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Court of AppealSupreme Court

New South Wales

Case Name: White Constructions Pty Ltd v PBS Holdings Pty Ltd

Medium Neutral Citation: [2020] NSWCA 277

Hearing Date(s): 9-10 June 2020

Date of Orders: 04 November 2020

Decision Date: 4 November 2020

Before: Bell P at [1]; Leeming JA at [136]; White JA at [154]

Decision: Appeal dismissed with costs.

Catchwords:

APPEAL – whether or not decision of primary judge based in part on demeanour findings – significance for standard of appellate review and intervention – where primary judge’s decision was supported by contemporaneous documents – no basis for appellate interference with primary judge’s findings of fact. CONTRACT – contractual interpretation – whether warranties in a multi-party deed were made in favour of all parties to the deed or only one party.

Legislation Cited:

State Owned Corporations Act 1989 (NSW)Supreme Court Act 1970 (NSW) s 75A Sydney Water Act 1994 (NSW) ss 4, 12, 70, 73, 74, Div 9 Uniform Civil Procedure Rules 2005 (NSW) r 31.54

Cases Cited:

Boensch v Pascoe (2019) 94 ALJR 112; [2019] HCA 49Fabre v Arenales (1992) 27 NSWLR 437Fox v Percy (2003) 214 CLR 118; [2003] HCA 22Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187Lee v Lee (2019) 266 CLR 129; [2019] HCA 28Masterton Homes Pty Ltd v Palm Assets Pty Ltd (2009) 261 ALR 382; [2009] NSWCA 234Olsen v Olsen (2019) 101 NSWLR 225; [2019] NSWCA 278Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; [2016] HCA 22Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135

Texts Cited: H Bennett and Professor G Broe, “The civil standard of proof and the ‘test’ in Briginshaw: Is there a neurobiological basis to being ‘comfortably satisfied’?” (2012) 86 ALJ 258

Category: Principal judgment

Parties:

White Constructions Pty Ltd (Appellant)PBS Holdings Pty Ltd (First Respondent)Illawarra Water & Sewer Design Pty Ltd (Second Respondent)

Representation:

Counsel:M Dempsey SC, M Sheldon (Appellant)G A Sirtes SC, C L W Street (Respondents)Solicitors:Jones Day (Appellant)Colin Biggers & Paisley Lawyers (First Respondent)Indemnity Legal Pty Ltd (Second Respondent)

File Number(s): 2019/308044

Publication Restriction: N/A

Decision under appeal:

Court or Tribunal: Supreme Court of New South Wales

Jurisdiction: Equity – Technology and Construction List

Citation: [2019] NSWSC 1166

Date of Decision: 6 September 2019

Before: Hammerschlag J

File Number(s): 2017/285371

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE[This headnote is not to be read as part of the judgment]

This appeal related to a claim for damages allegedly suffered by the appellant,

White Constructions Pty Ltd (White), in connection with the sewerage design

for a development of a multi-lot subdivision in Kiama, NSW (the Development). One precondition for the registration of the subdivision by the

Land Titles Office was the issue by Sydney Water Corporation (Sydney Water) of a s 73 certificate under the Sydney Water Act 1994 (NSW) (s 73 Certificate), certifying that Sydney Water’s requirements to service the

subdivision with water, wastewater and stormwater services had been met.

In or about February 2012, White informally engaged the second respondent,

Illawarra Water & Sewer Designs Pty Ltd (IWS), to provide design and project

co-ordination services for the purposes of obtaining Sydney Water’s approval

of, and funding for, the sewer infrastructure for the Development. IWS was

principally represented by Mr Joel Edwards (Mr Edwards), and White was

principally represented by Mr Trevor Unicomb (Mr Unicomb). On or about 18

December 2014, White and IWS entered into a contract for design and project

co-ordination services for the delivery of sewerage infrastructure in respect of

the Development (the Fee Proposal contract).

In or about early February 2015, IWS prepared and provided to White a sewer

design that included two pumping stations. White subsequently entered into a

contract with another company for the construction works for the Development,

including sewer infrastructure works based on IWS’s sewer design.

Subsequently, the first respondent, PBS Holdings Pty Ltd (PBS), a water

servicing co-ordinator, submitted the sewer design prepared by IWS to Sydney

Water for the latter’s approval for the purposes of obtaining a s 73 Certificate.

On 24 November 2015, White, PBS and IWS entered into a Developer Works

Deed (the Deed) with Sydney Water. However, in January 2016, Sydney

Water rejected the sewer design prepared by IWS.

Following a suggestion by Sydney Water in March 2016, PBS subsequently

submitted to Sydney Water an alternative design, that used a horizontal deep-

bore main to gravity drain for the site, which Sydney Water approved. In

December 2016, the sewer infrastructure works for the Development were

relevantly completed.

Before the Equity Division of this Court, White alleged that, in breach of

contract, IWS failed to prepare a satisfactory sewer design within a reasonable

time, and that PBS failed to ensure that IWS discharged this obligation, such

that completion of the Development was delayed. This delay was said to have

caused White to suffer loss and damage.

The primary judge rejected White’s contention that the respondents breached

warranties given to White under the Deed, instead holding that the warranties

given by the Deed were only made to Sydney Water, and not to White, but

noted that essentially the same obligations were owed by IWS to White under

the Fee Proposal and that, as PBS had a duty to supervise White, it also had a

duty to ensure that IWS performed its duties within a reasonable time.

However, the primary judge held that there had been no breach of the Fee

Proposal contract, because Mr Unicomb had given Mr Edwards an instruction

not to pursue a gravity-fed design solution (the Instruction). As White had

therefore instructed IWS not to propound the underbore solution, no breach of

the Fee Proposal contract had been established. The claim was dismissed with

costs.

The principal issues which arose on appeal were:

(1) Whether PBS and IWS had obligations to White under the Deed, or whether contractual obligations were only owed pursuant to the Fee Proposal.

(2) Whether the finding by the primary judge that the Instruction had been given was in part a demeanour-based finding.

(3) Whether the primary judge erred in holding that Mr Unicomb had in fact given the Instruction to Mr Edwards, and in his findings as to the timing and terms of the Instruction.

The Court held (Bell P, Leeming and White JJA agreeing), dismissing the

appeal with costs:

(1) The primary judge did not err in his construction of the Deed and in his conclusion that it did not contain any warranties given by either of the respondents to White: [93]-[95] (Bell P); [136] (Leeming JA); [154] (White JA).

(2) The simple fact that a deed contains multiple parties does not, in and of itself, mean that every warranty given by one party to the Deed is given to all others: [96] (Bell P); [136] (Leeming JA); [154] (White JA).

Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135, considered.

(3) The language of the Deed did not support White’s construction of it and only Sydney Water was given remedies under the Deed for non-compliance by another party with its obligations under it: [99]-[100] (Bell P); [136] (Leeming JA); [154] (White JA).

(4) As Sydney Water was ultimately to assume ownership and responsibility for the sewerage system after the Development had been completed, it also made commercial sense that the warranties contained in the Deed were for Sydney Water’s benefit: [97] (Bell P); [136] (Leeming JA); [154] (White JA).

(5) By Bell P and White JA: The primary judge’s conclusions in relation to the Instruction turned in part upon an assessment of the demeanour of Messrs Edwards and Unicomb, but the conclusion was also supported by contemporaneous documents: [106]-[111]; [154]-[157].

Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187, considered.

(6) By Leeming JA: In preferring the evidence of Mr Edwards over that of Mr Unicomb, the primary judge did not rely on demeanour, but based his decision on documents and objective probabilities: [136]-[153].

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22, considered.

(7) The primary judge’s factual finding as to Mr Unicomb providing the Instruction to Mr Edwards was not “glaringly improbable”, and was in any event fully supported by the probabilities and objective contemporaneous evidence: [102]-[134] (Bell P); [156] (White JA).

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22; Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; [2016] HCA 22, considered.

(8) The primary judge’s factual finding as to Mr Unicomb providing the Instruction to Mr Edwards was supported by the probabilities and objective contemporaneous evidence: [136]-[153] (Leeming JA).

JUDGMENT1 BELL P: This appeal relates to a claim for damages alleged to have been

suffered by the appellant, White Constructions Pty Ltd (White), a developer, in

connection with the development of a multi-lot subdivision, known as Cedar

Grove in Kiama NSW (the Development).

2 White pre-sold all lots prior to commencing construction in early 2016.

Completion was conditional upon registration of the plan of subdivision, which

in turn was conditional on compliance with certain development consent

conditions. One such precondition for the registration by the Land Titles Office

of the subdivision was the issue by Sydney Water Corporation (Sydney Water) of a s 73 certificate under the Sydney Water Act 1994 (NSW) (s 73 Certificate), certifying that Sydney Water’s requirements to service the

subdivision with water, wastewater and stormwater services had been met.

3 The current appeal concerns the sewerage design for the Development. The

context, as explained by Hammerschlag J (the primary judge), was that the

usual design goal of a new land development sewerage installation is to

discharge sewerage from the development lots to a connection point with an

existing sewer main, via “lead-in works” and that, ideally, an installation will be

naturally gravity-fed to the connection point, but sometimes pumping

installations are required: White Constructions Pty Ltd v PBS Holdings Pty Ltd

[2019] NSWSC 1166 at [28]. The attractions of a gravity-fed solution lie in the

costs of operation and maintenance, with a gravity-fed solution using, or

predominantly using, the natural forces of gravity as opposed to requiring the

mechanical pumping of sewerage.

4 In or about February 2012, at least on an informal basis, White engaged the

second respondent, Illawarra Water & Sewer Designs Pty Ltd (IWS), a sewer

designer, to provide design and project co-ordination services for the purposes

of obtaining Sydney Water’s approval of, and funding for, the sewer

infrastructure for the development. IWS was principally represented by Mr Joel

Edwards (Mr Edwards).

5 In its dealings with IWS, White was, for the most part, represented by Mr

Trevor Unicomb (Mr Unicomb). Mr Unicomb had been retained to be White’s

project manager for the project. A major issue in the case concerns whether,

when and in what terms Mr Unicomb instructed Mr Edwards not to pursue a

gravity-fed solution for the sewerage design for the Development which

involved horizontal drilling into rock.

6 On or about 18 December 2014, White and IWS entered into a contract, under

which the latter agreed to provide design and project co-ordination services for

the delivery of sewer infrastructure in respect of the Development. The terms of

the contract were set out in a document prepared by IWS, entitled “Project

Coordinators Fee Proposal”, dated 18 December 2014 (the Fee Proposal).

7 In or about early February 2015, IWS prepared and provided to White a sewer

design that included two pumping stations. White subsequently entered into a

contract with Cleary Bros (Bombo) Pty Ltd (Cleary Bros) for the construction

works for the Development, including sewer infrastructure works based on

IWS’s sewer design. Construction work commenced in mid-August 2015.

8 Subsequently, the first respondent, PBS Holdings Pty Ltd (PBS) (referred to in

the judgment at first instance as Sydney Wide Coordinators or SWC), a water

servicing co-ordinator, submitted the sewer design prepared by IWS to Sydney

Water for the latter’s approval for the purposes of obtaining a s 73 certificate.

This design included the proposal involving pumping stations, rather than a

gravity-based solution.

9 On 24 November 2015, White as Developer, PBS as Water Servicing

Coordinator and IWS as Designer entered into a Developer Works Deed (the Deed) with Sydney Water. The requirements for such a Deed and its terms are

considered more fully later in this judgment. (The construction of this Deed and

a consideration of to whom warranties were given under it formed an important

element of the controversy between the parties.)

10 In January 2016, Sydney Water rejected the sewer design prepared by IWS.

11 On or about 16 May 2016, following a suggestion by Sydney Water in March of

that year, PBS submitted to Sydney Water an alternative design that used a

horizontal deep-bore main to gravity drain for the site (the horizontal bore sewerage system) instead of the previously submitted and rejected pumping

stations design. This was a gravity-fed solution.

12 On or about 11 August 2016, Sydney Water approved the revised sewer

design.

13 In or about late December 2016, the sewer infrastructure works for the

Development were relevantly completed.

14 The essence of the claim brought in the Technology and Construction List of

the Equity Division of this Court was pithily summarised by the primary judge

as follows (noting that his Honour referred to PBS as SWC):

“7. White says that, in breach of contract, IWS failed to prepare a satisfactory sewer design within a reasonable time and that SWC, for its part, failed to ensure that IWS discharged its obligations to do so, with the consequence that completion of the development was delayed, which caused White to suffer loss and damage.

8. The substance of this complaint is that IWS proposed to Sydney Water an installation involving pumping stations rather than a gravity-based solution involving a deep underbore, which latter solution was eventually approved by Sydney Water.

