New South Wales Supreme Court CITATION : Rickard Constructions & Anor v Rickard Hails Moretti & Ors [2004] NSWSC 1041 HEARING DATE(S) : 5/10/04, 6/10/04, 7/10/04, 8/10/04, 11/10/04, 12/10/04, 13/10/04, 14/10/04, 15/10/04, 18/10/04, 19/10/04, 20/10/04, 21/10/04, 22/10/04, 25/10/04, 26/10/04, 29/10/04, 4/11/04, 5/11/04 JUDGMENT DATE : 17 December 2004 JUDGMENT OF : McDougall J at 1 DECISION : See paras [244] and [245] of judgment CATCHWORDS : CONTRACT - assignment - whether cause of action for damages for breach of contract assignable - distinction between liquidated and unliquidated claims - whether cause of action for misleading and deceptive conduct assignable - whether cause of action for damages for breach of duty of care assignable - Poulton v Commonwealth (1952-1953) 89 CLR 540 considered - Trendtex Trading Corporation v Credit Suisse [1982] AC 679 considered - whether plaintiff has sufficient interest to justify assignment - TORT - duty of care - pure economic loss - whether defendant owed plaintiff duty to avoid economic loss - whether plaintiff vulnerable - breach of duty - whether duty of care breached - whether damage suffered - TRADE PRACTICES - Trade Practices Act 1974 - s 52 - whether representation misleading or deceptive - whether assignee suffers loss "by" misleading or deceptive conduct - PRACTICE AND PROCEDURE - joinder - SCR Pt 8 r 8 - whether leave should be granted further to amend summons to join third party as a plaintiff - whether third party "ought to have been joined" within SCR Pt 8 r 8(1)(b) - whether third party "necessary" within SCR Pt 8 r 8(1)(b) LEGISLATION CITED : Trade Practices Act 1974 (Cth) Law Reform (Miscellaneous Provisions) Act 1946 Comfort v Betts [1891] 1 QB 737 Fitzroy v Cave [1905] 2 KB 364 County Hotel and Wine Company Limited v London and North Western Railway Company [1918] 2 KB 251 Re Daley; Ex parte National Australia Bank Ltd (1992) 37 FCR 390 Torkington v Magee [1902] 2 KB 427 Defries v Milne [1913] 1 Ch 98 Ellis v Torrington [1920] 1 KB 399 Re Kenneth Wright Distributors Pty Ltd (in liq); W J Vine Pty Ltd v Hall [1973] VR 161 Camdex International Ltd v Bank of Zambia [1998] QB 22 Poulton v The Commonwealth (1952-1953) 89 CLR 540 Trendtex Trading Corporation v Credit Suisse [1982] AC 679 Giles v Thompson [1994] 1 AC 142 Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706 Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 Beatty v Brashs Pty Ltd [1998] 2 VR 201 Singleton v Freehill Hollingdale & Page [2000] SASC 278 Vangal Pty Ltd (in liq) v Kumagai Gumi Co Ltd [2002] QSC 137 CASES CITED : First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710 Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) 46-105 Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Federal Court of Australia, 7 November, 1994, unreported: BC9400129) National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 Chapman v Luminis (No 4) (2001) 123 FCR 62 Deloitte Touche Tohmatsu v Cridlands Pty Ltd (2003) 204 ALR 281 Brownton v Edward Moore Inbucon Ltd [1985] 3 All ER 499 Knight v McCann Erickson Pty Ltd (26 August 1991, unreported; BC-9101623) Pralle v Scharka [1978] 2 NSWLR 450 Cambridge Credit Corporation Ltd v Parkes Developments Ltd [1974] 2 NSWLR 590 Gordian Runoff v Price & Ors [2004] NSWSC 535 Pegang Mining Company Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56 News Limited v Australian Rugby Football League (1996) 64 FCR 410 State of Victoria v Sutton (1998) 195 CLR 291 Bishopsgate Insurance Australia Ltd (In liq) v Deloitte Haskins & Sells [1999] 3 VR 863 Bryan v Maloney (1995) 182 CLR 609 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628 Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 Heydon v NRMA Ltd (2000) 51 NSWLR 1 Rickard Constructions Pty Limited (First Plaintiff) Mayne Group Limited (Second Plaintiff) PARTIES : Rickard Hails Moretti Pty Limited (First Defendant) Jeffery & Katauskas Pty Limited (Second Defendant) Allianz Australia Insurance Limited (Third Defendant) FILE NUMBER(S) : SC 55027/00 F C Corsaro SC/T G R Parker (Plaintiff) COUNSEL : S R Donaldson SC/ P S Braham (First Defendant) M Dempsey SC/J Steele (Second Defendant) A S Martin SC/A J McInerney (Third Defendant) Maurice Blackburn Cashman (Plaintiff) SOLICITORS : Moray & Agnew (First Defendant) Colin Biggers & Paisley (Second Defendant) Moroney Betts (Third Defendant) RICKARD CONSTRUCTIONS PTY LIMITED v RICKARD HAILS MORETTI PTY LIMITED & ORS 55027/00 INDEX TO JUDGMENT [2004] NSWSC 1041 Para Background 2 The issues 10 The role of Rickard Partners 12 The role of Jeffery & Katauskas 17 The assignments 23 The assigned claims 39 Assignment of causes of action: the principles 42 Rickard Constructions has no sufficient interest 62 Conclusion on the assigned causes of action 72 The joinder application 73 Conclusion on the assigned claims 91 The pavement design and the criticisms of it 94 The failure of the pavement 122 Responsibility for the failure of the pavement 132 The claim against Rickard Partners 145 Duty of care 147 No breach of duty 153 Damage 160 The section 52 claim 163 The claim against Jeffery & Katauskas 166 Duty of care 167 No breach of duty 173 The proposed amended particulars 177 The further case of breach 184 The s 52 case 197 The subrogation and contribution claims 200 The claim against Allianz 204 Damage 229 Conclusions 242 Order 244 IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST McDOUGALL J 17 December 2004 55027/00 RICKARD CONSTRUCTIONS PTY LIMITED v RICKARD HAILS MORETTI PTY LIMITED & ORS JUDGMENT 1 HIS HONOUR: The plaintiff ("Rickard Constructions") constructed a pavement for a container depot ("the container depot" or "Lot 1") at Port Botany. The pavement was designed by the first defendant ("Rickard Partners"). The second defendant ("Jeffery & Katauskas") provided geotechnical services. The third defendant ("Allianz") issued a contract works insurance policy ("the policy") for the project in favour of Rickard Constructions. The pavement failed shortly after it was put into service. Rickard Constructions rebuilt it. The question is, who should bear the loss? Background 2 The container depot is located at Lot 1, 55 Friendship Road, Port Botany. Lot 1 was leased initially to Port Botany Container Park Pty Ltd ("Container Park"). Rickard Constructions and Container Park entered into a building contract, for the construction of the pavement, on 23 April 1998. Rickard Constructions' obligation was to execute the works – namely, the construction of the pavement – in a workmanlike manner in accordance with the design shown in the drawings and specifications prepared by Rickard Partners. 3 Thereafter, Container Park sold its business to Mayne Nickless Ltd ("Mayne Nickless") and MPG Logistics Pty Limited ("MPG Logistics"), a subsidiary of Mayne Nickless. (Unless for some reason it is necessary to distinguish between Mayne Nickless and MPG Logistics, I shall refer to them both for simplicity as Mayne.) As part of that transaction, Container Park assigned its interest in lot 1 and its interest in the building contract to Mayne Nickless. 4 Rickard Partners and Jeffery & Katauskas provided services in connection with the construction of the pavement both before and after 18 December 1998. Rickard Constructions continued, after that date, to perform its obligations under the building contract. After considerable delay (in part due to heavy rainfall in the first half of the calendar year 1999), it handed the works over to Mayne on 26 August 1999. 5 The container depot was to be used for the storage of shipping containers. That business involved the use of heavy forklift trucks, to shift and place the containers. The design of the pavement sought to take into account the loads that this usage would impose. However, the pavement failed within three days of being put into service, when substantial portions of it collapsed. 6 Not surprisingly, the failure of the pavement led to some difference of opinion between Rickard Constructions and Mayne. The former maintained that it had complied with its obligations under the building contract. (I reiterate that those obligations were to construct the pavement in accordance with the design prepared by Rickard Partners; it was not a design and construct contract.) Mayne seemed inclined to disregard the separate legal personalities of the builder and the designer, and to focus on the fact that both were effectively directed by Mr Charles Rickard, the principal of both companies at that time. In any event, on 3 May 2000, Rickard Constructions, Mayne Nickless and MPG Logistics entered into an agreement ("the 3 May agreement") for Rickard Constructions to carry through to completion the rectification of the failed pavement. 7 Under the 3 May agreement, Rickard Constructions agreed to complete the rectification works. Mayne Nickless and MPG Logistics agreed that the rectification works would constitute a variation under the building contract. However, Mayne Nickless and MPG Logistics were not to pay Rickard Constructions in cash for that variation. Instead, they agreed to assign to Rickard Constructions any right that they might have against the designer of the pavement or the supervisors of the pavement construction "to recover … the amount payable [by them to Rickard Constructions] in connection with" the variation. Rickard Constructions agreed to accept that assignment in full satisfaction of its claim for payment. 8 There have been two subsequent assignments, purporting or attempting to perfect Rickard Constructions' rights under the assignment in the 3 May agreement. 9 There was a substantial body of expert evidence directed to identifying the cause or causes of the failure of the pavement. It will be necessary, in due course, to turn to some of the detail of that evidence. However, it is sufficient for present purposes to note that I have concluded (in line with the majority of the experts) that the primary cause of failure of the pavement was the presence of excessive moisture in the base course material which, with the loading of the pavement through the operation of the forklift trucks, led to a build up of excessive pore pressure. That in turn diminished the stiffness of the base course and hence of the pavement, and caused it to fail under load. The issues 10 In summary, Rickard Constructions' case is that: (1) It constructed the pavement in a good and workmanlike manner and in accordance with the design and specification prepared by Rickard Partners. (2) It was, therefore, entitled to be paid for the cost of executing the rectification works. (3) Rickard Partners owed, and breached, a duty of care to Mayne in connection with the design of the pavement and in connection with the supervision of the construction of the pavement. (4) Jeffery & Katauskas owed, and breached, a duty of care to Mayne in connection with the geotechnical advice that it provided, and the geotechnical services that it rendered, relating to the construction of the pavement. (5) Rickard Partners and Jeffery & Katauskas were, therefore, liable to Mayne for the cost of the variation. (6) Rickard Constructions was entitled, under the assignment, to recover the amounts payable by them to Mayne in respect of that liability. (7) Alternatively, the collapse of the pavement was "sudden and unforeseen physical loss of or damage to Insured Property from any cause … " within the insuring clause of the policy so that Rickard Constructions was entitled to be indemnified by Allianz in respect of the cost of rectification. 11 Against that summary, I set out the issues agreed by the parties (the issues reflect the fact that there were a number of cross-claims between the defendants): " Technical Issues 1A. What was the cause of the failure of the Pavement and in particular was the failure of the Pavement attributable to: (a) any design deficiency of the pavement of the type identified in the joint expert's report; (b) excessive quantities of moisture in the Pavement as a result of entry of moisture during the construction of the Pavement; (c) any other aspect of the manner of construction of the Pavement. Technical (Insurance) Issues between the Plaintiff and the Third Defendant 1B. Was there physical loss of or damage to Insured Property and, if so, when? 1C. Was there a fault, defect, error or omission in design, plan or specification? 1D. Was there a fault, defect, error or omission in material or workmanship? 1E. What were the costs of loss or damage caused by fault, defect, error or omission in design, plan or specification? 1F. What were the costs of loss or damage caused by fault, defect, error or omission in workmanship or material? 1G. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in design or specification immediately prior to the loss or damage occurring? 1H. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring? Claims by RC against RP Negligence Claim of RC 2. Did RC rely upon RP to provide it with engineering, supervisory and certification services in connection with the design and construction of the pavement? 3. Did any such reliance give rise to a duty owed to RC by RP in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project? 4. Having regard to the Court's findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS? 5. Was the performance of the rectification works and other works the subject of RC's variation claims: (a) caused by RP's alleged breach; or (b) a foreseeable consequence of RP's alleged breach? 6. If so, what was the quantum of RC's loss flowing from any such breach of duty? 7. Having regard to the Court's findings on the technical issues: (a) was RC's loss caused or contributed to by negligence on RC's part; (b) if so, the quantum by which RC's damages should be reduced on account of such contributory negligence. Misleading & Deceptive Conduct Claim of RC 8. Did RP make representations to RC concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS? 9. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)? 10. Was the performance of the rectification works and other works the subject of RC's variation claims a loss and, if so was it: a. undertaken in reliance upon or otherwise caused by RP's alleged representations; or b. a foreseeable consequence of RP's alleged representations? 11. If so, what was the quantum of RC's loss (if any) flowing from such misleading & deceptive conduct. Contract Claim of Mayne companies 12. What were the terms of any contract between PBCP and RP in connection with the design of the Container Park and the supervision or certification of the construction of the Container Park? 13. Were the rights and obligations of PBCP under any such contract assigned or novated to the Mayne companies on or after 4 January, 1999 so as to give rise to contractual obligations in the same terms as between the Mayne companies and RP? 14. Having regard to the Court's findings on the technical issues, did RP breach its contract with the Mayne companies in the manner alleged in the particulars to paragraph 17 of the SFAS? 15. Did the Mayne companies suffer any loss as a consequence of the alleged breach and, if so, what was the quantum of that loss? Negligence Claim of Mayne Companies 16. Did RP on or about 23 April 1998 undertake to the Mayne Companies to provide design, supervision and certification services in relation to the Pavement? 17. Did any such undertaking give rise to a duty owed by RP to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies? 18. Having regard to the Court's findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS? 19. The quantum of the Mayne Companies' loss (if any) flowing from any such breach of duty. Misleading & Deceptive Conduct Claim of Mayne Companies 20. Did RP make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS? 21. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)? 22. The quantum of the Mayne Companies' loss (if any) flowing from such misleading & deceptive conduct. Assignment of Mayne Companies' Claims to RC 23. Were the Mayne Companies' claims against RP (or any of them) validly assigned to RC under the First Deed? 24. If not, were the Mayne Companies' claims against RP (or any of them) assigned to Patrick under the Business Sale Agreement? 25. If not, were the Mayne Companies' claims against RP (or any of them) validly assigned to RC under the Second Deed? Subrogation to Mayne Companies' Claims 26. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies' claims against RP. 27. Is the present matter properly constituted to permit such a subrogated right to be pursued by RP? Contribution in respect of Mayne Companies' Claims 28. Having regard to the Court's findings on the technical issues, was RC a tortfeasor liable to the Mayne Companies in respect of damage suffered by those Companies arising out of failure of the Pavement. 29. Having regard to the Court's findings on the technical issues, was RP a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage. 30. Can RC recover, under the Law Reform (Miscellaneous Provisions) Act 1946 , the whole or any part of the cost of performing the work the subject of the Variation claims. 31. The quantum of contribution which RP should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 . 32. Alternatively is RC entitled to contribution in equity from RP towards the cost to it of performing the work the subject of the Variation claims, and if so the quantum of such contribution. Claims against J&K 33. What were the terms and scope of Jeffery & Katauskas' retainer with Rickard & Partners? 34. What, if any, responsibilities were undertaken or owed by J&K to the plaintiff or Mayne Nickless or Logistics with respect to the design or construction of the Pavement and in particular: a. Whether J & K's letter to the plaintiff dated 3 May 1999 (6-136 to 6-137) or any subsequent conduct of J & K in respect of the inspection or approval of proof rolling imposed any duty on J & K in respect of the adequacy of the Works as completed by the plaintiff. b. Whether by paragraph 1 of J & K's facsimile of 19 November 1998 to Rickard & Partners (4-189) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement. c. Whether Jeffery & Katauskas' fax of 5 February 1999 to Rickard & Partners (5-563 to 7, and in particular Note 1 at 5–564) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement. d. Whether according to the evidence of Mr Rickard, as a result of his alleged discussions with Mr Jeffrey, J&K were retained to ensure that the construction work complied with the design and specification or whether the retainer was for Level 2 testing only. Negligence Claim of RC 35. Did J&K owe a duty to RC in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project? 36. Having regard to the Court's findings on the technical issues, did J&K breach that duty? 37. Whether any such breach caused any loss to RC? 38. The quantum of RC's loss flowing from any such breach of duty. 39. Having regard to the Court's findings on the technical issues: (a) was RC's loss caused or contributed to by negligence on RC's part; (b) if so, the quantum by which RC's damages should be reduced on account of such contributory negligence. Misleading & Deceptive Conduct Claim of RC 40. Did J&K make representations to RC concerning the design and construction of the Pavement in the terms alleged? 41. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)? 42. The quantum of RC's loss (if any) flowing from such misleading & deceptive conduct. Negligence Claim of Mayne Companies 43. [The second defendant says on any claim made by either of the Mayne Companies (in tort or otherwise), it is at issue whether and if so what cause of action accrued to either company or was assigned by either company.] 44. Did J&K owe a duty to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies? 45. Did J&K breach any duty to the Mayne Companies? 46. Whether any such breach caused any loss to the Mayne Companies? 47. The quantum of the Mayne Companies' loss flowing from any such breach of duty. Misleading & Deceptive Conduct Claim of Mayne Companies 48. Did J&K make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged? 49. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)? 50. The quantum of the Mayne Companies' loss (if any) flowing from such misleading & deceptive conduct. Assignment of Mayne Companies' Claims to RC 51. Were the Mayne Companies' claims against J&K validly assigned to RC under the First Deed? 52. If not, were the Mayne Companies' claims against J&K assigned to Patrick under the Business Sale Agreement? 53. If not, were the Mayne Companies' claims against J&K validly assigned to RC under the Second Deed? Subrogation to Mayne Companies' Claims 54. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies' claims against J&K. Contribution in respect of Mayne Companies' Claims 55. Having regard to the Court's findings on the technical issues, was J&K a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage. 56. The quantum of contribution which J&K should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 . 57. Alternatively is RC entitled to contribution in equity from J&K towards amounts paid or allowed in favour of the Mayne Companies under the First Deed, and if so the quantum of such contribution. Cross-Claims between RP and J&K Contract Claim by RP 58. Having regard to the Court's findings on the technical issues, did J&K breach the terms of its retainer by RP? 59. Is J&K's liability limited by the terms of its contract with RP? 60. The quantum of RP's loss, in the form of liability to RC, (if any) flowing from that breach. Contribution Claims between RP and J&K 61. Having regard to the Court's findings on the technical issues, were either or both of RP and J&K tortfeasors liable to RC in respect of damage suffered by RC arising out of failure of the Pavement. 62. The quantum of contribution which RP and J&K should make to each other under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 . 