extension of time, disputes, other things, doesn't it? A: Yes. Q: As far as you were concerned, as the Contract Manager for Multiplex, these were important matters, weren't they? A: Yes. Q: And they needed to be resolved, that is to say, the parties, Multiplex and the subcontractors, had to have reached agreement on those things as part of their subcontract dealings, didn't they? A: Yes. Q: As far as you were concerned, the signing of a subcontract by a subcontractor was an essential part of the subcontract relationship, wasn't it? A: Yes. Q: And indeed, as far as you were concerned, you had in fact made it known to subcontractors' representatives that if they didn't sign the subcontract, they might not get paid at all? A: Yes. [At transcript pages 299.39 – 300.8] 56 Mr Cooksley agreed that it was an essential requirement for all Multiplex subcontractors to sign a subcontract agreement in every case and that it was indispensable to subcontractors to do so. Mr Cooksley agreed that it was part of his responsibility to ensure that subcontractors signed their agreements. [T300-T301] 13 December 1996 57 Multiplex sent a letter to JRK on this date entitled, "Stadium Australia Project Documentation Requirements" (MFI DX, volume 5, PAB.05.083). 58 The letter began: "As part of your contractual obligations you are required to submit the following documentation: 1. Quality Assurance …" December 1996 59 JRK commenced work on the temporary works. 28 January 1997 60 Multiplex sent a letter to JRK on this date entitled, "Australia Stadium Project Monthly Reports" (MFI DX, PAB.05.111). 61 The letter reads: · "As part of your contractual obligations for issuing of your Monthly Progress Claims and associated documentation, we require the attached pro-formas for (Quality Assurance Report and Employee Payment Declaration) to be completed and issued with the Progress Claim. Failure to issue these forms will result in delays in processing your claim." 62 In relation to this letter, Mr Gray (for JRK) submitted: "…the point that I'm making is that these requirements are set out in this correspondence referenced to contractual obligations. The parties as I have said, we accept they were going to make a contract and that, in our submission, the fact that it was done in this way is consistent with that assumption. They were going to make a contract; it was required; these procedures are normal." 31 January 1997 63 A subcontract of this date replaced the previous one entered into in October 1996 in respect of the temporary works (Exhibit DY1, tab 1, JRK0021 0161). 12 February 1997 64 JRK responded to the letter of 5 December 1996 and submitted a price of $8,524,000 for the works (Exhibit DY2, tab 4, JRK0001 0251). This price was expressed to exclude: "Cash retention. Performance bond. Site and/or special allowances. Builders temporary services. Removal of surplus spoil off site. Site accommodation. Roof, gutters, rainwater heads, external downpipes, overflows, flashing and spitters. Electrical works. Cranage of materials and plant. Fire extinguishers." 65 The letter also stated: "Our tender price is based on the tender documents enclosed with your invitation to tender however, only the services, plant and equipment indicated on the tender plans has been included in our price. Those services, plant and equipment that may be specified or inferred but are not indicated on the drawings have not been included in our price. We cannot at this stage indicate a final price for the design of the hydraulic services for the project until we have been briefed on the overall design extent and intent, together with results of discussions held to date with governing authorities and overall design programming." 66 The letter was signed, "John R Keith per Twiss". 67 JRK had filled in the "Form of Tender" document (as previously included in the tender material sent to JRK on 5 December 1996) and attached it to this letter. 68 Mr Parslow gave evidence that when he read the tender of this date, he thought that it did not qualify the scope of work required to be undertaken. Importantly he recognised that the amount of information provided by JRK made it difficult to be confident that it had taken all necessary matters into account. [Mr Parslow's Statement, 12 April 2001, paragraph 12] 69 For the duration of the Stadium Australia Project, Mr Keith contends that: (a) Mr Twiss and Mr Johnson would refer to him for determination and/or ratification in relation to management decisions by JRK in relation to the Stadium Australia project; (b) he discussed the Stadium Australia Project with Mr Twiss and Mr Johnson on a regular basis and at weekly team meetings; and (c) he signed or authorised others to sign all formal contract and subcontract agreements on behalf of JRK. [Mr Keith's Affidavit, 11 September 2001, paras 4, 5, 6] After 12 February 1997 70 Multiplex arranged for each of the tenderers to meet with its personnel (including Mr Cooksley, Mr Scicluna and Mr Parslow) to discuss the proposed scope of work. Meetings were also arranged between the tenderers and Multiplex's hydraulic consultants, Sinclair Knight Mertz (SKM) to discuss the design brief. 71 At one of these meetings, Mr Cooksley alleges that he said (to all tenderers including JRK): "Have you had a chance to go though the subcontract agreement and standard annexures? To which he contends Mr Twiss or Mr Keith responded: "Yes, but we have included a few matters in our tender which we can go through with you." [Mr Cooksley's Statement, 12 April 2001, paragraph 14] 72 According to Mr Cooksley, further conversation took place in relation to the matters listed under the heading, "Exclusions" in the 12 February 1997 tender. [Mr Cooksley's Statement, 12 April 2001, paragraph 14] 73 Mr Keith, whose evidence is accepted in this regard, contended that at at least one of the meetings he attended, Mr Cooksley said: "Multiplex have a project specific contract produced by solicitors Dunhill Madden Butler for the Stadium Australia Project." To which Mr Keith responded: "We will need to study that document and then get back to you." [Mr Keith's affidavit, 11 September 2001, paragraph 66] 4 March 1997 74 JRK submitted a revised tender price of $7,816,000 (Exhibit DY2, tab 5, JRK0001 0288). The tender contained the same exclusions that were specified in the letter of 12 February 1997. 75 The letter stated: "We herein submit our price for the amount of Seven Million Eight Hundred and Sixteen Thousand Dollars ($7,816,000.00) for the above project all as detailed below. Our tender price is based on the tender documents enclosed with your invitation to tender however, only the services, plants and equipment indicated on the tender plans has been included in our price. Those services, plant and equipment that may be specified or inferred but are not indicated on the drawings have not been included in our price. We cannot at this stage indicate a final price for the design of the hydraulic services for the project until we have been briefed on the overall design extent and intent, together with results of discussions held to date with governing authorities and overall design programming." 7 March 1997 76 JRK submitted a further revised tender price of $8,139,000 (Exhibit DY2, tab 6, JK01-028). The letter stated: "As requested we herein submit our revised price for the amount of Eight Million One Hundred and Thirty Nine Thousand Dollars ($8,139,000.00) for the above project all as detailed below. Our tender price is based on the tender documents enclosed with your invitation to tender however, only the services, plant and equipment indicated on the tender price has been included in our price. Those services, plant and equipment that may be specified or inferred but are not indicated on the drawings have not been included in our price. We cannot at this stage indicate a final price for the design of the hydraulic services for the project until we have been briefed on the overall design extent and intent, together with results of discussions held to date with governing authorities and overall design programming." 77 The revised tender now included the following five additional inclusions: "- Supply and installation of four (4) 700kl irrigation storage tanks (at $428,000.00). - Level 0 hot water service. - Garbage room drains. - Site accommodation. - Site allowances of $1.80." 78 The letter was signed "John R Keith per Twiss". 10 March 1997 79 Mr Keith signed the following letter sent by JRK to Multiplex which was in the following terms (Exhibit DY2, tab 7, JRK0001 0290): "Further to our hydraulic services tender of the 7th March 1997 we submit an alternative proposal as follows: 1. Hydraulic services price based on the tender plans and specification. 2. Work with Multiplex Constructions, Sub-Contractors, Consultants and Governing Authorities as a preferred subcontractor to complete co-ordinated fully engineered hydraulic services design documented using AUTOCAD or Microstation. 3. Completed design submitted to Governing Authorities for approval together with payment of necessary fees. 4. Submission of final hydraulic services price based on completed design. 5. Ongoing on-site construction assistance including installation of core holes, temporary site services and technical advice. Our tender price is Seven Million Five Hundred and Sixty Thousand Dollars ($7,560,000.00) Our tender includes the following: Preparation of co-ordinated hydraulic services ($72,000.00) Retention by Bank Guarantee (2x2.5%) John R Keith Pty Ltd enterprise agreement. Six day week when required to maintain programme. Supply and installation of four (4) 700kl irrigation storage tanks (at $428,000.00). Level 0 hot water service. Garbage room drains. Site accommodation. Site allowances. HDPE pipework for plumbing and trade waste lines. Lilac coloured pipework for all recycled water services. All storage tanks and pumping units specified. Excluded:- Cash retention. Performance bond. Builders temporary services Removal of surplus spoil off site. Roof, gutters, rainwater heads, external downpipes, overflows, flashing and spitters. Electrical works. Cranage of materials and plant. Fire extinguishers. Painting. Hand excavation. Trench gratings and frames. Bath support frame or base. Special insurances. Excavation in rock, shale or concrete. Dewatering. Piers, lintels encasement works. External site services. Surveying." [emphasis added] 80 Multiplex's case is that JRK put this proposal forward with a view to submitting a better, final tender price based on the design to be completed. Its case is that the price submitted would remain provisional until the point when the design was completed, with a final price then being put forward. Multiplex contends that JRK later processed the amount of $72,00.00 (to prepare the drawings) as a variation to the temporary works contract (see various Progress Claims submitted by JRK in Exhibit DY1, tab 2) [Transcript page 64.55]. 81 Importantly, this letter in contradistinction to the previous letters of 12 February 1997 and 4 and 7 March 1997, did not set out a tender price "based on the tender documents" enclosed with the invitation to tender of 5 December 1996. Multiplex contends that where the earlier letter reserved the final price to a time when the design was complete and further information was available, this proposal involved an alternative plan put forward by JRK as to how the final price would be developed. Multiplex's submission was that this was not in any way an attempt by JRK to move away from the basis of the tenderer earlier made. See generally at Transcript page 55 where Mr Corsaro (for Multiplex) put the matter as follows: "So what it envisaged, your Honour, is an arrangement where Keith would work to complete the design for the hydraulic services with a view to submitting a final hydraulic services price based on that design. …And the letter then put forward a tender price of $7,560,000, so that the obvious arrangement here, your Honour, is a provisional price for the permanent hydraulic services of 7.56 million. …With Keith working together with Multiplex constructions and its subcontractors to finalise the design and that the price would remain provisional until the point when the design was completed, with a final price then being put forward. …And on any view we would say that what your Honour would find here is an arrangement proposed whereby Keith would work with Multiplex with a view to putting forward a better tender price, and in no way is this a step away from the tender documents which were to be the foundation of the arrangement , in other words the general conditions and so on. It doesn't in any way, shape or form appear to be a move away from Keith's original tender insofar as it acknowledged the tender documentation had been received and certainly by implication accepted that documentation." [emphasis added] 82 And later at Transcript page 71: "..it is true that when one goes back for example to the earlier letter on 7 March, that those letters set out tenderer prices based on the tender documents enclosed with the invitation to tender and that that no longer appears in this letter, budgets and they don't appear….is because the earlier letters reserved the final price to a time when the design was complex when further information was available. This letter is an attempt by [the plaintiff] to come to an arrangement as to how the final price would be developed, namely that [the plaintiff] itself would prepare the drawings, and this is important, because this, if as Mr Gray maintains, it was the scope that wasn't agreed, at the end of the day [the evidence will disclose] that Mr Twiss prepared the drawings out of which they tendered and [see] says he agreed the price." 