Adc v White [1999] NSWSC 43 (8 February 1999)

Last Updated: 13 April 1999

NEW SOUTH WALES SUPREME COURT

CITATION: ADC v White [1999] NSWSC 43

CURRENT JURISDICTION: Equity Division

Construction List

FILE NUMBER(S): 55041/91

HEARING DATE{S): 7-9 December 1998

JUDGMENT DATE: 08/02/1999

PARTIES:

Australian Development Corporation Pty Ltd

Plaintiff

White Constructions (ACT) Pty Ltd

First Defendant

Exxon Coal Australia Ltd (formerly White Industries Ltd)

Second Defendant

JUDGMENT OF: Einstein J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

P- R.V. Gyles QC, P.F. Liney

D1- no appearance

D2- B.W. Rayment QC, S. Goldstein

SOLICITORS:

P- Colin Biggers & Paisley

D2- Mallesons Stephen Jaques

CATCHWORDS:

Practice - Reference by court - Powers of court - In respect of factual findings of referee - In respect of findings of law by referee - Exercise of judicial discretion to adopt, vary or reject referee's report in whole or in part - Supreme Court Rules 1970 (NSW) Pt 72, r 13.

Trade Practices - Misleading and deceptive conduct - Trade Practices Act 1974 (Cth) sections 52, 82(1).

Damages - Trade Practices Act - Requirement to establish loss or damage - Assessment of damages - Whether referee correct to use hypothetical comparison - 'Nullus commodum capere potest de injuria sua propria'

`no man can take advantage of his own wrong' - Suggested constraints on the selection and use of hypothetical alternative to avoid infringing the maxim - Principles applicable.

Evidence - Whether referee failed to deal with arguable points - Failure by the referee to refer to certain evidence in report - Whether referee obliged to give reasons for assessment of evidence of witness.

Contract - Building contract - Misrepresentation.

ACTS CITED:

Supreme Court Rules 1970 (NSW) Pt 72

r13

Trade Practices Act 1974 (Cth) sections 52

82(1)

DECISION:

Short Minutes to be brought in.

JUDGMENT:

PARTIES: Australian Development Corporation Pty Ltd

Plaintiff

White Constructions (ACT) Pty Ltd

First Defendant

Exxon Coal Australia Ltd (formerly White Industries Ltd)

Second Defendant

TITLE OF COURT: Supreme Court of New South Wales (Equity Division - Construction List)

DELIVERED: Sydney, 8 February 1999

FILE No.: 55041/91

HEARING DATES: 7-9 December 1998

JUDGMENT OF: EINSTEIN J

CATCHWORDS:

Practice - Reference by court - Powers of court - In respect of factual findings of referee - In respect of findings of law by referee - Exercise of judicial discretion to adopt, vary or reject referee's report in whole or in part - Supreme Court Rules 1970 (NSW) Pt 72, r 13.

Trade Practices - Misleading and deceptive conduct - Trade Practices Act 1974 (Cth) sections 52, 82(1).

Damages - Trade Practices Act - Requirement to establish loss or damage - Assessment of damages - Whether referee correct to use hypothetical comparison - 'Nullus commodum capere potest de injuria sua propria'; `no man can take advantage of his own wrong' - Suggested constraints on the selection and use of hypothetical alternative to avoid infringing the maxim - Principles applicable.

Evidence - Whether referee failed to deal with arguable points - Failure by the referee to refer to certain evidence in report - Whether referee obliged to give reasons for assessment of evidence of witness.

Contract - Building contract - Misrepresentation.

Supreme Court Rules 1970 (NSW) Pt 72, r13

Trade Practices Act 1974 (Cth) sections 52, 82(1)

CASES CITED:

Alghussein Establishment v Eton College [1988] 1 WLR 587

Allen v Bega Valley Council (unreported, Supreme Court of NSW (CA), 22 December 1994)

Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd & Ors (1996) 12 BCL 317

Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408

Cheall v APEX [1983] 2 AC 180

Collings Construction Co Pty Ltd & Anor v ACCC (1998) 43 NSWLR 131

ECC Lighting Ltd v McGurk (unreported, Supreme Court of NSW, 22 December 1995, McClelland CJ)

Gates v City Mutual Life Assurance Society [1986] HCA 3; (1986) 160 CLR 1

Grozier v Tate (1946) 16 LGR 57

Hughes Aircraft Systems International v Airservices Australia (unreported, Federal Court of Australia, ACT, 9 December 1997, Finn J)

Marks v GIO [1998] HCA 69; (1998) 158 ALR 333

Mihalis Angelos (1971) 1 QB 164

New Zealand Shipping Co Ltd v Societe et des Ateliers et Chantiers de France [1919] AC 1

Perry v Fitzhowe 8 QB 757

Sellars v Adelaide Petroleum NL & Ors [1994] HCA 4; (1993-1994) 179 CLR 332

Sinanian v EKS Carpentry Pty Ltd & Ors (unreported, Supreme Court of NSW (CA), 5 Sept 1997)

Super Pty Ltd v SJP Formwork (Australia) Pty Ltd (1992) 29 NSWLR 549

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130

The Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

Twycross v Grant & Ors (1877) 2 CPD 469

Tywne's Case 3 Rep 80

Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410

REPRESENTATIONS:

Counsel

Plaintiff: Australian Development Corporation Pty Limited: R.V. Gyles QC

P.F. Liney

Defendants:White Constructions (ACT) Pty Limited and Ors. No Appearance

Exxon Coal Australia Ltd (formerly B.W. Rayment QC

White Industries Ltd) S. Goldstein

Solicitors

Plaintiff: Colin Biggers & Paisley

Second Defendant:Mallesons Stephen Jaques

Number of Paragraphs 232 [plus appended extracts from the judgment of Giles CJ Comm Div of 30 June 1996 and from the Referee's Report of 1 June 1998]

TABLE OF CONTENTS Page

BACKGROUND 1

The Notices of Motion before the Court 6

The Principles which Inform the Court's Discretion in Respect

of a Referee's Report 8

The Judgments of Giles J of 30 January 1996 and 29 April 1997 9

The Holdings which Bound the Referee 10

The Order for Reference to Mr Morrisey 11

The Referee's Report 12

SUGGESTED UNCONTRADICTED EVIDENCE OF MR HUNTSTEAD 12

ADC'S SUBMISSIONS AS TO THE CORRECT LEGAL PRINCIPLE 13

ADC'S ALTERNATIVE SUBMISSION THAT THE REFEREE

IN ANY EVENT MISAPPLIED `THE SECOND STAGE COMPARISON' 15

ADC'S SUBMISSIONS AS TO:

No Admissible Evidence or No Sufficient Admissible Evidence 17

Suggested Internal Contradictory Findings 17

Suggested Misapprehension of Mr Fischer's Evidence 18

Suggested Failure to Deal With Arguable Points 19

ADC'S ATTACK ON THE REFEREE'S FINDING OF THE

HYPOTHETICAL ALTERNATIVE SCENARIO:

The Threshold question 20

The Question of Principle 23

The Suggested Constraint on the Hypothetical Comparison -

`A Wrongdoer Cannot be Assumed to Put Forward a

Hypothetical Involving his own Wrongdoing' 25

THE ALLEGED FINDINGS CONTRARY TO SUGGESTED

UNCONTRADICTED EVIDENCE OF MR HUNTSTEAD 41

THE REFEREE'S SUGGESTED INTERNAL

CONTRADICTORY FINDINGS 63

THE REFEREE'S SUGGESTED MISAPPREHENSION

OF THE EVIDENCE OF MR FISCHER 66

THE REFEREE'S SUGGESTED FAILURE TO DEAL WITH

ARGUABLE POINTS 67

CONCLUSION AS TO ADC'S SUBMISSION AS TO NO ADMISSIBLE

EVIDENCE OR NO SUFFICIENT ADMISSIBLE EVIDENCE 68

SUBMISSIONS AS TO THE PRECISE ORDERS WHICH SHOULD

BE MADE 68

ADC'S CASE AGAINST ACT 70

Appendices

Appendix 1 - Extract from judgment of Giles CJ Comm Div of 30 June 1996

Appendix 2 - Extract from Referee's Report of 1 June 1998

THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION (CONSTRUCTION LIST)

EINSTEIN J

55041/91 Australian Development Corporation Pty Limited v White Constructions (ACT) Pty Limited and Ors.

JUDGMENT Monday 8 February 1999

Background

1 It is now some sixteen or seventeen years since the National Capital Development Commission invited the submission of designs for the development of a site in Canberra involving a three-storey office building and a twenty-storey residential building with underground car parking beneath and adjacent to the buildings which became known as the `Quadrant project' (`the project'). It is almost twelve years since the execution of a written agreement (`the contract'), under which White Constructions (ACT) Pty Limited (`ACT') agreed to design and construct the project for Australian Development Corporation Pty Limited (`ADC') for a price of $19,535,000.00. ACT was a wholly owned subsidiary of White Constructions Limited (`WCL') which was in turn a wholly owned subsidiary of White Industries Limited, now known as Exxon Coal Australia Limited (`WIL' or `Exxon').

2 In taking the Court through the background history, Mr Gyles QC appearing for ADC, pointed out that `the lengthy negotiations which had taken place between the White Group on the one hand and ADC on the other hand for the construction of the complex . . . were conducted on the part of the White Group by officers of WIL, [that] it was officers of WIL who had done the estimating internally which was the foundation for those negotiations and [that] ADC had been negotiating with others . . . as well'.

3 During the intervening period, there has been much litigation in relation to the contract. These proceedings were commenced in 1991. In July 1992 there were referred to the Honourable D.A. Yeldham QC for enquiry and report, a number of questions in the proceedings.

4 The report brought down was dated 19 April 1993. The report then came before Giles CJ Comm. Div. pursuant to Part 72 Rule 13 of the Rules.

5 Eight questions had been before Mr Yeldham. The referee's opinion on Question 4A was, in summary form as follows:

`WIL represented that it and ACT or one of them could do the work required by the contract for the price stipulated therein utilising a steel frame for the residential building and ADC relied on the representation in contracting with ACT.'

[See summary set out in the judgment of Giles CJ Comm. Div. 14.10.93 at page 2]

6 In his judgment delivered on 14 October 1993, Giles J adopted the report in relation to some of the questions, rejected it in relation to others, and arrived at different answers to the latter questions. A number of ADC's causes of action then fell away, but ADC amended to include claims against WCL for damages for inducing breach of contract, ACT's intermediate holding company.

7 Relevantly the judgment of Giles J of 14 October 1993 stated:

`Question 4A

Originally both the residential and the office buildings in the project were to be of concrete. In the course of the negotiations structural steel frames were introduced. A fax dated 28 January 1987 from Mr Amann, an estimator employed by WIL, on the letterhead of WIL recorded a "Revised Final Offer" which included a figure of $2,542,000 for structural steel for columns and beams in both the residential and the office buildings, and included the words, "The structure will be constructed of structural steel columns and beams . . .". Mr Fischer of ADC said that he formed an understanding that the residential building and the office building would be constructed of structural steel columns and beams, and that he had a conversation with Mr Amann to the effect (para 17 of Mr Fischer's statement) -

"I said:

`I have studied steel framed buildings and I cannot understand how you can make it viable. We have designed and were planning to build the MBF building in Bathurst Street, Sydney and we went through the whole question of concrete versus steel.'

Amann said:

`That is not your worry.'

I said:

`What about the details? How will you deal with the underside of balconies and fire proofing for example?'

Amann said:

`Don't you worry about it, it is all included in the price. We know what we are doing.'"

Mr Amann denied this conversation, but the referee accepted that it took place. The referee said -

"I prefer the version of Mr Fischer to that of Amann, as a matter of probability, and I am of the opinion that Amann as an employee of WIL (he was not employed by ACT) did inform Fischer that the project could be carried out (whether by WIL or ACT does not matter) for the price submitted on 28 January to the design contained in the draft specification of that date, including the use of structural steel frame to the residential component which it had introduced as a cost saving. I accept also the claim in paragraph 20 of Mr Fischer's statement (Exhibit 5) that had he not received the assurances that the project could be completed using steel frame for the agreed price he would not have signed the contract, evidence which was corroborated by him when he was permitted to be recalled during the course of addresses . . . . I do not think that it is an answer to say, as was submitted by senior counsel of WIL, that the only reliance was upon the contractual provisions and not upon any statement concerning the use of steel."

After referring to another conversation which the referee regarded as corroborative of Mr Fischer's concern that the work required by the contract could be performed for the price stipulated utilising a steel frame for the residential building, the referee said-

"I answer question 4A by saying that, as is claimed in paragraph 15 of the amended Summons, WIL by its servant, Amann, did make a statement to Mr Fischer concerning a steel frame for the residential building in terms set out in paragraph 17 of Mr Fischer's statement (Exhibit 5). I find also that some reliance was placed upon the statement by the plaintiff. In this respect it should be borne in mind that, as Wilson J said in Gould v Vaggelas 157 CLR 215 at page 236, the representation need not be the sole inducement for a course of action. It is sufficient so long as it plays some part, even if only a minor part."