63. Alternatively is either of RP or J&K entitled to contribution in equity from the other towards its liability to RC, and if so the quantum of such contribution. Claim by RC against Allianz 64. Whether, having regard to the Court's findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property and, if so, when? 65. Whether, having regard to the Court's findings on the technical (insurance) issues, the physical loss of or damage to the Insured Property was sudden and unforseen? 66. Whether, having regard to the Court's findings on the technical (insurance) issues, there was a fault, defect, error or omission in the design, plan or specification. 67. Whether, having regard to the Court's findings on the technical (insurance) issues, there was a fault, defect, error or omission in material or workmanship. 68. Whether, having regard to the Court's findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in the design, plan or specification. 69. Whether, having regard to the Court's findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in material or workmanship. 70. Whether, having regard to the Court's findings on the technical (insurance) issues, RC was guilty of any of the following breaches of condition and if so whether such failures may be relied upon by Allianz under section 54(2) of the Insurance Contracts Act 1984 : (a) failure to take reasonable precautions to prevent loss or damage; (b) failure to notify Allianz of material changes in risk arising from the manner in which the construction was carried out and to take such additional precautions to minimise the risk of a claim raising due to such changes in risk. 71. Having regard to the Court's findings on the technical (insurance) issues, the: (a) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in the design, plan or specification. (b) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in material or workmanship. (c) costs of loss or damage caused directly by fault, defect, error or omission in the design, plan or specification. (d) costs of loss or damage caused directly by fault, defect, error or omission in material or workmanship. (e) costs which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in the design, plan or specification immediately prior to the loss or damage occurring. (f) costs which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring." The role of Rickard Partners 12 Rickard Partners carries on business as civil engineers. It was known at the time as Rickard & Partners Pty Limited. Since then, it has changed its name, first to Bonacci Rickard (NSW) Pty Limited, and thereafter to its present name, Rickard Hails Moretti Pty Limited. Rickard Partners had expertise in 1998 in the design of heavy duty pavements. In particular, it had designed the pavement on a container depot situated across the road from lot 1, at 60 Friendship Road, Port Botany ("60 Friendship Road"). That pavement was constructed some years before the construction of the subject pavement, and it appears to have performed satisfactorily. 13 Rickard Partners undertook the design of the pavement for lot 1. In outline, that design comprised (from the lowest level up): (1) A sub-grade layer, namely compacted sand that was present on the site (but which, it appears, may have been imported to the site in the course of earlier reclamation works carried out by others). (2) A sub-base layer, comprising compacted crushed sandstone. (3) A base course layer, comprising compacted DGB20 (essentially, a gravel material meeting a particular specification of the Roads & Traffic Authority; the initials "DGB" refer to densely graded base course and the figure "20" refers to the average size, in mm, of the gravel particles). (4) An asphalt layer, which provided both sealing to the underlying layers and a wearing surface. 14 The design of the pavement was undertaken by Mr Brett Hails. It will be necessary to turn later to the detail of the design and to the criticisms made of it. 15 Rickard Constructions also suggested that Rickard Partners provided some services relating to the supervision of the construction of the pavement. However, such evidence as there is (and it is very limited indeed) suggests that the extent of the "supervision" performed by Rickard Partners may have been limited to: (1) Upon request by a representative of Rickard Constructions, arranging for Jeffery & Katauskas to inspect and test a section of a pavement layer that was said to have been completed and fully compacted. (2) Examining the test results produced by Jeffery & Katauskas. (3) Informing Rickard Constructions whether the tested section of pavement layer was adequate, or whether there was a need for further work to be done. 16 Finally, when (as it was thought) the pavement works were complete, Rickard Partners certified completion to Rickard Constructions. Rickard Constructions in turn certified practical completion to Container Park. In consequence, the relevant certifying authority under the Environmental Planning & Assessment Act 1979 (NSW), Randwick City Council, issued an occupation certificate on 27 August 1999. The role of Jeffery & Katauskas 17 Jeffery & Katauskas carries on business as geotechnical engineers. It was retained as a geotechnical testing sub-consultant to Rickard Partners. That retainer was what is known as a "level 2" retainer: a reference to Australian Standard AS 3798-1990. The reference is to the level of certification required: "The geotechnical testing authority carries out sampling and testing as required or specified. The geotechnical testing authority is responsible for selecting the timing and location of sampling and testing operations within each visit he/she makes to the site, but will rely upon the superintendent to advise when such visits are required and to ensure that sufficient samples and tests are taken over the project. On completion of the earthworks, the geotechnical testing authority may be required to provide a report setting out the sampling and testing which it has carried out, and the locations and results thereof. It will not be in a position to express any opinion beyond this as to the compliance of the works with the specification or their suitability for any particular purpose." 18 Jeffery & Katauskas had provided geotechnical testing services in connection with the 60 Friendship Road project. Those services were level 1 services. That is a higher level of certification than level 2: "The geotechnical testing authority provides a full-time inspection and testing service on all earthworks (including stripping, test rolling and associated operations) on the project, and decides the locations and timing of sampling and testing operations. On completion of the earthworks the geotechnical testing authority may be required to provide a report setting out the inspections, sampling and testing it has carried out, and the locations and results thereof. Unless very unusual conditions apply, the authority may also be required to express an opinion that the works, so far as it has been able to determine, comply with the requirements of the specification and drawings." 19 It may be noted that, when Jeffery & Katauskas were asked to provide a proposal for geotechnical services on lot 1, it suggested that the services should be level 1 services. It said: "We consider Level 1 Certification is essential since it is the fill and pavement materials' quality and density which is so relevant to the ultimate paving performance." 20 Nonetheless, apparently for reasons of cost (and, no doubt, because of the experience gained on 60 Friendship Road), the retainer was to provide level 2 services. 21 In addition, at a time when the project had been experiencing very heavy rainfall, Jeffery & Katauskas was asked to provide what was called "Wet Weather Procedures". That was done initially at a meeting on 29 April 1999, with the results being confirmed in a letter from Jeffery & Katauskas to Rickard Constructions dated 3 May 1999. 22 Jeffery & Katauskas did not have any part in the formulation of the design of the pavement, nor was it asked to review or check the design. It did, however, suggest to Rickard Partners that Mr Hails should obtain an independent review of the design. The assignments 23 The first assignment (from Mayne Nickless and MPG Logistics to Rickard Constructions) relied upon is that found in the 3 May agreement. In considering the terms of that assignment, it is necessary to bear in mind that Rickard Constructions had carried out work for Mayne Nickless and MPG Logistics in respect of other parts of the 55 Friendship Road site (known as lot 2 and lot 3) and had outstanding claims for that work. By clause 2 of the 3 May agreement, those claims were settled for $650,000 (payable to Rickard Constructions), with a release given by Rickard Constructions to Mayne Nickless and MPG Logistics for all claims other than what were called "the Variation Claims", and a small and presently irrelevant claim for an outstanding invoice. 24 The expression "Variation Claim" was defined to mean: "Any claim (including extension of time claims) by Constructions, MNL or MPG for payment for works done and loss suffered in consequence of the failure of the lot 1 pavement including, without limitation, the Rectification Works done or agreed to be done pursuant to this Agreement on lot 1." 25 The "Rectification Works" were defined by reference to an annexure that is not in evidence, but they may be taken to be works agreed to be necessary for the rectification of the failed pavement. I assume that they were, at least in substance, the works described in a specification prepared by Rickard Partners in November 1999. 26 Clause 3 of the 3 May agreement dealt with the "Variation Claims". It read, relevantly, as follows: "3 Variation Claims 3.1 Claims made Construction claims that under the Construction Contract the Variation Claims are recoverable from MNL and MPG as a variation or latent condition or otherwise. 3.2 Settlement of Variation Claims MNL and MPG accept the Variation Claims by Constructions on the basis that Constructions accepts in full payment of the Variation Claims the amount (if any) recovered pursuant to any Assigned Action. 3.3 Assignment of MNL Rights (a) In consideration for Constructions entering this Agreement and accepting the payments and rights under this Agreement in full and final settlement of any claim for the Variation Claims, MNL and MPG assign the Assigned Actions to Constructions. (b) To the extent to which any of the Assigned Actions are not assignable, MNL and MPG hold them on trust for the benefit of Constructions. … " 27 The "Assigned Actions" were defined as: "Any right, claim, action or cause of action which may be brought by MNL or MPG to recover from the designers of the pavement on Lot 1 or the supervisors of the pavement construction on Lot 1 (including Jeffery & Katauskas and Rickard & Partners Pty Limited) the amount payable by MNL or MPG to Constructions in connection with a Variation Claim (other than any right, claim, action or cause of action against Constructions, its contractors, agents or employees)". 28 Clause 3.4 dealt with "Carriage of Assigned Actions". It made provision for the events that Rickard Constructions did not pursue an assigned action, or did not do so in a timely manner; and for the event that Rickard Constructions did pursue any assigned action. In this latter event, sub para (5) provided that: "The amount (if any) recovered pursuant to the Assigned Action after payment of all costs incurred by Constructions in connection with the Assigned Action (including the payment of any costs paid by Constructions to MNL or MPG) may be contained by Constructions (up to the amount of the relevant Variation Claim) and any excess divided equally between MNL or MPG and Constructions". 29 On 22 September 2003, Rickard Constructions, Mayne Nickless, MPG Logistics and others entered into an "Assignment Deed" ("the second assignment"). The purpose of that deed was expressed, by recital E, to be "to confirm the assignment of the Assigned Causes of Action and, to the extent (if any) that the Assigned Causes of Action have not been assigned to Constructions, to effect that assignment." 30 By the time the second assignment was made: (1) These proceedings had been commenced. (2) Rickard Partners and Jeffery & Katauskas had raised, as issues, the limited character of the assignment under the 3 May agreement. (3) Mayne Nickless and MPG Logistics had sold their interest in the business conducted on and from lot 1, and Mayne Nickless had assigned its leasehold interest in lot 1, to an unrelated third party. 31 At that time, Mayne Nickless and MPG Logistics had been joined, as defendants, to these proceedings. The relief claimed against them was, in substance, declarations as to either the efficacy of the first assignment or as to their obligations if it were held to be inefficacious. 32 By cl 2(a) of the second assignment, and with a presently irrelevant exception, Mayne Nickless and MPG Logistics assigned to Rickard Constructions "the whole of the Assigned Causes of Action to the extent that all or any part of the Assigned Causes of Action have not already been assigned to Constructions." 33 The assigned causes of action were defined to mean: "Any right, claim, action or cause of action which MNL or MPG has or might have to recover from the designers of the pavement on Lot 1 or the supervisors of the pavement construction on Lot 1 (including Jeffery & Katauskas and Rickard & Partners Pty Ltd) which is connected with the pavement on Lot 1 (other than any right, claim, action or cause of action against Constructions, its contractors, agents or employees)." 34 In short, the second assignment purported, somewhat at odds with Recital E, to remove the restriction, in the definition of what was assigned, to a claim in connection with a "Variation Claim". 35 By cl 4 of the second assignment, Constructions was obliged to discontinue these proceedings as against Mayne Nickless and MPG Logistics, and undertook not to "commence other proceedings or seek to join MNL or MPG to proceedings which have the same or similar relief to that sought against MNL and MPG in" these proceedings. 36 Rickard Partners and Jeffery & Katauskas suggested that the second assignment was ineffective because, at its date, Mayne Nickless and MPG Logistics had no assignable interest in any cause of action relating to the container depot. (That followed, they said, from the sale of that business.) Accordingly, on 15 October 2004 (ie, during the hearing of these proceedings), Rickard Constructions, Mayne Nickless, MPG Logistics and the purchasers (known collectively as "the Patrick Parties" and others) entered into a "Deed of Clarification and Assignment" ("the third assignment"). By cl 2 of the third assignment, Mayne Nickless, MPG Logistics and the Patrick Parties acknowledged and agreed that they did not intend that the sale of business agreement would have the effect of transferring to the Patrick Parties any part of the Assigned Causes of Action (an expression defined to have the same meaning as it had in the second assignment: see para [33] above). 37 Clause 3 was a further assignment: "To the extent that any part of the Assigned Causes of Action has not already been assigned to Constructions pursuant to the First Assignment Deed or the Second Assignment Deed, the Patrick Parties assign that part of the Assigned Causes of Action to Constructions." 38 Finally in this context, near the end of the hearing, Rickard Constructions sought to join Mayne Nickless as a plaintiff (it was said, with its consent; but there was no direct evidence of this), and further to amend its summons so as to include a claim for relief by Mayne Nickless in respect of any unassigned cause of action against Rickard Partners and Jeffery & Katauskas. That application was opposed. The assigned claims 39 Rickard Constructions submitted that there were assigned to it, and it was entitled to enforce, causes of action against Rickard Partners and Jeffery & Katauskas for: (1) Damages for breach of contract; (2) Damages for breach of duty of care; and (3) Damages for misleading or deceptive conduct. 40 Rickard Constructions claimed its interest as assignee pursuant to one or other of the assignments that I have described. 41 Rickard Partners and Jeffery & Katauskas submitted that the assigned claims must fail. They submitted that: (1) Their causes of action were not assignable at law or in equity; (2) Alternatively, Rickard Constructions had no interest sufficient to justify the assignments to it; and (3) In any event, for the purposes of ss 52 and 82 of the Trade Practices Act 1974 (Cth), Rickard Constructions, as assignee, could not be said to have suffered damage "by" the alleged contraventions of s 52. Assignment of causes of action: the principles 42 The following propositions appear to be uncontroversial: (1) A debt arising under a contract is regarded as property, and is assignable; and this is so even if the debt is overdue for payment: Comfort v Betts [1891] 1 QB 737; Fitzroy v Cave [1905] 2 KB 364; County Hotel and Wine Company Limited v London and North Western Railway Company [1918] 2 KB 251; Re Daley; Ex parte National Australia Bank Ltd (1992) 37 FCR 390. (2) The benefit of a contract, whether a claim to which that benefit gives rise is liquidated or unliquidated, may be assigned before breach: Torkington v Magee [1902] 2 KB 427. (3) A cause of action (at least, in contract: Defries v Milne [1913] 1 Ch 98) that is annexed to a right of property may be assigned along with that property: Ellis v Torrington [1920] 1 KB 399; Re Kenneth Wright Distributors Pty Ltd (in liq); W J Vine Pty Ltd v Hall [1973] VR 161; Camdex International Ltd v Bank of Zambia [1998] QB 22. 43 In Poulton v The Commonwealth (1952-1953) 89 CLR 540, it was said that causes of action in tort are not assignable at law or in equity: see Fullagar J (at first instance) at 571, and Williams, Webb and Kitto JJ (on appeal) at 602. Since their Honours all considered that there had been no assignment (or purported assignment), what they said was obiter. I recognise that, as it is put in Meagher, Gummow & Lehane's Equity Doctrines and Remedies, (4th ed by Meagher, Heydon and Leeming, Butterworths LexisNexis, 2002) at 281 [6-480]), "It is not easy for courts below the High Court legitimately to depart from the considered dicta of three [sic] High Court justices". 44 In Trendtex Trading Corporation v Credit Suisse [1982] AC 679, the House of Lords concluded that a cause of action in contract could be assigned where the assignee has a genuine and substantial, or genuine commercial, interest in the enforcement of that cause of action. The principle established in Trendtex was applied, in the related area of champerty in connection with a cause of action in tort, in Giles v Thompson [1994] 1 AC 142. 45 The application of the Trendtex principle in Australia has been considered in a number of first instance decisions but not, so far as my own researches or those of counsel show, by any intermediate appellate court. A number of those decisions suggest that it should be followed (and that the obiter remarks of the High Court in Poulton should be distinguished or regarded as no longer applicable); and a number suggest the contrary. 46 Decisions that support the adoption of the Trendtex principle in Australia include: Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706 (Needham J); Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 (Cohen J); South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 (Debelle J); Beatty v Brashs Pty Ltd [1998] 2 VR 201 (Smith J); Singleton v Freehill Hollingdale & Page [2000] SASC 278 (Olsson J); Vangal Pty Ltd (in liq) v Kumagai Gumi Co Ltd [2002] QSC 137 (Mullins J). 47 Support for the application of Trendtex is also found in New Zealand in the decision of Gault J in First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710. 48 Decisions declining to apply the Trendtex principle in Australia include: Park v Allied Mortgage Corporation Ltd (1993) ATPR (Digest) ¶ 46-105 (Davies J); Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (Federal Court of Australia, 7 November, 1994, unreported: BC9400129) (Beaumont J); National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514 (Lindgren J); Chapman v Luminis (No 4) (2001) 123 FCR 62 (Von Doussa J); Deloitte Touche Tohmatsu v Cridlands Pty Ltd (2003) 204 ALR 281 (Selway J). 49 Neither list may be comprehensive. 50 The reasoning in the first category of cases may be summarised as follows: (1) The relevant remarks by the High Court in Poulton were obiter. In any event, they do not bear on the question of assignment of a bare cause of action (ie, one not annexed to or associated with a proprietary right) for breach of contract. (2) There is no public policy ground for distinguishing between assignment of a cause of action for unliquidated damages for breach of contract on the one hand and, on the other, a cause of action for damages in tort (at least where the tort is not of a personal nature). (3) The obiter remarks in Poulton may be distinguished because the assignee lacked the requisite interest to support the assignment; alternatively, because the High Court said nothing about assignment to persons possessing the requisite interest, what was said may be distinguished on that basis. (4) What was said in Poulton reflects the effect of considerably older English authority, and (self evidently) does not take into account the review of that earlier line of authority by the House of Lords in Trendtex. (5) Further, Poulton was decided before modern developments in the law of negligence; the tort of negligence is frequently involved in commercial disputes and cannot be regarded as peculiar to personal claims. 