83 JRK on the other hand, submits that the critical phrase in this letter is "alternative proposal", and was used in this letter in contrast with everything else that JRK had written up until that point. JRK emphasises that the previous letters of 12 February 1997 and 4 and 7 March 1997 referred to the tender price being "based on the tender documents", whereas the 10 March 1997 letter states that the price is based on the plans and specifications. [Transcript page 119] 84 JRK submits that the 10 March 1997 letter constituted a distinct departure from the basis of the previous tenders and did not represent any acceptance of the original subcontract. JRK contends that the 10 March 1997 letter was taken by the parties as the foundation for all their further dealings and that everything discussed prior to that was simply disregarded. It contends that from 10 March 1997 onwards, the original subcontract was considered "out of the picture" in a contractual sense and that the parties were proceeding on the basis that they would determine the details and terms of their contract at a later stage. [Transcript pages 120 and 128] 85 JRK submits that it offered this alternative proposal because Multiplex wanted a lower price and JRK chose to get rid of the original subcontract terms, which terms it considered to be onerous. [Transcript page 121] 86 JRK also submits that the plans that JRK was to prepare for $72,000 were substantially "penetration plans" (to show how services such as pipes and electronic wiring were to go through concrete walls and slabs planned to be built by the architect or engineer) as well as being "coordination drawings" which were intended to ensure that the hydraulic services did not conflict with other services in terms of the location of facilities. JRK submits this was the function of these plans rather than to materially define the hydraulic works. [Transcript pages 124 and 128] 87 Mr Twiss gave evidence that while he prepared the designs (the scope of which was ultimately finalised in June 1997), JRK was already working on the main hydraulic work. [Mr Twiss' Statement, 24 January 2002, paragraph 11] [Transcript page 67] 17 March 1997 88 Mr Cooksley gave evidence that he arranged for Mr Mark Ainsworth (of Multiplex) to prepare a "Subcontract Comparison" spreadsheet and received it on this date (Exhibit DY2, tab 8). The document indicates that JRK was the "preferred subcontractor" for hydraulics on the Stadium Australia project. It has the signatures of Mr Obiala, Mr Stagg and Mr John Austin (all of Multiplex) to indicate their approval of the recommendation. [Mr Cooksley's Statement, 12 April 2001, paragraph 18] 89 Following this, Mr Cooksley says that he ceased negotiations with all other tenderers. On or around 18 March 1997 90 JRK commenced construction of the works. [Mr Keith's Affidavit, 11 September 2001, paragraph 40] 21 March 1997 91 Mr Cooksley met with Mr Keith and Mr Twiss; handwritten notes were made by Mr Cooksley (Exhibit DY2, tab 9). 92 According to Mr Cooksley, the following conversation took place: "Mr Cooksley: I want to confirm my understanding of where your latest bid is at. Am I right that your price at the moment for the contract work and additional temporary services is $7,834,273 plus $250,000 for the temporary services let to date? I want to confirm that you have also taken into account the following items:… … … Mr Keith/Mr Twiss: That's right. The price includes all those items. Mr Cooksley: We'll be looking to contract with you subject to David Hicks checking JRK's financial status, an industrial check and confirmation of the sales tax. We want you to progress the design over the next 2 months by which time we will be in a position to finalise the contract subject to acceptable contract sum. Can you also correct the "Exclusions" to reflect what we've agreed? On that basis you can proceed with the design work and any necessary work to keep up with the construction on site. I'd like you to monitor immediate expenditure against the tender price with John Scicluna." [Mr Cooksley's Statement, 12 April 2001, paragraphs 19 and 20] 23 March 1997 93 A meeting took place between Mr Keith, Mr Twiss and Mr Cooksley. JRK was informed that they were the preferred tenderer. JRK performed the works at all material times thereafter. 94 JRK worked with SKM and Multiplex's technical personnel to develop a hydraulic services design on which JRK could base its final tender price. 17 April 1997 95 Mr Parslow gave evidence that he attended a "tender finalisation meeting" with JRK during which he said words to the following effect: "The intent of the contract is to meet the design brief and to minimise variations. If possible I want no variations." [Mr Parslow's Statement, 12 April 2001, paragraph 24] 96 According to Mr Keith, he responded to this with: "There'll be no variations provided you don't add anything to the design of the works. If it is extra then you will have to pay for it." [Mr Keith's Affidavit, 11 September 2001, paragraph 85] 97 Mr Parslow states that he does not recall Mr Keith saying this and that if he had said it, Mr Parslow would have responded as it was obvious that if the design brief remained unchanged, the scope would remain the same. [Mr Parslow's Statement, 20 December 2001, paragraph 6] 27 May 1997 98 JRK submitted copies of its Quality Assurance Manual, Occupational Health and Safety Plan and Environmental Policy to Multiplex (Exhibit DY2, tab 11, JRK0002 0342). Mr Twiss signed this letter as "Project Manager". 99 Multiplex contends that this is significant in demonstrating that JRK was moving forward at this stage on the understanding that the tender documents applied because the tender documents required JRK to submit a quality system, an Occupational Health and Safety Plan and Environmental Policy. 100 Mr Twiss gave evidence that as far as he is aware, Quality Assurance Reports are common in significant construction projects. [Transcript page 282] 101 Mr Cooksley gave evidence that Multiplex requires Quality Assurance Programmes from its various subcontractors and consultants and that this is a standard requirement on every job since Multiplex received its accreditation. As far as Mr Cooksley is aware, this is true of every construction company that has been similarly accredited. [Transcript page 297] 4 June 1997 102 JRK, by letter written by Mr Twiss and signed by Mr Keith, submitted a revised tender price of $12,326,850 to complete the works (Exhibit DY2, tab 12, JRK0003 0017). The price was increased from the previous quote of $7,560,000 (on 10 March 1997) because by this stage, the design work quoted at $72,000 had been carried out and a final (although provisional) price could be quoted. 103 The letter is in the following terms: "We herein submit our price for the amount of Twelve Million Three Hundred and Twenty Six thousand Eight Hundred and Fifty Dollars ($12,326,850.00) for the above project all as detailed below. Our tender adjustment is based on the documents as listed in the attached Appendix A. 1. Our Tender Adjustment Includes The Following:- (a) Tender price dated 10th March 1997 $7,560,000.00 $7,560,000.00 2. Authorities Requirements Over And Above Documents (a) Dual gas metres, regulators and vents to AGL requirements $57,294.00 (b) Separate gas line to cogen $67,086.00 (c) Boundary traps, overflow of grease arrestors $15,445.00 (d) Reflux valves on outlet of grease arrestors $8,787.00 (e) Additional grease arrestor to achieve gravity fall & head room $9,686.00 (f) RPZ valve on potable water suction point $7,560.00 (g) Dual RPZ valves on potable water supply (recommended) $4,508.00 $170,466.00 3. Kitchens & Concessions (a) Level 0 kitchen $183,923.00 (b) Level 1 concessions $488,668.00 (c) Level 2 concessions $253,449.00 (d) Level 3 concessions $199,511.00 (e) Level 4 concessions $263,075.00 (f) Level 5 concessions $152,320.00 (g) Level 6 concessions $158,004.00 (h) Deductions for tender allowance ($502,022.00) $1,195,928.00 4. Additional Amenities (a) Level 0 amenities $484,633.00 (b) Level 1 amenities $361,812.00 (c) Level 2 amenities $19,292.00 (d) Level 3 amenities $817,241.00 (e) Level 4 amenities $26,650.00 (f) Level 5 amenities $20,123.00 (g) Level 6 amenities $36,099.00 $1,765,850.00 5. Additional Works Indicated On Consultants Issue 0 and 1 Drawings, Revised Specification and Latest Architectural Drawings Listed in Our Appendix A (a) Water filter to recycled water service $39,200.00 (b) Potable water suction point for fire fighting $6,955.00 (c) Water service to gantry including two (2) new pumps $68,544.00 (d) Fifty three (53) additional fire hydrants & fire hose $122,815.00 (e) Water wash down for core roofs $1,610.00 (f) Additional twenty-eight (28) drains for garbage room $42,931.00 (g) Additional forty-eight (48) roof sumps to ramps $36,600.00 (h) Automatic urinal cistern changed to Zip sensors $26,676.00 (i) Centralised hot water system including pipework $521,636.00 (j) Level 0 water and gas ring mains $1,322,130.00 (k) Deduction for irrigation tanks ($428,000.00) (l) Deduction for hot water service ($103,416.00) (m) Deduction for Level 0 drainage (North) ($15,225.00) (n) Deduction for recycled solenoid valves ($7,850.0) $1,634,606.00 Total Tender Price $12,326,850.00 6. Additional Work Outside Of Hydraulic Services Scope (a) Irrigation storage tanks $339,300.00 (b) Irrigation pipework including conduits $73,780.00 (c) Automatic filling of irrigation tanks $104,700.00 (d) Stormwater pumps and electrical works $62,650.00 (e) Access panels to in wall cisterns $370,605.00 (f) Drains to photographers moat $26,326.00 ________________ Total $977,361.00 Possible Savings 1) Change of toilet seat type; 2) Change in wall cisterns to suites as discussed; 3) Change in wall cisterns to duct cisterns as discussed; 4) Do not interconnect east and west stands in waters services; 5) Take gantry cold water service off main pressure system; 6) Use local hot water heaters for temporary concession & Level 0 maintenance amenities; 7) Maximise lengths of urinals & wall-on urinals to suit sensor flush systems as discussed; 8) Changes to selected sanitary fixtures, faucets and taps; 9) Combined hydrant and potable water storage tanks into one tank. Our Tender Adjustment Excludes The Following: 1) Painting of services; 2) Sheathing of hot water insulation; 3) Sub-soil drainage; 4) Hose cocks to Level 0 service road; 5) Cash retention; 6) Performance bond; 7) Roof gutters, rainwater heads, external downpipes, overflow, flashing and spitters; 8) Electrical works; 9) Cranage of materials and plant; 10) Fire extinguishers; 11) Trench gratings and frames; 12) Piers, lintels, encasement works; 13) External site services; 14) Trade waste storage tanks; 15) Fit out of kitchens and concessions; 16) Gas service for Olympic flame; 17) No allowance for sales tax; 18) Fire hydrant and fire hose reel cabinets. We request retention and payment terms be negotiated. Should you require any additional information please contact the undersigned." 104 Mr Twiss gave evidence that by this stage, he had finalised the scope of the design brief and that the scope of works was represented by the architectural and hydraulic services drawings listed in Appendix A to the letter of 4 June 1997. [Mr Twiss' Statement, 24 January 2002, paragraph 11] [Transcript page 67 - 68] 105 Mr Corsaro submitted that this document is to be read as part of a tender process which had by this point in time been finalised to the stage where a preliminary price of $7.56 million as a result of a considerable amount of designing work for which Multiplex had paid, had now become $12,326,850.00 with various savings proposed and a shopping list of items that specified amounts. He submitted that: "There is nothing here which in some way adjusts the process by saying, "We no longer will abide by the tender conditions and we no longer consider ourselves, if we agree on this, as being bound on terms that include your standard subcontract". It is just totally divorced of that sort of statement and in the circumstances as a chain of correspondence, your Honour, it makes plain that it is intended, we would say, to hark back to that material." [Transcript page 70] 106 There was some dispute between the parties as to which set of drawings were referred to in this letter. Ie the "JRK set" (Exhibit D12) or the "Multiplex set" (Exhibit D16). [Mr Hutton's statement, 4 February 2002, paragraphs 4-6]. 107 Mr Hutton explained that in his opinion, the Multiplex set of drawings are an amalgam of the JRK set overlaid with architectural background of a later date. The SKM database incorporates revised architectural drawings and deletes or archives the earlier revisions and automatically updates the architectural background onto the existing drawings. [Mr Hutton's statement, 4 February 2002, paragraph 7]. 108 When in December 2001, SKM was asked by Multiplex to print the set of hydraulic drawings referred to in the letter of 4 June 1997, SKM accessed them electronically. When such drawings are printed, the SKM system automatically updated them with the most current architectural details. The drawings provided to Multiplex and thence to JRK's solicitors, do not therefore necessarily reflect the state of architectural development as at June 1997 and in Mr Hutton's opinion, are likely to reflect a much later stage in the development. However, the hydraulic details should be the same as the hydraulic drawings referred to in the letter of 4 June 1997 and only the architectural background should differ. [Mr Hutton's statement, 4 February 2002, paragraph 9]. 109 Mr Hutton goes on to say: "In my opinion, to understand the extent of the architectural design for the project as at June 1997, one must refer to the architectural drawings listed in the schedule to the letter dated 4 June 1997 from JRK to Multiplex. In my opinion, to the extent that scope of hydraulics work is defined by the drawings, it is necessary to refer in this instance, to the JRK Set for the hydraulics pipework and also to the architectural drawings listed in Appendix A to the JRK letter dated 4 June 1997, for the extent of fixtures and fitting required and whatever incidental work is required to complete the hydraulics system." [Mr Hutton's Statement, 4 February 2002, paragraphs 10, 11] 27 June 1997 110 By letter of this date, JRK identified savings in its tender price of 4 June 1997, reducing the total tender price to $11,366,850 (Exhibit DY2, tab 14, JRK0003 0207). 111 This letter in its penultimate paragraph reads: "Our revised tender price based on our tender letter dated 4 June 1997 is now: TENDER PRICE $11,366,850.00" 18 July 1997 112 JRK submitted a further revised tender price of $11,411,264 for the works and identified an additional $606,756 worth of work which fell outside the scope of the works (Exhibit DY2, tab 17). The letter of this date is set out below (under the heading, "On or shortly after 18 July 1997"; without the so-called "handwritten additions and deletions"). 113 Mr Corsaro, in drawing attention to the penultimate paragraph where JRK requested retention and payment terms to be negotiated, submitted as follows: "And even if the retention and payment terms, even if that request were in some way some reservation, it would not preclude the making of a contract on the class 4 for which we contend as an alternative cost to the Masters v Cameron…Because it was obviously intended, your Honour, there would be a formal contract with a final tender price, based on a final scope, prepared by Keith, prepared by Twiss, the author of this letter, to finalise what was only a preliminary price earlier, following a tender price, which had gone for many months, which included a wealth of documentation, and that is what happened forthwith … " [Transcript page 73] 114 Essentially, Multiplex's case as put by Mr Corsaro (at transcript page 85) is that the original tender conditions set out in the tender documents of 5 December 1996 remained pervasive through all of the negotiations so that JRK ultimately is to be seen as having tendered on 18 July 1997 (following the chain of correspondence leading to the communication from JRK of 18 July 1997) and having so tendered in terms of the price and scope of work formulated in and correspondence up to 18 July 1997. 