9. White says that IWS’s breach caused the completion of the project to be delayed from 15 July 2016 to 1 March 2017.”

15 As put at [157] of the primary judgment, “White’s essential complaint is about

delay. Its loss was allegedly caused because the underbore design was not

prepared and submitted earlier.”

16 White claimed to have incurred substantial financing costs as a result of the

delay to completion of the Development which was said to have been

occasioned by the initial proposal for, and ultimate rejection of, the two

pumping stations designs, rather than the horizontal bore sewerage system

which was ultimately approved and implemented.

17 The primary judge noted at [153] that the experts called by both parties agreed

that “gravity sewerage options are generally preferred over pumping stations”,

and (at [155]) that a design should have been submitted by 24 November 2015

which, if prepared to the prescribed standard, would likely have been approved

on or about 4 January 2016. This, it was said, would have allowed the

completion of the Development by July 2016, whereas ultimate approval of the

horizontal bore sewerage system was not submitted until mid-May 2016 and

not approved until 11 August 2016, with installation of the sewerage

infrastructure not completed until late December 2016.

18 The primary judge rejected White’s claims, and dismissed the Further

Amended Technology and Construction List Statement with costs.

Issues on appeal

19 A number of issues arise on appeal including:

(1) whether PBS and IWS had obligations to White under the Deed, or whether contractual obligations were only owed pursuant to the Fee Proposal. The significance of this issue lay in the fact that the Deed contained warranties given by both IWS and PBS which, if owed to White in addition to (as opposed to solely to) Sydney Water, would, together with an entire agreement clause in the Deed, permit White to circumvent an argument that the terms of IWS’s obligations under the Fee Proposal had been qualified by verbal instructions said to have been given by Mr Unicomb on behalf of White to Mr Edwards, prior to entry into the Deed, not to pursue a gravity-fed design solution (the Instruction);

(2) whether the primary judge erred in holding that the Instruction had in fact been given, and whether he erred in his findings as to the timing and terms of such instructions. A related issue concerned the nature of this finding by the primary judge, and whether it was in part a

demeanour-based finding, with White contending that it was not, and that this Court was in as good a position as the primary judge to make an assessment as to whether or not the disputed Instruction had been given;

(3) the role played by Mr Ian McIntyre (Mr McIntyre), an “adviser” appointed under the Uniform Civil Procedure Rules 2005 (NSW) r 31.54 (UCPR), and whether the primary judge failed to afford White procedural fairness by acting upon his advice without giving the parties an opportunity to make submissions in respect of that advice or its application;

(4) the adequacy of the primary judge’s reasons with respect to the expert evidence on the issue of delay and damages;

(5) subsidiary issues relating to the damages claim.

20 Before turning to consider each of these issues, it is necessary to set out in

considerably greater detail both the statutory and factual background to the

engagement by White of PBS and IWS, the relevant terms of the Fee Proposal

and of the Deed, and of the events following rejection of the pumping station

proposal.

BackgroundSydney Water

21 It is first convenient to refer to Sydney Water and the role it plays in the

development of land, such as that which was the subject of the Development in

the present case.

22 Sydney Water Corporation is constituted by s 4 of the Sydney Water Act as a

corporation. It is a corporation within the meaning of the State Owned

Corporations Act 1989 (NSW). One of its functions under s 12 of the Sydney

Water Act is, under licence, to “provide, construct, operate, manage or

maintain systems or services for”, inter alia, “providing sewerage services” or

“disposing of waste water”.

23 Division 9 of the Sydney Water Act is headed “Development”. It makes

provision, in s 70, for the issue of compliance certificates in relation to

particular developments, certifying either that Sydney Water’s requirements

under Div 9 in relation to the development have been complied with or that no

such requirements were imposed by Sydney Water in relation to the

development.

24 Section 73 of the Sydney Water Act provides that:

“If an application is made to the Corporation for a compliance certificate, the Corporation:

(a) may grant the developer a compliance certificate, without serving a notice on the developer under section 74, or

(b) must grant the developer a compliance certificate, when the Corporation is satisfied that the requirements of a notice served on the developer under section 74 have been complied with, or

(c) must, at the developer’s request, grant the developer a compliance certificate, if no compliance certificate has been granted to, and no notice under section 74 has been served on, the developer within 60 days after the making of an application under section 72 or within a further period approved by the Minister in a particular case that is notified to the developer within the period of 60 days.”

25 Section 74 of the Sydney Water Act provides that:

“(1) If an application is made to the Corporation for a compliance certificate, the Corporation may, before proceeding further with the application, serve a notice on the developer requiring the developer to do any one or more of the following:

(a) to pay an amount to the Corporation to cover the whole or an appropriate portion of relevant costs (as defined in section 75), as assessed by the Corporation either in the notice or in another notice,

(b) to enter into one or more agreements providing for any one or more of the following:

(i) the payment of such an amount to the Corporation,

(ii) the construction, or the construction and the manner of construction, of the works specified in the notice,

(iii) the transfer of any such works to the Corporation,

(c) to provide reasonable security, in a form approved by the Corporation, for due performance of such an agreement,

(d) to attend to such additional or ancillary matters as are specified by the Corporation and as are necessary to give effect to any one or more requirements imposed under paragraphs (a)–(c).

(2) The Corporation may withdraw a requirement contained in a notice under this section, in which case the requirement is treated as not having been made.

(3) This section has effect subject to the Independent Pricing and Regulatory Tribunal Act 1992.”

26 The primary judge observed (at [40]) that, once Sydney Water receives an

application for a s 73 Certificate, it issues a Notice of Requirements (NOR)

which the Developer is required to satisfy. The primary judge noted that

“[t]hese requirements inevitably require the developer to engage an authorised

Water Servicing Coordinator to be the contact point with Sydney Water”, and

that “Sydney Water does not have direct contact with the developer.”

27 The primary judge noted (at [40]) that Mr Edwards of IWS was designated as a

Key Person with PBS, “which gave him direct access to Sydney Water”. The

primary judge also noted (at [41]) that Sydney Water “requires the developer to

engage appropriately capable Developer Infrastructure Providers (in this case

IWS) and then to enter into a Developer Works Deed (incorporating standard

terms) which sets out all the parties’ roles and responsibilities.”

Early engagement

28 From as early as 2012, Mr Unicomb was in discussion with Mr Edwards in

relation to sewerage works on the development site. As is perhaps not

unusual, no contractual arrangements were in place between White and IWS at

this time in relation to the Development, although documents before the Court

suggested that Mr Edwards was engaged in work with Mr Unicomb on other

projects at around this time.

29 Thus, on 9 January 2012, Mr Unicomb sent an email to Mr Edwards with the

subject line “Kiama Subdivision”, inquiring as to how he was going with the

“sewer proposal for the Milne subdivision (that is the land above the Cedar

Grove Estate)”. Just under a month later, on 3 February 2012, Mr Unicomb

sent to Mr Edwards a plan “showing approx. location of sewer through the

treed area to the east of the site”. The attachment to that email was not in

evidence before the primary judge. There was, however, in evidence a plan of

the proposed development which had been prepared by Don Fox Planning Pty

Ltd (the Don Fox Plan) and was described on the plan as “Lot Dimensions &

Areas Cedar Grove Stage 2 White Constructions”. (This plan was reproduced

at [170] of the primary judgment.) On this plan, which is to be inferred was sent

to Mr Edwards by Mr Unicomb, Mr Edwards had handwritten the following five

options:

“Option 1 – Retain & fill approx 8m retaining wall & drain back to Bong Bong Rd.

Option 2 – Open cut within proposed Rd. Max depth of abt 7m – gravity to Lot 1.

Option 3 – Low pressure sewer system in footway. Lots within this catchment require collection tank & pump set up.

Option 4 – Pump station & rising main for this catchment.

Option 5 – Directional drilling/horizontal bore. (Blue stone may be a problem”.

30 Metadata that was in evidence [Blue 4/1511] disclosed that the Don Fox Plan

with Mr Edwards’ handwritten options was scanned into his computer on 6

February 2012 in a file named “cedargrove2sewerconcept”. This document

was referred to by Mr Edwards in his affidavit of 3 July 2019 as the “2012

Options Document”, and he deposed in this affidavit that he had no email

record of sending the 2012 Options Document to Mr Unicomb which he said

was “unsurprising to me because it is very likely that I attended Mr Unicomb’s

office to deliver the document by hand after I had scanned it to my computer”.

31 On the same day that the 2012 Options Document was scanned into Mr

Edwards’ computer, Mr Unicomb emailed him inquiring how he was “going with

[the] sewer design concept for Milne land at Kiama”. The evidentiary record

before the Court was silent as to any documentary response to this email

inquiry. Mr Edwards said in his affidavit of 3 July 2019 that he had no record of

responding to Mr Unicomb’s email and posited that this was because it was

“likely that I attended on Mr Unicomb personally to provide him with the original

2012 Options Document”. Mr Edwards said that he did not have a copy of the

original 2012 Options Document with his handwritten annotations on his file,

and that the only copy he could locate was the scanned document on his

computer.

32 There was a contest between Mr Unicomb and Mr Edwards as to whether or

not Mr Unicomb had even been provided with the 2012 Options Document.

This was resolved in favour of Mr Edwards’ account that it had been.

33 The evidentiary record discloses little about what transpired between February

2012 and the first quarter of 2013 with regard to the Development. It would

appear that Mr Unicomb was working with Council in relation to the

development of a Planning Proposal for the Development and that that

proposal required input in relation to Sydney Water’s requirements for

sewerage and water facilities to the site. It would appear that there had been

some liaison with Sydney Water because, on 2 April 2013, Sydney Water wrote

to “Unicomb Development Services” (presumably Mr Unicomb’s service

company) c/- of Sydney Wide Coordinators with what was described as a

“Feasibility Letter” with regard to the site and the proposed development. This

letter contained, under the heading “What You Must Do To Get A Section 73

Certificate In The Future”, the following:

“1. Obtain Development Consent from the consent authority for your subdivision proposal.

2. Engage a Water Servicing Coordinator (Coordinator).

You must engage your current or another authorised Coordinator to manage the design and construction of works that you must provide, at your cost, to service your subdivision. If you wish to engage another Coordinator (at any point in this process) you must write and tell Sydney Water.

For a list of authorised Coordinators, either visit www.sydneywater.com.au > Building and Developing > Developing Your Land or call 13 20 92.

The Coordinator will be your point of contact with Sydney Water. They can answer most questions that you might have about the process and developer charges and can give you a quote or information about costs for services/works (including Sydney Water costs).

3. Developer Works Deed

After the Coordinator has submitted your new application, they will receive the Sydney Water Notice and Developer Works Deed. You and your accredited Developer Infrastructure Providers (Providers) will need to sign and lodge both copies of the Deed with your nominated Coordinator. After Sydney Water has signed the documents, one copy will be returned to the Coordinator.

The Deed sets out for this project:

• your responsibilities;

• Sydney Water's responsibilities; and

• the Provider's responsibilities.

You must do all the things that we ask you to do in that Deed. This is because lots in your subdivision do not have water and sewer services and you must construct and pay for the following works extensions under this Deed to provide these services.

Note: The Coordinator must be fully authorised by us for the whole time of the agreement.”

34 Section 4.2 of the Feasibility Letter, headed “Sewer”, was as follows:

“Each lot in your subdivision must have a sewer main that is the right size and can be used for connection. That sewer must also have a connection point within each lot's boundaries.

Sydney Water has assessed your application and found that:

• The proposed development lies to the west of Hutchinson Street. It is currently zoned as Rural Landscape (RUZ) and is not included in the Illawarra MDP.

• This development falls within the catchment draining to the existing 300 mm sewer main constructed under WN 300526 (See Figure 1 below).

• The 300 mm sewer main has sufficient capacity to service the proposed development.

• You must construct a waste water main extension to serve your proposed 93 Lot subdivision. The terms of the Deed define this extension as 'Major Works'.

• You must use Sydney Water's Technical Specifications for Low Infiltration Sewer Systems to plan, design and construct the sewer. This specification must be used in conjunction with (and have precedence over) the Sewerage Code of Australia, WSA02-2002 (Sydney Water Edition). A Defect Liability Period of 12 months will apply to the works following their completion and acceptance by Sydney Water. Sydney Water will carry out Validation Testing one month prior to the expiry of that period. If we find any defects we will tell you. It will be your responsibility to rectify any notified defects.

• Any lender called by you for the works will need to provide for the above requirements.”

35 At some point in 2013 (the evidentiary record did not disclose precisely when),

Mr Unicomb prepared a Planning Proposal in respect of the Development.

Section 3.3.9.2 of that document, headed “Sewer and Water Reticulation”, was

in the following terms:

“Sydney Water Coordinators have completed a preliminary sewer design for the masterplan of the site. Plan No.1 in Appendix 10 shows the preliminary sewer layout. Sydney Water Coordinators are approved Water & Sewer coordinators for Sydney Water works.