51 It will be noted that the cases against the introduction of the Trendtex principle in Australia are all decisions of the Federal Court of Australia. Those decisions are to some extent complicated because, to the extent that they involve a claim under s 82 of the Trade Practices Act 1974 (Cth) for damages for contravention of s 52, it has been held consistently that an assignee of the cause of action is not, for the purposes of s 82, a person who suffers damage "by" the contravention: see Davies J in Park at 53, 469. However, that aside, the consistent approach is that it is not open to courts of first instance to depart from a considered statement of the High Court, and that bare rights of action in tort should be regarded as incapable of assignment (whether or not the tort is of a personal kind). 52 What was said in Poulton was confined, in terms, to the assignment of bare rights of action in tort. In principle, therefore, it should not be taken to extend to the assignment of bare rights of action in contract; although, as Cohen J put it in Monk at 152, "there seems no logic in making a distinction between a cause of action in tort and one in contract if the basis of the claim is a commercial one". (This view was shared by Gault J in First City Corporation (at 757), Debelle J in South Australian Management Corporation (at 57) and Smith J in Beatty (at 209).) 53 If it were necessary for me to reach a concluded view, it would be that I am at liberty to depart, and should depart, from the dicta of the High Court in Poulton. I have come to this view for a number of reasons: (1) Their Honours were doing no more than identifying the law as it then stood. It was unnecessary for them to decide whether the principle that they identified should be applied to the facts of the case before them (because, as they said, there was in fact no assignment). (2) In terms, what their Honours said applies only to an assignment of a cause of action in tort. (3) Their Honours did not consider (because they did not need to consider) whether there were any exceptions to the rule. Trendtex does not deny the rule; it establishes that there is an exception, at least in relation to causes of action in contract, where the assignee has the requisite interest to support the assignment. (4) The rule is at base a reflection of the policy of the common law against maintenance. The content of that policy, and its application, change from time to time. It is a likely that a re-examination of the rule, in the light of changing social, commercial and economic conditions, will indicate exceptions that had not existed, or had not been perceived, in earlier times. (5) I therefore regard it as open to me to have regard to the analysis of the policy considerations in Trendtex and Giles (and in cases in England that follow them), and to the recognition of those changed, or revealed, policy considerations in decisions in this country. 54 In relation to contractual causes of action, I find the distinction between liquidated and unliquidated claims difficult to follow. I have already noted that a debt is assignable even if it is overdue. As is pointed out in Meagher, Gummow & Lehane at 281 [6-480], where the debt is overdue, "there has been a breach of the contract to pay and … in fact, all that is assigned is the right to sue to recover the debt. The case of an overdue debt merely points up the problem inherent in the distinctions drawn in this breach [sic] of the law: for what is a debt but a right to sue to recover a sum certain? In what other sense is a debt to be regarded as property?" I do not think that a rule based on public policy which encourages illogical distinctions of this sort should be applied unless there is no alternative. I do not regard the obiter statements in Poulton, limited as they are to assignment of bare causes of action in tort, as providing a compelling reason to accept such illogical distinctions and their consequences. 55 If then, in principle, an assignment of a cause of action in contract (to recover unliquidated damages) should be accepted where the assignee has a sufficient interest to support the assignment, what justification is there for denying the same view where the cause of action is one in tort? As Debelle J said in South Australian Mangement Corporation at 57-58, the distinction between causes of action for unliquidated damages for breach of contract and for damages in tort "has little weight in an action where … the causes of action in both contract and in tort both [sic] stem from the same facts, where the test of causation will be the same, and where, in large part, the measure of damages for the pecuniary loss which directly flows from the breach will be the same … For the purpose of determining whether an assignment is valid, it is possible to draw a valid distinction between torts of a personal nature and torts which affect the plaintiff's commercial interests or his interests in property." 56 My conclusion makes it necessary to consider the nature of the interest required to support an assignment of a cause of action. As Lloyd LJ (with the concurrence of Sir John Donaldson MR) said in Brownton v Edward Moore Inbucon Ltd [1985] 3 All ER 499 at 509, "[t]here is no difference between the interest required to justify maintenance of an action and the interest required to justify the taking of a share in the proceeds, or the interest required to support an out-and-out assignment." 57 In Giles (a case of alleged champerty), Lord Mustill said at 163 that it is necessary to consider "whether the transaction … is validated by the existence of a legitimate interest in the person supporting the action distinct from the benefit which he seeks to derive from it". That is consistent with the approach in Trendtex, where their Lordships suggested that the interest acquired was one arising other than by the terms of the assignment. 58 In Re Timothy's, Needham J concluded at 712 that "the principle of the Trendtex case can be applied to an assignment of a right of action by a debtor to a creditor where the evidence shows that, without that assignment, the creditor is not likely to be paid his debt. In such a case the rule of public policy would be inapplicable because the assignment would not be champertous." His Honour concluded that the debtor did not have the capacity to pay, so that, without the assignment, the creditor would remain unpaid. Thus, his Honour concluded that the creditor "had a sufficient commercial interest in the proceedings to entitle it to accept an assignment of them." It cannot be suggested that Mayne Nickless is or was unable to pay any debt properly owing to Rickard Constructions for the rectification works. Thus, in the sense identified by Needham J, it cannot be said that, without the assignment, Rickard Constructions was not likely to be paid its debt. 59 Cohen J analysed the concept of "genuine commercial interest" in Monk. In that case, the plaintiff sought to take an assignment of a cause of action against the defendant so that he would have something to set off against a judgment debt recovered by the defendant against him. Cohen J said that this was not the requisite genuine commercial interest. He said that what was required was something beyond a mere personal interest in profiting from the outcome of the proceedings; an interest by the assignee in the assignor or its business affairs or activities which might be protected by the assignment: "In my opinion [the interest claimed by the plaintiff] is not a genuine commercial interest in the way that the phrase has been used in the judgments. Examples may be given from the facts in the various cases concerned. For instance it was held that there was such an interest where the assignee was already a substantial creditor of the assignor with a right to enforce the debt ( Trendtex, Re Timothy's) or where the assignee was the sole shareholder who was a guarantor of the overdraft of the assignor ( Re Daley) or where the assignee was a debenture holder with an interest in protecting the value of its security ( First City Corporation). The plaintiff's only apparent interest is in the possibility of his becoming a creditor of the bank. That is, his interest is in using the debt which might arise from the cause of action for his personal benefit. That no doubt is the interest of any assignee. The using of the debt as a set-off against the judgment debt is merely an example of obtaining some personal benefit. … In the authorities where the Trendtex test has been applied, the commercial interest has gone beyond a mere personal interest in profiting from the outcome in the proceedings and has required an interest by the assignee in the assignor or its business affairs or activities which the assignment may in some way protect. … " 60 In Beatty, Smith J at 215 emphasised that the interest relied upon must exist prior to the assignment. He concluded that such an interest existed where, prior to the assignment, the creditors were owed money by Brashs and they were only likely to be paid if the debtor succeeded in recovering damages. That interest, his Honour held, was sufficient; and clearly it predated the assignment. 61 In National Mutual Property Services, Lindgren J held that, even if the Trendtex test applied, there was no requisite interest. He said at 540 that the interest must exist independently of the assignment: " … the genuine commercial interest referred to in Trendtex is not a nebulous notion of the general commercial advantage of the assignee but something more specific and limited. In particular, it does not embrace an interest arising from an arrangement voluntarily entered into by the assignee of which the impugned assignment is an essential part, like the arrangement in the present case. Rather, the expression refers to a commercial interest which exists already or by reason of other matters, and which receives ancillary support from the assignment." Rickard Constructions has no sufficient interest 62 It is clear that the "Timothy's" or "Beatty" interest does not exist. As I have noted, it cannot be suggested that Mayne Nickless would be unable to pay (assuming, of course, that it was liable to pay) unless it recovered damages (and the payment of those damages) in an action against Rickard Partners or Jeffery & Katauskas. In this context, it is necessary to bear in mind the position as between Rickard Constructions on the one hand and Mayne Nickless and MPG Logistics on the other. If Rickard Constructions had performed the work required by the contract in a workmanlike manner and in accordance with the drawings and specification, then it had fulfilled its contract. Rickard Constructions had no part in the design of the pavement and was not liable for any deficiencies in the design. On the assumption that the original work was properly done, Rickard Constructions was entitled to be paid for the rectification works done at the request of Mayne Nickless and MPG Logistics. If, on the other hand, Rickard Constructions had not fulfilled its obligations under the building contract, and if the failure of the pavement were a result of that, then Rickard Constructions would have been obliged to rectify the defective works at its own cost. 63 The position taken by Rickard Constructions is, and so far as I know has always been, that it fulfilled all its obligations under the building contract. Thus, its position is that it was entitled to be paid for the works as a variation. It appears from the recitals to the 3 May agreement that Mayne Nickless and MPG Logistics may have taken a different view. However, by cl 3.2, they agreed to accept Rickard Constructions' "Variation Claims" – including its claim for the cost of the Rectifications Works: although they did so on the basis that Rickard Constructions would take in full payment any amount that it recovered pursuant to any Assigned Action. 64 In substance, it was the 3 May agreement by which Rickard Constructions undertook to carry out the Rectification Works (see cl 4) and by which the assignment was effected. In my judgment, it follows necessarily that the genuine commercial interest claimed by Rickard Constructions in the subject matter of the assignment is an interest arising under and by virtue of the instrument of assignment. 65 It does not appear that, prior to 3 May 2000, Rickard Constructions had performed any substantial work of rectification, that it had made any demand for payment, or that payment had been refused. There is no basis, in the evidence or as a matter of reasoning from what is known, for thinking that, prior to 3 May 2000, Rickard Constructions had any interest in any action that Mayne might have against Rickard Constructions or Jeffery & Katauskas. 66 There may have been commercial advantages to Rickard Constructions in reaching the agreement that it did; in particular, it may have assisted in the resolution of the other claims that was effected by cl 2 of the 3 May agreement. However, those other claims did not relate to lot 1 or to the failed pavement; and it could not be said that the existence of those claims, relating as they did to other properties and other works under other contracts, gave Rickard Constructions any interest in any action relating to work done on lot 1 under the building contract. 67 I therefore conclude, applying the Trendtex test, that Rickard Constructions had no interest sufficient to justify the assignment effected by cl 3 of the 3 May agreement. 68 If I am wrong in thinking that Trendtex applies, then the same result would be reached, at least in respect of the assigned claims in tort, by application of the dicta in Poulton. 69 Finally, to the extent that the claims purportedly assigned included claims under the Trade Practices Act for misleading or deceptive conduct, then the assignment fails, alternatively, for the reasons given by Davies J in Park: namely, that Rickard Constructions, as an assignee, is not a person who has suffered damage "by" such misleading or deceptive conduct as is proved so as to give it a claim for damages under s 82. 70 The second and third assignments were intended, in substance, to perfect or complete the assignment effected by the 3 May agreement. They are not supported by any separate interest, and in my judgment they must fail for the same reason. 71 Further, the second assignment fails because, at the time it was purportedly effected, the assignors (Mayne Nickless and MPG Logistics) had no interest in the purported subject matter of the assignment. Whatever interest they had, had passed to the Patrick Parties under the business sale agreement made on 23 November 2000. Conclusion on the assigned causes of action 72 I therefore conclude that the assigned causes of action fail, because the assignments relied upon are ineffective for the reasons that I have given. This makes it necessary to consider the application to join Mayne Nickless as a plaintiff, and to amend consequentially. The joinder application 73 Mayne Nickless and MPG Logistics were joined as defendants by the filing of a further amended summons on 13 July 2001. The relief claimed against them (either alone or in conjunction with other defendants) included declarations as to the efficacy of the assignment effected by the 3 May agreement and, in the alternative, a declaration that to the extent that the assignment was ineffective, they held the relevant rights and causes of action on trust for Rickard Constructions. Alternatively, Rickard Constructions sought an order that Mayne Nickless and MPG Logistics take proceedings against Rickard Partners and Jeffery & Katauskas to enforce the rights and causes of action that (it said) they held on trust for it. The proceedings were discontinued as against Mayne Nickless and MPG Logistics at some time after the making of the second assignment, whereupon they ceased to be parties. 74 At the end of the hearing before me, Rickard Constructions sought leave further to amend the summons so as to include a direct claim by Mayne Nickless against Rickard Partners and Jeffery & Katauskas to enforce, in the event that the assignments were ineffective, the causes of action that were purportedly assigned. 75 Rickard Partners and Jeffery & Katauskas submitted that Mayne Nickless should not be joined as a plaintiff and that leave to amend should not be given. 76 Rickard Partners submitted that Mayne Nickless was not a party that "ought to have been joined" within SCR Pt 8 r 8(1)(a), and was not someone "whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon" within SCR Pt 8 r 8(1)(b). It submitted that the purpose of Pt 8 r 8 was not to permit the substitution of a new plaintiff with a new cause of action for an existing plaintiff whose action is not maintainable: relying upon the decision of McClelland J in Knight v McCann Erickson Pty Ltd (26 August 1991, unreported; BC-9101623). 77 In Knight, McClelland J said (at BC 4): "Pt 8 R 8(1)(a) applies where the party to be added ought to have been made a party in the first instance … Pt 8 R 8(1)(b) cannot properly be construed to authorise the reconstitution of proceedings by the substitution of a new plaintiff with a new cause of action for an old plaintiff whose cause of action is no longer maintainable. The addition of parties contemplated by Pt 8 R 8 is an addition which is ancillary to, not in substitution for, the proceedings as theretofore constituted." 78 I do not think that the joinder of Mayne Nickless is justified under para (a). Rickard Constructions' case is that it, as assignee, is entitled to enforce the cause of action in question. A decision on that claim (including the decision indicated in the preceding section of these reasons) will not impact in any way on such rights as Mayne Nickless may have, or retain. Compare Pralle v Scharka [1978] 2 NSWLR 450, where a person ought to have been joined because his rights in land might be affected by the outcome of the litigation; and Cambridge Credit Corporation Ltd v Parkes Developments Ltd [1974] 2 NSWLR 590, where a land owner ought to have been joined because its interests might be affected by proceedings concerning the validity of a planning approval. 79 Nor do I think that Mayne Nickless is a "necessary" party under para (b). The question of Rickard Constructions' entitlement under the deed of assignment can be litigated effectually and completely without the joinder. Again, no commercial or other interest of Mayne Nickless will be affected by that process. See Gordian Runoff v Price & Ors [2004] NSWSC 535 at [10] and following, where I analysed the cases on SCR Pt 8 r (1)(b) and its equivalents. For the reasons that I there gave, I think that the test expressed by Lord Diplock in Pegang Mining Company Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56 is appropriate. His Lordship said, in substance, that the test required by the rule was whether the rights or liabilities of the person sought to be joined against or to any party to the action in respect of the subject matter of the action be directly affected by any order which might be made. As I noted in paras [12] and [13], his Lordship's test was cited with approval by the Full Court of the Federal Court of Australia in News Limited v Australian Rugby Football League (1996) 64 FCR 410, and by McHugh J State of Victoria v Sutton (1998) 195 CLR 291 at 316-317, [77] to [78]. 80 On that analysis, Mayne Nickless is not someone whose joinder is "necessary" within para (b). Its rights (if any) remain unaffected by any decision (including that set out in the preceding section of these reasons) on Rickard Constructions' claims against Rickard Partners and Jeffery and Katauskas. 81 Even if, contrary to my conclusions, there were power under SCR Pt 8 r 8 to join Mayne Nickless as a plaintiff, I would have declined on discretionary grounds to do so. 82 The sole purpose of the joinder would appear to be to enable Mayne Nickless to seek to recover the rectification costs. However, in substance, it would not be doing so for its own benefit (because it incurred no rectification costs), but for the benefit of Rickard Constructions (which carried out the Rectification Works in consideration only of the assignment). Mayne Nickless had been a party but it agreed with Rickard Constructions to be let out of the proceedings following the making of the second assignment. That is the clearest indication that Mayne Nickless did not regard itself as having any interest to be protected by its continuing presence as a party in the proceedings. 83 I have not overlooked the fact that, under cl 3.4(b)(5) of the 3 May agreement, Mayne Nickless has a contingent interest in the fruits of the action: if they exceed all costs incurred by Rickard Constructions in connection with the Assigned Action and the amount of the Variation Claim. But in circumstances where Mayne Nickless did not think that its presence as a party was necessary to protect whatever the real value of that contingent interest might be, I do not think that the Court should substitute its own judgment. 84 In the absence of any explanation for the lateness of the application to join Mayne Nickless as a party, it could be inferred (as both Rickard Partners and Jeffery & Katauskas submitted) that it stood aside from the proceedings so as to avoid exposing itself to any adverse costs order. It is possible that (if the joinder were authorised by SCR Pt 8 r 8) leave to join Mayne Nickless could be on terms that it was liable for any costs ordered in favour of the defendants, including costs relating to work done or things happening before its joinder. But Mayne Nickless has not indicated that it would accept such a term; and has not been heard in opposition to the imposition of it. 85 There are two other matters that I regard as of greater – indeed dispositive – significance on the discretionary issue (assuming, as I have indicated, that one gets so far as considering discretionary issues). The first is that, because Mayne Nickless has not been a party for most of the time that these proceedings have been current, it has not been exposed to orders for discovery. The second is that Rickard Partners and Jeffery & Katauskas have not had the opportunity of considering their position as against Mayne Nickless and (for example) making an offer of compromise or otherwise seeking to reach some resolution with it. 86 In answer to these propositions, Rickard Constructions submitted that subpoenas for production had been directed to Mayne Nickless and it had produced documents; and that there was no evidence to show that Rickard Partners or Jeffery & Katauskas might have sought to make an offer of compromise, or otherwise to treat, with Mayne Nickless. 