115 Multiplex's case is that when JRK submitted the tender it was to be taken to have agreed that it would be required to enter into a contract on the original subcontract terms and that what occurred through the chain of correspondence was simply that the additional matters of significance such as price and scope were agreed to; the original subcontract terms never having been negotiable and no attempt ever having been made to renegotiate them. Those original subcontract terms, together with the request for tender letter are said to have simply remained in the background through the whole of the later chain of correspondence; the parties communications to be regarded as never intended to remove or vary the one given which was that those original subcontract terms would be the terms which would apply when price and scope had been finally tied down as they were by 18 July 1997. On or shortly after 18 July 1997 116 Mr Twiss gave evidence that following a meeting with Mr Parslow (and possibly Mr Cooksley), he made handwritten annotations onto the letter of 18 July 1997 (Exhibit DY2, tab 20, JRK0004 0060); one of which was to change the total tender price to $12,408,020. [Mr Twiss' Statement, 24 January 2002, paragraph 17] 117 Following this, JRK sent a copy of the annotated letter dated 18 July 1997 back to Multiplex. Multiplex contends that the total tender price agreed to at this time between itself and JRK on or about 18 July 1997 was $12,408,020 particularised as follows: Tender price for the Works $11,086,264 Work outside scope of Works $606,756 Temporary Works $715,000 TOTAL $12,408,020 The annotated 18 July letter 118 The amended letter ["the annotated 18 July letter", but sometimes simply referred to as 'the 18 July letter', there usually being no particular relevance in the first version of that letter which fell away once the annotated letter was sent] is in the following terms: "Re: Stadium Australia Hydraulic Services Tender Adjustment Further to our discussions with yourself K Parslow, J Scicluna, L Hutton and P Walker we have investigated all aspects of the hydraulic services with view of obtaining a final tender price and advise as follows. The following is to be read in conjunction with documents as listed in our Tender Adjustment dated the 4th and 27th June 1997. $7,360,000.00 [handwritten addition] 1. Tender dated 10th March 1997 $7,560,000.00 [handwritten deletion] 2. Authorities requirements (less separate gas main) $103,380.00 3. Kitchens and concessions (including branch pipework) $1,195,928.00 4. Additional amenities $1,765,850.00 5. Additional work requested by Consultants & Architect $1,634,606.00 6. Hose cocks to the following:- a) Level 0 roadway (20 off) $15,000.00 b) Concessions (48 off) $9,000.00 c) Seating tiers Level 2 (12 off) $8,000.00 d) Seating tiers Level 5 (4 off) $2,000.00 e) Seating tiers Level 8 (8 off) $38,000.00** **(includes pump up grade) f) Seating tiers Level 8 North/South (4 off) $16,000.00 $88,000.00 [handwritten deletions] 7. Stormwater drainage from main to collection sump of north and south stands $18,000.00 8. Downpipes to Level 6 box gutters $28,000.00 9. Increase recycled water pressure pump capacity and pipework $43,000.00 10. Increase capacity of sewerage pumping stations to take Level 1 amenities west stand (subject to co-ordination with new layouts) $18,000.00 11. Offset plumbing west stand to connect to sewer (subject to co-ordination with new layouts) $19,000.00 [handwritten deletions] 12. Change toilet pans in Level 1 temporary and relocatable toilets to Concorde (408 off) ($94,900.00) 13. Reduce services within Level 0 ring main ($286,000.00) 14. Delete underslung water services under Levels 2 & 4 ($147,500.00) 15. Delete branch pipework in concessions ($407,500.00) 16. Combined gas services & run high pressure branches ($19,000.00) 17. Change sanitary fixtures ($100,000.00) 18. Wall hung urinals changed back to slab type ___ ($7,600.00) TOTAL TENDER PRICE $11,411,264.00 [handwritten deletion] $11,086,264.00 [handwritten addition] 19. Additional Work Outside Of Hydraulic Services Scope a) Irrigation storage tanks $339,300.00 b) Irrigation pipework including conduits $74,780.00 c) Automatic filling or irrigation tanks $104,700.00 d) Stormwater pumps $62,650.00 e) Drains to photographers moat $26,326.00 _______________________ TOTAL $606,756.00 Temporaries $715,000.00 [handwritten addition] PROJECT TOTAL $12,408,020.00 [handwritten addition] Our Tender Adjustment Excludes The Following:- 1. Painting of services; 2. Sheathing of hot water insulation; 3. Sub-soil drainage; 4. Cash retention; 5. Performance bond; 6. Roof gutters, rainwater heads, external downpipes, overflow, flashing & spitters; 7. Electrical works; 8. Cranage of materials and plant; 9. Fire extinguishers; 10. Trench gratings and frames; 11. Piers, lintels, encasement works; 12. External site services; 13. Trade waste storage tanks; 14. Fit out of kitchens and concessions; 15. Gas service for Olympic frame; 16. No allowance for sales tax; 17. Fire hydrant and fire hose reel cabinets; 18. Fire hose reels and/or fire hydrants to seating tiers; 19. Drainage of seating tiers; 20. Stormwater drainage of north and south seating tiers; 21. Access panels for in wall & induct cisterns. We request retention and payment terms be negotiated. Should you require any additional information please contact the undersigned." 119 Mr Twiss gave evidence that although he has no clear recollection of speaking to Mr Keith about the letter, it was his usual practice to obtain Mr Keith's approval before submitting letters such as this and would have done so. [Mr Twiss' Statement, 24 January 2002, paragraph 19] Mr Keith gave evidence that Mr Twiss was authorised to make this decision. [Transcript page 224] 120 JRK submits that these discussions did not result in a formal signed document and that full agreement between the parties had not been reached. [Transcript page 122] [Mr Keith gave evidence that the amount agreed upon did not represent a "final total project price" and was not therefore a fixed price payable by Multiplex for whatever hydraulic works it might request of JRK thereafter on the Stadium Australia Project.] [Admitted subject to relevance] [Mr Keith's Affidavit, 11 September 2001, paragraph 39] 121 Mr Keith gave evidence that the sum of $12,408,020 was for the works set out in JRK's letters to Multiplex dated 10 March 1997, 4 June 1997, 27 June 197, 18 July 1997 and 12 August 1997 and the 128 technical drawings attached to the letter of 4 June 1997 ("the JRK original works"). [Mr Keith's Affidavit, 11 September 2001, paragraph 8] 122 Mr Keith also gave evidence that this agreement as to price had been made with Multiplex and was in place certainly by 12 August 1997, but that scope was to be finalised. The price agreed to was however in connection with some of the scope [Transcript page 225 - 226]. The following exchange took place: "Q. What I asked you is this, you also knew at that time, you also believed at that time that Mr Twiss had negotiated a scope of works to go along with that contract value of $12,408,020 and I think you said yes? A. Yes. HIS HONOUR: Q. What was the basis of that belief of yours? A. We had a number of drawings there and the dynamic design had been progressing and he adjusted the price so I think when he (Mr Twiss) altered it, when he amended it in his handwriting and initialled it that was the basis, on that a set of documents scope of work. Q. Is that something he told you? A: Yes. CORSARO: Q. You were allowing Mr Twiss to negotiate with the Multiplex people to try and agree scope and price at that time, correct? A. Yes." [Transcript page 226] 123 Mr Parslow gave evidence that as at this date, he understood the position to be that under its contractual obligations, JRK was obliged to supply and install a DAF unit and saw it as one of his responsibilities to ensure that JRK's scope of works included this obligation. It would have been his responsibility to ensure that the contract expressed such an obligation, however the amount of detail would be limited to what was written in the contract and Multiplex relied on letters from JRK and drawings. Multiplex did not seek to update all information. [Transcript page 244 - 245] 12 August 1997 124 JRK sent a letter to Multiplex stating a "Total Contract Price" of $12,408,020 (Exhibit DY2, tab 21, JK01-051). The letters prior to this letter had referred to the price as the "Total Tender Price". 125 This letter was in the following terms: "re: Stadium Australia Hydraulic Services Contract Price Further to our discussions with yourself we have pleasure in submitting our contract price as follows:- a) Hydraulic Services Contract Works $11,693,020.00 b) Temporary Hydraulic Services $715,000.00 TOTAL CONTRACT PRICE $12,408,020.00 Our contract price includes:- 1. Tender dated 10th March 1997; 2. Authorities requirements; 3. Kitchens and concessions; 4. Additional amenities; 5. Stormwater drainage to collection sump north and south stands; 6. Downpipes to Level 6 box gutters; 7. Concorde pans to Level 1 & 3 temporary and relocatable toilets; 8. Duravit sanitary fixture; 9. Stainless steel slab type urinals; 10. Irrigation storage tanks; 11. Irrigation pipework and conduits; 12. Automatic filling of irrigation tanks; 13. Stormwater pumps and electrical works; 14. Drains from tiers to photographers moat; Our contract price excludes the following:- 1. Painting of services; 2. Sheathing of hot water; 3. Sub-soil drainage; 4. Cash retention; 5. Performance bond; 6. Roof gutters, rainwater heads, external downpipes; overflow, flashing & spitters; 7. Electrical works; 8. Cranage of materials and plant; 9. Fire extinguishers; 10. Hot & cold water and gas service roughins to concessions; 11. Hose cocks to Level 0 roadway, concourses and tiers; 12. Trade waste storage tank; 13. Fit out of kitchen and concessions; 14. Trench gratings and frames; 15. Piers, lintels, encasement works; 16. External site services; 17. Gas service for Olympic flame; 18. No allowance for sales tax; 19. Fire hydrant and fire hose reel cabinet; 20. Fire hose reels and/or fire hydrants to seating tiers; 21. Drainage of seating tiers; 22. Stormwater drainage of north and south seating tiers; 23. Access panels for in wall & induct cisterns. We request retention and payment terms be negotiated. Should you require any additional information please contact the undersigned." 126 Mr Twiss gave evidence that although he has no clear recollection of speaking to Mr Keith about the letter (which Mr Twiss wrote), it was his usual practice to obtain Mr Keith's approval before submitted letters such as this and would have done so. [Mr Twiss' Statement, 24 January 2002, paragraph 19] 127 Mr Twiss gave evidence that his reference to "contract" price was deliberate because at that time he thought that there was a contract in place between Multiplex and JRK for the main works and that the scope of works in this letter was intended to reflect the scope of work represented by the letter of 18 July 1997. [Mr Twiss' Statement, 24 January 2002, paragraph 18] 128 During cross examination, Mr Twiss explained that at this date he considered there to be a contract in place between JRK and Multiplex because he understood that on this date, they had agreed on a price as well as a scope of works included in this price. Mr Twiss understood that the design was a dynamic one in that changes were made to it from time to time that frequently had ramifications for the hydraulics design that JRK was doing. [Transcript page 278] 129 During re-examination, Mr Twiss explained that in so far as the design might change and have implications for the hydraulics, he would claim a reimbursement where there was a cost or time implication by submitting a variation to Multiplex. This was done very often. [Transcript page 284] 130 According to Mr Cooksley, after receiving this letter he said to Mr Twiss: "Now that we have the contract sum can you make sure that you include it in your next progress claim so that the contract sum is split into logical elements which can be assessed on a percentage complete basis on a site-walk." [Mr Cooksley's Statement, 20 December 2001, paragraph 6] 15 August 1997 131 By this stage, JRK had submitted numerous Progress Claims to Multiplex which had, until this time, specified the "Original Contract Value" as being $250,000 (as per the subcontract agreement for temporary works). 132 Progress Claim No 9 submitted on 15 August 1997 (Exhibit DY3, tab 23) however specified the "Original Contract Value" as being $12,408,020. Multiplex contends that this was in accordance with the agreement reached on 18 July 1997, and that once JRK had prepared coordinated drawings and finalised its price accordingly, the parties administered the transaction thereafter as though there was a contract. [Transcript page 66] 133 Mr Corsaro submitted that insofar as variations were claimed and from time to time disallowed (that is to say not paid in the amount claimed) there was complete silence from JRK in terms of a failure to assert that there was no contract at this stage. The submission is that if JRK's position for example as at August 1997 was that they believed that there was no contract, one would expect to find on various occasions an express assertion to the effect that what was being claimed was not "a variation" but was rather a "claim for reasonable remuneration". [Transcript page 82] 134 Mr Corsaro also relied upon the fact that JRK had forwarded statutory declarations to Multiplex in support of Progress Claims submitted by it (as for example Progress Claim No 9, 15 August 1997). In accordance with clause 2(c) Schedule 5 of the original subcontract, representatives of JRK had declared that "(i) all amounts accrued due and payable by JRK to Subcontractors/Suppliers have been duly paid to the relevant Subcontractors/Suppliers" (ii) no monies are due and payable to its Subcontractors/Suppliers (iii) no wages are due and owing by JRK in respect of the relevant works for the period to which the payment claim rates" [the last word presumably being a typographic error and intended to read 'relates'] 135 See for example such a declaration dated 15 September 1997 (part of Exhibit DY3, tab 24). 136 Mr Cooksley gave evidence that statutory declarations have been required in significant construction projects in NSW since about 1991 and understands that it is effectively a legal requirement for all progress payments. [Transcript page 298] 15 September 1997 137 The Progress Claim submitted by JRK for this month enclosed a Statutory Declaration which is sworn as being "in accordance with Clause 2(c) – Schedule 5 of the Subcontract Agreement". 