There is a touch of obscurity in this. Paragraph 15 of the summons alleged a representation that the work required by the contract could be done for the price stipulated therein utilising a steel frame for the residential building. On one view the referee answered question 4A by finding that Mr Amman said what Mr Fischer attributed to him, without saying whether Mr Amman's words amounted to the representation alleged. But the words "as is claimed in paragraph 15" and the passage from the report earlier set out show that the referee meant that Mr Amann's words amounted to the representation alleged, and before me it was taken that he took this second step. I have reflected that in my summary of the referee's opinions at the beginning of these reasons.

WIL's primary submission was that all that Mr Amann told Mr Fischer was that the question of whether or not a steel framed building could be built for the price stated was a matter for the builder, and that there was "no representation in any relevant sense". It pointed out that the contract was a fixed price contract whereby any cost overruns would be to the account of the builder and contained a provision that the parties thereto would not be bound by any external representations, and said that all that could have been represented was that the builder would comply with its contractual obligations.

Perhaps that would be so if the conversation ended with the words, "That is not your worry". But Mr Amann said more, and it is not simply a question of whether a promise to do something connotes a present ability to do it (cf Futuretronics International Pty Ltd v Gadzhis (1990) ATPR 41-049). In the conversation accepted by the referee he conveyed by the words "it is all included in the price" that the work required by the contract, relevantly so far as a steel frame was intended for the residential building fell within the quoted price, and by the following words "We know what we are doing" that the price was appropriate for the performance of the work so required. In a commercial context, it would not be thought that the builder was quoting a price insufficient to carry out the work and shouldering a loss, and what Mr Amann said would reasonably have been understood as representing that the price was a price which would cover the cost of doing the work. From the referee's findings, clearly it was understood as an assurance that the contract was "viable" (Mr Fischer's opening query to Mr Amann) notwithstanding the use of a steel frame. In my opinion the referee was correct in finding in the conversation between Mr Amann and Mr Fischer the representation addressed in the question.

WIL's further submission was that the report should not be adopted so far as the referee held that ADC relied on the representation as distinct from the contractual provisions in entering into the contract. It said that in this respect the referee's opinion was at odds with his opinion that WIL did not represent that it would be responsible for the performance of ACT's obligations under the contract, and that it followed from the latter opinion that ADC relied on its rights under the contract with ACT as the perceived contracting party rather than upon what was said by Mr Amann.

There is no inconsistency between reliance upon the representation the subject of the question and the absence of, or of reliance on, a quite different representation. Even if ADC did not rely on WIL holding out that it would be responsible for ACT's performance of the contract, it could well have relied upon the representation the subject of the question. Further, the referee specifically accepted Mr Fischer's evidence that had he not received the assurances that the project could be completed for the agreed price using a steel frame he would not have signed the contract. That is a finding of fact the adoption of which was not contested, and WIL's submission overlooks the distinction between reliance in entering into a contract and reliance upon the rights under a contract once entered into. I consider that the report should be adopted in relation to question 4A.

The referee was careful to point out that what this might lead to in the proceedings was not a matter for his opinion. It may be that it does not avail ADC. That must be left for the future.'

[judgment pages 25 to 29] [emphasis added]

8 Mr Gyles submitted that these findings could not be `rolled back' by anything which later occurred. Mr Gyles submitted that WIL had been attempting to subvert the referee's finding on this issue by a series of manoeuvres.

9 It is relevant to note the terms of paragraphs 15 to 17 inclusive of ADC's amended Summons dated 3 February 1993 :

`15. Further or in the alternative, the defendants represented that the defendants or one of them could do the work required by the contract for the price stipulated therein utilising a steel frame for the residential building.

PARTICULARS

(a) See the facsimile of 23 January 1987 to the plaintiff from Robert Amman on behalf of the second defendant and the letter to the plaintiff of 28 January1987 signed on behalf of the second defendant.

(b) In or about January/February 1987 prior to the contract, Mr. Amman, on behalf of the second defendant, orally told this to representatives of the plaintiff.

16. In reliance on each of the said representations the plaintiff entered into the agreement.

17. The said representations were false or misleading, further or in the alternative misleading or deceptive or likely to mislead or deceive in that respectively:

(a) the second defendant is not responsible or does not accept responsibility to the plaintiff for the defaults of the first defendant under the agreement;

(aa) At the time of the said representation and at the time of the agreement the second defendant intended to cease construction work, transfer existing construction work to and undertake further construction work through White Constructions Limited with a view to a public flotation or outright sale of the shares in the capital yet made no disclosure to the plaintiff of all or any of the foregoing.

(b) the defendants and neither of them could do the work required by the Agreement for the price stipulated therein by utilising a steel frame for the residential building;

(ba) The second defendant had no reasonable grounds for making the representations.

(c) the fact that the first defendant was licensed was not the only reason for naming it as the contracting party.'

10 In a document dated 2 December 1994 the parties agreed upon the issues remaining in the proceedings and that there should be a hearing to determine those issues other than the amount of any damages to which ADC or ACT might be entitled with the amount of any damages to be the subject of an order for reference if liability were established. There then followed a hearing before Giles J.

11 The judgment of Giles J was handed down on 30 January 1996 and is reported in Volume 12, Building and Construction Law, page 317 and covers some 60 pages. Pages 365 to 376 of the judgment are appended for convenience to this judgment. The third last sentence reads:

`More litigation is necessary to determine whether WIL is liable to ADC and if so for what amount.'

12 On 16 May 1997, Giles J referred to Mr J.A. Morrisey for enquiry and report `the balance of the proceedings'. Mr Morrisey's report was in turn brought down on 1 June 1998.

The Notices of Motion before the Court

13 There is presently before the Court an amended notice of motion filed by ADC on 7 December 1998 seeking orders:

(a) as against the first defendant:

(i) that the report be adopted;

(ii) that there be judgment for the plaintiff against the first defendant in the sum of $33,593,268 plus interest thereon to date of judgment;

(iii) that the first defendant pay the costs of the plaintiff's claim against it;

(b) as against the second defendant:

(i) that those parts of the referee's report identified in the schedule, be adopted;

(ii) that the report otherwise be rejected;

(c) in the alternative seeking as against the second defendant:

(i) that the Court reject the findings of the referee that:

(a) if the plaintiff had not entered into the contract which it did with the first defendant as a result of the second defendant's contravention of Section 52 of the Trade Practices Act, the plaintiff would have entered into a similar contract with the first defendant (but utilising a concrete frame instead of a steel frame for the residential tower) for approximately the same price, which would have been just as `non-viable';

(b) in those circumstances, the plaintiff suffered no loss as a consequence of the second defendant's contravention of Section 52;

(ii) that the Court decide the remaining issues on the evidence taken before the referee;

(d) as against both defendants:

(i) that the defendants pay the costs of the motion;

(ii) for such further or other orders as to the Court may seem appropriate.