87 The first of those responses does not seem to me to deal with the problem. The effect of an order for discovery is to require the party obliged to give discovery to produce all available documents that fall within the terms of the order. It does not put upon the party seeking discovery any requirement to forecast, or more accurately guess, what documents or classes of documents might be held. However, a subpoena must be directed towards clearly defined documents or classes of documents. It is no substitute for discovery; indeed a subpoena that is cast so wide as in effect to require the party to whom it is addressed to give discovery is liable to be set aside as an abuse of process. I do not regard the ability to serve subpoenas as any substitute for the inability to require discovery; and, having regard to the issues in these proceedings, the inability to require discovery is a real, rather than a theoretical, detriment to Rickard Partners and Jeffery & Katauskas. 88 Nor do I think that the second proposition answers the submission to which it was responsive. The application to join Mayne Nickless as a party was intimated after the conclusion of the evidence. The parties were then engaged in the preparation of written submissions. It is hardly to be expected that Rickard Partners and Jeffery & Katauskas should have diverted themselves from that task (a task that, it will be seen from the written submissions that were filed, was onerous and, no doubt, time-consuming) and turned their attention to the application for leave to join Mayne Nickless. It is unrealistic to expect Rickard Partners and Jeffery & Katauskas to have dropped what they were doing and to have turned to preparing evidence in opposition to the joinder application. In some circumstances, the courts have said that prejudice (in relation to amendments) may be inferred even in the absence of direct evidence: see Bishopsgate Insurance Australia Ltd (In liq) v Deloitte Haskins & Sells [1999] 3 VR 863. Although the circumstances of this case, and the nature of the prejudice suggested by the relevant defendants, are far removed from the circumstances and suggested prejudice of that case, I think that the general principle is applicable. Some kinds of prejudice are demonstrable by argument; others may require evidence. The particular prejudice – inability to serve an offer of compromise, or otherwise to treat with Mayne Nickless - falls into the former category. 89 Further, the loss of that opportunity constitutes real and not merely hypothetical prejudice. As I have said, it is open to infer that Mayne Nickless has no real continuing interest in the outcome of this litigation. Had it been joined as a plaintiff at some earlier stage, I consider that it is quite plausible to think that the relevant defendants would have sought to compromise with it and that, if they were not able to do so, they might have sought to put pressure – legitimate pressure – on it by serving offers of compromise. I therefore think that the loss of that opportunity is, as I have indicated, a source of real prejudice. 90 Accordingly, even if, contrary to my view, there were power to join Mayne Nickless as a plaintiff, I would have exercised my discretion to do so adversely to the application. Conclusion on the assigned claims 91 Because I have concluded that the assignments are ineffective, and because I have concluded that Mayne Nickless can not be joined (and that, even if it could be joined, it should not be), the assigned claims must fail. Because the assignments are ineffective, Rickard Constructions cannot enforce them. Because Mayne Nickless is not to be joined as a plaintiff, it cannot enforce them in these proceedings, either for the benefit of Rickard Constructions or otherwise. 92 I therefore do not propose to consider the merits of those assigned claims. This means that issues 23 to 25 and 51 to 53 should be answered adversely to Rickard Constructions and that, accordingly, it is not necessary to deal with issues 12 to 22 and 43 to 50. That having been said, at least some of the issues that remain for consideration involve questions that would also be relevant to issues 12 to 22 and 43 to 50. 93 That leaves for consideration, apart from the direct claims by Rickard Constructions against the defendants, the subrogation claims (issues 26, 27 and 54) and the contribution claims (issues 28 to 31 and 55 to 57). I will deal with the direct claims and then return to the subrogation and contribution claims. But before I turn to the detail of the direct claims, I will deal with the pavement design and the criticisms of it, and with the cause of the collapse. The pavement design and the criticisms of it 94 The person within Rickard Partners who had principal responsibility for design was Mr Hails, then a senior associate. Mr Rickard, however, agreed that it was he who had instructed Mr Hails to prepare the design and that he "oversaw and controlled the work that was carried out" by Mr Hails pursuant to that instruction (T 133.19-.30). 95 The starting point of the design was the (apparently successful) pavement constructed at 60 Friendship Road. However, in the case of lot 1, Container Park wanted an asphalt layer 100 mm thick overall, compared to the 50 mm asphalt wearing layer at 60 Friendship Road. 96 Mr Hails was not called to give evidence, a circumstance that excited some criticism from some parties. However, his working papers, showing the evolution of the design, were proved. As I have noted, the basic design comprised an asphalt wearing layer over a DGB20 base course over a crushed sandstone sub-base over compacted sand sub-grade. Mr Hails appears to have produced a number of articulations of that scheme, with different thicknesses for the various layers. In doing so, he made certain assumptions as to the weight of the forklift machine that would be used on the pavement, so as to assess the loading that would be applied to the pavement. 97 The draft (for want of a better word) designs were analysed and tested by a computer programme known as "CIRCLY". A number of design variables (or, in the jargon of the trade, "parameters") are input to the programme: including the likely loading, the thickness, degree of compaction and stiffness of the layers – and the programme calculates the number of repetitions (ie, the number of times that the pavement is subjected to the design loading) before it will fail. If assumptions are made as to the number of repetitions that will occur over an average working week and year, this produces a projection of the design life of the pavement. 98 The design upon which Mr Hails settled comprised the following layers (from the sub-grade up): Subgrade (compacted sand) having a California Bearing Ratio (a measure of stiffness or resistance to load, usually abbreviated to CBR) of 12% when soaked. The compaction specified for the sub-grade was 98% standard compaction. (I will deal with standard compaction, and its relative modified compaction, shortly.) A crushed sandstone sub-base with an overall thickness of 750 mm, comprising three levels. The lowest and intermediate levels were each specified to be 200 mm thick and compacted to 98% standard. The highest level was specified to be 150 mm thick and compacted to 100% standard. A base course of DGB20 105 mm thick and compacted to 100% standard. An asphalt wearing layer (specified to be AC 28 – a reference to asphaltic cement comprising asphalt and blue metal, or similar material, with an average particle size of 28 mm) 100 mm thick. 99 The overall pavement thickness as specified was, therefore, 800 mm. However, the evidence was that this was the minimum thickness and that over most of its area the pavement was in fact thicker: this, apparently, reflecting the need for there to be a slight gradient in the pavement to enable water to drain off. 100 Mr Hails' CIRCLY analysis of this design, making certain assumptions as to the CBR of the sub-grade, sub-base and base course, gave a design life of 3.13 x 105 repetitions, or 25 years. It was not suggested that this was an inadequate design life for a pavement of this character. 101 It was, however, suggested by Allianz that in fact the design life was substantially less, because of what it alleged were defects in the design. Allianz relied on expert evidence adduced from a consulting engineer, Mr Lyle Marshall, and a geotechnical engineer, Mr Peter Waddell. 102 The principal criticisms made of the design by Messrs Lyle and Waddell focused on the allegedly insufficient stiffness of the base course and sub-base components and on the alleged failure to design the pavement in accordance with the principle that that each layer should be stiffer than the layer beneath it. There were, however, other criticisms including: (1) The failure to specify modified compaction for the base course and lower layers. (2) The failure to specify constant testing of the crushed sandstone delivered to site for use in the sub-base, so as to ensure that it complied with the composition and stiffness assumptions in the design. (3) The assumption said to underline the design, that it was appropriate to use the same design theory as had been used on prior projects, including 60 Friendship Road. (4) The failure to specify the testing of DGB20 delivered to site for use in the base course, to ensure that it complied with the relevant specification. (5) The failure to specify stabilisation of the sub-base by the use of cement or fly ash. (6) The use of the Austroads Pavement Design Guide which, it was said, was not suitable for a heavy duty pavement required to carry a fully laden forklift weighing in excess of 90 tonnes. (7) Failure to heed advice from Jeffery & Katauskas as to plate load bearing tests undertaken to establish the vertical modulus (another measure of stiffness, or bearing capacity) of the sandstone material. (8) The failure to take into account the variable quality and relatively lower stiffness of the sandstone sub-base material. 103 The experts called by the other parties, Dr Brian Burman (called by Rickard Constructions), Mr Michael Thom (called by Rickard Partners) and Mr Andrew Leventhal (called by Jeffery & Katauskas), did not agree with Messrs Marshall and Waddell that the design was defective in any of the ways that I have outlined. Further, Jeffery & Katauskas called one of its then principals, Mr Rod Jeffery. He gave both evidence of fact and evidence of an expert nature. To the extent that he was able to express an opinion (and he had not reviewed all the matters raised by Messrs Marshall and Waddell), he did not agree that there were design deficiencies. 104 I do not accept the evidence of Messrs Marshall and Waddell that there were design defects of the kinds alleged. There are three reasons. Firstly, as I have indicated, their view is inconsistent with the views of the other experts. Secondly, it is apparent, on analysis, that their views are based on inadequate CIRCLY analysis undertaken by Mr Waddell on the basis of inadequate information. Further, as will be seen in the next section of these reasons, I think that there is a logical flaw in the reasoning of Messrs Marshall and Waddell on the question of the cause of the collapse of the pavement. Although that does not, as a matter of logic, necessarily impinge on the acceptability of their evidence as to the alleged existence of design flaws, I take it into account in concluding that, as I have said, I favour the majority approach. 105 Mr Marshall was a civil rather than a geotechnical engineer. He had substantial experience in the design of industrial pavements. However, he said, when undertaking such a design, he would normally obtain geotechnical assistance. It is I think clear, on an analysis of the whole of Mr Marshall's evidence, that his view as to the existence of design inadequacies is based on two things. The first is an empirical matter: his own design experience over the years. The second is his reliance on the evidence of Mr Waddell: including, in particular, on Mr Waddell's CIRCLY analysis. 106 Mr Waddell carried out his CIRCLY analysis taking what he suggested were typical CBR values of the sandstone sub-base material. The result, in Mr Waddell's opinion, was to demonstrate that the sandstone sub-base was inadequately stiff; and also (in contravention of the design principle referred to in para [102] above) to show that it was less stiff than the underlying layer, mainly the sub-grade. 107 However, it became apparent that Mr Waddell had chosen the lowest CBR values from materials at particular portions of the site, and had not used other, and considerably higher, CBR values from other materials at other portions of the site. Mr Waddell ignored those additional values, as did Mr Marshall also. Neither was able to justify their failure to take that additional material into account. The effect was that Mr Waddell (and also Mr Marshall) ignored data which must have suggested to them that the CBR values chosen by Mr Waddell for his CIRCLY analysis were not only unrepresentative but also low. In this context, it is worth bearing in mind that Mr Marshall acknowledged that one should not use either the lowest nor the highest of varying values obtained (T 827.1, T 832.13); but this was in substance precisely what Mr Waddell and he did. 108 Discarding the highest and lowest CBR values in the material available to Messrs Marshall and Waddell, it was nonetheless the case that the average CBR value was double the value selected by them for the purposes of analysis (T 831.30). (It was also the case that those higher average values were obtained using standard compaction rather than modified compaction as advocated by Messrs Marshall and Waddell.) 109 Neither Mr Marshall nor Mr Waddell offered any intellectually respectable, let alone persuasive, reason for their selection of values that were not only unrepresentative but also low – ie, most likely to produce an outcome critical of the design of the pavement. This aspect of their evidence is unacceptable. Although each of them denied that he had taken this course so as to produce the outcome most favourable for the party by whom he was called, and most adverse to the interests of the party against whom, in effect, he was called, I am left with the uneasy feeling (particularly having regard to the inability of either of them to produce an acceptable reason for what was done) that this may have been at least a subconscious motiving factor. 110 Whatever the reason, I regard this as affecting, in a very serious and adverse way, the reliability of the evidence given by them not just on this point but overall, and as a sufficient reason for declining to accept the opinions expressed by each of them to the extent that they differ from the opinion of the majority. 111 That is sufficient to dispose not only of the principal criticisms that they make but also of the individual criticisms (because none of the other experts agreed with those individual criticisms). However, in my view, the other criticisms should be rejected on their merits. 112 The criticism dealing with the selection of standard rather than modified compaction goes nowhere. It is correct to observe that the same material, if compacted to (say) 95% modified compaction, will be stiffer – more resistant to load – than if compacted to 95% standard. The tests, or methods of compaction, are different; and modified compaction produces, at the same percentage figure, a stiffer material. But it does not follow that material compacted at (say) 100% standard will not be at least as stiff as material compacted at (say) 95% modified. The issue is not one of the method of testing compaction, but whether, one method or the other having been chosen, compaction to the specified percentage using the specified method will produce a material of sufficient stiffness. All the experts agreed that this was so; but the submissions for Allianz did not deal with this rather obvious proposition. 113 The criticism based upon the alleged fundamental principle of pavement design – that each layer should be stiffer than the layer immediately below it – goes nowhere. The principle, as a principle, may be accepted. However, it has not been demonstrated that the fundamental principle was breached. That is because the argument that it was dependent upon assumptions as to the stiffness of the sandstone sub-base layer that, as I have just said, relied on unrepresentative and low CBR values. 114 The criticisms relating to the testing of sandstone and DGB20 material go nowhere. It might be accepted, in principle, that strength or integrity critical to the success of a particular design should be tested regularly and comprehensively, to ensure that it possesses the qualities that have been assumed as a component of the design. But (for the reasons that I give in the next section) it has not been shown that the omission of testing, or the failure to specify sufficient testing, has any causal relationship to the collapse that occurred. Nor, for the reasons just given, has it been shown that the material that was in fact delivered and incorporated into the pavement was of inferior quality, such that it would have been picked up by proper testing. 115 The criticism based on reliance on previous designs goes nowhere. I accept that, in principle, it would be insufficient to copy across unchanged a prior design, without ensuring firstly that the material to be used in the new project would be equivalent to the material assumed in the prior design, and secondly that the prior design in any event met the design life requirements of the new project. But this criticism ignores the fact that Mr Hails' design evolved from the earlier designs, and that it was tested by CIRCLY analysis – a method of analysis that all experts agreed was appropriate. I see nothing wrong in taking, as a starting point, a design that has been shown to work in an equivalent situation elsewhere, and using that as the basis for a new design. There would be a problem (certainly in principle and perhaps in practice) with the unquestioning adoption of a prior design; but that is not what happened in the present case. 116 The criticism of the failure to stabilise the sub-base material is valid only if it is assumed that it was the moisture in that material that caused the failure. Only Messrs Marshall and Waddell adopted that theory. For the reasons that I give in the next section of these reasons, I do not accept that theory. In any event, the criticism suffers from the defect that it has not been shown that the failure to stabilise the sub-base contributed to the failure of the pavement. 117 The criticism relating to the thickness of the base course is critically dependent upon the unrepresentative and low CBR values taken by Mr Waddell in his analysis. It cannot stand, for the reasons already given. 118 The criticism based on the use of the Austroads pavement design criteria is fallacious. I accept that there is a significant difference between road pavements (even those designed for roads carrying very heavy traffic) and a pavement of the kind required for lot 1. However, the critical question is whether the design was adequate, not whether the design was produced by the use of theoretically appropriate criteria. In the present case, Mr Hails' CIRCLY analysis (which did not depend on any assumption as to the source of the design) showed that the pavement would meet the design life required of it. Mr Waddell's contrary analysis is unacceptable because, as I have said more than once, it was based on the lowest, and unrepresentative, CBR values available. 119 It is correct to say, as Allianz does in its written submissions, that Mr Leventhal gave evidence that use of the Austroads pavement design guide would lead to a significant reduction in the life of pavement. However, it is necessary to bear in mind that this was a criticism of a theoretical nature, and not one that was related to the actual design of the pavement and the actual design life predicted by CIRCLY analysis. Mr Leventhal's opinion, which was effectively an off-the-cuff response in cross-examination, assumed that if a pavement designed according to the Austroads guide was to be subjected to a substantially higher loading than that appropriate for road pavements, the design life would be reduced very substantially. That may be taken as correct. But by focussing on one element only of the CIRCLY analysis, it fails to take account of the interrelationship between all the elements that CIRCLY analysis requires to be undertaken. (In saying this, I mean no criticism of Mr Leventhal.) He was asked to consider only the impact of a change in one variable, presumably upon the assumption that all other variables (which produced the overall outcome) were unchanged. (He was not asked directly – and neither was any other expert – to express a view on the adequacy, or otherwise, of Mr Hails' CIRCLY analysis upon the basis of the totality of the values that he used.) 120 The alleged failure to heed the advice of Jeffery & Katauskas again goes nowhere. I accept that Mr Hails, having been given the advice in question (and having had that advice in substance confirmed by another geotechnical consultant), should have queried his design – more specifically, the assumptions within his design. However, again, this theoretical deficiency in the design process has no relationship to what I find (in the next section of these reasons) was the reason for the failure of the pavement. 