22 September 1997 138 Mr Cooksley signed a Site Instruction (Exhibit P7) which was a pre-printed form produced for Multiplex personnel to use. There is reference made in the words of the form to various clauses in a "subcontract agreement" which Mr Cooksley explained referred to the standard Multiplex subcontract agreement, but not the one which was given to JRK in December 1996. The subcontract to which this document refers was never given to JRK at any time. [Transcript page 295 - 296] 10 October 1997 139 Mr Cooksley gave evidence that between 29 July 1997 and 10 October 1997, he prepared execution copies of a Subcontract Agreement ("the second subcontract") to be sent to JRK with the assistance of Mr Piddock. He says that he used the letter of 18 July 1997 (as amended) as a basis for the contract. [Mr Cooksley's Statement, 12 April 2001, paragraph 30] 140 [Mr Cooksley alleges that the second subcontract was amended on 10 October 1997 to reflect what he considered to be the scope of work agreed with JRK as set out in the letter of 18 July 1997 (as amended).] [Admitted subject to relevance] [Mr Cooksley's Statement, 12 April 2001, paragraph 31] Mr Cooksley gave evidence that he used the 18 July 1997 letter (as amended) as part of the basis of the contract as he saw this as the obvious thing to do. [Transcript page 294] 141 Mr Parslow gave evidence that at around this time, he was sent a copy of this subcontract for review and checked it using JRK's annotated version of the 18 July 1997 letter. Mr Parslow was satisfied that this subcontract accorded with his understanding of Multiplex's obligations under the Head Contract and indicated his approval. [Mr Parslow's Statement, 12 April 2001, paragraphs 43, 44] 27 November 1997 142 Under cover of letter dated 27 November 1997, Mr Cooksley sent two copies of the second subcontract for execution by JRK (Exhibit DY3, tab 23, JRK0006 0083). Multiplex contends that the materials located behind tab 22 of Exhibit DY2 (from the third page onwards) constituted the materials sent to JRK by Multiplex on this date. 143 The second subcontract sent by Mr Cooksley was in some respects different to the original subcontract sent to JRK by Multiplex with the tender documents on 5 December 1996, and included some terms and conditions that had not previously been included. Both versions of the subcontract contained an arbitration clause. 144 One part of clause 1 of the second subcontract (as compared with clause 1 of the original subcontract) read: "…Nothing in this clause shall oblige Multiplex to disclose the contract sum under the Contract Documents nor other documents, except as set out in Exhibit "D&C". Notwithstanding this clause and clause 22.1(a), no term of this Agreement shall be interpreted as having more than one meaning. The Subcontractor agrees that the limitation period for Multiplex to bring any claim against the Subcontractor under this Agreement shall be determined as if this Agreement was a deed." [emphasis added] 145 Multiplex pointed out that the only difference between this clause and clause 1 of the original subcontract were the words underlined above. 146 Generally, the differences between the 27 November 1997 second subcontract and the 5 December 1996 original subcontract were sought to be summarised in the plaintiff's particulars (MFI P1). These are particulars in respect of which the parties are said not to have agreed on the scope of the work to be performed by JRK for the price of $12,408,020 referred to in the letter of 18 July 1997. [See MFI P1 at numbers 4-9]. 147 It is convenient to note that the November 1997 second subcontract appearing in Exhibit DY2, tab 22 includes a summary of annexures (Exhibit DY2, tab 22, JRK 00210411). Shift work [MFI P1, Item 4] 148 Annexure 9 (Exhibit DY2, tab 22, JRK0021 0421) is entitled "Shift work" and reads: "Where the local Authority permits extended hours of work, the subcontractor, when required by Multiplex, shall perform the Works in two or more shifts. The Subcontractor shall supply sufficient labour, supervision, materials, lighting and equipment for each shift as necessary to comply with Multiplex's amended programme, which shall take into account the fact that work will be carried out in shifts." 149 A clause [Special condition 9-page JK02-041 in Exhibit DY vol 1] in precisely the same words is to be found in the original form of subcontract sent on 5 December 1996. JRK's design obligations [MFI P1, Item 5] 150 Annexure 15 of the 27 November 1997 second subcontract (Exhibit DY2, tab 22, JRK0021 0426) is to be compared to the document in Exhibit DY1, tab 3 as part of the 5 December 1996 original subcontract. Both documents are headed "Design obligations of the subcontractor" and only very minor alterations have taken place to the second subcontract in paragraphs 14.0 and 15.2. 151 Paragraph 15.12 in the second subcontract includes some additional words dealing with the provision of initial operating and maintenance manuals and final operating and maintenance manuals by the plaintiff. These seem to me to be minor changes. The second form of subcontract also uses the words "ought to be in the agreed format as instructed by Multiplex" whereas this form of words does not appear in the original form of subcontract. It seems to me that this is also a minor matter. But more significantly, paragraphs 15.13-15.20 clearly add material obligations which had not been found earlier.. The plaintiff does not appear to rely upon paragraphs 15.21 and 15.22 in the particulars. Scope of works – penetrations [MFI P1, Item 6] 152 An item which does appear to have significance is that which appears in Annexure 21 of the 27 November 1997 second subcontract (Exhibit DY2, tab 22, JRK0021 0439). The Annexure is headed, "Scope of Works" and one of the bullet points reads: "Coring of penetrations and works resulting from Approval of Core Hole application." 153 There appears not to have been any such provision in the original form of subcontract of 5 December 1996. However, the 4 June 1997 JRK letter appended a schedule of tender adjustment documents which includes reference to "Hydraulics Services Specification Revision 3" which in paragraph 1.9.3 (JRK 00210541] has a series of provisions as follows: "1.9.3 Core holes, Embedded Services, Inserts & Anchor Bolts General CORE Scope This section of the specification for concrete sets out the requirements for the provision of core holes and the embedment of service pipes, conduits, inserts and anchor bolts etc in the concrete members of the structure. Responsibility The Subcontractor shall be responsible for the installation of the core and embedment requirements of all trades and for the provision of them in accordance with the requirements of the contract documents. Location and Details Where the location and details of the core holes and embedments are shown on the structural drawings of the contract documents then such shall be followed. Where such information is not shown then the Subcontractor shall submit the requirements of its trade in this respect to Multiplex for approval. ninspections The Subcontractor shall give sufficient notice and in any case not less than 24 hours to Multiplex of the completion of the provision and fixing of all cores and embedments and shall allow a further sufficient time and not less than two hours for the carrying out of the inspection. INTEGRITY OF CONCRETE AND REINFORMCEMENT Reinforcement shall not be cut to provide space for core holes or embedments nor shall the hardened concrete be cut or cored without the approval of Multiplex. Any repositioning of reinforcement to provide for holes or embedments shall be with the approval of Multiplex. SIZE, SPACING AND COVER OF EMBEDMENTS Pipes and conduits embedded in concrete shall not cause the strength and serviceability of the structure to fall below that required by the designer or to prevent the concrete in place complying with Section 19 of AS 3600. PLACING TOLERANCES Unless shown otherwise on the contract drawings, core holes and embedments shall be fixed and maintained in their correct position within a tolerance of = 10mm unless noted otherwise. Ensure that fixings do not allow water to track to the reinforcement. The tolerance for spacing of anchor bolts for steelwork shall comply with AS 4100. PROTECTION Inserts, anchor bolts and embedded fixings shall be galvanised unless otherwise indicated on the contract drawings or specified under their particular trade. Threads shall be greased and all embedded items shall be covered and protected against damage." 154 The plaintiff's case is that it was not responsible for any such work. The defendant's position is apparently that the plaintiff is responsible for this form of Works. Scope of works – Multiplex's obligations to others [MFI P1, Item 7] 155 Another part of Annexure 21 of the 27 November 1997 second subcontract setting out the "Scope of Works" is a paragraph entitled "General" which reads: "Notwithstanding the above, the Subcontractor has allowed to execute the performance of its obligations under this Agreement and fulfil all of Multiplex's obligations to others under the Contract Documents including the Design Brief in relation to the Works". 156 No such provision appears to be found anywhere in the 5 December 1996 version. Documentation register [MFI P1, Item 8] 157 Annexure 24 in the 27 November 1997 second subcontract (Exhibit DY2, tab 22, JRK0021 0451) is headed, "Documentation Register". The register begins by identifying the following item: "Documents as per "Issues by Recipient Report" attached dated 13 October 1997 (57 pages)" 158 JRK's case is that the documents were not to include these 57 pages of identified documents. JRK's letter of 18 July 1997 [MFI P1, Item 9] 159 The 27 November 1997 form of second subcontract includes (at the end of the fairly voluminous materials attached to the second subcontract), a copy of the letter from JRK to Multiplex of 18 July 1997. This document appears logically placed in the materials where, if it was to be an annexure to the proposed subcontract, it would receive the annexure number "32". It is not identified with such a number, and it is not noted at all in the "Summary of Annexures" list included in the second subcontract (in Exhibit DY2, tab 22, JRK 00210411). That list only runs up to Annexure 31. 160 According to Mr Cooksley, he continued to have regular meetings with Mr Twiss, Mr Parslow and/or Mr Scicluna to discuss variations and progress payments after the subcontract was sent. He says that from time to time he would ask what was happening with the subcontract and that Mr Twiss responded: "It's with the office to sign, it's not up to me to sign the contract." [Mr Cooksley's Statement, 12 April 2001, paras 32, 34] 161 Multiplex submits that during the time that the letter sat at the offices of JRK, the works continued, progress claims were made, statutory declarations were submitted and payments were being made. December 1997 162 Mr Keith gave evidence that at about this time, he had a meeting with Mr Obiala during which time they had the following conversation: "Mr Obiala: OK John, John R Keith will be required to provide as retention for the Stadium Project two bank guarantees for $100,00 each, one to be released upon practical completion of the Project and one to be released at the end of the 12 month defects liability period." Mr Keith: I will go ahead and make arrangements to submit the bank guarantees." [Mr Keith's Affidavit, 11 September 2001, paragraph 12] 8 May 1998 163 Mr Twiss gave evidence that the second subcontract sat on his desk for a long time and that Mr Cooksley called him from time to time asking for the contract to be signed. Mr Twiss says that he told Mr Cooksley he would speak to Mr Keith about it and did so on a few occasions. [Mr Twiss' Statement, 24 January 2002, paragraph 22] 164 Mr Johnson finally signed the agreement after making substantial handwritten amendments to the original document ("the amended subcontract")and then sent it back to Multiplex (Exhibit DY3, tab 25, JRK0021 0586). [Mr Johnson's Affidavit, 12 September 2001, paragraph 36] Mr Johnson did not amend the arbitration clause. 165 Multiplex submits that until this time, Mr Johnson had not been a party to any of the discussions between the parties [Transcript page 100]. 166 Mr Johnson gave evidence that he attached a copy of the letter of 18 July 1997 (as amended by JRK) to the amended subcontract sent to Multiplex in order to reflect the conditions upon which JRK submitted its tender to Multiplex. Mr Johnson contends that he prepared the amended subcontract in part by deleting clauses from the second subcontract that [were not part of the tender submitted by JRK.] [Admitted subject to relevance] [Mr Johnson's Affidavit, 12 September 2001, paragraph 36] 167 Mr Johnson denies that the terms contained in the second subcontract which were not expressly dealt with in the letter of 18 July 1997 (as amended) were "agreed". [Admitted subject to relevance] [Mr Johnson's Affidavit, 12 September 2001, paragraph 38] 168 Mr Johnson amended the last part of clause 1 by striking out the following words from Cooksley's subcontract only: "Subcontractor agrees that the limitation period for Multiplex to bring any claim against the Subcontractor under this Agreement shall be determined as if this Agreement was a deed." 169 In relation to this amendment, Mr Corsaro for Multiplex pointed out that Mr Johnson did not amend the part of this clause that had been added to the original contract by Mr Cooksley, but rather amended a part that had already been agreed. Multiplex contends that this type of amendment (as well as others pointed up by it) demonstrates that JRK approached the subcontract as though it was a "complete new phase of operations and previous arrangements were no longer operative" [Transcript page 103]. 170 Mr Cooksley received the amended subcontract and says that he signed the attestation clause and began initialling each page, however realised that the amended subcontract contained substantial amendments when he reached page 2 and stopped signing it thereafter. Mr Cooksley did not execute the document. [Mr Cooksley's Statement, 12 April 2001, paragraph 36] 26 May 1998 171 A meeting took place at Stadium Australia between Mr Cooksley (on behalf of Multiplex) and Mr Peter Johnson and Mr Jim Twiss (on behalf of JRK). Mr Cooksley informed them that the amendments made to the second subcontract by JRK were unacceptable to Multiplex, particularly with respect to the scope of work which had been finalised and agreed at the latest by 27 November 1997. 