The preliminary sewer design shows

(i) the northern section of the site draining to Banksia Street and Lilly Pilly Way within the adjacent Cedar Grove Estate. Design flow calculations by Sydney Wide Coordinators show there is sufficient

capacity in the Cedar Grove Estate sewer system for the increased flows from this development.

(ii) The south eastern catchment of the site draining down the Noorinan and Hutchinson Street road reserves to connect with the Willow Creek sewer carrier, and

(iii) Several options for the south western catchment of the development. The low point of the catchment for sewer is approximately 7m lower than the high point between the south eastern and south western catchments and approximately 6m lower than the high point between the south western and north western catchment of the development. The viable options identified to sewer this catchment are

• Gravity feed to the south eastern catchment by deep open cut excavation. This option is shown on Plan No.1 in Appendix

• Low pressure sewer system for the south western catchment. This would require a collection tank and pump setup on each lot similar to the system in Jamberoo

• Pump station and rising main for this catchment, and

• Construction of a gravity sewer main through the rural property to the west with a connection to the low pressure main along Jamberoo Road. This option is shown on plan no. 2 in Appendix 10.

Sydney Water has confirmed that the site can be serviced with reticulated sewer and water services.” (emphasis added).

36 Plan No 1 in the Appendix as referred to in the Planning Proposal (Options Plan 1) had been prepared by Mr Edwards in or about March 2013. An image

of that Plan is reproduced below.

It will be seen that that Plan contained a notation headed “OPTIONS IF

GRAVITY SEWER NOT CHOSEN” under which the following was

noted:

“1. Gravity system using deep cut excavation.

2. Pump station and rising main.

3. Low pressure system in southwestern catchment.”

37 There is something of a gap in the evidentiary record for approximately 8

months following receipt of the Sydney Water Feasibility Letter in April 2013.

That hiatus may well have been because White was awaiting rezoning of the

developed land to R2 residential. So much was suggested by an email from Mr

Unicomb to Mr Edwards on 20 January 2014, in which he wrote:

“As discussed last Friday the Planning Proposal for the Milne property at Kiama has been given gateway approval for rezoning to R2 residential. We need to review the sewer options for the site and present them to Sydney Water. The outcome is to get Sydney Water’[s] agreement in principle to our preferred option and to price that option for inclusion in the finance agreement for the site.

Can you please review the options so that we can meet to discuss the various advantage/disadvantages of each option. After we have met to review can you then arrange a meeting with Sydney Water so that we can present the options to them. I have no problems with initial discussions with SW or the exchange of info regarding the various options. The idea is to come to the best servicing option for the site.”

38 On 7 April 2014, Mr Unicomb emailed Mr Edwards a contour plan for the land

asking him to review the plan, to then arrange a meeting with Sydney Water

“ASAP”, also to charge White c/- Mr Unicomb’s service company on an hourly

basis for that work. It was at about this time that Mr Edwards said in his

affidavit of 8 June 2018 that he had a conversation with Mr Unicomb to the

following effect:

“Edwards: ‘Trevor, the full gravity system is the option that Sydney Water would prefer most, but I’m concerned that the geological conditions will prevent that from being a viable option.’

Unicomb: ‘Joel, that’s correct. Even though a full gravity system would be preferred by Sydney Water it would require us to carry out either open cut excavation or deep boring to achieve the result. Open cut excavation could significantly affect the lot-yield and I can’t find someone that could bore to the required depth in this dense rock. The full gravity options are completely off the table. Please find an

alternative option for the sewer arrangements other than a gravity system’.”

39 Mr Unicomb denied this conversation.

40 As summarised by the primary judge at [46]-[48] of the judgment, Mr Edwards

said that he told Mr Unicomb on a number of occasions that Sydney Water’s

preferred option was a complete gravity feed system, unless it was persuaded

otherwise. He also recalled having discussed with Mr Unicomb the possibility of

boring and the geological composition of the rock on the development site in

the period between April to October 2014, but that Mr Unicomb repeatedly

indicated that the rock could not be bored due to its hardness. Mr Edwards

recalled such a conversation occurring and attending a meeting at Mr

Unicomb’s home office in Blackbutt in or about May 2014 and that Mr Unicomb

had plans and diagrams showing possible routes and depths, and that he

again emphasised the hardness of the rock.

41 The primary judge recorded at [48] that Mr Unicomb denied that any such

conversations took place with Mr Edwards and that he never discussed with Mr

Edwards the possibility of boring until Sydney Water requested in March 2016

that it be considered in an options report. The primary judge did not accept this

evidence.

42 When under cross-examination, Mr Edwards said that “the discarding of the

bore option was much, much earlier, so 2012”. Mr Edwards connected the

answer in this passage of cross-examination with the 2012 Options Document

(which at Option 5 had referred to horizontal drilling) and Plan No 1 of March

2013 (see [36] above), which made no reference to drilling as an option if a

gravity sewer was not chosen, the inference being that that option had been

dropped in the interim. Mr Edwards had given no evidence of any such

conversation in 2012 or 2013 in his affidavits, despite acknowledging that he

had exhausted his recollection of any relevant conversations with Mr Unicomb

in those affidavits. (In its submissions on appeal, White made much of this

change in Mr Edwards’ evidence, the absence of any reference to a

conversation in 2012/2013 in his affidavit evidence, and submitted that this

undermined the integrity of his evidence including the accuracy of his account

as to what he claimed Mr Unicomb had said to him in 2014 (see [40] above)).

43 When challenged with the proposition that the first time any discussion of a

horizontal boring option between Mr Edwards and Mr Unicomb occurred was

after 29 March 2016 (when Sydney Water had raised it: see at [72] below), Mr

Edwards responded:

“That doesn’t even make sense, I don’t think. I think if I prepare a document, you said - you mentioned before that I forgot about that over a 25 couple of days, but I prepared a document with that option, then why would I - it doesn’t make any sense to say that I just forgot that was an option altogether. That discussion took place.”

44 Returning to the judgment, the primary judge recorded at [50]-[56] that:

“[50] Edwards says that the topic of gravity feed on the site by deep boring was raised at various times. He says that he recalls Unicomb saying words to the effect:

Taking into account the hardness of the rock, horizontal boring is just not possible. The depth of the bore holes would have to be up to 11 meters for a considerable distance and I don’t know anyone that has the capability to bore with the degree of accuracy required to put the sewer in. If the sewer was not bored, then it could only be achieved by open cut excavation which can’t be done because it would probably significantly affect the yield on the development because of its effect on buildings adjacent to sewer lines.

[51] Edwards says that whilst he was aware of horizontal boring generally, he had never had any experience or knowledge of it occurring in the area due to its rocky nature.

[52] Unicomb says that at no time during his discussions with Edwards did Edwards suggest a boring option. He says that the boring option involved boring from a low point in the SW catchment to a low point in the SE catchment, then boring from the low point in the SE catchment through the ridge between the SE catchment and the northern catchment. The bore would then discharge into the gravity sewer system in the northern catchment of the site. He says further that at no time during his discussions with Edwards did Edwards tell him that a detailed options report would need to be submitted to Sydney Water to get approval for the pumping station option.

[53] Unicomb says that on a number of occasions between April and November 2014, Edwards said to him words to the effect of:

Pumping stations have been used on other sites in the Sydney Water distribution area. They are the best solution for the job.

[54] Edwards says that Unicomb instructed him to research and advocate a packaged pump system. He recounts a conversation in about May 2014 to the following effect:

Edwards: Trevor, bearing in mind that the cost of full pump stations would be significant and the lead in time required lengthy, pump stations are typically very large and complex developments and the lots required to be serviced probably do not meet that criteria, I think the most appropriate pump system would be a package pump because they are relatively inexpensive and I have had previous experience with installing this type of system.

Unicomb: I agree, Joel. I think that the best way forward is to proceed with the package pump system.

[55] On 7 November 2014, Unicomb obtained a further geological report from Douglas Partners. The report revealed very high-strength latite and that the rock was typically massive. The report stated that excavation into the high-strength rock would be difficult and would require heavy ripping, hammering, grinding or possibly rock-sawing.

[56] I interpolate that Unicomb says (which appears to be inaccurate) that he only sought advice from White’s geotechnical consultant regarding the hardness of rock when seeking costs from boring contractors in mid-2016. It is plain that Unicomb (consistently with what Edwards says) was conscious of the rock problems much earlier.”

45 The next event of significance was the making of a Fee Proposal by IWS

which, although never signed, was one of the two contractual documents by

reference to which White sought to make its case against IWS.

The Fee Proposal

46 On 18 December 2014, Mr Edwards sent to Mr Unicomb a Fee Proposal which

commenced with the following paragraph:

“We have pleasure in submitting our Fee Proposal for Design & Project Coordination Service for the delivery of design & field coordination of sewer infrastructure to Sydney Water (see item 1 of Project Mana9ers Agreement). lf you accept our proposal it will become an agreement between you (the Developer) and lllawarra Water & Sewer Design Pty Limited (the Project Coordinator & Designer).”

47 The Fee Proposal included the following:

“Our Service

Our service to you is to ensure your obligations to Sydney Water, under your Works Agreement are complied with. Such obligations will include, that you as the Developer, must complete the construction of the works as specified in the Notice of Requirements.

We will achieve this by following the Sydney Water Asset Creation Developer Process. Our services, as part of that process include the following:

• Prepare the design package, prepare checklists and submit to Sydney Water for approval

• Liaise with Sydney Water should the design require amendment

• Prepare Review of Environmental Factors from designer

• Review constructor's Safe Work Plan, Environmental Management Plan, Incident Management Plan and Traffic Management Plan (if required)

• Pursue design approval and forward construction package to constructor

• Liaise with constructor on job commencement date and initiate Construction Commencement Notice and forward same to Sydney Water

• Co-ordinate the work required by the Notice of Requirements with site personnel, constructor, designer and Sydney Water personnel as appropriate

• Undertake field audits and/or field checking

• Liaise with constructor during construction stage

• Receive and review test results

• Prepare Work-as-Executed drawings

• Request chlorination of water line (where applicable)

• Notify and co-ordinate connection to Sydney Water system

• Assemble and distribute to field representative field inspection package for Sydney Water sign-off

• Assemble and submit Project Completion Package to Sydney Water

• Receive Transfer Letter from Sydney Water and liaise with developer regarding payment of any outstanding Sydney Water charges

• Receive and Issue Section 73 Compliance Certificate to developer (if applicable)

Please note that as Project Coordinators we will progress the above as expeditiously as possible but cannot totally control the input of others or lack thereof.

Exclusions:

• Construction work

• All negotiations concerning Road Opening Permits and or Road Restoration Receipts

• All negotiations with adjoining owners, including for right of entry

• Protracted negotiations with Sydney Water

• Obtaining quotations from accredited contractors and reviewing same

• Co-ordination and acceptance of preferred quote on behalf of developer

Should the developer require any of the above exclusions to be provided in our quotation then this must be stipulated in writing.

Your Responsibilities:

• Ensure site survey has been undertaken

• Ensure boundary alignments are maintained adjacent to works that are to be undertaken

• Payment terms of this agreement are to be kept. If payment terms are not met, we reserve the right to cease work and retain a lean over all documentation in our possession.

Scope of Works

The scope of works for the project is:

• Sewer & Water Design - $26260 + GST

• Field Coordination / PM - $29795 + GST

• Sewer & Water WAC - $7575 + GST

• Mains to Meter $5050 + GST”.

48 It is uncontroversial that, by 3 February 2015, IWS had prepared a sewer

design, incorporating pumping stations, with a connection to a lead-in main,

and that, by 11 February 2015, Mr Edwards had provided Mr Unicomb with

draft sewer plans.

49 On 16 June 2015, White obtained conditional consent from Kiama Municipal

Council for the Development and took transfer of the land on 26 June 2015,

which it had contracted to purchase from a Mr and Mrs Milne.

50 On 7 July 2015, White entered into a works contract with Cleary Bros for the

construction of the works necessary to achieve the subdivision (the Building Contract). These included drainage works, road works, water reticulation and

sewer works. The Building Contract specified the Date for Practical Completion

to be 30 weeks, with this period later extended to 43 weeks. Mr Unicomb was

appointed Superintendent under the Building Contract.

51 On 17 August 2015, Cleary Bros commenced work on the site.

52 White applied to Sydney Water for a s 73 Certificate on 15 September 2015

and Sydney Water issued a NOR on 4 November 2015. This included the

requirement to enter into a Developer Works Deed. Addressed to Unicomb

Development Services c/- Sydney Wide Coordinators, the NOR included the

following:

“You and your Providers will need to enter into an agreement with Sydney Water. To do this you need to sign and lodge both originals of the enclosed Developer Works Deed (Deed) with your nominated Coordinator. You will then need to work with your Coordinator to have the other Providers sign the Deed.