14 The notice of motion sought only relief against ACT and WIL, WCL having been earlier dismissed from the proceedings.

15 There is also before the Court a notice of motion filed on 19 June 1998 by WIL in which it seeks an order that the Court adopt so much of the referee's report as was delivered by the referee and that the balance of the proceedings be referred to him for enquiry and report as relates to the dispute between the plaintiff and WIL. That notice of motion also seeks an order that ADC pay WIL's costs of the reference and of the application.

16 Mr Rayment submitted in the alternative as follows:

(a) That the Court should adopt the referee's report.

(b) That the Court should ask some questions of the referee with a view to later adoption of the report, if appropriate.

(c) That the Court should both adopt the report as well as refer the matter back to the referee for determination of issues not yet determined, but suggested as convenient to be determined inter alia, against the event that the proceedings come before the Court of Appeal which may set aside the referee's decision of no loss or damage, including:

(i) The limitation or time bar issues.

(ii) The quantification of the actual cost of construction of the building in concrete.

17 I deal with the parties further submissions on relief below.

18 ACT did not appear. ADC was represented by Mr Gyles QC and Mr Liney of counsel. WIL was represented by Mr Rayment QC and Mr Goldstein of counsel.

The Principles which Inform the Court's Discretion in Respect of a Referee's Report

The parties were at one in accepting that the principles which inform the Court's discretion whether and to what extent to adopt, vary or reject the referee's report are as set out in Super Pty Ltd v SJP Formwork (Australia) Pty Ltd (1992) 29 NSWLR 549.

19 The Court's discretion to adopt, vary or reject the referee's report is not constrained in the same way that challenges to arbitral awards are constrained. As Super makes plain, grounds for rejecting a report may include:

(a) an error of principle;

(b) a patent misapprehension of the evidence;

(c) perversity or manifest unreasonableness in fact finding.

20 Super also makes plain that where a complaint about a report involves a question of law, or the application of legal standards to the facts, a proper exercise of the discretion requires a judge to consider and determine that matter afresh.

21 ADC opposed the adoption of the report on the basis of :

(a) suggested errors of principle, involving questions of law or the application of legal principles to the facts;

(b) a suggested patent misapprehension of the evidence and perverse or manifest unreasonableness in fact finding.

The Judgments of Giles J of 30 January 1996 and 29 April 1997

22 It will be necessary from time to time in this judgment to refer to the judgment delivered by Giles J on 30 January 1996, to which I have already referred. Giles J himself referred to that judgment when his Honour later had to deal with whether the remaining issues should be the subject of an order for reference. In a judgment dealing with that question, handed down on 29 April 1997, Giles J said of his reasons, delivered on 30 January 1996, as follows:

`In reasons delivered on 30 January 1996 I held that ADC was entitled to damages from ACT for breach of contract but was not entitled to damages from WCL and that ACT was not entitled to damages from ADC. The position as between ADC and Exxon was more complicated. ADC claimed against Exxon for contravention of the Act, alleging that misleading or deceptive conduct on the part of Exxon caused it to enter into the contract and that it thereby suffered loss of [sic] damage. The misleading or deceptive conduct causing entry into the contract was established. I did not feel able to reach a definite conclusion as to the occasioning of loss or damage, and in particular when any loss or damage was suffered (which was important to whether ADC commenced action within three years of the accrual of its cause of action), until ADC's case for the amount of its damages was put forward.'

[judgment of 29 April 1997 at page 2]

23 In the same judgment of 29 April 1997, Giles J identified what his Honour referred to as `the remaining issues' as follows:

(a) As between ADC and ACT, the amount of damages to which ADC is entitled for breach of contract; and

(b) as between ADC and Exxon, whether ADC's entry into the contract occasioned loss or damage, and if so when the damage was suffered and the amount of damages.

24 Also in this judgment Giles J in dealing with the question of evidence exchanged to that point in time going to the remaining issues and the fact that the evidence was of an expert or technical nature, said as follows:

`The unforeseen complication is that it is still necessary to determine for the purposes of the remaining issues what ADC would have done had there not been the misleading or deceptive conduct and when any loss or damage occasioned to it was suffered, questions which are linked and to an extent go beyond the expert or technical questions otherwise to be determined. That also is common ground, although the extent is seen differently by ADC and Exxon.'

[judgment at pages 3-4]

The Holdings which Bound the Referee

25 Before continuing with the chronology and turning to the submissions of the parties, it is convenient to return to the holdings which bound the referee, Mr Morrisey. The holdings were:

(1) `. . . that WIL represented that it and ADC or one of them could do the work required by the contract for the price stipulated therein utilising a steel frame for the residential building'. [Adoption by Giles J on 14 October 1993 of the report of Yeldham J in relation to question 4A; Giles J, 30 January 1996 at page 365].

(2) That ADC placed some reliance upon the representation in entering into the contract. [Adoption by Giles J on 14 October 1993 of the report of Yeldham J in relation to question 4A; Giles J, 30 January 1996 especially pages 365-369]

[It is important to note here that the referee, Mr Morrisey, was bound by:

(a) Mr Yeldham's findings as to reliance which involved Mr Yeldham's acceptance of Mr Fischer's evidence, in its full terms - "had I not received the assurances that the project would be completed using steel frame for the agreed price, I would not have agreed to sign the contract".

(b) Giles J's findings as to the effect of the representation upon Mr Fischer's signature of the contract - see Giles J judgment, 30 January 1996 at pages 368-369]

(3) That the representation was untrue in that on a proper assessment the work required by the contract could not be done for the price. [Giles J, 30 January 1996 at page 368]

(4) That:

(a) In context, the making of the representation was misleading or deceptive conduct or conduct likely to mislead or deceive in contravention of section 52 of the Trade Practices Act and

(b) if ADC's entry into the contract occasioned loss or damage, that loss or damage was suffered by the contravention.

[Giles J, 30 January 1996 at page 369]

26 It is pertinent to note, as Mr Rayment reminded the Court in submission, that there was no finding binding on the referee to the effect that there had been an implied representation from the giving of the quoted price that WIL had checked it and found it to be viable. Mr Rayment's submission was that it was doubtful in the extreme that it would be necessary to take a builder who quoted a price as thereby implicitly representing that it found the quoted price to be viable. In support of this proposition, Mr Rayment submitted that a builder may have a number of motives, such as for example a need for continuity of work, for giving a particular price to a proprietor. Mr Rayment submitted that the only implicit representation in such a situation might well be that the builder had done his or her best to work out what the price was and bona fide believed in the price as a matter of opinion. These were not, however, matters for debate on the notices of motion before the Court.