172 According to Mr Johnson, the following conversation took place: "Mr Johnson: I understand that you are unhappy with the changes that I have made to the permanent hydraulic works agreement? Mr Cooksley: Yes, I want it as per the agreement that we sent to you. Mr Johnson: I cannot do that. We want it amended to reflect our understanding of our tender. Much of the contract you sent me is not applicable. You have put multiple drawings schedules for various trades and other non-relevant documents and details in the agreement. None of those are applicable to us and that is why I deleted them. Mr Cooksley: Well I will have to look into it. I now understand why you are not happy with the document. I have to go to another meeting now, I will get back to you. and then later: "Mr Johnson: Well David, there seems to be a lot of matters in issue, you better have a think about them and come back to us. Mr Cooksley: You know it is not our practice to accept any alterations to our contracts. Mr Johnson: We don't accept the contract without the alterations and in an event we are almost half way through the job." [Mr Johnsons' Statement, 11 October 2000, paragraphs 17-18] 173 Mr Cooksley recalls that he said the following: "As you are aware the subcontract that you are being requested to sign is not new and is in similar terms to the contract for the temporary works which you have previously executed. You need copies of the drawings relevant to other trades because this is a D&C subcontract and you will have to interface and coordinate your work with those other trades. You've had the subcontract for a long time and I haven't heard anything from you. I don't see why I should accept any alterations now. I had altered the subcontract agreement before sending it out to you to reflect what had been agreed . You're now asking for changes a long way down the track when a substantial amount of the work has been completed. Insofar as the design aspects within the subcontract are concerned, I believe that had all been agreed between Parslow and Twiss. There's nothing I can do about the design. Our technical person has signed off on it. You'll have to talk to Parslow about that." [Mr Cooksley's Statement, 12 April 2001, paragraph 39] 174 Mr Cooksley contends that they arranged another meeting to discuss the form of subcontract agreement (but that no specific time was appointed). [Mr Cooksley's Statement, 12 April 2001, paragraph 39; Mr Cooksley's statement, 20 December 2001, paragraph 17] Mr Johnson denies this and says he did not hear from Mr Cooksley against until about November 1998. He also asserts that he had no other discussions with anyone from Multiplex about the Stadium Australia project other than the meetings of 26 May 997 and 2 November 1998. [Mr Johnson's Affidavit, 12 September 2001, paragraphs 63, 64, 65] 175 In response to this, Mr Johnson contends: · that the Temporary Works Contract was not "in similar terms" to the second subcontract there being more than 10 changes plus technical related alterations between the two document and that the documents were for different types of works; · [Mr Cooksley took approximately the same amount of time to prepare the second subcontract as JRK did to assess and issue the amended subcontract] [Admitted subject to relevance]; · that at this meeting he said: "You are incorrect if you think that the Multiplex October 1997 version of the subcontract reflects the final agreed tender position of both parties."; · by the time Multiplex had forwarded the second subcontract to JRK, they had made payments to JRK for the main hydraulic words for approximately $4,000; · after JRK had sent the amended subcontract to Multiplex, Multiplex continued to forward payments to JRK for the period up to November 1998 to the approximate value of $12,000; · that he denies Mr Cooksley's comment that the second subcontract reflects changes to the "design aspects" agreed to by JRK during the tender period; and · Mr Parslow's name was not mentioned at the meeting and he has never met or spoken to Mr Parslow. [Mr Johnson's Affidavit, 12 September 2001, paragraphs 49-62] 2 November 1998 176 A further meeting took place at Stadium Australia between Mr Cooksley, Mr Twiss and Mr Johnson in order to consider each of the changes which had been made in the amended subcontract. 177 During the discussion, Mr Cooksley used the original copy of the amended subcontract as a working draft and marked it up with comments about what changes were and were not agreed to. Mr Johnson kept his own record of the discussions. 178 Multiplex contends that by the conclusion of this meeting, the only changes in the amended subcontract about which a compromise had not been reached were: (a) clauses 8(d), 11 and 12(h); (b) Annexure 9; and (c) changes to the scope of work (Annexures 14, 15, 21, 22, 24 and 32). 179 JRK on the other hand, denies that this list comprised the entirety of the disagreement and contends that agreement had not been reached on clauses 2.1(b) and 5(d) of the amended subcontract. It also alleges that discussions between Mr Cooksley and Mr Johnson in relation to the proposed amended subcontract never reached completion and that agreements on individual clauses were conditional on total agreement on all clauses being reached (and that this never happened). 180 During the meeting, Multiplex maintained that the scope of work had been previously agreed. By the end of the meeting, Mr Cooksley and Mr Johnson agreed to seek instructions on the issues where a compromise had not been reached. After this, there were no further discussions between the parties in relation to the terms of the subcontract. 181 Mr Cooksley gave evidence that he said words to the following effect: "Although I believe the contract has been agreed, let's go through it anyway and see if we can get to something we can both live with." [Mr Cooksley's Statement, 12 April 2001, paragraph 42] 182 Mr Cooksley states that following this discussion ensued in relation to various parts of the subcontract. [Mr Cooksley's Statement, 12 April 2001, paragraph 42] 183 As to the Shift Work clause earlier referred to and appearing as Annexure 9 in the 27 November version, the clear evidence given by Mr Cooksley [page 8 of his 20 December 2001 statement] was that at this meeting he was not prepared to change his position which was that the clause required to be included. 184 As to the Design Obligations of the Subcontractor, clauses certain of which had appeared in the 5 December version which clauses had been supplemented and in some cases slightly varied in Annexure 15 of the 27 November version, Mr Johnson's evidence was that Mr Twiss had said that he would review the clauses again and advise what position JKR would be prepared. [Affidavit 12 September 2001 at paragraph 107] 185 Mr Cooksley gave evidence that this clause was not agreed [page 8 of his 20 December 2 and one statement]. 186 As to the terms of Annexure 21-Scope of Works-dealing with coring of penetrations &c. Mr Cooksley's evidence was that he could not recall what was discussed [is statement 12 April 2001 at page 16]. Mr Johnson clearly disagreed with the inclusion of the site and deleted the same as is apparent from the materials behind 25 of Exhibit DY vol. 3. 187 As to so much of Annexure 21-Scope of Works as included the general proposed covenant that notwithstanding the above, the Subcontractor had allowed to execute the performance of its obligations under the Agreement and to fulfil all of Multiplex's obligations to others under the Contract Documents including the Design Brief in relation to the Works, this was deleted by Mr Johnson as is apparent from the materials behind 25 of Exhibit DY vol. 3. JRK in submissions highlights the extent of this obligation suggested as being something like a blank cheque to the effect that wherever Multiplex may have covenanted to carry out some hydraulic works at some time, JRK was covenanting that it had allowed to fulfil those obligations to others. 188 As to the Documentation Register issue the subject of the proposed Annexure 24 it is clear that the parties disagreed about whether there should be a reference to the 57 pages of drawings in the contract. Mr Cooksley was quite clear that as far as he was concerned the Multiplex designer had given JRK these drawings which would be needed for coordination of other trades so that they should stay in [page 16-statement 12 April 2001; page 8 statement 20 December 2001]. Mr Johnson on the other hand was insistent that there should be no reference in the contract to drawings received after the tender period and having himself or with Mr Twiss stated that as the plaintiff did not receive the drawings during the tender period they were unwilling to include them within the subcontract as the plaintiff was never given the opportunity to investigate what cost implications they may create when combined with documents which the plaintiff did receive during the tender period. [Affidavit of Mr Johnson of 12 September 2001 at paragraph 117] 189 In relation to schedule 5,clause 12 and the question of whether or not the Plaintiffs letter of 18 July 1997 should be included in the final contract, Mr Cooksley gave evidence that he would not put the Plaintiffs letter in as an Annexure but had said that if there was something regarding scope in that letter which the plaintiff felt should have been in the subcontract the plaintiff should have put it in the design section of the subcontract. [Page 15 of Mr Cooksley is statement of 12 April 2001] Mr Cooksley did not agreed to put this in the subcontract agreement-page 9 of Mr Cooksley is statement of 20 December 2001. Mr Johnson's evidence was that this question was subject to further discussions between the plaintiff and Multiplex [statement of 12 September 2001 paragraph 118]. 190 [According to Mr Cooksley, the meeting was left on the basis that Mr Johnson would go back to JRK with the matters in dispute and that following this, he never heard anything further from them in relation to these matters.] [Admitted subject to relevance] [Mr Cooksley's Statement, 12 April 2001, paragraph 44]. 191 Mr Cooksley contends that on a number of occasions during this meeting, Mr Johnson said to him: "I can't deal with that, I'll have to talk to John Keith about that and get back to you." [Mr Cooksley's Statement, 12 April 2001, paragraph 46] 192 Mr Cooksley gave the following evidence during his cross examination in relation to this meeting: "Q: And it's agreed, isn't it, that at that meeting virtually nothing of any significance was discussed? A: Yes. Q: And that the only meeting at which there was a detailed consideration of the terms of the proposed subcontract was November 1998, is that right? A: Yes. Q: At the end of the meeting in November 1998 there were a number of points on which you and Mr Johnson had failed to agree, is that right? A: Yes. Q: And it's common ground that nothing ever transpired after then by which you reached agreement, is that so? A: That's correct. Q: As far as you were concerned, at least some of the areas on which you and Mr Johnson were in disagreement were important questions so far as Multiplex was concerned? A: Yes. Q: And the fact that you failed to reach agreement was a reflection of your insistence on behalf of Multiplex that you were not prepared to change the position that you were expressing in relation to those items, is that right? A: At the end of the meeting, yes, I said I had changed as much I could. Q: In other words, you had drawn your line on the sand, or whatever expression you would like to use, and that was as far as you were going? A: Yes." [Transcript page 298 – 299] 193 According to Mr Johnson, the following conversation took place at the end of the meeting: "Mr Johnson: Well David, where does this leave us now? Mr Cooksley: I will have to go away and speak to other parties within Multiplex and come back to you. Mr Johnson: Obviously I have to go away and think about some of the points which you have raised and get some instructions also." [Mr Johnson's Affidavit, 11 October 2000, paragraph 25] 194 Mr Cooksley denies saying these words. [Mr Cooksley's Statement, 12 April 2001, paragraph 46] 195 Mr Johnson contends that no date was set for any further meeting, he did not attend any further meeting in relation to the subcontract and he received no further communications from Mr Cooksley (or Multiplex in general) in connection with finalising it. [Mr Johnson's Affidavit, 11 October 2000, paragraph 26] 196 According to Mr Johnson, [the fact that annotations were made to the subcontract at this meeting is consistent with his understanding that the second subcontract did not reflect any final agreement between JRK and Multiplex as to its terms but was rather the subject of ongoing negotiation.] [Admitted subject to relevance] [Mr Johnson's Affidavit, 12 September 2001, paragraph 37] March 1999 197 JRK was reaching practical completion in relation to the Works. [Transcript page 208] June 1999 198 Mr Keith gave evidence that JRK supplied and installed a Dissolved Aeration Flotation Unit ("DAF") unit for Stadium Australia at this time. [Mr Keith's Affidavit, 28 July 2000, paragraph 9] 199 [Mr Keith explained in his affidavit that a DAF is: "…a device to remove various pollutants from kitchen waster so as to enable waste water from the kitchen then to be discharged into waste pipes…"] [Mr Keith's Affidavit, 28 July 2000, paragraph 8] [Admitted as supplemented by oral evidence: Transcript page 183] 6 July 1999 200 Multiplex sent a letter of this date to JRK (Exhibit D1). M Keith gave evidence that by March 1999 JRK was nearing practical completion on the Works and so by this stage, all there was to do was to tie up loose ends. Later during Mr Keith's cross examination however, he disagreed with the assertion put to him that by July 1999, JRK had carried out all of the works it had agreed to do under the scope as it saw it. [Transcript pages 208; 211] 201 The letter commences: "Please find the enclosed schedule Attachment A which provides details of the total Approved Adjusted Contract Sum for your Subcontract of $14,309,253.37 as of today…" 202 Mr Keith explained that in this document, Multiplex was describing on an item-by-item basis its position on the variation claims that JRK had made during the course of the Works. [Transcript page 209] 203 The following exchange took place during cross examination in relation to this letter: "Q:. So that save for those items where we see a comment in the last column on pages 1, 2 and 3 this document set out, so far as you understood it, the differences between the parties on the item of works carried out by Keith, which Keith maintained were additional to its contract scope as at 6 July 1999. Correct? A: I have to answer that with a qualified "yes". Q: What qualification do you want to add? A: The scope of works changed with the drawings. We had agreement on price but not on scope. Q: I will explore that offer of your offer of qualification in a moment, but I want you to concentrate on this document, if you would. When you read it you understood this document to set out, so far as Multiplex understood it, the disputes on each individual item, where they existed, claimed by way of variation notice by Keith during the course of the job. Correct? A: On their scope of works. Q: On their scope of works. Well, on what it described as the original contract sum; correct? A: We had agreement on price but not on scope. Q: But insofar as Keith saw the scope differently to Multiplex during the course of this work it claimed for the work done over and above that scope which it saw by variation notices. True? A: Not - no, not always. Q: Really. Why would Keith hold its hand in relation to some? A: Because the drawings just kept changing . We had issued 4,000 additional drawings during the course of construction." [Transcript page 210] [emphasis added] 204 Mr Keith agreed that this document indicated what Multiplex considered to be the ambit of the dispute with JRK as at 6 July 1999. [Transcript page 213] 21 July 1999 205 JRK wrote a letter to Multiplex of this date in reply to Multiplex's letter of 6 July 1999 (Exhibit D2). JRK later wrote a further letter dated 30 July 1999 asking for Multiplex to respond to the letter of 21 July 1999 "as a matter of urgency" (Exhibit D2). 