Before signing the Deed, each party must also read and understand the conditions of the agreement that are set out in the Developer Works Deed - Schedule 1: Standard Terms document. That document as well as information about it are available at sydneywater.com.au > Plumbing, building & developing > Developing > Developer deeds & standard terms

The Deed and the Standard Terms set out for this development all parties' roles and responsibilities as well as other information.

You must do all the things that we ask you to do in the Deed. This is because lots in your subdivision do not have water and sewer services and you must construct and pay for the following works extensions under this Deed to provide these services.”

The Deed

53 On 24 November 2015, the Deed was entered into between Sydney Water,

White, PBS and IWS.

54 Part B2(a) of the Deed comprised an entire agreement clause, which provided

that:

“The Developer Workers Deed makes up the entire agreement between the parties about the Developer Workers. It completely replaces any previous understanding, agreement, representation or warranty”.

As will be seen, White sought to rely on this clause as superseding any prior

agreement or understanding that had been reached between Mr Unicomb and

Mr Edwards, to the effect that a design involving boring would not be pursued.

55 Part B1 of the Deed recorded that the Deed comprised a number of

instruments, one of which was Schedule 1: Standard Terms (the Standard Terms).

56 Part A1 of the Standard Terms was entitled “General obligations”. Under cl

A1.1 of the Standard Terms, it was provided that:

“(a) The Developer is responsible for the Developer Works and must ensure that they are performed in line with the Developer Works Deed.

(b) The Developer must engage a Water Servicing Coordinator (WSC) to manage the design and construction.

(c) The WSC must ensure that Listed Providers design and construct the works in line with:

(i) the Developer Works Deed and any document forming part of it, such as the Notice of Requirements (NOR), Job Specific Schedule Letter and Listed Provider Instructions

(ii) relevant Sydney Water policies, forms and specifications

(iii) relevant Legal Requirements and Standards.

(d) If either the Developer or a Listed Provider Party fails to perform an obligation, Sydney Water, at its discretion, may either:

(i) ask the Developer to make good the failure at no cost to Sydney Water

(ii) make good the failure itself and recover its costs as a debt to be paid in line with A7.3(b).

(e) The terms of A1.1 (d) do not affect any other rights Sydney Water might have. In particular, if a breach of the Deed causes Sydney Water to breach a Customer Contract, the Developer must pay Sydney Water damages that cover customer redress”.

57 Under cl A1.2 of the Standard Terms, Sydney Water’s obligations were

specified as follows:

“(a) Sydney Water must prepare the Developer Works Deed between the parties and set:

(i) the functional requirements for water, wastewater and stormwater services

(ii) standards for design, construction (including field testing and drilling) and asset recording

(iii) acceptable pipeline materials and products

(iv) the acceptance requirements.

(b) Sydney Water does not have to do anything to help the Developer or Listed Providers perform their obligations under the Developer Works Deed”.

58 Part B6 of the Standard Terms was entitled “General warranties”. Clause B6.1

of the Standard Terms contained “Developer warranties”, as follows:

“(a) The Developer warrants to Sydney Water that it has:

(i) not been found by the Independent Commission Against Corruption (ICAC) to have engaged in Corrupt Conduct; and

(ii) read and will comply with Sydney Water's Business Ethics Guide on the website.

(b) The Developer warrants that, in ensuring the performance of the Developer Works, it will not employ or continue to employ an employee or subcontractor found by the ICAC to have engaged in Corrupt Conduct, or who has had their listing terminated by Sydney Water for a breach of the Business Ethics Guide.

Sydney Water may direct the Developer to stop employing an employee or subcontractor to ensure the performance of the Developer Works and stop them from being on Sydney Water's premises or worksites if the employee or subcontractor has:

(i) had their listing terminated by Sydney Water for a breach of the Business Ethics Guide; or

(ii) been found to have engaged in Corrupt Conduct by the ICAC.

The Developer must then stop employing that employee or subcontractor for ensuring the performance of the Developer Works and appoint a replacement subcontractor under the Developer Works Deed.

(c) The Developer warrants to Sydney Water that:

(i) it is the site's registered proprietor or has the registered proprietor's authority to enter the site and perform the Developer Works;

(ii) if Sydney Water is the site's registered proprietor or has an easement over the site, it has gained all necessary approvals from Sydney Water to perform the works (with the WSC);

(iii) it has reviewed the NOR with the WSC and is satisfied that the Developer Works can be designed and constructed in line with the requirements;

(iv) it will arrange for the Developer Works to be designed and constructed in line with the NOR;

(v) it accepts that, if any work does not meet the terms of this Deed, Sydney Water is entitled to stop the work on site immediately and seek compensation under section 45 of the Sydney Water Act 1994;

(vi) when the Developer Works are completed, they must be fit for purpose and comply with this Deed, all Legal Requirements and Standards;

(vii) only Listed Providers will perform the Developer Works; and

(viii) if the Listed Provider performing the works is found to have connected to a Sydney Water asset without appropriate approval then, at the direction of Sydney Water, the listed provider will immediately cease work. The developer must then stop employing that Listed Provider for ensuring the performance of the developer works and appoint a replacement Listed Provider under the Developer Works Deed.

(d) The Developer warrants that it will notify Sydney Water, the Designer, the WSC and the Constructor in writing immediately if it becomes aware that it might:

(i) discontinue its involvement with the Developer Works or

(ii) transfer ownership of the site to another Person before the works are finished.

Sydney Water will then either negotiate transitional arrangements for the Developer Works or ask the Developer to immediately stop performing them.

(e) The Developer warrants that, after giving the notification in B6.1(d), it will make sure the Developer Works do not restart until all parties (including incoming parties) have executed the Novation Deed in Schedule 2.

(f) The Developer warrants that it accepts the Novation Deed.

(g) The Developer warrants that:

(i) the acts and omissions of Sydney Water, its sub-licensees, assignees and other users in relation to the Developer Works, Background IP and Foreground IP in accordance with Sydney Water's rights under the Developer Works Deed do not infringe any person's rights in relation to Intellectual Property or Moral Rights or misappropriate a trade secret or breach any person's confidence;

(ii) it has the right to grant any assignments and licences granted pursuant to the Developer Works Deed;

(iii) it has not and will not infringe the Intellectual Property or Moral Rights, misappropriate any trade secret or breach the confidence of any person or entity in relation to this Developer Works Deed; and

(iv) it will not act in a manner inconsistent with the rights of Sydney Water in the Developer Works, Background IP or Foreground IP as set out in the Developer Works Deed”.

59 Clause B6.2 of the Standards Terms contained “Listed Provider Party

warranties”, as follows:

“(a) Each Listed Provider Party warrants to Sydney Water that it has:

(i) not been found by the ICAC to have engaged in Corrupt Conduct; and

(ii) read and will comply with Sydney Water's Business Ethics Guide on the website.

(b) Each Listed Provider Party warrants that, in performing the Developer Works, it will not employ or continue to employ an employee or subcontractor found by the ICAC to have engaged in Corrupt Conduct, or who has had their listing terminated by Sydney Water for a breach of the Business Ethics Guide.

Sydney Water may direct the Listed Provider Party to stop employing an employee or subcontractor to provide the Developer Works and stop them from being on Sydney Water's premises or worksites if the employee or subcontractor has:

(i) had their listing terminated by Sydney Water for a breach of the Business Ethics Guide

(ii) been found to have engaged in Corrupt Conduct by the ICAC.

The Listed Provider Party must then stop employing that employee or subcontractor for providing the Developer Works and appoint a replacement subcontractor under the Developer Works Deed.

(c) Each Listed Provider Party warrants that it:

(i) has entered into an agreement with the Developer; and

(ii) will perform all its obligations under that agreement in line with its terms.

(d) Each Listed Provider Party warrants that it will, while performing the Developer Works:

(i) Be listed on Sydney Water's web site and maintain its obligation to meet the relevant Mandatory Criteria for Providers of Developer Works; and

(ii) ensure that any person it nominates to perform any function (including signing documents) relating to the Developer Works or this Deed, is authorised to perform that function.

(e) Each Listed Provider Party warrants that it accepts the Novation Deed in Schedule 2.

(f) Each Provider party warrants that it has a Quality Management System (QMS) and a Product Specific Quality Plan (PSQP) which will maintain the following minimum quality assurance certification requirements:

(i) third party certification of the Providers QMS including processes to address Sydney Water's requirements for PSQP by an independent JAS/ANZ registered certification company to AS/NZS ISO 9001. The QMS must address all warranties, activities and services that relate to the provider under this Developer Works Deed, or

(ii) third party certification of the providers QMS and the PSQP that documents the Providers processes to address Sydney Water's requirements for a PSQP by an independent JAS/ANZ registered certification company firm to AS/NZS ISO 9001; or

(iii) in the case of a provider that performs construction work only in relation to Developer works, a third party accredited Product Specific Integrated Management system that complies with the Civil Construction Management Code.

(g) The Provider will ensure and warrants to Sydney Water that developer works performed by it will be fit for the purpose or purposes detailed in its agreement with the developer.

Without limiting any other right which Sydney Water may have, if within 12 months of the date of Transfer of Ownership Notice, the Developer Works prove to be defective or not fit for purpose due to acts, errors or omissions of the Provider, the Provider must remedy the defects, by repairing, replacing or modifying the defects within the reasonable period specified by Sydney Water.

The Provider must meet all costs of the remedial work.

If the Provider does not remedy the defects by the period specified by Sydney Water, Sydney Water may remedy the defects at the cost of the provider. The provider must pay any costs Sydney Water incurs in remedying the defects within 30 days of the date of Sydney Water's invoice.

Sydney Water may consider it necessary to remedy the defects without first giving the Provider the opportunity to do so. The Provider must pay any costs Sydney Water incurs in remedying the defects within 30 days of the date of Sydney Water's invoice”.

60 Clause B6.3 of the Standards Terms contained “Sydney Water warranties”,

which provided that:

“(a) Information made available in the documents of the Developer Works Deed, before or after the e-Developer Application, does not

constitute a warranty or representation of any kind by Sydney Water. The Developer and Listed Provider Parties acknowledge that they must check and verify this information.

(b) The Developer will not be entitled to any money or to extend the Developer Works Term because of any alleged statement, warranty or representation about the information in B6.3(a) that might prove incorrect.

(c) Sydney Water makes no representations about the financial viability of any Listed Provider.

(d) Sydney Water makes no representations about, and will not be responsible for:

(i) examining or approving any drawings

(ii) inspecting or testing any Developer Works or materials

(iii) giving any advice to the Developer”.

61 Part B7 of the Standard Terms was entitled “Specific warranties, indemnities

and release”. Clause B7.1 of the Standard Terms contained “Designer

warranties”, which provided that:

“(a) As well as the warranties under B6.2, the Designer warrants that:

(i) it will perform all its obligations under the Instructions to Designers – Major Works and related documents

(ii) it has prepared or will prepare the Design using due skill, care and diligence

(iii) the Design will be fit for purpose

(iv) the Developer Works depicted in the Design can be constructed in line with the Design.

(b) The Designer also warrants that it has reviewed the NOR and is satisfied that a Design can be prepared that will:

(i) meet these requirements

(ii) respond to any comments made by Sydney Water

(iii) satisfy all Legal Requirements and Standards that applied when the Design Package was completed”.

62 Clause B7.2 of the Standard Terms contained “WSC warranties”, which

provided that:

“As well as the warranties under B6.2, the WSC warrants that it:

(a) will perform all its obligations under the relevant Instructions to Water Servicing Coordinators, its contract with Sydney Water and related documents

(b) will monitor the performance of all Listed Providers in line with:

(i) the Developer Works Deed

(ii) any comments made by Sydney Water about the Design Package

(iii) all relevant Legal Requirements and Standards

(c) will meet its obligations under its agreement with the Developer to help complete the Developer Works

(d) for Major Works, will work with the Designer to monitor the design and construction of the Developer Works to ensure that they will be fit for purpose and comply with:

(i) the Developer Works Deed

(ii) any comments made by Sydney Water about the Design Package

(iii) all Legal Requirements and Standards

(e) for Minor Works, will also act as the Designer and assume any obligations identified in the Developer Works Deed

(f) if the Constructor vacates the site [see B7.3(d)], will notify Sydney Water in writing at least two days before the Constructor plans to resume construction”.

Events after the Deed

63 The following uncontroversial chronological narrative of events is largely taken

directly from the primary judgment.

64 IWS’s sewer design was submitted to Sydney Water on 3 February 2016. The

design provided for packaged pump stations.