121 The last criticism made, relating to the vertical modulus value of the sandstone, is in effect a combination of a number of the previous criticisms. It has no greater validity than they do. The failure of the pavement 122 The majority of the experts (Dr Burman, Mr Thom and Mr Leventhal) thought that the pavement had failed because of the build-up of excessive moisture in the DGB20 base course. The postulated failure mechanism was that, when the pavement was loaded by the operation of the heavy forklift trucks, there was a build-up of pore pressure in the base course which, in simple terms, caused its stiffness, or ability to resist load, to diminish sharply. Thus, the base course was unable to support the loaded asphalt wearing course and the pavement collapsed. Mr Jeffery agreed that excessive moisture in the base course was the primary cause of the rapid failure. 123 Messrs Marshall and Waddell said that the primary reason for the failure was the defective design, although Mr Marshall added, somewhat curiously, that "construction issues are also a primary cause". Dr Burman and Messrs Thom and Leventhal did not agree. Mr Jeffery indicated some agreement with the position taken by Messrs Marshall and Wadell, but he was uncertain because he had not done a design check. 124 I prefer the majority view. In this context, I do not think that Mr Jeffery's propensity to accept the "design defect" theory can be regarded as significant support, given that, as the joint report indicated, he had not done a design check. My preference for the majority view is not based simply on the fact that it is a majority view. I think that the majority view is clearly reasoned and rational: that is to say, I think that Dr Burman, Mr Thom and Mr Leventhal have provided clear and persuasive reasons in support of their theory. Further, the majority view is supported by empirical evidence of failures in other circumstances where the base course had become excessively moist. Finally, it is consistent with the observed phenomena, including that there had been heavy rain over a period of months before the failure; that in at least some areas the base course was sealed (ie, the 100 mm asphalt layer was placed over it) while it was still wet and "heaving"; and that it is unlikely, having regard to the weather conditions and other matters of which the experts gave evidence, that the base course could have dried out between the time when it was sealed over and the time when the pavement failed. 125 In support of the majority view is the circumstance that, on the evidence, there is a very significant correlation between the failed areas of the pavement and the areas that were observed to be wet and heaving before they were sealed. In other words, there is empirical support for the theory based on observations made at the time. 126 By contrast, I find the evidence of Messrs Marshall and Waddell on this topic entirely unconvincing. There are three principal reasons: (1) Firstly, as I have indicated in the preceding section of these reasons, I do not think that the design defects alleged by them have been substantiated. (2) Secondly, they have not demonstrated that the design defects (if indeed they existed) were likely to have led to the failure that in fact occurred; and (3) Thirdly, on their evidence, the design defects are likely to have led to a failure of a different kind. 127 I have already dealt with the first problem. The second and third may be considered together. 128 The effect of the design defects (assuming them to have been substantiated) would be to reduce the design life of the pavement. That means, in substance, that the pavement would fail at a time – on one view of the evidence, much earlier – than it would have been expected to fail in the absence of those defects. However, that does not explain the failure that in fact occurred. Indeed, at one point Mr Marshall's evidence appeared to be, in substance, that the failure was the inherent inability of the pavement (on his and Mr Waddell's theory) to achieve its design life. 129 Further, the evidence of all experts (and Messrs Marshall and Waddell are included) is that the alleged design defects would have led to what was called a "rutting" failure. In other words, as the pavement deteriorated, ruts would have formed along the paths traversed by the loaded forklift trucks. But that was not the kind of failure that occurred. 130 The evidence of Messrs Marshall and Waddell on this point was so illogical, in their failure to recognise, let alone accept, that the cause postulated by them would not explain the failure that in fact occurred, that, as I have already indicated, it leads me to have considerable hesitation in accepting their evidence not only on this point but overall. 131 In substance, then, I conclude that the pavement failed because the asphalt layer was placed over base course that was, in sections, excessively wet; and the pavement was put into use before the base course had any opportunity to dry out. (There was some difference between the experts as to whether, firstly, the base course could dry out; secondly, whether it should have been allowed to dry out before the pavement was put into use; and, thirdly, whether the preferable alternative would have been to remove, dry and replace and recompact any base course material that was excessively moist. I will deal with this dispute later in these reasons.) Responsibility for the failure of the pavement 132 So far, I have dealt with the cause of the failure of the pavement. Not surprisingly, an issue much in dispute between the parties was that of responsibility for the failure: more accurately, responsibility for the circumstances that caused the failure. 133 I have concluded that primary responsibility for the failure must be attributed to Rickard Constructions. The conditions that caused the failure occurred because, in substance, Rickard Constructions permitted the asphalt wearing layer to be placed over the base course, thereby sealing the base course (and the underlying layers), whilst the base course was excessively wet. 134 I have no doubt that Rickard Constructions well appreciated that it was not good construction practice to apply an asphalt wearing layer over base course material that was excessively wet. Mr Rickard certainly understood this. Mr Thom confirmed that "if [the base course] becomes saturated, all contractors know it has to be dried back" (T 466.40). 135 As I have mentioned, Rickard Constructions' personnel on site, apart from Mr Rickard, were not called. I draw the usual inference from the failure to call them in relation to a matter that was in contest. 136 Further, on a number of occasions, Rickard Constructions was warned by the asphalting contractor, CSR Emoleum, of the risk of asphalting over soft pavement layers. Those warnings were not heeded. 137 Thus, I conclude, Rickard Constructions failed to adopt good construction practices when it caused the asphalt wearing layer to be placed over the finished base course when, to its knowledge, that base course (at least in parts) was wet and soft. 138 But the problem is more general. Rickard Constructions arranged for the sub-base and base course layers to be placed and compacted and, thereafter, tested. It knew that, after those tests were carried out, there was heavy rainfall. The rainfall records for a nearby site, Sydney Kingsford Smith Airport, were proved. They, together with site diaries, show that there were many very wet days during the construction of the sub-base and base course layers of the pavement. 139 It is clear that Rickard Constructions was aware of the problem. That is why it consulted Jeffery & Katauskas in late April 1999, and retained (or through Rickard Partners retained) Jeffery & Katauskas to give the advice in its letter of 3 May 1999 on the questions that were raised. (I deal with the genesis of this letter and its significance later, when considering the direct claim against Jeffery & Katauskas.) But Rickard Constructions did not request that sections of the pavement layers that had been tested by Jeffery & Katauskas be retested following sustained heavy rain. Nor did it arrange for Rickard Partners to do so. There was no basis shown in the evidence for Rickard Constructions, or a reasonable and competent civil engineering contractor in its place, to assume that the tested material would (after heavy and sustained rain) remain sound and adequate to play its part contributing to the overall strength of the pavement. Yet, by sealing over the base course without retesting, Rickard Constructions effectively assumed that the base course and sub-base layers remained effective. Not only was there no basis for this assumption; it was directly inconsistent with the tenor of the advice, requested of Jeffery & Katauskas, given in the letter of 3 May 1999. 140 It is apparent that Mayne wished to occupy the container depot as soon as possible. I have no doubt that Mayne was putting pressure on Rickard Constructions to achieve practical completion as soon as possible. I have the uneasy feeling that Rickard Constructions may have reacted to that pressure by taking shortcuts: specifically, by deciding not to retest finished sections of work that had been affected by rain. It may well be that the construction personnel who effectively made the decision (and who were not called) feared that, if retesting were undertaken, it would reveal the need for very substantial reworking of the finished layers, and would thereby delay the achievement of practical completion. In the absence of direct evidence or cross-examination on this point, I do not think that it is open to me so to conclude; but I do not need to go so far to find that Rickard Constructions, in sealing the pavement knowing that portions of it were wet and soft and in any event without retesting the whole, knowing it to have been severely affected by moisture, did not follow good construction practice. 141 I therefore conclude that the effective responsibility for the creation of the conditions that led to the failure of the pavement, through the mechanism that I have described, must be attributed to Rickard Constructions. 142 There is empirical evidence to support the proposition that the direct cause of the failure was sealing over wet base course material. As I have noted, CSR Emoleum warned on a number of occasions that this should not be done. The approximate areas described in its warnings were identified. There is a correlation between the areas so identified (bearing in mind that the identification was not precise, because of the relatively limited information given by CSR Emoleum) and the failed sections of some of the pavement. That correlation suggests that all the areas identified by CSR Emoleum failed. However, the overall failures were greater in extent than the areas identified by CSR Emoleum. 143 I have not overlooked the evidence of Mr Michael Nugent. He was the site foreman for Walker Civil Engineering ("Walker"). Walker was contracted to supply, place and compact the sub-base and base course layers. Rickard Constructions submitted that his evidence was inconsistent with there having been faulty or defective workmanship on its part. I do not accept that submission. I agree that his evidence is that he recorded no instance of what he regarded as faulty workmanship. But I think his testimony cannot bear the load that the submission places on it. Whilst I accept Mr Nugent as a witness of truth, who sought to give evidence to the best of his recollection, I do not think that his evidence can prevail against the overwhelming facts, and the inferences from them, to which I have referred. 144 Nor have I overlooked the submission for Rickard Constructions that the conclusion to which I have come entails fixing it with a degree of knowledge or understanding greater than that of the consultants, Rickard Partners and Jeffery & Katauskas, on site. That submission is misdirected. The question is not what Rickard Partners or Jeffery & Katauskas might have seen, and might have thought. (To the extent that this question is asked of Jeffery & Katauskas, the answer is clear from its letter of 3 May 1999; and the significant fact in this context is that Rickard Constructions effectively ignored the majority of the recommendations in that letter.) Rather, the question is what Rickard Constructions, or a reasonable and competent civil engineering contractor in its place, should have known, should have understood and should have done. As I have said, I have no doubt that Rickard Constructions understood, as would a reasonable and competent civil engineering contractor in its place, that excessively wet base course material should not be sealed, and that base course material that had been tested but had thereafter been exposed to prolonged and heavy rainfall should be retested before sealing. The claim against Rickard Partners 145 Rickard Constructions' direct claim against Rickard Partners is brought in negligence and pursuant to the Trade Practices Act. Rickard Constructions says that: (1) It relied upon Rickard Partners to provide engineering, supervision and certification services in connection with the works comprised in the building contract and the construction of the pavement. (2) Rickard Partners owed Rickard Constructions a duty to take reasonable care in providing design, supervision and certification services. (3) Rickard Partners failed to carry out its services with reasonable care. (4) Rickard Constructions suffered loss and damage as a result: making good the defects in the pavement after it failed without recovering payment from Mayne. (5) Alternatively, Rickard Partners represented that the plans and specifications were adequate for the construction of the pavement and that it had provided and would provide supervision with appropriate care, skill and diligence. (6) To the extent that the representations were with respect to a future matter, they were made without reasonable grounds. (7) The design was not adequate for the construction of the pavement. (8) Rickard Partners has engaged in misleading or deceptive conduct in breach of s 52 of the Trade Practices Act. (9) Rickard Constructions relied on the representations. (10) Rickard Constructions has suffered loss, of the kind already mentioned, by that conduct. 146 In my judgment, the claim, however formulated, must fail. Duty of care 147 Rickard Constructions' claim is one for pure economic loss: economic loss not associated with physical damage or destruction to any property of Rickard Constructions. In those circumstances, if a duty of care is to be found, it is necessary to show more than that some negligence on the part of Rickard Partners was a cause of the loss and that the loss was reasonably foreseeable. That is because (to paraphrase Brennan J in Bryan v Maloney (1995) 182 CLR 609, 632) to hold that liability for pure economic loss would follow simply because the defendant's negligence was the cause of reasonably foreseeable loss (which in fact was sustained) would be destructive of commerce and inimical to contractual relations, and would create the real likelihood of liability in an indeterminate amount for an indeterminate time to an indeterminate class of potential plaintiffs. The law therefore requires that there be some additional circumstance before liability for pure economic loss will be imposed. 148 One such additional circumstance that has been identified is the "vulnerability" of the plaintiff. As the majority (Gleeson CJ and Gummow, Hayne and Heydon JJ) explained in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628 at 633-634 [23], vulnerability means more than that the plaintiff is likely to suffer damage if reasonable care were not taken. Their Honours said that vulnerability, in this context, referred to the plaintiff's inability to protect itself from the consequences of the defendant's reasonable care: "… [T]he vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss upon the defendant." 149 Their Honours referred at 634 [24] to cases where notions of assumption of responsibility and known reliance grounded a duty of care in the context of pure economic loss. Their Honours noted that these cases could be explained by reference to notions of vulnerability, but did not find it necessary "to attempt to identify or articulate the breadth of any general proposition about the importance of vulnerability." 150 Ordinarily, analysis of vulnerability will require consideration of the salient features of the relationship between the person said to owe, and the person said to be entitled to the benefit of, the duty of care, and to the context in which that relationship is to be found. Thus, in considering whether a duty of care exists in relation to the provision of professional services, it will be necessary to focus attention on the existence and terms of any retainer, or other contract, pursuant to which those services were provided. As the majority said in Woolcock at 635 [28], the contract will at least define the task undertaken; it would be difficult to hold that the person who provided the services owed a duty of care to a third party to avoid economic loss if the performance of that duty would have required the provider to do more or different work than was required or permitted under the contract. 151 In the present case, I do not think that Rickard Constructions was vulnerable to any want of care on the part of Rickard Partners in connection with the design or specification for the pavement. That is because Rickard Constructions' duty, to Container Park and to Mayne, was to construct the pavement (using the appropriate standard of skill, competence and good workmanship) in accordance with the design and specification prepared by Rickard Partners. If Rickard Constructions complied with that obligation then it fulfilled its contract. It was entitled to be paid. If the pavement failed because of any defect in the design or specification, Rickard Constructions had no liability for rectification. 152 It might be otherwise in connection with the alleged duty to supervise. It could be argued that, in this case, Rickard Constructions was vulnerable, because a failure on the part of Rickard Partners to exercise the requisite standard of competence in relation to supervision might cause Rickard Constructions to construct the pavement otherwise than in accordance with the design and specification, and therefore to be liable for the cost of making good any loss caused thereby. No breach of duty 153 Even if I were wrong in concluding that Rickard Partners owed Rickard Constructions no duty of care relating to the design and specification of the pavement, I would nonetheless conclude that it had not breached any duty that it did owe. In this context, it is to be noted that the case of breach of duty, relating to design and specification, that Rickard Constructions alleged against Rickard Partners was not supported by Dr Burman, the expert called for Rickard Constructions. Nor was it supported by Mr Thom, the expert called for Rickard Partners. The pleaded case must fail. (The case that Allianz sought to make out against Rickard Partners was not supported, in its pleadings, evidence or submissions, by Rickard Constructions; and I have in any event concluded that that case should fail.) 154 The supervision case is difficult to understand. The only pleaded case that can be understood as relating to failure to supervise is that found in the particulars to para 17 of Rickard Constructions' contentions (which, by para 29D, are repeated in the direct claim) at paras (g), (h), (m) and (n). They allege that: (1) Rickard Partners "failed to supervise the construction of the base layer" because it "wrongly approved the laying of the AC layer content properly [sic]" (para (g)). (2) Rickard Partners failed to check the characteristics of the base layer and its moisture content (para (h)) – assuming that this allegation is directed at supervision rather than design and specification. (3) Rickard Partners did not properly supervise the construction of the base layer and allowed material that did not comply with the specification to be incorporated into the constructed pavement, including unbound gravel with excessive fines and fines that were more plastic than those specififed (para (m)). (4) Rickard Partners wrongly approved the placement of the AC layer on the base layer without checking that the base layer was suitable having regard to its material quality, degree of compaction and moisture content (para (m)). 155 The difficulty with this case is that there was no contract proved for the provision of general supervision services by Rickard Partners to Rickard Constructions, nor was there proved any arrangement by which Rickard Partners undertook some responsibility for general supervision of the work carried out by Rickard Constructions. Although, on the evidence, one of Rickard Partners' engineers (Mr Andrew Castle) was "resident" on Lot 1 whilst the pavement was being constructed, it is not shown that he performed any active supervision of the works that were being carried out. Indeed, such evidence as there is is to the contrary. The materials for the sub-base were brought to site, placed and compacted by Walker. Walker's site foreman, Mr Nugent, gave evidence, but said nothing of being supervised or directed or instructed by Mr Castle. 