The Order for Reference to Mr Morrisey

27 It is common ground that following the judgment of Giles J of 30 January 1996 and the further judgment of 29 April 1997, the proceedings were stood over for the parties to agree upon a referee and frame an order for reference. It is common ground that Mr Morrisey had referred to him by orders of the Court made on 16 May 1997 for enquiry and report `the balance of the proceedings'. It is common ground that at a conference held on 2 June 1997, the parties agreed a statement of issues as follows:

"(a) as between ADC and ACT, the amount of damages to which ADC is entitled for breach of contract;

(b) as between ADC and WIL, whether ADC's entry into the contract with ACT occasioned loss or damage and if so, when the damage was suffered and the amount of damages.

If the damage in (b) was suffered earlier than 9 August 1988, whether ADC's cause of action under Section 82(1) of the Trade Practices Act is barred by virtue of Section 82(2)".

[See pages 1-2 of the referee's report of 1 June 1999]

28 The referee was then required to determine whether ADC's entry into the contract with ACT as a result of the misrepresentation by WIL as to the viability of the contract, occasioned loss or damage, and if so how much, for the purposes of Section 82 of the Trade Practices Act.

[Plaintiff's overview submissions paragraph 3]

The Referee's Report

29 The referee's report of 1 June 1998 covers some 108 pages. The report was closely examined before me as was the January 1996 judgment of Giles J in the reported form. Again and as a matter of convenience, I append pages 74 to 84 of the report to the judgment.

Suggested Uncontradicted Evidence of Mr Huntstead

30 I note immediately Mr Gyles' submission that on the evidence, Mr Amman, a senior estimator with WIL, was not a decision maker for WIL, whereas Mr Huntstead, who was Mr Amman's superior and gave evidence before the referee, had been responsible for recommending the offer to be submitted by ADC to the directors. Mr Gyles submitted that there was simply no basis on which the referee could have made a finding [see page 74 of the report] that WIL would have put forward a price equating to the price which was bid in relation to concrete. The submission was that the referee in fact edited out so much of ADC's written submissions as had dealt with Mr Huntstead's evidence. The matter is dealt with in paragraphs 119 and following below.

ADC's Submissions

31 ADC claimed before the referee that its loss consisted of:

(a) the actual construction cost it incurred as a result of its entry into the contract with ACT ($37.9m net of PC), less what would have been a reasonable contract price for the work ($18.6m net of PC), being a net claim of $19.3m;

(b) consequential costs consisting of $9.2m additional financing charges on the above expenditure.

[Plaintiff's overview submissions of 3 December 1998 before me - referring to ADC's statement pursuant to Part 72 Rule 8(5), paras 6(d) and 21-24]

ADC's Submissions as to the Correct Legal Principle

32 ADC submitted before me that its claim was in accordance with correct legal principle. The submission was that a plaintiff who has been induced by a misrepresentation to enter into a contract, whether for property or services, is entitled to recover as damages the amount he or she actually paid as a result of so doing (including consequential costs); less the true or fair value of what he or she received, which in the present case was said by the plaintiff to be equivalent to a fair and reasonable contract price for the work. The plaintiff's submission was that this represents the disadvantage that such a plaintiff suffered, less the value he received, and restores the plaintiff to the position as if the wrong had not occurred.

33 ADC sought to rely inter alia, on Spencer, Bower and Turner `Actionable Misrepresentation', 3rd edition paragraphs 203, 206 and 208. Paragraph 203 reads as follows:

`Damages

203. In an action of deceit, or its equitable equivalent, the relief to which a successful plaintiff is entitled is damages, and damages only. There can be no question of undoing any contract or transaction, since the action is instituted and maintained on the basis that the representee has elected, or is compelled by the application of certain rules of law, to adhere to such contract or transaction; from which it follows that he can be put back in the position in which he was before he altered it on the faith of the fraudulent misrepresentation (which is the purpose of all civil relief) only by the recovery of a gross sum in money, which is to compensate him (so far as money can) for the loss which he has suffered down to the date of trial, and also for such loss (if any) as he must necessarily suffer in the future under the provisions of the contract which he is fixed with, or otherwise.'

Paragraphs 206 and 208 are set out in paragraph 92 of this Judgment.

34 Reliance was also placed upon McGregor on Damages, 15th edition at page 1096 where the proposition put under the heading `Fraudulent Misrepresentation : Deceit' reads `The normal measure of damages is the value transferred less the value received, whether of property or of services'.

35 ADC's submission was that the objective of the award of damages in tort is to place the plaintiff in the position he or she would have been in absent the tort, that is, if left alone; in the present case, as ADC puts it, `if no representation had been made'.

36 ADC's submission was that if a plaintiff is induced to enter into a transaction which it would not otherwise have entered, then the objective of the award of damages is achieved if the plaintiff recovers all that he or she outlaid (subject to any break in the chain of causation by true supervening events for example), but must give credit for value received as a result of the transaction.

37 On ADC's submissions, if it is necessary to explain the matter by way of comparison of position, the comparative is simply not entering the transaction and so becoming liable to make the outlay's. On ADC's submission, the Court does not go further and ask what else would have been done with the money.

38 ADC's submission was that such investigation as might take place of a hypothetical character is usually on the issue of reliance or inducement; in cases where there has been no transaction and, for example, the loss of an opportunity is claimed; or where the plaintiff is seeking some extra `loss of expectation' - type damages in the case of a misrepresentation leading to a transaction (for example Collings Construction Co Pty Ltd & Anor v ACCC (1998) 43 NSWLR 131).

39 ADC submitted that even where a `hypothetical' is indulged in, little if any weight is attached to ex-post facto statements and in this regard cites Finn J in Hughes Aircraft Systems International v Air Services Australia 9 December 1997, Unreported, Federal Court of Australia. [Butterworths Cases 970710 at page 4]

40 ADC submitted that Giles J had found that the misleading conduct had caused ADC to enter into the contract. On ADC's submission, the only question for the referee was what loss this occasioned to ADC. On ADC's submissions, the contentions of WIL which the referee had accepted in the reported pages 78-83, were `a thinly disguised collateral attack upon his Honour's judgment'.

41 ADC submitted that the referee's approach did not accord with principle. ADC's submission before me in this regard was, inter alia as follows:

`Instead [of following an approach which accorded with principle] he `found' a hypothetical alternative scenario wherein ADC, instead of being misled into the non-viable ACT contract by the misrepresentation as to its viability, entered into another contract, also with ACT, which was also underpriced by WIL/ACT, and which would therefore have been equally non-viable and therefore would have carried the same adverse financial consequences for ADC. On the basis of this hypothetical alternative scenario, he `found' that ADC therefore suffered no loss as a result of its actual entry into the contract with ACT, since the hypothetical loss neutralised the actual loss (report page 84)'.

[ADC's overview submissions, 3 December 1998 at paragraph 7.]

42 ADC then submitted that the referee's approach is unsupported by any authority and entirely begs the task of assessing ADC's actual loss flowing from its entry into the contract in reliance on WIL's misrepresentation, in accordance with the principles which ADC submitted obtained.