65 On 9 February 2016, IWS lodged with Sydney Water a Waste Water Servicing

Options Report, together with a contour plan. It included the following:

“Introduction / History

Stage 2 of Cedar Grove Estate in Kama [sic] is an approved 100 lot residential subdivision off Lilly Pilly Way, on the outskirts of western Kiama. The land in question is cleared paddock, fringed by remnant vegetation. It has some attributes which make it particularly difficult to service with sewer. The predominate strata is extremely hard bluestone, at surface level or with minimal cover. There are also a number of distinct catchments within the site. Attached is a contour plan which illustrates these catchments.

Sewer Options

There were a number of options considered for providing sewer services to the site:-

- Gravity sewer to the DN300 trunkmain with the creek in unformed Bong Bong Rd.

- Complex works pump station within the site, & Rising Main joining gravity system to trunkmain.

- Low Pressure Sewer system joining gravity system to trunkmain.

- Packaged Pump Stations with pressure mains, joining gravity system to trunkmain.

The alternatives described have different advantages & disadvantages, for both Developer and Sydney Water, however the Package Pump Station option seemed a logical choice in this case.

Gravity Sewer

Due to the topography of the area, & the difficult strata, it was determined early on that the gravity sewer system would not be viable in servicing this development. A high point of over 70m AHD isolates one of the catchments, which is at around 58m. Having run the invert levels, we are conservatively looking at 8 to 9m cuts in bluestone at a minimum of $350 per cu metre.

This is not only uneconomical, but practically impossible.” (emphasis added)

66 Significantly, Mr Edwards ran this document past Mr Unicomb before he sent it,

and Mr Unicomb responded, pointing out one matter that is immaterial for

present purposes, and instructed Mr Edwards to send the document “ASAP”.

67 On 19 February 2016, Sydney Water called for a more detailed options report

in an email from Ms Margaret McTainsh (McTainsh) to Mr Edwards, who

forwarded the email to Mr Unicomb.

68 On 25 February 2016, Mr Edwards wrote to Sydney Water saying, relevantly,

that “gravity is impractical & impossibly expensive with up to 11.2m of

excavation in bluestone”.

69 Mr Unicomb then prepared a submission for inclusion in a new options report,

and he sent it to Mr Edwards on 2 March 2016.

70 On 6 March 2016, Mr Unicomb sent Mr Edwards further information for

inclusion in the proposed draft options report. A further draft, which the primary

judge found was apparently prepared on 7 March 2016, was more

comprehensive. Mr Unicomb prepared and included an options table in the

report. The only options identified as viable for the southwest and southeast

catchments were packaged pump stations and a low pressure system.

71 A further draft was prepared and was held by the primary judge to have been

sent to Sydney Water on or about 17 March 2016. His Honour noted at [112]

that there:

“…was some debate during evidence as to who of Unicomb and Edwards prepared what in the options reports. There is little doubt that Unicomb’s contribution was significant. I think it is fair to say that Unicomb was driving the process.”

This finding was not challenged.

72 On 29 March 2016 at 2.31pm, Mr Matthew Stark (Mr Stark) of Sydney Water

forwarded comments to Mr Edwards on the draft Options Report that had been

submitted to Sydney Water, as follows:

“Feedback on 148199 DRAFT Wastewater Options Report (March 2016) v 3:

- The report does not address the requirements sent through on 3rd March in the preparation guide. Things that specifically need to be included are: demand forecasting, any staging and timing of works requirements.

- Has a bore been considered for each SE/SW catchment rather than an SPS? It certainly seems as if the SE catchment can get adequate grade for a bore from proposed SPS location to the proposed pipe on Banksia Rd. While initial costs for the bore may be high, as permanent infrastructure it has substantially lower risk and operating costs than a SPS – this needs to be considered (rather than just deep gravity servicing houses). An option, maybe two, should be included that involve boring.

- Apart from the Appendix B gravity option. Have other options been considered through Stage 1 of Cedar Grove Estate? These may be considered instead of the current proposed Line 2 along the unformed Bong Bong St.

- The non-cost criteria ranking incorrectly considers advantages/disadvantages that should be covered in the cost and therefore not a factor. It needs to be totalled correctly, and the system (e.g 1-4 score or 1-2 scoring) explained. It is also very lite on in its descriptions of each option.

- The cost basis needs to be provided (it is not clear where the costs have come from) and especially it is not clear what has been assumed to be included/excluded (e.g. what size pumping station/ wet well diameter/flow requirements). Has the cost of land for the packaged pumping station/s been included?

- The cost for the packaged pumping stations seems very low for both supply and install. Especially when compared to the cost used for the low pressure on-property equipment.

- There needs to be a discussion of the potential commercial arrangements for the various options (e.g. who is intended to own the SPS, OR who would install the low pressure on-property works?) The commercial arrangement affects the cost (e.g. are all LPS pots to be bought and installed by developer or individually; is the SPS to Sydney Water specification e.g. with telemetry)

- Once the above have been addressed we can look in more detail to evaluate their actual options assessment.

- It should also be noted that the previous advice from Sydney Water staff was that a packaged SPS was appropriate to consider as one of the options in servicing this development. Not that it was the preferred option.

- The version of Appendix B plan 2 received is not clear enough. If it was colour it may be better.

- The Executive Summary should start the document and summarise the proceeding discussion, it should not come at the end nor should it include new material. (In general the formatting leaves much to be desired and makes it a much harder read)”. (emphasis in original).

73 The primary judge described this communication from Sydney Water as

significant as it was the first time that Sydney Water had raised a solution by

way of underboring. The Sydney Water email was forwarded by Mr Edwards to

Mr Unicomb at 3.39pm on the day it was received.

74 The primary judge took up the narrative at [115], stating that “Unicomb

intervened, responding to Sydney Water directly. He also spoke to Stark.” This

was an accurate characterisation of events and by 6.07pm on the same day,

having spoken to Mr Stark of Sydney Water but not Mr Edwards, Mr Unicomb

prepared and sent to Sydney Water an amended options report which included

a deep gravity bore option for both the SW and SE catchments, as well as a

net present value calculation for this option. Mr Unicomb’s covering email

noted that he had “added some more notes regarding the costing of the various

options.”

75 The amended Options Report provided by Mr Unicomb showed as viable

options:

(i) a 300m bore from the low point in the SW catchment to join with the

sewer through lot 5, and

(ii) a 150m bore from the low point in the SE catchment to a point in lot

14, then a 50m extension in rock,

as well as the packaged pump stations (SE & SW catchments) and low

pressure system in SW & SE catchments which had been shown as

viable on the earlier plan. Significantly, Mr Unicomb described the

“Disadvantages” of the two boring options as “[v]ery high cost to

construct” with the bores being 9.5m and 8.5m deep “in very hard

basalt” in both instances.

76 This observation by Mr Unicomb was inconsistent with a submission advanced

on appeal by White (AS 51) that there was “no evidence of any awareness at

the relevant time of the comparative cost of an under bore to other options”. It

was also inconsistent with White’s submission (at AS 52) that “[t]here is no

evidence of any known correlation between hard rock and high cost

impossibility of an under bore in either 2012 or 2014.” Mr Unicomb drew the

correlation in March 2016 without any reference to either Mr Edwards or any

consultants. It may readily be inferred that he was well aware of it at an earlier

point in time. So much may also be inferred from Mr Unicomb’s endorsement

of Mr Edwards’ observation in the 9 February 2016 Options Report sent to

Sydney Water: see at [65]-[66] above.

77 Further discussions and negotiations continued with Sydney Water as

described by the primary judge at [119]-[122] at a level of detail that does not

require reproduction in these reasons. His Honour then at [123] recounted a

conversation between Mr Unicomb and Mr Edwards, with Mr Edwards

attributing to Mr Unicomb words to the following effect:

“Joel, Sydney Water’s requirement that the pump stations have to have their own dedicated land have really complicated things for us. There are significant implications arising out of this. We have sold some of the lots off the plan and we do not want to enter into negotiations with lot

owners because of changes in sewer connection arrangements. The developer is not willing to sacrifice any lots or lot area.

Sydney Water’s email 24 March that they sent to you 29 March suggested that the boring option be investigated further. I had previously discounted it because I didn’t think it could be done. I haven’t costed it and don’t know what it would look like. It’s why I didn’t go into any specific detail about that in the options report. Get some quotes on the boring and see what that looks like compared to the cost of the package pump stations and also the loss of two lots so the developer can decide what is the most financially efficient response. I’ll have to include it in any future options report.” (emphasis added).

78 On 1 April 2016, Mr Unicomb sent an email to Mr Edwards which again

exposed Mr Unicomb’s concern about the costs of a boring solution and the

strength of the rock that would need to be drilled. This email included the

statement that:

“If the cost of this bore is high and Sydney [W]ater won't fund it th[e]n I think the only option is for a low pressure system for the rear 55 lots. NB our Geotech consultants have advised the some of the rock could be up to 250MPa. Maxibors price was for max strength of 150MPA.”

79 At [124]-[126] of the judgment, the primary judge recorded that:

“[124] On 19 April 2016, 6 July 2016 and 1 August 2016, Sydney Water gave approvals for various components of the sewerage works, excluding the underbore component.

[125] On 16 May 2016, Edwards sent Sydney Water what appears to be the seventh and final options report. The options remained the same as they were in the previous report. Sydney Water favoured the boring solution, and despite considering that the report did not address its comments about requiring more information on the cost basis, indicated its confirmation that the matter could proceed ‘beyond options’.

[126] Sydney Water finally approved the underbore design on 11 August 2016.”

80 The primary judge found that all the work, including the sewer works, was

effectively completed on 24 February 2017, and that a Certificate of Practical

Completion was issued on 1 March 2017.

The primary judgment

81 The primary judge made a number of important findings in favour of White

including that, in reliance on the evidence of each party’s expert water

servicing co-ordinator, a compliant sewer design should have been submitted

by 24 November 2015 and, if so, it would have been likely to have been

approved on or about 4 January 2016: at [155]. The primary judge further held

that, although there is no defined timeframe for Sydney Water to give design

approval, generally for gravity sewers, approval could be expected within six to

eight weeks of lodgement: at [155].

82 Notwithstanding these findings, the primary judge ultimately found against

White, holding that no warranty was provided by the respondents to White

under the Deed (at [146]) and further that, although the initial designs clearly

did not meet Sydney Water’s requirements, there was no breach of obligations

under the Fee Proposal, because Mr Unicomb had given Mr Edwards the

Instruction not to propound an underbore option. The primary judge held that

this “probabilit[y] [was] supported by objective contemporaneous

circumstances”: at [165]-[167].

83 The primary judge had identified the importance of the factual finding as to

whether or not Mr Unicomb gave the Instruction at [162] of the judgment as

follows:

“If White had instructed IWS not to propound the underbore solution, but to propound the pumping stations solution, it can hardly be suggested by White that IWS’s failure to propound the underbore solution was a breach of the Fee Proposal or that, if it is a breach, damages suffered by it (if it suffered them) were caused by that breach as opposed to its own conduct”.

84 Additionally, although each of the parties tendered reports from independent

expert witnesses with knowledge and experience in programming and delay

analysis (Mr Jonathan Shahady for White, and Mr James Senogles for IWS),

the primary judge stated (at [22]):

“The expert reports are complex. To the unschooled, they are impenetrable. It was apparent to me that I would need significant assistance to be put in a position to critically evaluate their opinions and conclusions”.

85 With the consent of the parties, Mr McIntyre, who had many years of

experience in the same discipline, was appointed under UCPR r 31.54 to

advise the Court. The primary judge acted upon the advice received from Mr

McIntyre, finding that neither method as adopted by either party’s expert

witness was “appropriate” to be adopted in the present case: at [195]. Rather,

the primary judge held (at [196]-[197]) that the appropriate method was that, in

accordance with Mr McIntyre’s opinion:

“…close consideration and examination of the actual evidence of what was happening on the ground will reveal if the delay in approving the sewerage design actually played a role in delaying the project and, if so, how and by how much. In effect, [Mr McIntyre] advised that the Court should apply the common law common sense approach to causation referred to by the High Court in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506.

The Court is concerned with common law notions of causation. The only appropriate method is to determine the matter by paying close attention to the facts, and assessing whether White has proved, on the probabilities, that delay in the underboring solution delayed the project as a whole and, if so, by how much.”

86 The primary judge ultimately held that White had failed to discharge this

burden: at [199].

87 Of the two principal findings made by the primary judge that are challenged on

this appeal, one involved a question of law and the other a question or

questions of fact.

88 As to the first finding, as has been noted above, the primary judge rejected

White’s contention that both of the respondents breached warranties said to

have been given by them to White pursuant to Pts B7.1 and B7.2 of the

Standard Terms to the Deed. The primary judge held that the warranties given

by the respondents under the Deed were only made to Sydney Water and not

to White: at [145]. At [146], the primary judge provided his reasons for this

finding as follows:

“Neither Part B7.1 nor Part B7.2 of the Standard Terms state expressly that the warranties are given in favour of White. If warranties in favour of White had been intended, the Deed could easily have said so. White’s contention requires words to be read in. The opposing contention does not require words to be read in, because both Parts B7.1 and B7.2 commence with the words ‘As well as the warranties under B6.2…’, and Part B6.2(a) commences with the words ‘Each listed provider warrants to Sydney Water…’. The warranties in Parts B7.1 and B7.2 are clearly given in favour of Sydney Water. It is not necessary to read in words such as ‘to the other parties to this Deed’ to give these paragraphs effect”.