156 Likewise, Mr Steven Hulbert, Rickard Constructions' site foreman for the last couple of months of the construction of the project, gave evidence. However, he gave no evidence of supervision, direction or instruction by Mr Castle (or by anyone else speaking on behalf of Rickard Partners, as opposed to Rickard Constructions). 157 Bearing those matters in mind, and bearing in mind also that Rickard Constructions did not call other site personnel, I would not conclude that Rickard Partners was retained to, or undertook to, or did, supervise the construction of the pavement. Specifically, I do not find that the approvals referred to in Rickard Constructions' particulars (see para [154] above) were given. I add only that in this area as in others (including the issues that were agreed) Rickard Constructions' submissions did not address the specific case that was pleaded – a circumstance that has not made it easy to deal with the issues that were raised. 158 The evidence suggests only that Rickard Partners would from time to time inform Jeffery & Katauskas that areas of the site were ready for testing; examine the test results produced by Jeffery & Katauskas; and advise Rickard Constructions if the results showed the need for work on a tested area to be redone or rectified before the next layer was constructed. 159 Thus, the evidence goes nowhere near making out the case, relating to supervision, that has been pleaded and particularised. Nor does the evidence show that the limited duties of a supervisory nature undertaken by Rickard Partners (those referred to in the preceding paragraph) were carried out negligently. Damage 160 If I were wrong both as to the existence and breach of a duty of care relating to design, I would conclude that Rickard Constructions has not shown that it suffered any damage. The damage alleged is the cost of reconstructing the failed pavement. However, as I have said, if Rickard Constructions had constructed the pavement in accordance with the design and specification, it would have discharged its obligations under the building contract. If the pavement failed in those circumstances, and Mayne wished Rickard Constructions to rectify the failed pavement, Rickard Constructions was entitled to be paid. If (as happened) Rickard Constructions undertook to do that without seeking to be paid (except in so far as it took the assignment as consideration for carrying out the rectification works), then that was not something that was causally related to any assumed breach of any duty of care that may have existed. It was the result of Rickard Constructions' deliberate choice, for whatever reason, not to seek to be paid for that which, on its case, it was entitled to be paid. 161 Alternatively, it could be said that Rickard Constructions agreed to accept, as payment to it for carrying out the rectification works, the assignment. If it judged the assignment to be of sufficient value, then, again, it suffered no loss. If the assignment proved to be a nugatory consideration (as, I have concluded, it is), that again is not something that can be said to be causally related to any breach of any duty that Rickard Partners may have owed to Rickard Constructions. 162 Again (as with the existence of a duty of care), the position may be different when one considers the duty of care alleged in relation to supervision. However, as I have found, the duty alleged has not been proved; and the duty that has been proved has not been shown to have been breached. The section 52 claim 163 The reasons that I have given for rejecting the negligence claim mean that the s 52 claim must also be rejected. 164 Although the matter was not argued in detail, I would conclude that Rickard Partners, by finalising and submitting the design for the pavement, represented that it was adequate for the construction of the pavement. But it has not been shown that the representation was misleading or deceptive. On the contrary, Rickard Constructions called no evidence to show that the design was inadequate; and even if it be appropriate to regard Allianz' evidence as available to Rickard Constructions on this point (and it is not), I have found that the criticisms made of the design by Allianz cannot be sustained. In any event, even if it were misleading or deceptive, the loss claimed is not loss that is occasioned "by" the hypothetical misleading or deceptive conduct. 165 It has not been shown that the representation alleged relating to supervision services was made. Thus, no question arises of its misleading or deceptive character (and this is so whether it is to be regarded as a representation in relation to an existing, or a future, state of affairs). Even if it be assumed that a representation was made that Rickard Partners would provide the limited supervision services to which I have referred in para [158] above with reasonable skill and care, there is no basis for thinking that Rickard Partners lacked adequate grounds for making that representation; and there is no basis for thinking that the representation was otherwise misleading or deceptive. The claim against Jeffery and Katauskas 166 The case pleaded by Rickard Constructions against Jeffery and Katauskas is as follows: (1) Rickard Constructions relied upon Jeffery and Katauskas to provide "quality control, assurance and testing services" for the work under the building contract, and the construction of the pavement. (2) Jeffery and Katauskas owed Rickard Constructions a duty to take reasonable care in providing those services. (3) Jeffery and Katauskas failed to use reasonable care in providing those services, because the services provided by it did not detect the potential failure of the pavement due to the presence of excess moisture in the base course before the asphalt layer was applied. (This summarises the case on the second further amended summons; at the conclusion of the hearing, Rickard Partners sought leave to amend the particulars of breach of duty. I deal with that in paras [177] and following below.) (4) Rickard Constructions suffered the loss already referred to (see para [145(4)] above). (5) Alternatively, Jeffery and Katauskas represented that the pavement was being properly constructed and that the moisture levels were appropriate to achieve a sound pavement. (6) Rickard Constructions relied upon those representations by continuing with construction of the pavement and placing the AC layer on the base course. (7) The representations were misleading or deceptive. (8) Rickard Constructions has suffered the loss already referred to by that misleading or deceptive conduct. Duty of care 167 Any consideration of the duty of care alleged against Jeffery & Katauskas must take into account the terms of its retainer. That is for the reasons given in para [150] above. 168 Other matters relevant to the question include that Jeffery & Katauskas: (1) Was retained by Rickard Partners, not by Rickard Constructions. (2) Was not retained or requested, and did not volunteer, to review the design. (3) Nonetheless, did suggest to Rickard Partners that the design should be checked. (3) Was retained on a "level 2" basis, with the incidents of that retainer being as described in para [17] above. (4) Had suggested to Rickard Partners that the retainer should be a "level 1" retainer, with the more onerous incidents described in para [18] above, but that Rickard Partners had rejected this, presumably on the basis of cost. 169 There is no doubt that both Rickard Constructions and Rickard Partners, in each case through Mr Rickard, were aware of these matters. Thus, among other things, Rickard Constructions must be taken to have been aware of, among other things, not only the limited nature of the retainer, but also of the precise incidents of that retainer. Equally, Rickard Constructions must have been aware, through Mr Rickard, that Rickard Partners had a resident engineer on site and that it was this engineer who, upon request by Rickard Constructions, would arrange for Jeffery & Katauskas to come to the site and test particular areas of work that had been filled and compacted. 170 It is unclear whether Rickard Constructions asserts that Jeffery & Katauskas owed it a duty of care relating to the design of the pavement. However, Jeffery & Katauskas has put submissions on that point, apparently taking the view that this is a case that Rickard Constructions seeks, by the amendments with which I deal in paras [177] and following below, to make. I therefore propose to deal with it. I see no basis upon which it can be said that Jeffery and Katauskas owed any duty of care to Rickard Constructions relating to the design of the pavement. The reasons given in para [151] above, in relation to vulnerability, apply with at least equal force to Jeffery & Katauskas. Further, because Jeffery & Katauskas was not the designer of the pavement and was not retained or requested to review the design, it is inherently implausible that there could be any circumstances, whether of reliance or otherwise, that could impose such a duty of care upon it. 171 It may be that in some circumstances the full extent of a professional person's duty of care may not be defined solely by the retainer (something that the majority in Woolcock at 635 [30] appeared to regard as still open; and see Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642, 652 (Kirby P, although noting that what his Honour said was not followed in Heydon v NRMA Ltd (2000) 51 NSWLR 1)). But even if that be accepted in principle, there is nothing in the circumstances of the present case to suggest that Jeffery & Katauskas came under, let alone that they undertook, any duty of care in relation to the design. 172 As with Rickard Partners (see para [152] above), I think that the position might be otherwise in respect of the duty of care alleged in relation to the testing services in fact undertaken by Jeffery & Katauskas. But again, I see no reason for extending any duty of care in relation to those services beyond the terms of the retainer. No breach of duty 173 On the assumption that Jeffery & Katauskas came under a duty of care in relation to the testing services that they undertook, no breach of that duty has been made good. It has not been suggested that its performance of the testing services that it undertook was in any way defective: that is to say, it has not been suggested that (for example) it derived wrong test results. 174 The submission that was put is that Jeffery & Katauskas should have undertaken a greater amount of testing. However, I do not think that the evidence makes this proposition good. Jeffery & Katauskas was called to site to test portions of work that were indicated to it as complete. Its obligation, under the terms of its retainer, was to perform the number of tests that it thought appropriate at places (within the overall area indicated to be tested) that it thought to be appropriate. It has not been suggested that Jeffery & Katauskas performed an insufficient number of tests within those areas or that it failed to use appropriate professional skill in selecting the locations where those tests were to be performed. So far as I understood the case to be put against it, it was that Jeffery & Katauskas should have tested, or retested, other areas of the site. 175 It may be accepted that when an area that had previously been tested (and that was not thereafter sealed) was affected by heavy rain, then it was desirable, if not necessary, for that area to be retested before it was sealed. But that was a decision to be undertaken by Rickard Constructions. Jeffery & Katauskas was not required, under the terms of its retainer, to decide that it should come to the site regardless of requests, and undertake testing other than on areas of work indicated to it. The evidence is clear that Rickard Constructions understood the significance of heavy rain on areas of work that had been completed but not sealed. (I will refer to this in discussing the claim against Allianz; but it is sufficient to note that that evidence came both from Mr Rickard and from Mr Thom, who dealt with the position of contractors generally.) In those circumstances, if Rickard Constructions did not suggest that there was a need for further testing, there was nothing in the terms of the retainer of Jeffery & Katauskas that required the latter to volunteer some different view; and I see no basis for imposing on Jeffery & Katauskas a duty of care more onerous than its obligations under its retainer. 176 I therefore conclude that this aspect of the negligence case against Jeffery & Katauskas must fail. The proposed amended particulars 177 There is another aspect of the case that, although not expressly raised on the pleadings (subject to an application for leave to amend), must now be considered. That relates to what Rickard Constructions was pleased to call, with some want of accuracy, the "wet weather procedure": the letter of 3 May 1999 referred to in para [21] above. 178 The amended particulars of breach of duty on which Rickard Constructions sought to rely would allege that: (1) Jeffery & Katauskas failed to warn that the sub-base and base course materials were susceptible to elevated moisture levels and that failure of the pavement was likely unless moisture levels were carefully controlled and maintained prior to sealing (para (b)). (2) Jeffery & Katauskas recommended that wet areas in the sub-base and base course be proof rolled, but this procedure was not of itself sufficient to detect excessive moisture levels (para (c)). (3) Jeffery & Katauskas failed to carry out, or recommend that there be carried out, tests of moisture levels in the base and sub-base materials by reference to optimum moisture conditions or appropriate saturation levels (para (d)). (4) Jeffery & Katauskas failed to carry out, or to recommend that there be carried out, tests of moisture levels immediately before the asphalt layer was placed (para (e)). 179 Although the first and second of these further particulars were not in terms confined to what I will call for convenience the 3 May letter, it appeared from what was said in argument that they were intended to be so limited. With one exception, Jeffery & Katauskas did not oppose the application for leave to add the first and second further particulars. The exception is the reference in each to "sub-base and". The inclusion of reference to sub-base appears to be inconsistent both with the evidence of Dr Burman and with the joint report of the geotechnical experts. 180 I see no point in granting leave to amend to include an allegation that, on the evidence, must fail. I would therefore grant leave to Rickard Constructions to amend the particulars of negligence to para 31 of its contentions by the addition of paras (b) and (c) as set out in the draft handed up (and summarised above) on the bases that: (1) The words "sub-base and" be deleted from each; (2) In para (b), the words "in its letter of 3 May 1999" be inserted after the word "warn"; and (3) The same words be inserted in para (c) after the word "recommended". 181 The third and fourth proposed particulars are in a different category. The first of them was not foreshadowed in opening. It does not appear to be pressed. In any case, it would appear to allege an obligation to do something far beyond the terms of the retainer: a consideration of particular force bearing in mind the matters to which I have referred in para [168(3), (4)] above. The case is not one that Jeffery & Katauskas should be required to meet relying only on the evidence that has been adduced. In this, it may be contrasted with the case (limited in the way that I have just described) under the first two proposed particulars: that case was advanced in opening and was the subject of evidence. In this case, because the issue was not squarely raised, Jeffery & Katauskas has been deprived of the opportunity to consider how to deal with it. 182 Accordingly, I refuse leave to amend so as to include the third further particular of breach of duty, namely para (d) of the particulars to para 31 in the draft third further amended summons. 183 For essentially the same reasons, I refuse leave to amend in respect of the fourth further particular of breach: namely, that set out in para (e) of the particulars to para 31 in the draft third further amended summons. The further case of breach 184 Jeffery & Katauskas appears to accept that it owed Rickard Constructions "a duty to advise with care in respect of the matters stated in [the 3 May] letter": written submissions dated 4 November 2004, para 27(2). 185 There is some conflict as to the genesis of the 3 May letter. Mr Rickard said that there was a meeting on site between himself and Messrs Christopher Potts and Lance Woodworth of Rickard Constructions and David Treweek of Jeffery & Katauskas. Mr Treweek says that the first meeting was on site with Mr Potts and that there was a subsequent meeting in the offices of Jeffery & Katauskas. I prefer Mr Treweek's version of events. Among other things, the 3 May letter commences "Further to our Thursday 29 April 1999 meeting at our offices". Mr Rickard could not recall any such meeting. It is unlikely that Mr Treweek would have suggested in the 3 May letter that there was such a meeting if there were not. Further Messrs Potts and Woodworth were not called and no explanation was given for their absence. I draw the usual inference from the unexplained failure to call them on a matter that was in contest. 186 Mr Treweek's evidence was that, at the site meeting, a number of matters were pointed out to him and discussed (including that rainwater from the buildings under construction was discharging directly onto unsealed but compacted layers of the pavement). He said, and I accept, that he was asked to formalise an advice on certain points, and that this is what he did in the 3 May letter. 187 The letter dealt with a number of issues. One was the proof rolling of the finished sub-base. (Proof rolling is a procedure whereby a heavy self propelled drum roller is passed back and forth across an area of work, to identify areas that are soft or "heaving". If material is heaving – ie, moving under the pressure imposed by the roller – it indicates that it is excessively moist.) 188 The letter proposed that the entire finished sub-base should be proof rolled and that soft areas should be rectified. Rectification would involve stripping, placing either fresh material or the material that had been stripped after it had dried out, and recompacting. The letter confirmed that all material should be rolled under Jeffery & Katauskas' supervision prior to placement of the base course. Jeffery & Katauskas were not asked to observe the proof rolling of the sub-base or to advise on the outcome of that proof rolling. 189 The letter also dealt with the base course material. It made a recommendation as to the standard that the material should achieve. Jeffery & Katauskas offered to test the material or to conduct audits; it was not asked to do so. 190 The letter suggested that all non confirming material (ie, material that had already been tested and shown not to meet the required level of compaction) should be retested. Jeffery & Katauskas was not retained to do this. 191 No one from Rickard Constructions suggested that Jeffery & Katauskas was asked to perform any of the tests or geotechnical services referred to in the 3 May letter other than to test the asphalt layer during placement. No one suggested that Jeffery & Katauskas in fact undertook any of the recommended tests, again with the exception of testing of asphalt. 192 Rickard Partners had prepared a quality control procedures document. That document noted that, if the works were affected by wet weather, Rickard Partners could call for field density tests prior to the recommencement of work, but that was only to be done "after prolonged wet weather and after discussion with" Rickard Constructions. There was evidence that Rickard Constructions or Walker Civil Engineering conducted proof rolling of various parts of the work without reference to Jeffery & Katauskas and without requiring representatives of Jeffery & Katauskas to be present. That, no doubt, reflected an implementation of the quality control procedure to which I have referred. (I have not overlooked that there is evidence that Jeffery & Katauskas' personnel from time to time were present during proof rolling; but there is no evidence to suggest that this was done in pursuance of, or as an implementation of any of the recommendations contained in, the 3 May letter.) 193 In all the circumstances, I do not think that Rickard Constructions owed a duty of care, in relation to the 3 May letter, over and above the specific request of it to advise on the matters outlined in that letter and the advice that it gave in response. Again, the starting point must be the retainer: in this case, the specific requests for advice made in the meetings to which Mr Treweek referred. That, in turn, must be viewed against the background of the prior limited (level 2) retainer of Jeffery & Katauskas. It would be quite inimical to commercial and contractual relations to impose on someone in the position of Rickard Constructions a common law duty of care outside and greater than the scope of its obligations under precise and limited retainers, in relation to the subject matter of the requests in late April 1999. 194 Rickard Constructions did not suggest that, if the retainer as amended were confined in the way that I think it should be, the further particulars of breach (to the extent that I have allowed them) could go to breach of that retainer. In truth, its case was that the retainer was wider, and embraced duties of care which were correlative in extent to the breaches alleged. For the reasons that I have given, I do not think that this case can be sustained. 