43 ADC's submission was that the referee's approach on this subject, was entirely misguided, and as such, his report on this subject should be rejected.

ADC's Alternative Submission that the Referee in Any Event Misapplied `the Second Stage Comparison'

44 ADC then submitted that even if the referee's approach had been correct in principle, it was wrong in execution. The submission was that if it was necessary to go to a second stage comparison, this is done on an objective and not a subjective basis. On ADC's submissions, the question here would be as to what would a properly informed, reasonable and honest principal and builder agree in relation to the project. ADC's submission is that the answer must be a contract for a reasonable price which would yield the identical result, on ADC's submissions, to the Court simply ensuring that the plaintiff recovered all that it outlaid but give credit for value received as a result of the transaction. [See the plaintiff's earlier submissions set out above].

45 ADC submits that its argument is `even more compelling when it is appreciated that the gist of the misrepresentation here was that the building could be built for the quoted price by the builder concerned, that is, that the contract was viable, particularly when the misrepresentation is by a substantial parent in relation to a subsidiary'.

46 ADC submits that again, if it is necessary to go to the second stage comparison, an alternative approach is to ask what contract would have been entered into between ADC and ACT, assuming that both parties were acting honestly and reasonably and were fully informed. On ADC's submission, the same result must follow, namely a contract at a reasonable price.

47 Here, ADC submits that the Court simply will not assume that reasonable, honest and properly informed parties would enter into a contract at a gross undervalue. On ADC's submission, even if this would be assumed, it could only work to the advantage of the plaintiff, as the set-off would be less and the verdict greater. On ADC's submission, in no circumstances could the Court assume that the hypothetical contract would be broken by the builder, for that would be to reward a party for its own wrong.

48 In relation to the same topic, ADC notes that in Mihalis Angelos (1971) 1 QB 164, Edmond Davies LJ said at 202-203:

`The assumption has to be made that, had there been no anticipatory breach, the defendant would have performed his legal obligation and no more.'

49 In short, even if the referee's approach had been correct in principle, ADC's submission is that it was wrong in execution for the reasons that:

(a) Even if hypothesising what would have happened had ADC not been misled into the contract with ACT which was non-viable and improperly performed, the referee should not have hypothesised entry into a different contract with ACT which was equally non-viable and improperly performed. On the contrary, the referee should have hypothesised that the alternative contract would have been properly priced and properly performed.

(b) In finding that if ACT had proffered an alternative contract price, it would have been equally underpriced and non-viable, the referee misconceived the evidence, which was not to that effect at all.

(c) The referee's hypothetical approach involved hypotheses which were legally irrelevant on any view. The submission is that the referee not only asked `what would have happened if the wrong had occurred', but also `what would have happened if, additionally, matters antecedent to the wrong had not occurred'.

ADC's Submissions as to No Admissible Evidence or No Sufficient Admissible Evidence

50 ADC further submits that in any event, there was either no admissible evidence or no sufficient admissible evidence upon which the referee could have found that WIL would have consciously permitted its subsidiary to enter into a hypothetical alternative contract at a gross undervalue or that ACT would have breached the hypothetical contract with the same consequences as found in relation to the actual contract. In this regard, ADC's submission is that the referee's hypothetical finding involved, in relation to key elements:

(i) internally contradictory findings;

(ii) misapprehension of the evidence of Mr Fischer;

(iii) failure to deal with arguable points.

Suggested Internal Contradictory Findings

51 ADC's submissions in relation to suggested internally contradictory finding were as follows:

'25. WIL's submissions adopted by the referee included the submission that an alternative contract with ACT was highly likely if not inevitable because ever since 1985 the parties had been negotiating toward a contract for concrete which only became steel at the last moment: report pp 82.1, 82.4. (In fact, ACT was only introduced as an entity in 1987; such negotiations as there were in 1985 and 1986 were with WIL.) Linked with this is the submission (and finding) that: "This is a case where the plaintiff cannot correctly say that but for the breach of s52 no contract at all would have been entered into with ACT" (report p 82.2).

26. The referee's finding in accordance with the WIL submissions on these points directly contradicts his own independent finding earlier in the report. At page 46 after a lengthy recitation of the pre-contract history, the referee there concluded: first, that in truth there was not really a course of 18 months of negotiations between the parties; and second, this was a case where absent the misrepresentation there would have been `no transaction' between the parties (adopting the language used in Kenny & Good v MGICA (1997) 147 ALR 568 - see the referee's recitation of the competing submissions at pp 6 and 7).

27. The referee clearly accepted ADC's Written Submission in Reply (paragraph 125) that on a proper view of the pre-contract history there was no sense of inevitability about a contract with Whites and that until Mr Fischer had his doubts, there was simply no reason for ADC to look elsewhere.

28. The earlier, independent conclusion of the referee should be preferred. His later adoption of the WIL submissions is inconsistent and cannot stand.'

[Plaintiff's written submissions dated 9 July 1998 paras 25-28]

Suggested Misapprehension of Mr Fischer's Evidence

52 ADC's submission in relation to the suggested misapprehension by the referee of the evidence of Mr Fischer were as follows:

'29. Next, the WIL submissions adopted by the referee included the submission that ADC (Mr Fischer) would not have sought (or not relied on) an assurance from WIL concerning a hypothetical new price in concrete (report p 80). . . .

30. That submission and finding misstated Mr Fischer's evidence in rejecting it as improbable.

31. In support of the conclusion at the foot of page 80, Mr Fischer is said to have given implausible evidence to the effect that, if WIL had come back with a price in concrete following rejection of its steel price, he would have been reassured by a statement that "we know what we are doing" and "it's all in the price". That was not his evidence. The evidence referred to is set out in the report at pages 59-60. Two contexts must be distinguished. One is the actual context in which the actual misrepresentation was made; the other is the hypothetical context in which assurance might, hypothetically, have been sought and given. The evidence at pages 59-60 deals with the hypothetical context. Mr Fischer says only that he would have sought a "full assurance" from WIL, and, if he was assured then that would satisfy him. He does not say what, in this hypothetical context, he would have required by way of assurance - perhaps he would have required a detailed breakdown of costs. At pages 65-6, Mr Fischer is simply reciting the actual misrepresentation (in terms which have been conclusively found in his favour earlier in the proceedings). The references to "it's all in the price" and "we know what we're doing" belong only in the context of the actual misrepresentation. On the hypothesis that Mr Fischer had not relied on such statements to enter into the contract for steel, it can certainly not be assumed that he would have been reassured by such statements to enter into a contract for concrete (or even that such statements would have been made).

32. Thus, the WIL submissions and the referee's findings have conflated two different areas of evidence, and rejected the conflated version as improbable.

33. The referee's (implicit) rejection of Mr Fischer's evidence that he would have only proceeded to contract with ACT for concrete if he had obtained appropriate assurances from WIL, is unsound and should be rejected.