89 The primary judge held that, although the Deed Warranties did not apply in

favour of White, essentially the same obligations were owed by IWS to White

under the Fee Proposal; that is, to prepare, within a reasonable time and with

due care, skill and diligence, a design fit for purpose which met Sydney Water’s

requirements: at [148]. The primary judge also held, in a finding that was not

challenged by way of notice of contention, that PBS, because it had to

supervise IWS, also had a duty to ensure that IWS performed its duties within a

reasonable time: at [150].

90 Those findings made of crucial significance the second principal finding which

related to the Instruction not to pursue a horizontal drilling/underbore solution,

and whether or not it had been given by Mr Unicomb to Mr Edwards. On this

issue, the primary judge held that, contrary to his denial, Mr Unicomb had

instructed Mr Edwards not to pursue a sewerage design that would involve

boring through what was considered to be the hard rock that characterised the

land on which the Development was to take place. The primary judge’s key

findings in this regard were as follows:

“[164] It is clear that both Edwards and Unicomb favoured a non-gravity solution. If Unicomb gave the instruction, the most White could say was that Edwards should have deflected it from doing what it wanted to. Having regard to the respective personalities of Unicomb (and Morcom) on the one hand and Edwards on the other, I am not persuaded that Edwards would have prevailed. Morcom and Unicomb are demonstrative and dominant. Edwards is restrained and less dominant. I am not satisfied in any event that the pumping station solution was hopeless.

[165] Did Unicomb give the instruction?

[166] I find that he did.

[167] I prefer Edwards’ evidence to that of Unicomb. The probabilities, supported by the objective contemporaneous circumstances, favour Edwards.

[168] There is no doubt that White would have wished to keep the cost of the project down. White had obtained two geological reports – which have been referred to earlier. His failure to disclose them is not without significance.

[169] I believe Edwards when he says he had never heard of an underboring solution being implemented in the area because of rocks.

[170] In evidence is a document created by Edwards on 6 February 2012, which includes his handwritten description of five available sewer options. Option number 5 is a horizontal bore. There is no record of the document being emailed to Unicomb. Edwards’ evidence is that this is unsurprising because it is very likely that he attended Unicomb’s office

to deliver the document by hand. The existence of this document in itself supports Edwards”.

91 His Honour then set out the 2012 Options Document before continuing:

“171 The first options report lodged with Sydney Water by IWS on 9 February 2016 makes reference to a gravity option, but makes no reference to an underbore. The gravity sewer is described as not only ‘uneconomical’, but ‘practically impossible’. This is consistent with the instruction having been given.

172 During Edward’s cross-examination the following exchange occurred about the document, which is Figure 3, and Edwards’ assertion of the instruction:

Q. I suggest such conversations never took place and the first time there was any discussion of a horizontal boring option between you and Mr Unicomb was after 29 March 2016; that’s correct, isn’t it.

A. That doesn’t even make sense, I don’t think. I think if I prepare a document, you said - you mentioned before that I forgot about that over a couple of days, but I prepared a document with that option, then why would I - it doesn’t make any sense to say that I just forgot that was an option altogether. That discussion took place.

173 I consider Edwards’ response to be compelling.

174 The underbore option was first included when Unicomb sent an amended options report to Stark on 29 March 2016. There then followed a series of options reports until the final one on 16 May 2016.

175 The significant aspect of this is that Unicomb, in my view, took effective control of this process, starting with his direct communication with Stark.

176 The options reports required financial analysis which plainly it was not Edwards’ function, nor within his capability, to provide. Edwards also made it clear at an early point that he did not have hydraulic expertise, yet White did not instruct hydraulic experts.

177 Although no point was made of it, it is worthwhile to observe that the Fee Proposal excluded protracted negotiations with Sydney Water.

178 White has not established that any of the delay between 29 March 2016 and 16 May 2016 was fairly caused by Edwards.

179 The consequence is that White has failed to establish any breach of contract by IWS or SWC and its case must be dismissed.”

92 I turn now to consider the principal issues in contention on the appeal.

Consideration – the Deed

93 In challenging the primary judge’s conclusion as to the warranties, White put

that, on a proper construction of the Deed read as a whole, the warranties

given under Standard Terms cl B7.1(a) (extracted at [61] above), and cl

B7.2(a) (extracted at [62] above) were owed to it as well as Sydney Water,

submitting that:

“White is a party to the Deed and prima facie a beneficiary of covenants under it; the language of relevant provisions is expressed to be, and apparently are intended to be, in favour of all parties: Background (c), Agreement (b), A1 and A3 Disclaimer… B2(a) refers to an agreement between the parties not between Sydney Water and several parties; the Deed Poll referred to at B2(f)(ii)… provides at Agreement (d)… that all parties to the Deed enter into the Deed Poll and ‘can rely on it’;

Standard Terms A1.1 (d) and (e)… impose liabilities on the Developer in favour of Sydney Water for breaches of obligation by the Listed Providers, and it would be incongruous if equivalent rights were not provided by the Deed in the Developer against the Listed Providers;

The trial judge’s construction (J[146])… is in error as it assumes that the warranties in ST B6.2… are in favour only of Sydney Water because of the words ‘to Sydney Water’ ST B6.2(a). But not all of the warranties in section B6 General Warranties are in favour of Sydney Water. The Developer by ST B6.1(f)… and the Listed Providers by ST B6.2(e)… each warrant that they accept the Novation Deed (Schedule 2) (in the event of a Developer transferring ownership). That promise must be intended to be for the mutual benefit of each party.

Thus, the opening words in ST B7.1 and B7.2 ‘As well as the warranties under B6.2’ means does not mean that the following warranties are in favour of Sydney Water alone.

Freed of that misconceived restraint, the question of construction of the warranties B7.1(a) and B7.2(a) are intended to be in favour of the Developer.

The warranties in favour of White Constructions supported the obligations imposed upon White Constructions under the Deed, including the obligation in clause ST B6.1(c)(iii), B6.1(c)(iv)… (for White Constructions to arrange for the Developer Works to be designed and constructed in line with the NOR) and ST B6.1(c)(vi)… (warranty to Sydney Water when the Developer Works are completed, they will be fit for purpose and comply with this Deed all Legal Requirements and Standards). It aids the contractual purpose, is consistent and makes commercial sense that where White Constructions had those obligations, it also had the benefit of the Warranties given by IWS and SWC to ensure it could comply with its warranties to Sydney Water”.

94 The respondents submitted that the primary judge was correct to find that

neither respondent granted any warranties to White under the Deed, as the

Deed was a multi-party document with the central aim of satisfying the

statutory imperative within the Sydney Water Act that sewer assets constructed

by private enterprises vest in Sydney Water. In relation to the construction

advanced by White, the respondents submitted that:

“The construction that White advances reads words into both Part B7.1 and Part B7.2. This is what the primary judge found: J [146]… White’s construction of the [Deed] seeks to manipulate the words used in the opening sentence ‘As well as the warranties under B6.2…’. That opening sentence is the reference point for what follows. It is language of attachment to (and so confined by) the language used in Part B6.2(a) which are warranties to Sydney Water only. The word-play advanced by White is that the opening sentence of Part B7.1 and Part B7.2 means that the warranties are given to all parties to the [Deed], including White. That is a misconstruction of the [Deed]”. (emphasis in original).

95 I accept this submission and the correctness of the primary judge’s reasoning

on the question of construction.

96 As to White’s first contention, the fact that White was a party to the Deed does

not advance matters in the context of a multi-party deed. The fact of a multi-

party deed does not, by reason of that fact alone, mean that every warranty

given by one party to that Deed is given to all others. It is a question of

construing the terms of the Deed as a whole and the individual warranties, in

particular cf. Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100

NSWLR 432; [2019] NSWCA 135 at [67]-[71].

97 Secondly, the context by which the Deed came into existence is highly

relevant. As has been explained, its entry was a requirement of Sydney Water

in the context of the provision of a s 73 Certificate. It was Sydney Water which

was ultimately to assume ownership and responsibility for the sewerage

system after the Development had been completed, with what were described

in the Deed as the “Developer Works” to vest in Sydney Water. It made perfect

commercial sense that the warranties contained in the Deed would be directed

to it, and be for Sydney Water’s benefit.

98 Thirdly, the relationship between White and IWS/PBS necessarily predated the

entry into the Deed with Sydney Water, and it would not be expected that a

Deed would be entered into without a pre-existing contractual relationship

already existing between Developer and Designer. It would be in that pre-

existing contract that one would expect to find the obligations IWS owed to

White, and the Deed in Standard Term B8.1(c) expressly contemplated the

existence of other agreements between the parties.

99 Fourthly, the language of the Deed not only did not support White’s argument;

it was against it. In particular, each of cll B7.1 and 7.2 are prefaced with the

words “As well as the warranties under B6.2”. The warranties under B6.2 are

expressly given by “Each Listed Provider Party” to Sydney Water. They are of

a general character. The additional warranties under cll B7.1 and 7.2 are more

bespoke; they are formulated by reference to the identity and role of the party

to whom they are addressed, namely the Designer and the WSC (Water

Servicing Coordinator). No assistance to White’s argument is to be derived

from cl B6.1(f), because it is cl B6.2 that is the relevant provision on which Pts

7.1 and 7.2 expand.

100 Fifthly, only Sydney Water is given remedies under the Deed for non-

compliance by another party with its obligations under it: see, for example, cll

A1.1(d); C4.1; C4.2 and C5.3.

101 For these reasons, the primary judge was correct, in my opinion, in his

construction of the Deed and in his conclusion that it did not contain any

warranties given by either of the respondents to White. White’s challenge to

this aspect of the decision at first instance must be rejected.

Consideration – the Instruction

102 The significance as to whether or not the Instruction was in fact given has

already been noted (see at [83] above).

103 White’s challenge to the primary judge’s finding that the Instruction was given

must, perforce, overcome the heavy burden which falls on an appellant met

with adverse findings of fact. So much flows from decisions of the High Court,

including Fox v Percy (2003) 214 CLR 118 at 126; [2003] HCA 22 at [28]-[29]

(Fox v Percy); Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679;

[2016] HCA 22 (Robinson Helicopter) and Lee v Lee (2019) 266 CLR 129;

[2019] HCA 28 at [55]. In the latter case, the plurality said that:

“Appellate restraint with respect to interference with a trial judge's findings unless they are "glaringly improbable" or "contrary to compelling inferences" is as to factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence. It includes findings of secondary facts which are based on a combination of these impressions and other inferences from primary facts. Thereafter, "in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge". (footnotes omitted)

104 In the present case, there was a debate between the parties as to whether or

not the factual findings by the primary judge in relation to the Instruction were

based in part at least on impressions about the credibility and reliability of

witnesses formed by the primary judge as a result of seeing and hearing both

witnesses give their evidence. In my opinion, the better view is that they were

but even if they were not, for reasons I will explain, the primary judge’s findings

were correct and strongly supported by contemporaneous documentary

evidence.

105 Both Mr Edwards and Mr Unicomb were cross-examined at some length and

with some force during a trial which lasted some 9 days during which their

credibility was squarely in issue. The primary judge undoubtedly had a number

of advantages which this Court did not have in assessing the evidence and the

likelihood or otherwise of Mr Unicomb having given the Instruction to Mr

Edwards. These advantages included what was referred to by Gleeson CJ,

Gummow and Kirby JJ in Fox v Percy at [23] as “the ‘feeling’ of a case which

an appellate court, reading the transcript, cannot always fully share” (footnote

omitted). Their Honours went on to observe (at [23]) that:

“…the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.” (footnote omitted).

106 No doubt conscious of the hurdle standing in its way presented by Fox v Percy

and Robinson Helicopter, as I have indicated above, White submitted that the

primary judge’s conclusions in relation to the Instruction did not turn upon any

assessment of the demeanour of Messrs Edwards and Unicomb in the witness

box: AS [21]. Leeming JA, in his concurring judgment, favours this view. I

incline in the other direction, fully conscious that credibility is a larger concept

than demeanour, and the latter is not to be overemphasised: see Goodrich

Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 at [16]-

[27]. But, as also indicated above, I would reach the same conclusion as to the

correctness of the primary judge’s finding as to the Instruction even if I did not

take this view.