195 Thus, I do not think that it can be said that Jeffery & Katauskas breached the duty that it owed in respect of the 3 May letter by failing to warn in it that base course materials were susceptible to elevated moisture levels which might result in failure of the pavement. Firstly, that was not something that Jeffery & Katauskas was asked to deal with. Secondly (and this may explain the first point), it was a matter in any event well known to Rickard Constructions. Thirdly, in relation to moisture levels and their impact, the focus of the advice requested, and the procedure outlined in response to that advice, was on the sub-base. I have already said that I would not give leave to amend so as to include an allegation of breach relating to the sub-base; and one of the reasons for this was that, on the expert evidence, moisture levels in the sub-base were not a cause of the failure that occurred. 196 Further, in this context, I think that it is relevant to recollect that, with the exception of testing of asphalt, Jeffery & Katauskas was not retained to carry out any of the services, or tests, that it recommended in the 3 May letter. I find it difficult to understand how a more general case of duty and breach could be made out in circumstances where particular recommendations were effectively ignored. This tempts me to accept the description of this aspect of the plaintiff's case given by Jeffery & Katauskas (written submissions, para 43) as "an opportunistic re-construction of events which had no contemporaneous support." The s 52 case 197 The representations alleged to have been made are that the pavement was being properly constructed, and that the moisture level of the pavement was appropriate to achieve a sound pavement. Neither of those representations was made expressly. Nor, having regard to the limited terms of Jeffery & Katauskas' retainer, can either of them be said to have been made by implication in all the circumstances. 198 Jeffery & Katauskas was not retained to ensure that the pavement was being properly constructed, or even to ensure that the moisture levels in the pavement were appropriate. If it was not retained to do so, then its performance of the services that it was retained to provide cannot be elevated into representations to the effect alleged. 199 The s 52 case against Jeffery & Katauskas must fail. The subrogation and contribution claims 200 Rickard Constructions says that, under the 3 May agreement, and by carrying out the rectification works in accordance with that agreement, it made good loss sustained by Mayne; and that the loss was loss for which Rickard Partners or Jeffery & Katauskas would have had to pay because of their breach of conduct, negligence, or misleading or deceptive conduct. In the circumstances, Rickard Constructions says, it is entitled to indemnity or contribution from Rickard Partners and Jeffery & Katauskas on one or more of the following bases: (1) Equitable subrogation; (2) Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946; or (3) Contribution in equity. 201 These are the claims referred to in issues 26, 27, 28 to 31, 54 and 55 to 57. 202 Rickard Constructions did not address these issues in either its written or oral submissions (including its written submissions in reply, filed by leave – although late – after the conclusion of oral submissions). 203 In those circumstances, it might be open to conclude that the issues are not pressed. Whether or not this is so, I do not think that it is appropriate to deal with those issues in the absence of submissions, and I do not propose to do so. The issues will be answered accordingly. The claim against Allianz 204 I shall set out the relevant provisions of the policy, including cls 1 and 2 of the insuring clause, the definition of insured property, exclusions 1, 2 and 6 and the relevant part of condition 2. These are the various parts of the policy upon which attention was focussed. However, to the extent that it is necessary to construe them, I do so in the context of the policy as a whole: " Insuring Clause 1. Construction Period The underwriter will indemnify the Insured against sudden and unforeseen physical loss of or damage to Insured Property from any cause (not hereinafter excluded) occurring whilst at the Situation and during the Construction Period stated in the Schedule. Provided always that indemnity under this Policy shall cease to attach to the whole or any part of the Insured Property from the time stated under Construction Period in the Schedule. 2. Maintenance Period The Underwriter will indemnify the Insured against sudden and unforeseen physical loss of or damage to Insured Property provided such loss or damage: 2.1 manifests itself during the Maintenance Period described in the Schedule; and 2.2 originates from: 2.2.1 a cause (unless hereafter excluded) occurring and arising out of the works carried out by the Insured during the Construction Period at the Situation. 2.2.2 any cause (unless hereafter excluded) occurring and arising out of the course of operations carried out by the Contractor and/or Subcontractors in complying with the requirements of the Maintenance Clause(s) of the Contract. … Definitions 1. Insured Property 1.1 Contract Works (Item 1. of the Schedule) The whole of the works whether permanent or temporary including all materials incorporated or to be incorporated therein for the performance of the Contract described in the Schedule. … Exclusions The Underwriter will not indemnify the Insured against: 1. the costs of repairing, replacing or rectifying Insured Property in which there is a fault, defect, error or omission in material or workmanship, but the Underwriter will pay the costs of loss or damage caused directly by such fault, defect, error or omission less the costs which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring. 2. the costs of repairing, replacing or rectifying Insured Property in which there is a fault, defect, error or omission in design, plan or specification, but the Underwriter will pay the costs of loss or damage caused directly by such fault, defect, error or omission in design, plan or specification less the costs which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in design, plan or specification immediately prior to the loss or damage occurring. … 6. consequential loss, loss of use, penalties, fines, liquidated damages, or aggravated, punitive or exemplary damages. … Conditions … 2. Precautions The Insured and its employees and agents must at the Insured's expense: 2.1 take all reasonable precautions to prevent loss or damage; … " 205 It is clear that the pavement failed either during the construction period or during the maintenance period (cls 1 and 2 of the insuring clause). Since each looks to "sudden and unforeseen physical loss of or damage to Insured Property", nothing turns on the precise time of the failure. It is also clear that the pavement either was, or formed part of, the Insured Property as defined. 206 As articulated in closing submissions, the questions in dispute between Rickard Constructions and Allianz were: (1) Whether the failure was "sudden". (2) Whether the failure was "unforeseen". (3) Whether there was a "fault, defect, error or omission in material or workmanship". (4) Whether there was a "fault, defect, error or omission in design, plan or specification". (5) Whether, if either of the previous issues be answered "yes", there was any loss over and above "the costs which would have been incurred in repairing, replacing or rectifying" the relevant faulty work or design. (6) Whether any part of the claim was for consequential loss. (7) Whether the insured had taken reasonable precautions to prevent loss or damage. 207 I have concluded that there was no defect in design, but that there was defective workmanship. That engages cl 1 of the exclusions. Because I have come to the view that cl 1 affords a complete answer to the claim under the policy, I propose to deal principally with that issue. 208 Before I turn to cl 1 of the exclusions, I will set out in summary form the views to which I have come on the other questions in dispute: (1) The failure of the pavement was "sudden" within the meaning of the insuring clause. (2) Likewise, it was "unforeseen". (3) As I have said, there was. (4) As I have said, there was not. (6) No part of the claim against the insurer was a claim for consequential loss; or if it was, then it must fail. (7) It had. 209 Allianz' submissions on the first and second issues really depended on its case that there were design defects, and that the failure was a result of those defects (so that it could not be said to be either sudden or unforeseen). Alternatively, Allianz submitted, the failure could not be characterised as unforeseen because Rickard Constructions, or a reasonable and competent civil engineering contractor in its place, should have known or understood or foreseen that the failure was a likely consequence of the practices that I have identified as amounting to defective workmanship. I do not think that this is what "unforeseen" means in the context of the policy. To construe that word as Allianz submits would be, in effect, to limit the insuring clause in the same way that Allianz says its obligations are limited by cl 6 of the exclusions (a matter to which I refer briefly in the next paragraph). If foreseeability of loss is an essential element of liability in negligence, then Allianz' construction of the word "unforeseen" would mean that the policy could never indemnify Rickard Constructions for the negligent performance of its obligations as a civil engineering contractor. 210 In relation to the last question (para [206(7)]), Allianz conceded that the question was answered against it, at least at first instance, by decisions such as Legal & General Insurance Australia Ltd v Eather (1986) 6 NSWLR 390 and Toikan International Insurance Broking Pty Ltd v Plasteel Windows Australia Pty Ltd (1988) 15 NSWLR 641. That concession was properly made. 211 The reason why cl 1 of the exclusions affords a complete answer to the claim is simple. Where that clause applies (ie, where its opening words "The costs … workmanship" are engaged), Allianz' only liability is to pay the costs of loss or damage directly caused by defective workmanship (to use a compendious term) less the costs that would have been incurred in rectifying that defective workmanship immediately prior to the occurrence of loss or damage. 212 The opening words of the clause make it clear that Allianz is not liable for the cost of repairing, replacing or rectifying Insured Property in which there was defective workmanship. It is, however, liable to pay the cost of loss or damage caused directly by that defective workmanship. That liability is limited because there must be subtracted from it the cost that would have been incurred in repairing the defective workmanship immediately prior to the occurrence of the loss. Clearly, when cl 1 of the exclusions is read in conjunction with cl 6, it is apparent that no element of consequential loss is recoverable. 213 In the present case, there is no evidence of "the costs of loss or damage caused directly" by the defective workmanship. Nor is there any evidence of "the costs which would have been incurred in" rectifying that defective workmanship immediately before the occurrence of the loss. Rickard Constructions and Allianz each submitted that the onus of proof of those matters lay on the other. Further, Rickard Constructions submitted, if the onus of proof lay on it, it could be dealt with at a later stage of the hearing. (I deferred the evidence of the quantity surveyors, upon the basis that it might or might not be relevant, and that, if it proved to be relevant, it would be dealt with most effectively by a reference under Pt 72.) 214 The clause is, obviously enough, an exclusion clause. It follows that the onus of proof lies, in the first instance, with Allianz. It is therefore necessary for Allianz to show (on the assumption that the insuring clause has been engaged) that the claim is for, or includes, the cost of repairing Insured Property in which there is defective workmanship. Once that is shown, then, prima facie, Allianz is not liable. If Rickard Constructions, as the insured, contends that Allianz is liable under the following words of cl 1, it is for Rickard Constructions to show that. 215 That onus requires Rickard Constructions to prove: (1) What is the loss or damage caused directly by the defective workmanship. (2) What are the "costs" of that loss or damage. (3) What would have been necessary to rectify that defective workmanship immediately prior to the collapse of the pavement. (4) What costs would have been incurred in that rectification. 216 Rickard Constructions submitted in reply (written submissions in reply dated 16 November 2004, paras 110, 111) that: (1) Rectification of the defective workmanship immediately prior to the collapse of the pavement could have been done simply by permitting the moisture in the base course to dry out. (2) Alternatively (as put by Mr Thom), that rectification could have been undertaken by removing the asphalt wearing layer, aerating the base course material and replacing and recompacting it, and relaying the asphalt. 217 Rickard Constructions did not explicitly submit that the first alternative would not involve any cost, but it appears to be implicit in the submission, and I proceed upon that basis. It did submit that the second alternative was a matter that had been quantified by its quantity surveyor, Mr Clifford Ventris, and that it could in any event be dealt with by reference or otherwise if there were no agreement. 218 I do not think that the first alternative deals with the issue to which it was addressed, namely, the amount of "the costs which would have been incurred in … rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring". The faulty workmanship that I have found included both the sealing of sections of pavement known to be wet and soft, and the sealing of other sections of pavement that had been subjected to heavy rainfall after compaction and testing and that had not been retested. If drying out of the base course were possible – and, contrary to the submission for Rickard Constructions, I do not think that the expert evidence demonstrated clearly that it was – it would not rectify the defective workmanship. It would, at most, overcome (to some greater or lesser extent) the consequences. 219 Dr Burman was the most enthusiastic advocate of "drying out". To some extent, he was supported in this by Messrs Thom and Leventhal. Messrs Marshall and Waddell were of the view that drying out was both impractical and unlikely, in any event, to cure the problem. 220 The first difficulty with drying out is that it required the pavement to remain unused for an indeterminate period of time. The period of time would be indeterminate because, without taking up the pavement, the success of the process could only be ascertained by indirect testing such as Benkelman beam tests. (If repeated Benkelman beam testing showed no, or acceptable limits of, deflection, then, perhaps it could be inferred that the base course had dried out adequately.) This would have meant denying Mayne the use of the container depot. Rickard Constructions submitted that this was the result in any event, because it took some considerable time for the defective pavement to be repaired. That may be so. But it is not difficult to imagine that if Mayne were faced with a choice between delay occasioned by digging up, relaying and resealing the pavement (with appropriate attention paid to keeping it dry, and to testing it before it was sealed) on the one hand, and an indeterminate wait with an uncertain outcome on the other, it would have chosen the former course. 221 Another difficulty with the concept of drying out is not only that it is indeterminate in time, it is also dependent to some extent on weather conditions. Thus where (as was the case) there was prolonged heavy rain during the putative drying out period, the evidence suggests that drying out would have been at the very least delayed, and perhaps rendered impossible. It is for this reason that, at a technical level, Messrs Thom and Leventhal did not support drying out with the same enthusiasm as did Dr Burman. I think it is fair to say that Messrs Thom and Leventhal regarded drying out as a theoretical, rather than practical, solution. 222 More fundamentally, Rickard Constructions has not attempted to address the first two elements described in para [215] above. That seems to reflect what in my view is its incorrect construction of cl 1 of the exclusions. Rickard Constructions said (written submission in reply, pars 105 to 107): "105. The intent of the exclusion clause is to provide for the possibility that an insured event may result in RC being compensated for losses that it would have suffered even if the insured event had not occurred. To put this another way, the clause makes provision against RC getting the advantage of making good defects in construction or in design which would have to be made good even if the insured event did not occur. The exclusion clauses are intended to operate to ensure that RC does not get that benefit so that the costs that would always have been incurred in making good defects in design or construction are not cast on Allianz. 106. Therefore, the exclusion clauses embody the following concepts: (a) the cost of repairing, replacing or rectifying any fault, defect, error or omission in material workmanship or design of the Pavement; (b) the costs of loss or damage caused directly by the fault, defect, error or omission; (c) the costs which would have been incurred in repairing, replacing or rectifying the faulty or defective material, or the error or omission in the design. 107. In order to determine the costs that are excluded by (item (a)) above, it becomes necessary to determine the nature of any defect or omission that exists in the pavement. The costs in rectifying that deficiency are costs that would likely have been incurred, and are excluded." 223 In my judgment, that construction of the clause – particularly, the proposition advanced in para 106(a) set out above – is incorrect. The clause does not "embody", as the description or character of the excluded liability, the cost of rectifying defective workmanship or design (to summarise sub para (a)). It excludes liability for "the costs of … rectifying Insured Property in which there is a fault, defect, error or omission in material or workmanship" (emphasis supplied). The present claim is, precisely, one for the cost of rectifying Insured Property – the pavement – in which there was, or that was affected by, defective workmanship. That is clearly something greater than what Allianz will pay (namely, "the cost of loss or damage caused directly by such" defective workmanship); and that in turn is diminished further by the following words ("less the cost which would have been incurred in … rectifying the … defective … workmanship immediately prior to the loss or damage occurring"). 224 Drying out – a process that (if it worked at all) would take some months of fine weather to achieve - could not rectify the defective workmanship immediately prior to the failure of the pavement. As a matter of logic, the rectification of the defective workmanship immediately prior to the loss would have entailed the testing of the pavement by some appropriate method (such as the Benkelman beam test referred to frequently in the course of the evidence) to observe and quantify the extent to which it was defective. The Benkelman beam test does this because it measures the extent to which the pavement deflects under load. Once the defective pavement had been identified, rectification would have required the removal of the wearing layer and the underlying layers, and the placement of fresh (or dried out) fill for the sub-base and base course layers and the compacting of those layers to the appropriate specification. Finally, it would have required the replacement of the asphalt wearing course. 225 There is no reason for thinking that the costs of that (hypothetical) exercise would have been in any way significantly different to the costs actually incurred in repairing the failed pavement. 226 But it is not for this reason that the claim must fail. If that were the extent of the problem then, bearing in mind that consideration of the evidence of the quantity surveyors has been deferred, I would not think it appropriate to find against Rickard Constructions on that limited basis. The problem is a deeper one. As I have said, Rickard Constructions has not proved the matter referred to in para [215(1)] above. But it is this which is the starting point of the determination of any entitlement that Rickard Constructions may have once it is shown (as it has been shown) that the exclusion clause has been engaged. That is not a question of quantification. It is a matter of identifying what it is to be quantified. The evidence for Rickard Constructions simply does not do that, and so the question of quantification does not arise. 227 Further, if I am correct in concluding as well that Rickard Constructions has not identified the matter referred to in para [215(3)] above (see paras [216] and [217] above), then it has failed to identify the other essential component of its entitlement. The claim must fail for this reason also, and again, not as a matter of quantification only. 228 Accordingly, I conclude that the claim against Allianz must fail. Damage 229 In view of the conclusion to which I have come, it is not necessary for me to deal with the question of damage. However, I shall set out briefly the findings that I would have made had it been necessary to do so. 230 The quantification of the cost of rectification of the pavement has been deferred, to be dealt with by an order for reference under Pt 72, should it be necessary to do so. It is not. 231 The other aspect of the claim was for the damages suffered by Mayne. 