34. Next, the WIL submissions, adopted by the referee, include the submission (p 82.5) that:

(a) Mr Fischer did not have any concern about price except in the context of a steel frame; and

(b) even then, he said, whether ACT would be able to do the job for the price was a marginal consideration to him because he was to have the benefit of a lump sum contract.

Thus (goes the submission and finding) it is improbable that Mr Fischer would have sought or required assurance from WIL before proceeding to contract with ACT for concrete instead of steel.

35. The submission (and finding) misstates the evidence in a material way.

36. As to 34(a): It was steel that first triggered the question whether WIL knew what it was doing, and whether the contract was properly priced and viable: see the evidence at report pages 64.5 and 58.5. But that is not to say that, once those concerns had arisen, they would have disappeared if steel disappeared. On the contrary, once the questions had arisen, they would have remained (and perhaps intensified) if WIL had changed from steel to concrete: see the evidence at report pages 59.7 and 60.4. Thus there is no basis for the finding that Mr Fischer had no concern about price except in the context of a steel frame.

37. As to 34(b): Mr Fischer's evidence was in fact that, if WIL had (after abandoning steel) given a price in concrete, with a good reason why it was no longer proceeding with steel, he would have accepted it, because it was WIL and not ACT: see the evidence at report pp 68.5-70.2. This does not weaken Mr Fischer's evidence that he would have sought assurance from WIL, but rather reinforces it. Thus the rejection of Mr Fischer's evidence that he would have required assurance from WIL, is unsound and should be rejected.'

[Plaintiff's written submissions dated 9 July 1998 paras 29-37 - emphasis added]

Suggested Failure to Deal with Arguable Points

53 ADC's submissions in relation to the suggestion that the referee failed to deal with arguable points were as follows:

`Next, the WIL submissions (adopted by the referee) included a submission that ADC had time imperatives which made a hypothetical alternative contract with ACT most likely (report p 78.9).

39. The referee failed to consider or deal with the evidence and submissions of ADC to the contrary, to the effect that ADC had no real fears of suffering forfeiture so as to affect its decision: Written Submissions paragraph 77 and evidence there referred to.

40. If that evidence and submission is to be taken as having been rejected, the process of reasoning has not been revealed.

41. Next, the WIL submissions, adopted by the referee, included the submission that ADC had budgetary constraints such that it would not have been willing or able to countenance prices for concrete that were properly assessed and viable (report p 79).

42. The referee failed to consider or deal with the evidence and submission of ADC to the contrary, and to the effect that ADC was well able and prepared to accept an alternative concrete price of the order of $22-23M: Written Submissions, paragraphs 78, 79, Written Submissions in Reply paragraph 128, and the evidence there referred to.

43. If that evidence and submission are to be taken as having been rejected, the process of reasoning is not disclosed.'

[Plaintiff's written submissions dated 9 July 1998 paras 38-43]

ADC's Attack on the referee's Finding of the Hypothetical Alternative Scenario

54 It is plainly necessary to treat with each of ADC's submissions very carefully. To my mind a convenient starting point involves the first of ADC's submissions before me which attacked the referee's finding of the hypothetical alternative scenario.

The Threshold Question

55 A threshold question is raised by WIL here. WIL submits that an important consideration on the respective applications before me, concerns the approach taken before the referee by ADC. WIL submits that ADC's case throughout the reference involved the proposition that if ACT had entered into a contract for the construction of the building with a concrete frame and if the price had been similar to the price in the actual contract entered into in February 1987, then the contract would have met the same kind of non-performance by ACT as actually occurred in the case. WIL submit that so much of the plaintiff's case was undisputed by Exxon and that indeed, that was also part of the case of Exxon.

56 WIL submits that in contradistinction to the submissions as to principle put by Mr Gyles for ADC before me, ADC conducted the whole of its case before the referee upon the basis that the hypothetical did require to be considered. Here, WIL cite ADC's written statement of findings for which it contended before the referee. Those written findings were referred to before the referee at page 18 of the transcript. In those written submissions, ADC put its claims as follows:

`3. If ADC had not contracted with ACT, it would probably have contracted with another builder for substantially the same work but with a concrete frame instead of the steel frame recommended by WIL. The alternative builder would probably have been one of the earlier (1985) tenderers, with tender prices updated to allow for escalation but also for certain cost reductions introduced by group architects' modifications to the Dysart Scheme.

4. The contract price with the alternative builder would probably have been of the order of either:

(a) $24m - $26m (based on updating the 1985 tenders); or

(b) $21m - $23m (based on quantity surveyors' estimates of the reasonable cost of construction in concrete in early 1987).

5. Whichever approach is adopted in determining the probable alternative contract price, it would have been a price which made ample allowance for the cost of the work and for profit, so as to remove the disincentive for diligence and completion which affected the ACT contract.

6. The alternative contract would probably have been a lump sum contract (with provision for adjustment for variations), with a fixed date for practical completion (with provision for extension for certain types of delay) and with provision for liquidated damages.

7. It is not probable that such alternative contract would have been beset by the delays, lack of diligence, unreasonable provocation of industrial dispute, breaches of contract and ultimate necessity for termination that beset the ACT contract. On the contrary, the alternative builder would, having regard to the matters in 5 and 6 above, have had every incentive to proceed with all due diligence to timely completion, including by avoiding or settling industrial disputes.

8. Pursuant to the alternative contract, the works would probably have been completed for an amount of an order of $21 - $26m (see 4 above), by about April 1989 (the extended date for practical completion under the ACT contract).

9. Instead, as a result of contracting with ACT, ADC:

(a) suffered the delays, lack of diligence, unreasonable provocation of industrial dispute, breaches of contract and termination that have been found against ACT;

(b) incurred the costs of having the project completed by others (without the security of a lump sum, fixed date contract) and

(c) incurred the costs of financing the project through to its delayed completion date of 21August 1992.'

[emphasis added]

57 Hence, WIL submitted that both ADC and WIL had before the referee, been content to and in fact confined their cases to the very hypothetical which ADC now, as a matter of principle, seeks to suggest was misconceived. Mr Rayment for WIL, who appeared during the reference, contended that the question of principle which Mr Gyles sought to raise before me, had simply never been alluded to or put to the referee, but that to the contrary, ADC positively sought before the referee to prove that if it had not contracted with ACT, it would probably have contracted with another builder for substantially the same work, however, using a concrete frame instead of the steel frame recommended by WIL.