107 Although the primary judge’s reasoning on this issue was somewhat terse, his

Honour’s assessment was not one, in my view, based solely on objective

circumstances or inferences drawn from those objective circumstances. The

primary judge expressed himself in terms of “believing” Mr Edwards: see at [90]

above. He had before him two diametrically opposed accounts of events and

came to a clear view, preferring one over the other, after extensive cross-

examination of both witnesses.

108 When dealing with an aspect of the attack on Mr Edwards’ credit at first

instance, arising from a false assurance he had given Mr Unicomb in the

course of the project as to his interactions with Sydney Water, the primary

judge observed (at [97]):

“Edwards’ reply was misleading, and deliberately so, because he had not yet lodged the sewer plans with Sydney Water. This deception is not to be condoned in any way. My impression, nevertheless, was that he was a truthful witness. Edwards readily admitted to the falsity. He was no doubt being pressured by White at the time to deliver.” (emphasis added)

109 The primary judge’s acceptance of Mr Edwards as a truthful witness

necessarily meant that he rejected as untrue or mistaken Mr Unicomb’s denial

of various conversations and propositions that were forcefully put to him during

his cross-examination at first instance. Reference may also be made to the

primary judge’s observation at [168] in relation to Mr Unicomb’s failure to

disclose two geological reports, a matter the primary judge determined was

“not without significance” and which fed into the primary judge’s overall

assessment of credibility.

110 The primary judge also plainly formed a view as to the personalities of Messrs

Edwards and Unicomb, no doubt as a result of closely observing them in the

course of their cross-examinations: see at [164] where the primary judge

described Mr Unicomb as “demonstrative and dominant” and Mr Edwards as

“restrained and less dominant”.

111 White’s submission on appeal that the primary judge did not rely on or attribute

significance to demeanour should be rejected.

112 In its submissions in this Court, White mounted a strong attack on Mr Edwards’

evidence, making reference especially to his purported late recall of

conversations in 2012/2013 which he had originally placed in 2014: see [40]-

[42] above. In my view, whilst there was undoubtedly a basis for the forensic

attack made on Mr Edwards’ evidence both at first instance and on appeal,

there was also a strong answer to it. As the primary judge said at [167], “[t]he

probabilities, supported by the objective contemporaneous circumstances,

favour Edwards.”

113 The answer to White’s attack on the evidence of Mr Edwards began with the

existence of the 2012 Options Document. Although this only emerged late in

the day (not being referred to in Mr Edwards’ first affidavit), there was no doubt

or question as to the authenticity of the document. That was vouchsafed

because of the metadata which confirmed the date at which it was scanned

onto Mr Edwards’ computer, with the scanned copy including his handwritten

annotation of five options for the southwest catchment: see [29] above.

114 This document, moreover, was not “any document”, but contained Mr Edwards’

description of a series of options handwritten on a plan which had been sent to

him by Mr Unicomb in late 2011 in relation to a project he was managing on

behalf of White. The natural inference is that Mr Unicomb had asked Mr

Edwards to identify options for sewerage for the southwest catchment of the

Development site. This is not something he would have done without a request

to do so. A further and natural inference, moreover, is that having been asked

to undertake that task, he would have provided the result of his assessment to

Mr Unicomb. Whether he did this by providing Mr Unicomb with a copy of the

2012 Options Document, simply showed it to him, or even only discussed the

options with him is not really to the point, or critical. What is critical, and what is

more than reasonable to infer, is that the options were communicated to Mr

Unicomb.

115 Once this is accepted, or accepted as open (given the “glaringly improbable”

hurdle White needs to overcome), the next part of the analysis is relatively

straightforward. It involves the following steps:

(i) what was shown as Option 5 on the 2012 Options Document does

not appear on the subsequent March 2013 Option Plan No 1, headed

“Options if gravity sewer not chosen”;

(ii) its non-appearance can really only be explained by reason of it

either having been forgotten about or dismissed as an option;

(iii) it is inherently unlikely that it would have been forgotten about –

this was the point made by Mr Edwards in his answer under cross-

examination, reproduced and described by the primary judge as

“compelling” – see at [91] above, quoting [172]-[173] of the primary

judgment;

(iv) by March 2013, in preparing the Planning Proposal, Mr Unicomb

wrote:

“The viable options identified to sewer this catchment are

• Gravity feed to the south eastern catchment by deep open cut excavation. This option is shown on Plan No.1 in Appendix

• Low pressure sewer system for the south western catchment. This would require a collection tank and pump setup on each lot similar to the system in Jamberoo

• Pump station and rising main for this catchment, and

• Construction of a gravity sewer main through the rural property to the west with a connection to the low pressure main along Jamberoo Road. This option is shown on plan no. 2 in Appendix 10.”

(v) This statement supported the notion that Option 5 from the 2012

Options Document had been rejected by this stage. Moreover, the

language “require a collection tank and pump setup” and “Pump station

and rising main for this catchment” is the same language that appeared

on the 2012 Options Document with regard to Options 3 and 4. This

tends to support Mr Edwards’ account that he had provided that

document to Mr Unicomb (or at least discussed it with him) some time

before Mr Unicomb prepared the Planning Proposal document, and that

Option 5 had been rejected.

(vi) in an Options Report provided to Sydney Water on 9 February

2016 and authored by Mr Edwards (see [65] above), Mr Edwards wrote:

“Due to the topography of the area, & the difficult strata, it was determined early on that a gravity sewer would not be viable in servicing this development. A high point of over 70m AHD isolates one of the catchments, which is at around 58m. Having run the invert levels, we are conservatively looking at 8 to 9m cuts in bluestone at a minimum of $350 per cu metre.

This is not only uneconomical, but practically impossible.” (emphasis added).

(vii) Mr Unicomb was sent and approved this document before it was

submitted to Sydney Water: see [66] above. This was confirmatory of

the Instruction having been given by Mr Unicomb to Mr Edwards.

116 Reliance was also placed on the evidence volunteered by Mr Unicomb in his

first affidavit that a gravity sewer was not preferred by him because it involved

a long lead in “through hard rock”.

117 The respondents also relied, by way of corroboration of the primary judge’s

finding that the Instruction was given, on an email sent by Mr Unicomb to Mr

Edwards on 20 January 2014 in which he said that the outcome was to secure

Sydney Water’s agreement in principle “to our preferred option”, language

which suggested that other options had been considered and rejected.

118 Further support for the primary judge’s conclusion was an email sent on 29

October 2014 from Mr Edwards to Mr Phil Cooper of Sydney Water, in which

he said :

“The owner is dead set against pressure sewer, & gravity sewer is kms long, in solid rock...”.

The respondents posed the question “Why would Edwards invent this?”

and answered it convincingly:

“He had no motivation to do so. He advised Sydney Water of his principal’s objectives because this is what he had been told by Unicomb

since 2012. It was what he was told by Unicomb in 2014. Because this was White’s position.”

119 There was also considerable force in the respondents’ submission to the effect

that, if it were true that a deep boring solution was never raised or discussed

with Mr Unicomb, nor discounted “early on”, there is no sensible explanation for

why Mr Unicomb did not remonstrate with Mr Edwards upon receiving Sydney

Water’s email of 29 March 2016 that mentioned, when discussing available

boring options, a gravity boring solution. It was put that if this sewer option was

an epiphany to Mr Unicomb, which, according to White’s case narrative should

have been raised by Mr Edwards in the over almost half a decade of

discussing sewer design options for the site, surely Mr Unicomb would have

confronted Mr Edwards and said something like “Why didn't you tell me we

could do this” or “Shouldn't we have included a gravity sewer as an option?”.

The respondents pointed out accurately that “[n]ot one such thing was ever

said. Not one email was written. Rather, Unicomb said nothing.”

120 Whilst not all of these matters were called in aid by the primary judge to

support his conclusion as to the giving of the Instruction, they only serve to

reinforce that finding, and negative any conclusion that it was a finding that was

“glaringly improbable”.

121 One of White’s complaints on appeal (AS 22) is that the primary judge failed to

provide any valid or adequate reasons for preferring the evidence of Mr

Edwards over that of Mr Unicomb and failed to address or give proper weight

to submissions made for White. As already indicated, the primary judge’s

reasoning as to the fundamental difference between Mr Edwards and Mr

Unicomb as to the Instruction was relatively terse, and his Honour did not in

terms make all of the points referred to above in his analysis.

122 It should be observed, however, that his Honour had set out in considerable

detail in the body of his judgment the chronology including the 2012 Options

Document, the 2013 Options Plan No 1, Mr Unicomb’s Planning Proposal and

his approval of the submission made by Mr Edwards on 9 February 2016,

which recorded as a fact that drilling options had been discarded at an earlier

time, a matter that was entirely consistent with Mr Edwards’ account, especially

taken in conjunction with the 2012 Options Document. These matters were, in

my opinion, undoubtedly taken into account by the primary judge in reaching

his conclusion, at [167], that “[t]he probabilities, supported by the objective

contemporaneous circumstances, favour Edwards.”

123 It was a conclusion that, in my opinion, was not only not “glaringly improbable”

but was fully supported by the contemporaneous documents. It would follow

that, even if there were a basis for criticising the terse nature of the primary

judge’s analysis in his reasons for judgment, in conducting a rehearing within

the meaning of s 75A of the Supreme Court Act 1970 (NSW), I would have

reached the same conclusion as the primary judge in relation to the Instruction

and the legal consequences of a finding that it had been given, had I been

satisfied that the primary judge had erred in his conclusion in relation to the

Instruction.

124 That the Instruction was given and was continuing in nature is also supported

by Mr Unicomb’s endorsement of the statement made by Mr Edwards in the

Options Paper on 9 February 2016: see [65]-[66] above.

125 If the Instruction had been given and continued to operate, there is no reason

in principle to construe the Fee Proposal as excluding, or in some way

negativing, the Instruction. That would be a wholly uncommercial approach to

an analysis of the events that transpired. That contract did not contain an entire

agreement clause, nor was it apt to exclude the operation of verbal instructions

given by the client to the contractor. To the extent that White relied upon the

statement by Campbell JA in Masterton Homes Pty Ltd v Palm Assets Pty Ltd

(2009) 261 ALR 382; [2009] NSWCA 234 at [90(1)] (Masterton Homes) to the

effect that:

“[w]hen there is a document that on its face appears to be a complete contract, that provides an evidentiary basis for inferring that the document contains the whole of the express contractual terms that bind the parties”,

that statement was immediately qualified by his Honour’s observation in

[90(2)] that:

“[i]t is open to a party to prove that, even though there is a document that on its face appears to be a complete contract, the parties have agreed orally on terms additional to those contained in the writing.”

126 Moreover, as White JA put to Mr Dempsey SC in the course of argument

during the appeal, “[i]f the obligation is to exercise reasonable skill and care,

and not simply an absolute obligation to do something, why would not the

Instruction, if it were given, inform the content of the duty to act with reasonable

care and skill?” Perhaps picking up on this observation, Mr Sirtes SC for the

respondents submitted, cogently in my view, that:

“…this agreement on 18 December 2014 did not require the designer to act contrary to his instructions. His obligation was to prepare a design package and we say it would both artificial and contrary to acting in accordance with his obligations to prepare a design that was contrary to the limitations that were imposed upon him by his client…”

127 White’s reliance on Masterton Homes was also undermined by the fact that the

Fee Proposal was unsigned, a matter that might well be thought to tend against

a conclusion that the document in question appeared “on its face” to be a

complete contract.

128 For all of the above reasons, White’s attack on the primary judge’s finding that

the Instruction was given and the consequences of that finding, together with

its submission, apparently made for the first time on appeal, that the Instruction

was superseded by the Fee Proposal, must be rejected.

129 A claim for damages because of alleged negligent delay, by reason of a failure

to propose a particular solution, cannot be mounted in circumstances where

the client had, on the facts as found by the primary judge and not shown to

have been in error, indicated it did not wish that particular solution to be

pursued because of perceived cost and difficulty.

130 White’s submissions implicitly accepted (at AS 74) that the primary judge’s

conclusion on causation at [162], reproduced at [83] above, could not be

assailed if his Honour’s holding as to the giving of the Instruction was upheld.

131 For completeness, it should be noted that a number of grounds of appeal were

advanced challenging the primary judge’s contingent finding that, even had

liability been established, White had failed to establish that delay in the

underboring solution delayed the project as a whole. His Honour observed at

[198] that this required White to establish that:

“This requires [White] to establish that:

• the whole project would have been completed by 15 July 2016,

• the final sewer approval delay delayed sewer works,

• the sewer works delay prevented non-sewer works from otherwise proceeding, that is, that the programme could not reasonably have been varied to accommodate the consequences of late approval, and

• other works could not have been done to fill downtimes so as to save time later”.