206 In the letter of 21 July 1999, JRK dealt with the disputed variations and put its case as to why Multiplex should accept the variations. The dispute at this stage involved an amount of about $120,000. Nowhere in the letter did JRK claim for anything over and above that which had already been claimed as at 6 July 1999. [Transcript page 214] 5 August 1999 207 Multiplex sent a letter of this date to JRK (Exhibit D3) in response to JRK's letter of 21 July 1999. In this letter, Multiplex answered the disputed variations on an item-by-item basis explaining why the rejection of certain items still stood. Mr Keith agreed that if Multiplex's position as of this date was correct, then JRK owed it money. [Transcript page 215 - 217] 29 September 1999 208 Multiplex sent a letter of this date to JRK asking JRK to respond to its letter to it of 5 August 1999 (Exhibit D4). [Transcript page 216 - 217] 209 The letter stated: "We are anxious to finalise your subcontract Contract Sum and receive the refund payment that is, current approved Contract Sum of $14,309,253.37, current amount paid to date $14,429,159.35, and therefore an overpayment of $119,095.98." 210 Mr Keith agreed that by this stage, it was clear to him that Multiplex was anxious to "close their file on this case" and that their side of it was that this required some money to be paid by JRK. [Transcript page 218] 4 July 2000 211 JRK sent a letter of this date to Multiplex (Exhibit D5). Mr Keith says that this letter was written in order to tell Mr McDiven what JRK's net material and labour costs were for the project and to let him know that they had lost money on the job. [Transcript page 219] 5 July 2000 212 Mr Keith gave evidence that on this date he met with Mr McDiven (of Multiplex) and Mr Kofoed (director managing Stadium Australia) regarding monies unpaid by Multiplex in relation to JRK's work. [Mr Keith's Statement, 11 September 2001, paragraph 26] 213 According to Mr Keith, the following conversation took place after Mr Keith gave them a print-out showing the break-up of materials and labour expended by JRK on the Stadium Australia project: "Mr McDiven: John, what does this document relate to? Mr Keith: It is a complete break-up f all materials, invoices and labour used on the project. Mr McDiven: John, we have a contract. Mr Keith: Ross, the documents have never been agreed nor executed by both parties. Mr McDiven: Whose advice is that? Mr Keith: I have obtained legal advice, and they advise me that we have no formal contract. I'm awaiting a formal response from the lawyers. When I receive that I can forward a copy to you."] [Admitted subject to relevance] [Mr Keith's Statement, 11 September 2001, paragraph 26] 214 Mr Keith gave evidence that this was the first time that he had ever put the proposition that JRK had no contract for this job. Mr Keith says that his legal advice changed as of this date. [Transcript page 219] 13 September 2000 215 As at this date, Multiplex had paid JRK a sum of $14,429,159. Dealing with the issue The principles 216 It is convenient to commence with a recitation of some of the relevant principles. Generally these did not appear to be in issue at the bar table. The application of the principles was of course heavily in issue. As appropriate the questions of evidence left for determination in the final judgment will be referred to and addressed. The Principles Masters v Cameron 1954 91 CLR 353 217 In view of the Multiplex submission relying upon either the first or second, or alternatively the so-called 'fourth' class in Masters v Cameron it is necessary to recall the three classes for which the decision of the High Court is authority. The passage in question at 360 is in the following terms: "Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. In the each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution… Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own…" 218 As the defendants point out in their written submissions, the seeds of what has now been called the "fourth class" were sown in the earlier case of Sinclair Scott Co Ltd v Naughton (1929) 43 CLR 310: "One in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon while expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms." (per the majority consisting of Knox CJ, Rich and Dixon JJ at 317) 219 In Love & Stewart Ltd v S Instone & Co Ltd (1917) 33 TLR 475, His Lordship Lord Loreburn stated at 476: "It was quite lawful to make a bargain containing certain terms with which one was content, dealing with what one regarded as essentials, and at the same time to say that one would have a formal document drawn up with the full expectation that one would by consent insert in it a number of further terms. If that were the intention of the parties, then a bargain had been made, nonetheless that both parties felt quite sure that the formal document could comprise more than was contained in the preliminary bargain." 220 In Baulkham Hills Private Hospital Pty Ltd v G R. Securities Pty Ltd (1986) 40 NSWLR 622 McClelland J. by reference to Sinclair Scott and Co Ltd v Naughton (1929) 43 CLR 310 referred to a fourth class in terms of Masters v Cameron, namely the situation where the parties were content to be bound immediately and exclusively by the terms which they had agreed upon, whilst expecting to make a further contract in substitution for the first contract containing, by consent, additional terms. 221 On the issue which arose in Baulkham Hills of whether or not there was a binding contract, McClelland J at 627 put the manner as follows: "There was a binding contract, if and only if, by the exchange of letters the parties mutually communicated their respective assents to being legally bound by terms capable of having contractual effect: see the discussions in Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 at 9254ff and Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309. In the last mentioned case Mahoney J A (at 326) identified three questions which it is often useful to consider in such a context as the present, namely "….did the parties arrive at a consensus?; (if they did) was it such a consensus as was capable of forming a binding contract?; and (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?" 222 On appeal to the Court of Appeal, McLelland J's decision was affirmed on the basis of the principle quoted above in Sinclair, Scott. In G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, the Court of Appeal held that, "…the decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 63; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332-4, 337. If the terms of a document indicate that the parties intended to be bound immediately , effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction." (per McHugh JA as his Honour then was at 634E-F, with whom Kirby P and Glass JA agreed) [emphasis added] 223 As the defendants point out, the fourth class has now passed into common parlance insofar as the courts are concerned and is referred to regularly as an accepted classification: see Tern Minerals NL v Kalbara Mining NL (1990) 3 WAR 486; Heysham Properties Pty Limited v Action Motor Group Pty Limited & Ors (1996) 14 BCL 145; Telstra Corporation Limited v Australis Media Holdings (1997) 24 ACSR 55; Brunninghausen v Galvanics (1999) 46 NSWLR 538. 224 I accept that regardless of classification, the principle that is now recognised is that there can be an informal contract with the expectation that other terms will be negotiated and by consent included in the formal document. That is, to say that such further negotiations and activity regarding other terms is still to take place does not mean the existing informal contract is not binding: Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 (per Ipp J at 110-111). 225 Most recently, the fourth class was considered in Graham Evans Pty Ltd v Stencraft Pty Ltd 16 BCL 335 [Full Federal Court (French, Whitlam and Dowsett JJ) and see also transcript of special leave application which was refused]. Evans brought an action against Stencraft claiming damages for breach of contract. The claim was dismissed at first instance. Evans appealed to the Full Federal Court. The Full Federal Court, in reversing Spender J at first instance, considered Masters v Cameron and applied Baulkham Hills and in so doing upheld the appeal unanimously. The Full Court held that parties may be bound immediately by the terms, which they agree upon whilst expecting to negotiate the terms of, and make a further contract in substitution for, the first contract. 226 Brambles Holdings Ltd v Bathurst City Council (Unreported, 2001, NSWCA, Mason P, Heydon JA and Ipp AJA) was a case in which the "difficulties" of pressing too far the classical theory of contract formation based upon offer and acceptance (see also Pobije Agencies Pty Ltd v Vinidex Tubemakers Pty Ltd [2000] NSWCA 105 per Mason P at paragraph 1). Heydon JA said in that case, whilst considering the principles of the law of contract that: "Offer and acceptance analysis does not work well in various circumstances." [at paragraph 71] 227 In that case, Heydon JA set out succinctly the conventional and accepted principles of the law of contract: " The first relevant principle of law is that pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term : Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-352. The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 668, 669 and 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR [97011] at 9149 and 9154-9156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR [97023] at 9255. The third relevant principle is that post-contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed. As explained by Priestley JA (Meagher JA agreeing) in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326-330, the status of the relevant High Court authorities is unclear: hence unless it is demonstrated that the later decisions of the Victorian Full Court and Court of Appeal against admissibility, Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 and FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, are clearly wrong or they are overruled, they should be followed in New South Wales. No attempt was made to demonstrate that they are clearly wrong. The fourth relevant principle is that the construction of a contract is an objective question for the court, and the subjective beliefs of the parties are generally irrelevant in the absence of any argument that a decree of rectification should be ordered or an estoppel by convention found." 228 Hence in determining the circumstances surrounding the formation of the agreement, the matrix of facts, it is the objective intent that is paramount. Whether any relevant individual representative thought that an agreement existed or that it did not exit, is irrelevant to the exercise unless there exists an argument concerning estoppel. As Lord Wilberforce has said: "When one speaks of the intention of the parties to the contract one speaks objectively - the parties cannot themselves give direct evidence of what their intention was - and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties." [ Reardon -Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989] 229 Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1907) 5 CLR 647; Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548-549; Geebung Investments (supra); Anaconda Nickel (supra) are also authorities supporting the proposition that in ascertaining the relevant intention, that is the intention to contract, relevant circumstances may include prior negotiation and subsequent conduct. 230 A fundamental question falling for consideration is whether the conduct of the parties viewed in the light of surrounding circumstances shows or is indicative of an agreement having come into existence. "In an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at any particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal; rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed." [Per McHugh JA in Integrated Computer Services Pty Limited v Digital Equipment Corporation (Australia) Pty Limited (unreported, NSWCA, McHugh, Mahoney and Hope JJA, 23 December 1988); see also Raguz v Sullivan (2000) 50 NSWLR 236 at 251] 231 Questions of the relevance and probative value of evidence in circumstances in which the issue concerned whether or not an enforceable contract had been entered into were also before the court in Film Bars Pty Ltd v Pacific Film Laboratories (1979) BPR 97023. As McClelland J. put it, such questions cannot properly be considered independently of a consideration of the relevant issue namely what it is in point of fact that constitutes the making of a contract in circumstances such as here obtained. As his Honour points out, such a contract is made "by the mutual communication between the parties of their respective assents to being bound by identifiable terms otherwise capable of having contractual force, the mutual communication typically taking the form of offer and acceptance". As his Honour (citing Williston on Contract, 3rd ed, Vol 1 paragraph 21) points out, one is not concerned with the subjective thing known as meeting of the minds, but the objective thing, the manifestation of mutual assents which is essential to the making of a contract. [At page 9254] 232 Film Bars [at page 9255] is also authority for the proposition that: "in determining whether the communications between the parties constitute a contract the court is not confined to a consideration of the terms or manner in which the communications were made: they must be interpreted by reference to the subject matter and the surrounding circumstances including, inter alia, the nature of, and the relationship between, the parties, and previous communications between them, as well as to standards of reasonable conduct in the known circumstances." 233 I approach the evidentiary issues reserved for decision in the final judgment in precisely the way in which McClelland J. approached the issues in Film Bars. In short subsequent communications may have probative value depending upon the light they throw on the proper interpretation of earlier communications alleged to constitute the contract. Post contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed [cf Brambles Holdings supra]. 