232 The components of the claim were identified and discussed by the relevant witnesses, Mr John Klepec (an employee of Mayne, called by Rickard Constructions) and Mr Alexander Penklis (an independent expert, called by Rickard Partners and Jeffery & Katauskas). 233 The first issue related to the first element of the claim: an amount claimed by Mayne to have been payable to a third party pursuant to a deed of settlement. The witnesses were agreed (and, so far as I understood it, the parties by whom they were called were agreed) that the dispute was only whether the amount was $1,200,000 (as asserted by Mr Klepec) or $982,008.70 (as asserted by Mr Penklis). 234 The amount expressed by the deed to be payable was the latter (lower) figure. Mr Klepec's contention was that the settlement amount agreed was in fact the former (higher) figure, but that the third party was indebted to Mayne for the difference between the two figures of $217,991.35 (the difference of 5 cents is not one on which I propose to spend a deal of time). Mr Klepec reached that conclusion by reference to a without prejudice letter. The letter was tendered. I rejected the tender. The deed was tendered. The deed proves the lower amount. The deed does not show that the lower amount was reached after offsetting the amount of $217,991.35 against the higher amount. In my judgment, the amount to be allowed (should it become necessary to do so) is the lower amount, namely $982,008.70. 235 The next element of the claim was a amount of $686,592, said to be rent foregone by Mayne in respect of premises that, because it could not have access to the container depot when planned, it continued to use. Proof of liability for and quantification of this amount depended on what was called in submissions "the Truong e-mail" (an e-mail from Mr Thanh Truong of Mayne to Mr Klepec dated 19 October 2000, marked for identification 4 in the proceedings). I rejected the tender of that e-mail. It follows that this item is not proved. 236 Items 3 and 4 related to the cost of leasing alternative premises. They were in the amounts of $57,931 and $209,232 respectively. I am satisfied that they were incurred and should be allowed. 237 The fifth item was for the construction of a temporary fumigation pad. The amount claimed was $24,227. It was agreed that this amount was substantiated. However, it was shown to be a claim by MPG Logistics, not a claim by Mayne Nickless. 238 Items 6 to 14 relate to a number of additional costs said to have been incurred. They total $468,728. The evidence relied upon to prove them was the Truong e-mail. Because that document was not admitted into evidence, these claims are not made good. 239 Item 15, in the sum of $199,950, related to management costs. It was not pressed and would therefore not be allowed. 240 Item 16 relates to consultants' fees. It was agreed in the sum of $57,980. It is another MPG Logistics' claim. 241 Item 17 related to flights said to have been undertaken in the course of the rectification works. The amount claimed is $30,000 (said by Mr Klepec to be a conservative estimate). In my judgment, Mr Klepec's evidence at T 320 and following – which was effectively unchallenged – is sufficient to justify this claim. I am comforted by this in Mr Penklis' acknowledgment that he has "sighted invoices in excess of the amount claimed". He said that the issue was "the purpose of the trips". I am satisfied, as I have said, that Mr Klepec's evidence demonstrates the purpose of the trips sufficiently to enable this item to be claimed. It, too, is a claim of MPG Logistics. Conclusions 242 I return to the issues set out in para [11] above. Before I answer them, I wish to note that the resolution of the issues has been made difficult by the failure of (in particular) Rickard Constructions to address them specifically. The whole point in requiring the parties to agree upon the real issues in dispute is to focus the evidence, the submissions and the decision. Where parties do not address the issues directly and clearly, the Court's task in resolving the dispute is rendered more difficult. I do not regard it as appropriate for a party, having participated in the process of agreeing the real issues in dispute, to formulate its submissions on a different and less readily comprehensible basis. Not only does this make the task of analysis and resolution more difficult, it leads to a risk that issues will be overlooked, and that time will be wasted in addressing issues that, although not formally conceded, are not in reality pressed. The Court should not have to struggle, at the end of four weeks of evidence, to understand the case that a party seeks to make and the evidence by which it seeks to prove that case. But that is the result of a failure to address specifically and seriatim the issues that have been articulated by agreement. 243 I answer the issues set out in para [11] above as follows: 1A. What was the cause of the failure of the Pavement and in particular was the failure of the Pavement attributable to: (a) any design deficiency of the pavement of the type identified in the joint expert's report; (b) excessive quantities of moisture in the Pavement as a result of entry of moisture during the construction of the Pavement; (c) any other aspect of the manner of construction of the Pavement. Answer: The pavement failed because of the build-up of excessive pore pressures in the base course material. That occurred because the base course became excessively wet as the result of the entry of moisture (due to rainfall) during the construction of the pavement. 1B. Was there physical loss of or damage to Insured Property and, if so, when? Answer: Yes. It occurred when the pavement failed immediately after it was put into service and loaded by the operation of heavy forklift vehicles. 1C. Was there a fault, defect, error or omission in design, plan or specification? Answer: No. 1D. Was there a fault, defect, error or omission in material or workmanship? Answer: Yes. 1E. What were the costs of loss or damage caused by fault, defect, error or omission in design, plan or specification? Answer: Not applicable. 1F. What were the costs of loss or damage caused by fault, defect, error or omission in workmanship or material? Answer: Not proven. 1G. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in design or specification immediately prior to the loss or damage occurring? Answer: Not applicable. 1H. What were the costs of loss or damage which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring? Answer: Not proven (but, if this aspect of the exclusions were engaged, it is a matter that could have been proven as part of the consideration of the quantity surveying evidence, which I ordered to be deferred – should it arise – until after the delivery of these reasons.) 2. Did RC rely upon RP to provide it with engineering, supervisory and certification services in connection with the design and construction of the pavement? Answer: No. 3. Did any such reliance give rise to a duty owed to RC by RP in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project? Answer: No. 4. Having regard to the Court's findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS? Answer: Does not arise, but no. 5. Was the performance of the rectification works and other works the subject of RC's variation claims: (a) caused by RP's alleged breach; or (b) a foreseeable consequence of RP's alleged breach? Answer: No. 6. If so, what was the quantum of RC's loss flowing from any such breach of duty? Answer: Does not arise. 7. Having regard to the Court's findings on the technical issues: (a) was RC's loss caused or contributed to by negligence on RC's part; (b) if so, the quantum by which RC's damages should be reduced on account of such contributory negligence. Answer: (a) The loss, namely the failure of the pavement, was caused by defective workmanship on the part of Rickard Constructions. (b) Not applicable. 8. Did RP make representations to RC concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS? Answer: No. 9. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)? Answer: Does not arise. 10. Was the performance of the rectification works and other works the subject of RC's variation claims a loss and, if so was it: a. undertaken in reliance upon or otherwise caused by RP's alleged representations; or b. a foreseeable consequence of RP's alleged representations? Answer: No; otherwise does not arise. 11. If so, what was the quantum of RC's loss (if any) flowing from such misleading & deceptive conduct. Answer: Does not arise. 12. What were the terms of any contract between PBCP and RP in connection with the design of the Container Park and the supervision or certification of the construction of the Container Park? Answer: Not necessary to answer. 13. Were the rights and obligations of PBCP under any such contract assigned or novated to the Mayne companies on or after 4 January, 1999 so as to give rise to contractual obligations in the same terms as between the Mayne companies and RP? Answer: Not necessary to answer. 14. Having regard to the Court's findings on the technical issues, did RP breach its contract with the Mayne companies in the manner alleged in the particulars to paragraph 17 of the SFAS? Answer: Not necessary to answer. 15. Did the Mayne companies suffer any loss as a consequence of the alleged breach and, if so, what was the quantum of that loss? Answer: Not necessary to answer, but see paras [233] to [241] above. 16. Did RP on or about 23 April 1998 undertake to the Mayne Companies to provide design, supervision and certification services in relation to the Pavement? Answer: Not necessary to answer. 17. Did any such undertaking give rise to a duty owed by RP to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies? Answer: Not necessary to answer. 18. Having regard to the Court's findings on the technical issues, did RP breach that duty in the manner alleged in the particulars to paragraph 17 of the SFAS? Answer: Not necessary to answer. 19. The quantum of the Mayne Companies' loss (if any) flowing from any such breach of duty. Answer: Not necessary to answer, but see paras [233] to [241] above. 20. Did RP make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged in paragraph 24 of the SFAS? Answer: Not necessary to answer. 21. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether RP had reasonable grounds for making such representations)? Answer: Not necessary to answer. 22. The quantum of the Mayne Companies' loss (if any) flowing from such misleading & deceptive conduct. Answer: Not necessary to answer. 23. Were the Mayne Companies' claims against RP (or any of them) validly assigned to RC under the First Deed? Answer: No. 24. If not, were the Mayne Companies' claims against RP (or any of them) assigned to Patrick under the Business Sale Agreement? Answer: Yes. 25. If not, were the Mayne Companies' claims against RP (or any of them) validly assigned to RC under the Second Deed? Answer: Does not arise, but in any event no. 26. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies' claims against RP. Answer: Does not arise (for the reasons given in paras [202] and [203] above). 27. Is the present matter properly constituted to permit such a subrogated right to be pursued by RP? Answer: Does not arise. 28. Having regard to the Court's findings on the technical issues, was RC a tortfeasor liable to the Mayne Companies in respect of damage suffered by those Companies arising out of failure of the Pavement. Answer: Does not arise, but see the answer to issue 7(a). 29. Having regard to the Court's findings on the technical issues, was RP a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage. Answer: Does not arise. 30. Can RC recover, under the Law Reform (Miscellaneous Provisions) Act 1946 , the whole or any part of the cost of performing the work the subject of the Variation claims. Answer: Does not arise. 31. The quantum of contribution which RP should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 . Answer: Does not arise. 32. Alternatively is RC entitled to contribution in equity from RP towards the cost to it of performing the work the subject of the Variation claims, and if so the quantum of such contribution. Answer: Does not arise. 33. What were the terms and scope of Jeffery & Katauskas' retainer with Rickard & Partners? Answer: The retainer was to provide level 2 testing services of the kind described in para [17] above. 34. What, if any, responsibilities were undertaken or owed by J&K to the plaintiff or Mayne Nickless or Logistics with respect to the design or construction of the Pavement and in particular: a. Whether J & K's letter to the plaintiff dated 3 May 1999 (6-136 to 6-137) or any subsequent conduct of J & K in respect of the inspection or approval of proof rolling imposed any duty on J & K in respect of the adequacy of the Works as completed by the plaintiff. b. Whether by paragraph 1 of J & K's facsimile of 19 November 1998 to Rickard & Partners (4-189) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement. c. Whether Jeffery & Katauskas' fax of 5 February 1999 to Rickard & Partners (5-563 to 7, and in particular Note 1 at 5–564) made any representation or provided any advice to the plaintiff as to the specification of the moisture content of the sub-grade, sub-base or base course of the pavement. d. Whether according to the evidence of Mr Rickard, as a result of his alleged discussions with Mr Jeffrey, J&K were retained to ensure that the construction work complied with the design and specification or whether the retainer was for Level 2 testing only. Answer: The only obligation of Jeffery & Katauskas was to use appropriate professional skill in the provision of the services required under its retainer. As to the particular questions asked: a. No. b. No. c. This was not addressed in submissions and I do not propose to answer it. d. No. 35. Did J&K owe a duty to RC in the carrying out of its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to RC as the construction contractor on the project? Answer: No. 36. Having regard to the Court's findings on the technical issues, did J&K breach that duty? Answer: Does not arise. 37. Whether any such breach caused any loss to RC? Answer: Does not arise. 38. The quantum of RC's loss flowing from any such breach of duty. Answer: Does not arise. 39. Having regard to the Court's findings on the technical issues: (a) was RC's loss caused or contributed to by negligence on RC's part; (b) if so, the quantum by which RC's damages should be reduced on account of such contributory negligence. Answer: See the answer to issue 7(a). 40. Did J&K make representations to RC concerning the design and construction of the Pavement in the terms alleged? Answer: No. 41. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)? Answer: Does not arise. 42. The quantum of RC's loss (if any) flowing from such misleading & deceptive conduct. Answer: Does not arise. 43. [The second defendant says on any claim made by either of the Mayne Companies (in tort or otherwise), it is at issue whether and if so what cause of action accrued to either company or was assigned by either company.] Answer: Not necessary to answer. 44. Did J&K owe a duty to the Mayne Companies in carrying out its responsibilities with respect to the design and construction of the Pavement to exercise reasonable care to avoid financial loss to the Mayne Companies? Answer: Not necessary to answer. 45. Did J&K breach any duty to the Mayne Companies? Answer: Not necessary to answer. 46. Whether any such breach caused any loss to the Mayne Companies? Answer: Not necessary to answer. 47. The quantum of the Mayne Companies' loss flowing from any such breach of duty. Answer: Not necessary to answer, but see paras [233] to [241] above. 48. Did J&K make representations to the Mayne Companies concerning the design and construction of the Pavement in the terms alleged? Answer: Not necessary to answer. 49. Were those representations misleading or deceptive (including, with respect to any representations which may be found to have been made with respect to future matters, whether J&K had reasonable grounds for making such representations)? Answer: Not necessary to answer. 50. The quantum of the Mayne Companies' loss (if any) flowing from such misleading & deceptive conduct. Answer: Not necessary to answer. 51. Were the Mayne Companies' claims against J&K validly assigned to RC under the First Deed? Answer: No. 52. If not, were the Mayne Companies' claims against J&K assigned to Patrick under the Business Sale Agreement? Answer: Yes. 53. If not, were the Mayne Companies' claims against J&K validly assigned to RC under the Second Deed. Answer: Does not arise, but in any event no. 54. Is RC entitled to be subrogated, to the extent of the amounts paid or allowed in favour of the Mayne Companies under the First Deed, to the Mayne Companies' claims against J&K. Answer: Does not arise, for the reasons given in paras [202] and [203] above). 55. Having regard to the Court's findings on the technical issues, was J&K a tortfeasor who would, if sued by the Mayne Companies, have been liable in respect of that damage. Answer: Does not arise. 56. The quantum of contribution which J&K should make to RC under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 . Answer: Does not arise. 57. Alternatively is RC entitled to contribution in equity from J&K towards amounts paid or allowed in favour of the Mayne Companies under the First Deed, and if so the quantum of such contribution. Answer: Does not arise. 58. Having regard to the Court's findings on the technical issues, did J&K breach the terms of its retainer by RP? Answer: No. 59. Is J&K's liability limited by the terms of its contract with RP? Answer: Does not arise. 60. The quantum of RP's loss, in the form of liability to RC, (if any) flowing from that breach. Answer: Does not arise. 61. Having regard to the Court's findings on the technical issues, were either or both of RP and J&K tortfeasors liable to RC in respect of damage suffered by RC arising out of failure of the Pavement. Answer: Does not arise. 62. The quantum of contribution which RP and J&K should make to each other under section 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 . Answer: Does not arise. 63. Alternatively is either of RP or J&K entitled to contribution in equity from the other towards its liability to RC, and if so the quantum of such contribution. Answer: Does not arise. 64. Whether, having regard to the Court's findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property and, if so, when? Answer: Yes, when the pavement collapsed. 65. Whether, having regard to the Court's findings on the technical (insurance) issues, the physical loss of or damage to the Insured Property was sudden and unforseen? Answer: Yes; it was both sudden and unforeseen. 66. Whether, having regard to the Court's findings on the technical (insurance) issues, there was a fault, defect, error or omission in the design, plan or specification. Answer: No. 67. Whether, having regard to the Court's findings on the technical (insurance) issues, there was a fault, defect, error or omission in material or workmanship. Answer: Yes. 68. Whether, having regard to the Court's findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in the design, plan or specification. Answer: No. 69. Whether, having regard to the Court's findings on the technical (insurance) issues, there was physical loss of or damage to Insured Property caused by fault, defect, error or omission in material or workmanship. Answer: Yes. 70. Whether, having regard to the Court's findings on the technical (insurance) issues, RC was guilty of any of the following breaches of condition and if so whether such failures may be relied upon by Allianz under section 54(2) of the Insurance Contracts Act 1984 : (a) failure to take reasonable precautions to prevent loss or damage; (b) failure to notify Allianz of material changes in risk arising from the manner in which the construction was carried out and to take such additional precautions to minimise the risk of a claim raising due to such changes in risk. Answer: (a) No. (b) This was not addressed in submissions and I do not propose to answer it. 71. Having regard to the Court's findings on the technical (insurance) issues, the: (a) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in the design, plan or specification. (b) costs of repairing, replacing or rectifying Insured Property in which there was a fault, defect, error or omission in material or workmanship. (c) costs of loss or damage caused directly by fault, defect, error or omission in the design, plan or specification. (d) costs of loss or damage caused directly by fault, defect, error or omission in material or workmanship. (e) costs which would have been incurred in repairing, replacing or rectifying the fault, defect, error or omission in the design, plan or specification immediately prior to the loss or damage occurring. (f) costs which would have been incurred in repairing, replacing or rectifying the faulty or defective material or workmanship immediately prior to the loss or damage occurring. Answer: (a) Does not arise. (b) Not proven. (c) Does not arise. (d) Not proven. (e) Does not arise. (f) Not proven (but, if this aspect of the exclusions were engaged, it is a matter that could have been proven as part of the consideration of the quantity surveying evidence, which I ordered to be deferred – should it arise – until after the delivery of these reasons.) Order 244 There should be judgment for each of the defendants on Rickard Constructions' claim against it. There should be judgment for each of the cross-defendants on the various cross-claims. 245 I will hear the parties on costs. ****** Last Modified: 12/17/2004 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. 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