132 The primary judge gave reasons extending over some 80 paragraphs as to

why his Honour concluded that White had failed to discharge its burden. Earlier

in his Honour’s judgment at [22], he had described the expert reports going to

causation and damages as “complex” and “[t]o the unschooled …

impenetrable.” It was for this reason that he had appointed Mr McIntyre

pursuant to UCPR r 31.54(1) to assist him. In the event, the primary judge

relied upon Mr McIntyre’s opinion that the method and approach of the experts

on both sides was not appropriate to be adopted.

133 White wishes to challenge this conclusion, the adequacy of the primary judge’s

reasons on the question of delay and damages, as well as specific challenges

to a number of detailed matters that were considered by the primary judge.

Many of these Mr Dempsey accepted would more appropriately be dealt with

by way of remitter because of their detail if the Court had otherwise upheld the

challenge to liability. In light of their wholly contingent nature coupled with the

level of detail and granularity of the arguments White sought to put on delay

and damages, it is neither desirable nor efficient in my opinion to seek to deal

with them.

134 This approach is in line with Boensch v Pascoe (2019) 94 ALJR 112; [2019]

HCA 49 at [7]-[8], in which Kiefel CJ, Gageler and Keane JJ, with whom the

other members of the Court agreed at [101], observed that :

“…we would not criticise the Full Court for not addressing an issue raised before it which it did not consider to be dispositive. The principle that an appellate court should confine itself to determining only those issues which it considers to be dispositive of the justiciable controversy raised by the appeal before it is so much embedded in a common law system of adjudication that we have no name for it. In some other systems, it is known as ‘judicial economy’. Judicial economy promotes judicial efficiency in a common law system not only by narrowing the scope of the issues that need to be determined in the individual case

but also by ensuring that such pronouncements as are made by appellate courts on contested issues of law are limited to those that have the status of precedent.

Within the integrated Australian legal system, the mere potential for an appeal to be brought, by special leave, to the High Court provides no reason for an intermediate court of appeal to sacrifice those efficiencies. That is not to deny that there will be occasions when departure from judicial economy will enhance the overall efficiency of the system or that the prospect of an appeal being brought, by special leave, to this Court in a particular case can give rise to such an occasion. There is accordingly no reason to deny that, ‘although there can be no universal rule, it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground’. But a non-universal rule making it important for intermediate courts of appeal to consider whether to deal with all grounds of appeal is quite different from a rule that always or even ordinarily requires those courts to deal with all grounds of appeal. It is important to the efficiency of the system as a whole that intermediate courts of appeal should not feel compelled to treat determination of non-dispositive issues in appeals before them as the norm.” (footnotes omitted).

135 For the foregoing reasons, the appeal should be dismissed with costs.

136 LEEMING JA: I have had the considerable advantage of reading the

President’s reasons for judgment in draft. I agree with the orders proposed by

his Honour, and, subject to one issue, with his Honour’s reasons. That issue

concerns the factual challenge to the finding that an instruction not to use a “full

gravity system” was given. It follows that I agree with the President’s reasons in

relation to (a) the construction of the Deed, (b) causation and (c) the

inappropriateness of dealing with the ground directed to the contingent findings

of damages. In relation to whether the Instruction was given, I reach the same

conclusion that the President reaches (which is to say, that these grounds of

appeal fail), but by a slightly different route. What follows presupposes

familiarity with what the President has said as to the factual background and

the parties’ submissions.

137 Although I acknowledge the force of the considerations contained in the

President’s reasons, and in White JA’s reasons on this point, on balance I

prefer White’s submission that the primary judge, in preferring the evidence of

Mr Edwards over that of Mr Unicomb, did not rely on demeanour.

138 The joint judgment in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31]

noted the limits upon the ability of judges to distinguish truth from falsehood

accurately on the basis of the witnesses’ appearance, and the tendency to limit

judges’ reliance on the appearances of witnesses and to reason to their

conclusions, as far as possible, on the basis of contemporary materials,

objectively established facts and the apparent logic of events. Those limitations

have added force in an invidious case such as the present, where the primary

judge was required to determine, as between two known liars, whose account

was to be accepted.

139 The ultimate conclusion of the primary judge in resolving the dispute

concerning whether or not the Instruction was given was expressed in terms

which accorded with what was said in Fox v Percy at [31]. It was contained at

[167]:

“I prefer Edwards’ evidence to that of Unicomb. The probabilities, supported by the objective contemporaneous circumstances, favour Edwards.”

140 On balance I think that those reasons should be taken at face value. They

reflect the language of a very experienced judicial officer, who was doubtless

fully conscious of the human limitations of assessing credibility and reliability

based on demeanour. I do not think it was necessary for his Honour to go

further, and say expressly that he had disregarded the men’s demeanour.

141 The majority of his Honour’s reasoning on this issue (at [164]-[179], which

paragraphs have been reproduced by the President) is based on documents

and objective probabilities.

142 I need to address three aspects of his Honour’s reasons, which might be

thought to be suggestive of a demeanour-based finding. They are:

(1) the passage at [164]:

“Having regard to the respective personalities of Unicomb (and Morcom) on the one hand and Edwards on the other, I am not persuaded that Edwards would have prevailed. Morcom and Unicomb are demonstrative and dominant. Edwards is restrained and less dominant. I am not satisfied in any event that the pumping station solution was hopeless”;

(2) the sentence which constitutes [169]:

“I believe Edwards when he says he had never heard of an underboring solution being implemented in the area because of rocks”;

and

(3) the conclusion at [173] in respect of an answer by Mr Edwards in cross-examination:

“I consider Edwards’ response to be compelling”.

143 Even so, I do not consider that those statements displace what was said at

[167].

144 I deal first with the “personalities” of the two men, and the conclusions that Mr

Unicomb was “demonstrative and dominant”, while Mr Edwards was

“restrained and less dominant”. The question was each man’s personality at

the time of the events giving rise to the litigation, rather than the trial. It might

be thought that evaluations of each man’s personality by what they did at the

time, before litigation was commenced, would be more probative than the

personalities manifested in the witness box. To my mind, the emails between

the two men earlier reproduced by the primary judge fairly account for the

conclusions that Mr Edwards’ emails are fuller, more deferential, and more

polite. In contrast, the primary judge recorded emails from Mr Unicomb to Mr

Edwards:

(1) On 29 March 2016, Mr Unicomb emailed Mr Edwards:

“Joel

I had a discussion with Matthew this afternoon. He really had no idea about the email he sent you.

Nearly all the comments are from the engineers. ...”

(2) In response to Mr Unicomb’s terse “This meeting should be ASAP. I can’t meet next Tuesday but we need it this week anyway. Let me know what you can organise”, Mr Edwards sought to arrange a meeting with Sydney Water, copying in Mr Unicomb, in carefully polite language:

“If you could advise absolute earliest date & time for a meeting between myself, Planning & the Developers Rep it would be greatly appreciated.”

(3) On 30 March 2016 at 10.44am, Mr Unicomb emailed Mr Edwards:

“Joel

I think you need to be a lot more forceful. I have just got a phone call from CB advising a letter is being prepared regarding extensions of time and cost variations due to delays in sewer approval.

Trevor”

145 Those are far from isolated examples of the manner in which each man wrote

emails at the relevant time.

146 Turning to what the primary judge wrote about his “believing” Mr Edwards, and

finding his evidence “compelling”, I do not think this alters the position. After all,

some explanations are compelling or inherently believable, and some much

less so, and it does not strain language to say one has come to “believe”

something because a compelling account has been given. This need have

nothing to do with anyone’s demeanour. One may read a work of history, or

literary criticism, or some other non-fictional work, and find the account to be

“compelling”. The reader may thereafter hold a different belief about the

subject.

147 Perhaps unusually, this is a case where what emerges from the judge’s

reasoning is supported by what occurred at trial. Messrs Unicomb, Morcom

and Edwards were cross-examined over three days, occupying transcript

pages 42-225. Almost immediately thereafter (at transcript page 228) the

following was said:

“HIS HONOUR: The lay evidence is now done, so it’s appropriate to discuss these matters with you and Mr Sirtes. I’ve observed these witnesses and the one observation I can, I think, safely make is in relation to Mr Morcom that he wouldn’t spend one cent that he didn’t have to, and Mr Unicomb would manage his affairs with an absolute knowledge and conviction that he shouldn’t spend one cent that he shouldn’t need to, and Mr Morcom is making claims under heads of damage which are as bogus as Mr Edwards’ email that they were pushing Sydney Water.

In the bogus stakes they’re both running level. I’ve got to decide this. I have to decide whether this conversation took place. I have to have an actual persuasion, as the authorities say, that the words to the effect of Mr Edwards says were spoken, were spoken, and the safest course in that endeavour is I don’t think there is anything - you can make submissions about this and I’ll carefully consider them - but there is nothing so far as I’m concerned in either the demeanour of Mr Unicomb or of this man, Mr Edwards, that is any safe or appropriate to take into account in resolving this.”

148 That did not foreclose a demeanour based finding. It expressly left open to the

parties scope to make submissions on demeanour. However, at least on my

reading of the written and oral submissions, they did not do so.

149 That statement reinforces the inference which, on balance, I would draw from

his Honour’s reasons. The trial judge explicitly told the parties that he found it

neither safe nor appropriate to rely on demeanour. The trial judge wrote in his

judgment that he had relied upon the probabilities supported by the objective

contemporaneous circumstances. I think the trial judge should be taken to have

done what he told the parties he was going to do.

150 It is of course open to a judge to deny to himself or herself any advantage

based on his or her assessment of demeanour in the witness box. That

approach does not, of course, preclude findings of dishonesty or other findings

as to credit, although it does lower the bar for appellate interference.

151 But even though, favourably to White, I accept its submission as to how the

primary judge’s reasons are to be read, I nonetheless very comfortably reach

the same result as the President.

152 At the forefront of White’s submissions was that the inherent probabilities of the

case supported the absence of any Instruction being given. I do not agree. The

President’s reasons explain in more detail why. White’s submission faces a

series of difficulties. One was that it was accepted that Sydney Water preferred

a gravity solution, and that on this site either a deep trench or a horizontal bore

would be necessary to achieve that. Another is that the contemporaneous

handwritten annotations reproduced by the primary judge at [170], which

included as option 5 “directional drilling/horizontal bore (blue stone may be a

problem)” were accepted to have been made by Mr Edwards on a draft of the

subdivision (in the form it then took – with a mere 93 lots, as opposed to the

eventual 99) which undoubtedly was made on the morning of Monday 6

February 2012. Thus Mr Edwards was aware of the (obvious) fact that a gravity

solution might be achieved through directional drilling or a horizontal bore. This

in turn reinforces the power of the reasoning of the primary judge at [172]-[173]

that Mr Edwards’ response to the Browne v Dunn question was “compelling”.

153 Thus even accepting as, on balance, I do that the findings do not warrant the

deference to which demeanour-based findings are entitled, I conclude that

these grounds are not made out.

154 WHITE JA: I agree with Bell P, including on the only point of difference

between his Honour and Leeming JA.

155 I do not read para 167 of the primary judge’s reasons quoted by Leeming JA

(at [139]) as a statement by the primary judge that his assessment of the

credibility of Mr Unicomb and Mr Edwards was arrived at without regard to the

intuitive impression that both men made on the primary judge during the course

of their oral evidence. Rather the primary judge’s reference to objective

contemporaneous circumstances favouring Mr Edwards is the very kind of

testing of conclusions as to a witness’s credibility, having regard to the

impression made by the witness on the judge, that should be made as

described by Mahoney JA in Fabre v Arenales (1992) 27 NSWLR 437 at 448-

449, and as discussed by Dr H Bennett and Professor G Broe in their article

“The civil standard of proof and the ‘test’ in Briginshaw: Is there a

neurobiological basis to being ‘comfortably satisfied’?” (2012) 86 ALJ 258 at

274-275.

156 The primary judge enjoyed an advantage in assessing the credibility of the

witnesses which this court does not have. The fact that he tested his

conclusions against the objective probabilities does not affect that advantage.

157 After the conclusion of the cross-examination, the primary judge expressed a

view, quoted by Leeming JA at [147], that is not found in his Honour’s reasons

for judgment. Such views when expressed by a trial judge during the course of

a trial must be treated with caution. For example, it is not unknown for a trial

judge to suggest that he or she has not been impressed by the evidence of

either party to seek to bring the parties to a realistic expectation of difficulties in

their case with a view to encouraging a settlement. An explicit example can be

found in statements made by a judge in a family provision case to counsel for

the successful defendants quoted in Olsen v Olsen (2019) 101 NSWLR 225;

[2019] NSWCA 278 at [69]. I am not suggesting that this might be an

explanation for the primary judge’s observations in the present case; only that it

is unsafe for this court to assume, on the basis of statements made by a judge

during the course of a trial, that the judge has rejected all assistance from

seeing and hearing the witnesses in making findings as to their credibility,

when he or she does not say so in the reasons for judgment.

158 I agree that the appeal should be dismissed with costs.

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