234 Subsequent communications can also legitimately be used against a party as an admission by conduct of the existence or non-existence, as the case may be, of a subsisting contract. Having said that neither counsel sought to have particular material here admitted as admissions. 235 Considerable assistance in terms of following the relevant principles and seeking to apply them in the present case is to be obtained from the decision of the New South Wales Court of Appeal in Australian Broadcasting Corporation v X1VTH Commonwealth Games Ltd (1988) 18 NSWLR 540. Some consideration is also given to questions of evidence without any departure from the approach taken by McClelland J. in Film Bars. 236 Here, as there, the short issue is whether, when the parties negotiated about, and made their 'agreement' (the word is used in a neutral sense), concerning price (on or about 18 July 1997), they should be held to have entered at that stage into a contract, albeit one that would later be overtaken by a further more formal contract containing additional terms and conditions (at 543). 237 Here, as there, the alternative view is that, contemplating that at some future time it would be necessary for them to make agreement on various other terms and conditions, they first set about agreeing on price, in the expectation that if they could agree on that they would have little difficulty in reaching common ground on the other matters which they contemplated would form part of their contractual arrangement, but as to which, in the events which happened, they never reached final agreement. 238 The matter was put in the following terms by the Chief Justice (at 550 and following) with whose reasons for judgment Hope and Mahoney JJA agreed: "…The case involves the objective determination of the intention of the parties from a consideration of a series of communications exchanged by them in the context of their dealings over a period of time. In those circumstances it is both appropriate and necessary to have regard to the commercial circumstances surrounding the exchange of communications and, in particular to the subject matter of those communications : Allen v Carbone (1975) 132 CLR 528 at 531-532. Furthermore, as was noted earlier, it is proper to have regard to communications between the parties subsequent to the date of the alleged contract to the extent to which those communications throw light upon the meaning of the language which is being considered for the purpose of determining whether it expresses an intention one way or the other upon the critical matter. At the least, such subsequent communications will often form part of the context in which the particular exchanges in question are to be evaluated. The position is by no means so clear, however, in connection with internal memoranda… or statements as to subjective intention made by individuals in the course of giving evidence. As it happens, although the learned judge had a good deal of material of this kind put before him at the hearing, it was not particularly helpful even if admissible. In the first place, a great deal of it was equivocal and individual pieces of evidence were contradictory in effect. Some of the persons who participated in the negotiations in question were called to the witness box and vigorously examined as to what was going on inside their minds at particular times. This process in the end principally served to demonstrate what might have been expected to be the case, that is to say, that the witnesses, not being lawyers themselves, were in a state of considerable confusion about the issue that ultimately emerged as determinative of the rights of the parties …….. In so far as acts or statements of the kind referred to, not involving communications between the parties, are claimed to be relevant in a case such as the present upon the ground that they constitute an admission, it seems to me that it will often be necessary to identify with some care the fact which is said to have been admitted. As was noted, there may be cases in which the issue is such that the fact of the subjective state of mind of one or other of the parties is relevant. Normally, however, what is in issue is not their subjective state of mind but their "intention as expressed" (cf Inland Revenue Commissioners v Raphael [1935] AC 96 at 142 per Lord Wright) and caution may need to be exercised in relating the fact which is said to be admitted to the fact which is legally relevant." [emphasis added] Evidentiary Rulings 239 The defendants' case of an estoppel by convention and/or by representation permit the admission into evidence of materials particularly in relation to the subjective beliefs of the parties which would generally not be admissible. In that circumstance and by dint of section 60 and 77 of the Evidence Act the materials go into evidence generally. Notwithstanding that circumstance I do not regard evidence otherwise than of communications between the parties as of particular weight or as particularly helpful otherwise than arguably in relation to the estoppel cases. As Gleeson CJ put the matter in Australian Broadcasting Corporation, internal memoranda or statements as to subjective intention made by witnesses are often not particularly helpful even if admissible. Here as there, much of this evidence was equivocal and individual pieces of evidence may be found which were contradictory in effect. Here as there, the examination as to what was occurring in the minds of witnesses who participated in the negotiations simply throws up what would have been expected to be the case, namely that these witnesses not being lawyers, exhibited real confusion about the issue which ultimately emerges as determinative of the rights of the parties. 240 The plaintiff's objection to certain paragraphs of the defendants' affidavits based upon the rule in Browne v Dunn is rejected. Those paragraphs are allowed. Applying the principles to the facts 241 There are some real difficulties in working through the fundamental issues thrown up for determination. There is some validity as it seems to me, in several of these submissions put by each of the parties. 242 The commercial circumstances to be taken into account seem clear on the evidence. Stadium Australia was a one off unproven structure. There was a finite timeframe within which the Stadium had to be completed. At the time the December version was sent out, tenderers were being asked to tender in circumstances in which there was no completed and fixed body of data plans and specifications. That request for tender document went out at a time when it was clearly understood that the design would be dynamic. Throughout the history of the relevant relationship both parties assumed and expected that they would have a concluded contract regulating their relationship. Both approached the transaction on the basis that a formal written instrument regulating their mutual contractual rights and obligations was a fundamental requirement for both of them. There can be no suggestion that in this industry there could have been contemplated by the parties the notion of a $12 million contract otherwise than in writing. The assumed industry position was that contracts of this nature and magnitude would have to be in writing. Mr Cooksley's evidence already referred to was quite clear namely that the signing of a sub contract by a subcontractor was an essential and indeed indispensable part of the sub contract relationship. As far as he was concerned it was an essential requirement generally for all Multiplex subcontractors to sign subcontract agreements. He had even made known to subcontractors representatives that in the absence of the execution of a subcontract they might not be paid at all. His experience was that when the first payment was processed it was necessary to have a signed copy of the contract. If, which I doubt, it was necessary to sight specific evidence of the industry position, this evidence satisfies me of such a general industry practice. 243 The curious circumstance that following the sending of the annotated 18 July 1997 letter, Multiplex went about sending across the 27 November version and later became enmeshed in detailed but ultimately inconclusive negotiations with JRK as to the terms of the 27 November version, provides the plaintiff with a real basis for its submission that the objective intent of the parties discernible in weighing the whole of the matrix of fact and relevant communications, was not to make a concluded bargain. 244 Much is also made by the plaintiff of the fact that the 5 December version had simply not included any reference to the creation of a 'design brief'. [See the concession by Mr Corsaro SC at transcript page 354]. Hence the strength of the plaintiffs position relying on the so-called 'alternative approach'. Here the plaintiff draws heavily and arguably exclusively, upon the fact that each of the 12 December 1997, 4 March 1997 and 7 March 1997 letters from JRK had been couched in terms of a tender price based on the 5 December version. Each had used the following words at the commencement of the second paragraph: "Our tender price is based on the tender documents enclosed with your invitation to tender…" 245 The plaintiff argues that In contradistinction, a radical departure from this form of words is to be seen in the commencement of JRK's letter of 10 March 1997 where it notifies that it constitutes the submission of "an alternative proposal". The letter, on the plaintiff's submission, must be read as no longer suggesting that its content is based on the tender documents enclosed with the original invitation to tender but to the contrary clearly states that it is an alternative proposal, inter alia in respect of which the hydraulics services price is based on the tender plans and specification. The plaintiff points out that only that section of the materials forming part of the documents sent out with the December 1996 request for tender are referred to in the letter. And importantly, as has already been mentioned, the proposal was for JRK to work together with Multiplex and others to complete a co-ordinated fully engineered hydraulics services design to be documented in one of two ways. 246 It does seem to me there is a degree of inconsistency between the plaintiffs heavy reliance upon its letter of 10 March 1997 and its immediately following letters to suggest that the alternative proposal removed the 5 December 1996 version of the subcontract terms completely from contention on the one hand, and the plaintiffs submission on 27 May 1997 [at a point in time which sits squarely between 10 March 1997 and 1997] of a Quality Assurance Manual of the type stipulated for in clause 10 of the Special Conditions forming part of the 5 December 1996 subcontract version, on the other hand. This inconsistency arises not withstanding the extent to which Quality Assurance Manuals may have been common in significant construction projects for the reason that formal subcontracts are the norm in relation to such subcontracts and the inference is clearly open that such subcontracts stipulate for provision of such Manuals. I draw that inference. At the very least, JRK was sending confusing signals to Multiplex if JRK had been seeking to communicate the form of radical departure from the anterior regime for which it now contends. 247 It seems to me that it is very important not to be drawn into too much of the very close detail as to those matters which separated the parties in their negotiations extending up to late 1998 when they were essentially focusing upon the 27 November sub contract version. The strength with which their respective positions were pressed in those negotiations and their inability to agree on a number of matters ought not to be weighed in the same way as if a Masters v Cameron dispute turned on those later negotiations. It is quite plain that those negotiations did not result in a concluded contract. The reason why those negotiations become relevant is as part, but only part, of the integers to be taken into account together with all other relevant circumstances in the objective assessment of whether their communications evidenced, as at the sending of the annotated 18 July 1997 letter, an intention to make a concluded bargain. 248 The crucial, as it seems to me, objective circumstance, which forms the substratum of the parties communications, is the circumstance that the parties had engaged in a tender process which had led to the plaintiff becoming the preferred tenderer against a background in which the norm was for a detailed form of sub contract to be entered into. The evidence given by Mr Cooksley, which as I understood it was not gainsaid by any evidence adduced by the plaintiff, was that the signing of a sub contract by a subcontractor was an essential and indeed indispensable part of the sub contract relationship. A mere glance at the types of provision generally covered by the subcontract forms examined during the proceedings makes this proposition plain. Mr Cooksley said as much at transcript page 299. 249 In my view to interpret the use in the plaintiff's letter of 10 March 1997 of the words "an alternative proposal" as appropriately in context clearly telegraphing an intent to jettison the entirety of the 5 December sub contract version is to go too far. In context this is to overstrain the extent to which the words should be taken as having meaning. Nor do I see the subsequent requests that "retention and payment terms be negotiated" in the letters of 4 June, 18 July and 12 August read together with the 10 March 1997 letter, as appropriately, in context, clearly telegraphing any such intent. Reference has already been made to the submission on 27 May 1997 by the plaintiff of a formal document called for by the 5 December subcontract version. Had the plaintiff wished to communicate such a radical departure from the way in which the parties were conventionally engaged in the negotiation, one would have expected at the least to find the plaintiff, in the all-important 18 July 1997 letter (whether as first sent or in the annotated letter), alluding to the need for altered sub contract terms to be negotiated. 250 Alternatively and arguably looking at the matter another way, if one focuses upon the terms of the 18 July 1997 letter and its annotated version, there is such a clearly discernible intent to contract evident by the terms of this exceptionally carefully negotiated letter, as to clearly evidence an intent by the parties to make a concluded bargain albeit expecting to make a further contract in substitution for the first contract containing by consent, additional terms. 251 There are a number of reasons that show an objective intention to be bound by an agreement immediately: (a) JRK was working on site on a temporary contract; (b) by March 1997, JRK had been told it was the preferred tenderer. Mr Cooksley's evidence at Ex D14, paragraph 20 was not challenged; (c) JRK was asked to bring the design to a state which allowed it to submit a final tender price and it was paid for that; (d) Mr Twiss' involvement in the design development throughout the period before July 1997; (e) JRK's letter of 12 August 1997, submitting the " contract price " is language that confirms the existence of an agreement; and (f) the submission of the first progress claim by JRK after the 18 July 1997 letter showed a contract price of $12,408,020. 252 Furthermore, the conduct of Multiplex in seeking the bank guarantees at the stage that it did (December 1997) suggests that it believed that legal relations had already been created or were to be created in advance of the execution of any contract document. This is matched by JRK then providing those bank guarantees in accordance with the agreement [Ex P2, docs 5 & 6]. 253 As the defendants' submit, the appropriate way to view the chronology is shortly as follows [the following extract taken from the Defendants written submissions is essentially complete with the omission of one or two sentences]: · JRK submitted a tender on 12 February 1997 [which] conditionally offered to do the permanent hydraulics works for the price of $8,524,000 on certain terms. JRK's offer was conditional in the sense that it excluded certain items and proposed terms different from the Multiplex tender conditions. However, it expressly incorporated the documents referred to in the Invitation to Tender. By that letter JRK advised Multiplex that it could not determine a final price for the design of the permanent hydraulics works for the project until briefed on the overall design. · A number of post tender interviews between the parties and Multiplex's consultants followed to clarify the design brief in connection with the works [Ex D14, para 15; Ex D8, paras 10-15]. By tender letter dated 4 March 1997, JRK revised its price to $7,816,000 while still advising Multiplex that the price should not be considered as final as it still needed to be briefed on the design details. · JRK revised its tender price to $7,560,000 by letter dated 10 March 1997. The 10 March 1997 tender letter should be viewed as a step towards a better tender price. It suggests a practical way out of resolving the question of design details. Its starting point is the hydraulic services price based on the tender plans and specifications of $7,560,000, which price would remain provisional until JRK completed the design. The arrangement proposed by JRK was that JRK would prepare a design which could be submitted for approval and on which JRK would be in a position to price the works on a final basis. · In the meantime, Multiplex was assessing its position on the permanent hydraulics works based on the preliminary price referred to in the 10 March 1997 tender letter. That could only be made final on a design that was to be completed by JRK. JRK became Multiplex's preferred tenderer [Ex D14, para 17-20]. · JRK then commenced doing the work in connection with the permanent hydraulic services. Mr Twiss of JRK worked with Multiplex's design consultant, Sinclair Knight Merz to develop an hydraulic design on which JRK could then base its final price for the design and construction of the works required [Ex D10, paras 7-12 and Mr Twiss at T281/9-T292/15]. · On 27 May 1997, JRK submitted a Quality Assurance Manual . Submission of such a document had been stipulated for in clause 10 of the Special Conditions [Ex DY, vol 1, tab 3, pages JK02-041-JK02-042]. The matter had been specifically treated with in the Plaintiffs letter of 27 May 1997 earlier referred to. [Ex DY, vol 2, tab 11]; · Further discussions with Multiplex and Sinclair Knight Merz followed and then on 4 June 1997, JRK submitted a further revised tender price of $12,326,850 [Ex DY, vol 2, tab 7]. That tender identified revised drawings and specifications upon which the tender price was based. That tender letter is a 'tender adjustment', adjusting the price but not the fundamental conditions. What it sought to do was to explain why the tender price had increased from the preliminary price of $7,560,000, which is expressly referred to in the tender letter. It cannot be treated as a separate tender price divorced from the rest of the formal documents. It merely goes to explaining that, having carried out the exercise that was proposed in the tender letter of 10 March 1997, JRK was now closer to a final tender price. · That was followed by a letter dated 27 June 1997 in which JRK identified savings of $960,000, reducing the overall tender price to $11,366,850 [Ex DY, vol 2, tab 14]. This is consistent with a Design and Construct contract where the contractor in the course of the design work looks for and proffers any savings that are capable of being made to the works. · JRK revised the tender price again by letter dated 18 July 1997. The price now became $11,411,264 with work to an amount of $606,756 identified as falling outside the scope of the works. This letter incorporated expressly the tender letters of 10 March 1997, 4 June 1997 and 27 June 1997 and impliedly (via the 10 March 1997 letter) the material forming a part of the Invitation to Tender. By this letter JRK represented that it '[had] investigated all aspects of the hydraulic services with the view of obtaining a final tender price…" [Ex DY, vol 2, tab 22]. · JRK's letter of 18 July 1997 became the basis of further negotiations between the parties and led to a further revised final tender dated 12 August 1997 for $12,408,020 [Ex DY, vol 2, tab 21; Ex D10, paras 17-19]. This later revised tender was a re-engrossed form of the 18 July 1997 tender that was the subject of discussion and acceptance by Multiplex on or about 18 July 1997. Consequently, the 12 August 1997 letter stated, "Further to our discussions with yourself we have pleasure in submitting our contract price…". Mr Twiss gave unchallenged evidence that he was asked to submit the final contract price and he did so by this letter [Mr Twiss at T278/51-T279/12]. · From that time on, until 8 May 1998, the parties were moving forward as though they were bound by a contract. JRK made progress claims in accordance with the terms and conditions of the subcontract. Multiplex administered and paid those progress claims in precisely the manner it would be expected if the 5 December version set the terms and conditions of the subcontract. JRK made variation claims. Up to that date, Multiplex had paid and JRK had received $7,776,113.80 [Ex DX, Blue Folders, PAB.01.697. Mr Twiss gave clear evidence that he prepared the progress claims, "we had to get John to sign a form" (the statutory declaration) and that the first time he had done that was on this project should be preferred and accepted [Mr Twiss at transcript page283/13-55]. Mr Keith agreed that he contemplated that the general conditions that would apply if the parties agreed to a subcontract, were the conditions that contained Schedule 5, clause 2(c) [Mr Keith at transcript page 223/39-46]. 254 A not insignificant pointer, as it seems to me, supporting the inference that the annotated 18 July 1997 letter was a letter by which the parties intended to be bound in terms of a concluded bargain is the circumstance that the second form of sub contract sent by Mr Cooksley to the plaintiff included as an annexure, albeit not given an annexure number, a copy of the annotated 18 July letter. There is no doubt that the evidence proved this occurrence. It was accepted by both counsel that a document in this form on the evidence had indeed been included at the end of this version of subcontract [see transcript pages 96, 339, 340]. The very communication of this letter at this important point in time highlights its significance as a contractual document. 255 When pressed in argument to identify where the annotated 18 July 1997 letter (incorporating by express or implied reference (1) the plaintiffs letter of 10 March [which in turn incorporated other documents and plans by reference], (2) the plaintiffs letter of 4 June 1997 which expressly incorporated certain plans and specifications and (3) the plaintiffs letter of 27 June 1997) failed to throw up certainty in terms of the scope of work which the plaintiff was engaging to carry out, Mr Gray of counsel for the plaintiff was forced to submit that it was the entirety of the enumerable detailed terms and conditions usually to be found in a sub contract which were missing. [See transcript pages 369-371 and in particular 371.54] 256 The detailed transcript of argument particularly where Mr Gray addressed submissions repays careful reading. The Court endeavoured to elicit from Mr Gray an answer to the question of whether the annotated 18 July 1997 letter read together with those materials which are incorporated by reference in it, if read in isolation from any other document, was sufficiently precise as to scope of work and price as to leave no question of uncertainty. As I understood Mr Gray's responsive submissions the answer was generally in the affirmative although Mr Gray repeatedly sought to make the point that the problem would be inhere in the fact that the whole of the usual 'inch and a half' of terms and conditions to be found in the detailed forms of sub contract which were the norm in the industry, would by definition be absent. And Mr Gray then travelled through, again and again, those areas of dissension which later were evident in the negotiations following the submission of the November form. Looking at the later forms of dissension does not assist in the determination of the particular question which the Court had put to Mr Gray which endeavours to address the important question of certainty in terms of the scope of work to be provided by the plaintiff. Looking at the later forms of dissension of course does play a material part in the determination of whether or not the objective assessment of all the communications evidence an intention to make a concluded bargain. 257 Whilst I confess that my mind has wavered in terms of assessing a most curious set of circumstances, at the end of the day I have reached the clear conclusion that Multiplex is correct in its contention that a binding and enforceable agreement exists between the parties. Insofar as the agreement is in writing it is comprised of the following documents: (a) Multiplex's Invitation to Tender dated 5 December 1996, including the documents incorporated by reference [Ex DY, vol 1, tab 3], namely: (i) The Multiplex Subcontract Deed of Agreement; (ii) Annexures A to O; (ii) Hydraulics Specification Revision 0 dated November 1996; (iv) Documentation Register; (v) Special Conditions; (vi) Site Safety Instructions; (vii) Design Brief; and (b) JRK's 18 July 1997 letter, as amended, incorporating by express or implied reference the plans and documents [Ex DY, vol 2, tab 20], namely: (i) JRK's letter dated 10 March 1997, which incorporates other documents and plans by reference [Ex DY, vol 2, tab 7]; (ii) JRK's letter dated 4 June 1997, which incorporates expressly plans and specifications [Ex DY, vol 2, tab 12]; (iii) JRK's letter dated 27 June 1997 [Ex DY, vol 2, tab 14] 258 The agreement was formed between the parties on or about 18 July 1997, but before 12 August 1997, when Multiplex accepted JRK's final tender price of $12,408,020 as contained in JRK's letter dated 18 July as amended in the contemplation that the parties would make a further contract containing additional or other terms in substitution (Masters v Cameron class four type of agreement). Neither party addressed submissions suggesting that there were any material differences in the terms of the 12 August 1997 letter as opposed to the terms of the annotated 18 July 1997 letter. 259 On my findings either the 5 December 1996 letter [generally referred to in this judgment as 'the 5 December 1996 version"] had annexed to it each of the documents referred to in sub-paragraph (1)(a)(i)-(vii) of paragraph 11 above or those documents were available for inspection by the plaintiff at the time. The evidence in relation to and position in relation to Parts E and F of the Design Brief is referred to below. The identification of the drawings issue 260 In my view the plaintiff is not entitled to raise the issue of uncertainty or mistake sought to be raised concerning the suggestion that the parties are unable to agree and the evidence does not make plain which precise set of drawings was communicated in as part of the 5 December 1996 sub contract version. 261 In any event, on my findings the tender price was based upon the JRK set [Exhibit D 12] and the June 1997 Architecturals [Exhibit D 13]. The Minter Ellison drawings were not in existence at the time. Mr Hutton's evidence was that the drawings were stored electronically and that when the drawings were accessed or printed, they were automatically updated by the computer system with the most current architectural detail then contained within the system. Therefore the architectural details overlaid on the hydraulic drawings printed by SKM for Multiplex in late January 2002, that is the Minter Ellison set, do not necessarily reflect the state of architectural development as it was in 1997. In my opinion because of the way the SKM data base works, they are likely to reflect a much later stage in the development of the architectural design for Stadium Australia". The identification of the Design Brief issue 262 The plaintiff's particulars of the respects in which the parties are said not to have agreed on the scope of work to which the price of $12, 408,020 related [ MFI P 2], do not include any reference to the Design Brief. In consequence the question of whether or not Parts E and F of the brief [to be found in volume one of Exhibit D 6 (1)] were included in the materials sent out with the 5 December invitation to tender documents was not available on the pleadings to be litigated. In any event on my findings these Parts were available from 5 December for inspection by JRK. (See evidence given by Mr Cooksley at transcript page 294.20]. Estoppel 263 In light of the above holding it is unnecessary to go on to deal with the questions raised by the estoppel argument. The question of what the decision of the court may have been the matter not been resolved in the fashion identified in the above findings becomes somewhat academic. Short Minutes of Order and further submissions 264 By reason of the complexity of some of the issues raised it is possible that the above reasons have not dealt with every aspect of the matters which required to be determined. In that regard the parties have leave to address further submissions should there be any suggestion that some matters remain necessary to be clarified by determination. The parties will be invited to address any such further submissions and to prepare short minutes of order following their having been given an opportunity to read the above reasons. I certify that paragraphs 1 – 264 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on Thursday 14February 2002 ___________________ Susan Piggott Associate 14 February 2002 Last Modified: 03/14/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.