58 On Mr Rayment's submissions, ADC having failed dismally before the referee on the relevant question of fact, albeit that it imported a hypothetical element, now seeks to have the Court when the report is sought to be adopted by WIL, reject the report in a fashion which the Court ought not condone. In short, Mr Rayment submits that it is simply not open at this point in time in these proceedings, bearing in mind the manner in which ADC was content to conduct the litigation before the referee and to proffer issues before the referee, for ADC to now do a complete turnabout when it has failed on the only question squarely placed for determination before the referee. Mr Rayment's submission is that even if, which he does not accept, the principles now prayed in aid by ADC before me be correct, so that the hypothetical alternative ought not as a matter of principle to have been considered by the referee, this is not a matter which is now open to be contended for by ADC. Mr Rayment submits that the Court has a discretion and ought exercise that discretion, by denying to ADC any entitlement to challenge the referee's decision on a fundamental matter never argued before the referee.

59 Even if it were now open to ADC to attack the referee's approach as a matter of principle, I have come to the view that Mr Gyles' submissions on this question should be rejected. Hence it is unnecessary for me to deal with the so-called threshold question.

The Question of Principle

60 In my view, a number of decisions of the High Court of Australia have clearly laid down the necessity in proceedings where an applicant claims relief under Section 82 or Section 87 that the applicant establish what the applicant has lost, or in the case of Section 87, is likely to lose. The referee's statement (at pages 3 to 5 of the report) of the principles applicable for determining whether ADC's entry into the contract with ACT occasioned loss or damage, and if so, as to the amount of such loss or damage, was generally accurate.

61 As Gauldron J put the matter in Marks v GIO [1998] HCA 69; 158 ALR 333 [paragraphs 19 and 20] at 340:

`There being nothing in the Act to suggest otherwise, it is for an applicant for relief under s.82 or s.87 to establish what he or she has lost or, in the case of s.87, what he or she is likely to lose. In a case such as the present, if an applicant can establish that, but for the misleading and deceptive conduct, he or should would have entered into a contract that would have returned the very benefit that was represented, damages will be the same as if the representation had been contractual. That was the situation in Collings Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 43 NSWLR 131. In that situation, however, "it is for the [applicant] to establish that he could and would have entered into [that other] contract".

Moreover there may be cases where an applicant establishes that, but for the contravention of s.52 of the Act, he or she would not have entered into the contract in question or into any other contract or arrangement of that kind. It is possible - although not inevitable - that, in that situation also, the loss will be the same in money terms as it would have been if the representation were contractual.'

62 In the joint judgment of McHugh, Hayne and Callinan JJ in Marks at paragraph 39, their Honours in referring to Gates v City Mutual Life Assurance Society [1986] HCA 3; (1986) 160 CLR 1, said as follows:

`In that case the appellant claimed that he had been misled by a misrepresentation about the circumstances in which benefits would be payable under a total disability clause which he had added to his existing superannuation policy issued by the respondent. In fact, the clause provided for payment of benefits only where the appellant was incapable of attending to any gainful occupation; he had been told it would apply if he could not attend to his occupation. It was found that "but for the statements, Mr Gates would have proceeded exactly as he did save that he would not have paid extra for total disability cover".'

63 In short, as their Honours point out, the finding in Gates was not dissimilar from the referee's finding in the present proceedings.

64 Mason, Wilson and Dawson JJ in Gates, said inter alia at 13:

`Because the object of damages in tort is to place the plaintiff in the position in which he would have been but for the commission of the tort, it is necessary to determine what the plaintiff would have done had he not relied on the representation. If that reliance has deprived him of the opportunity of entering into a different contract for the purchase of goods on which he would have made a profit then he may recover that profit on the footing that it is part of the loss which he has suffered in consequence of altering his position under the inducement of the representation. This may well be so if the plaintiff can establish that he could and would have entered into the different contract and that it would have yielded the benefit claimed . . . The lost benefit is referable to opportunities foregone by reason of reliance on the misrepresentation. In this respect the measure of damages in tort begins to resemble the expectation element in the measure of damages in contract save that it is for the plaintiff to establish that he could and would have entered into the different contract.

So in the present case if the appellant were able to establish that but for his reliance on Mr Rainbird's representation, he could and would have entered into policies of insurance containing a disability clause of the kind represented by Mr Rainbird, he might then succeed in obtaining an award of damages equal to the benefits which would have been payable under such policies less the premiums paid or payable in respect of them.

Unfortunately for the appellant the evidence does not support this basis for an award of damages.'

[Emphasis added]

65 The referee was, in my view, entirely correct in approaching the question of determining whether ADC's entry into the contract occasioned loss or damage by examining whether ADC could establish that but for the misleading and deceptive conduct of WIL, ADC would have entered into some other, and if so, what, contract for building the project or would have acted in some other, and if so what, way. In short, the referee was required to determine what ADC would have done had it not relied on the representation. Subject to the matters sought to be put by ADC impugning the report dealt with in the later sections of this Judgment, the referee in fact, did determine what ADC would have done had it not relied on the representation. ADC was obliged to present a case for an award of any loss it claimed to have suffered by reason of the misleading and deceptive conduct of WIL. The enquiry into the hypothetical scenario here engaged in by the referee was entirely appropriate and accorded with principle.

[See. Re Commonwealth v Amann Aviation at 94 per Mason CJ, Dawson J; at 116 per Deane J and Sellars v Adelaide Petroleum NL & Ors (1993-1994) 179 CLR 333 at 349, 350, 352 and 355 per Mason CJ, Dawson, Toohey and Gaudron JJ for references to the requirement for a comparison between a hypothetical and an actual state of affairs, germane not only where the Court assesses damages for breach of contract or damages in tort, but also where the Court assesses claims for relief under s.82 Trade Practices Act for a contravention of s.52]

66 I do not see the passages quoted from Spencer, Bower and Turner or McGregor on Damages as requiring any different conclusion.

The Suggested Constraint on the Hypothetical Comparison - `A Wrongdoer cannot be assumed to put forward a hypothetical involving his own wrongdoing'

67 Mr Gyles submitted that even if the hypothetical comparison was required to be carried out by the referee, he was not entitled to assume that the hypothetical contract would be broken by the builder for, so Mr Gyles put it, that would be to reward a party for its own wrong.

68 In short form, Mr Gyles summarised his argument as involving the following propositions:

(1) Once a contract is entered into as a result of a misrepresentation, the plaintiff receives back all that the plaintiff outlaid so as to put itself in the position it was in before the representation was made, but giving credit for all that it has retained. In this case, that was said to be construction costs plus holding charges minus the value or a reasonable price.

(2) One can compare the contract which was entered into with a contract which might have been entered into. That, as it were, hypothetical contract, is one which the Court must assume was at a reasonable price and hence one must arrive at the same result, whether or not one is looking at the hypothetical parties or the actual parties.

(3) If it is appropriate to enter into the hypothetical arena, which ADC submits it is not, on ADC's submission, that arena is entered into upon the assumption that persons do not enter into contracts for gross undervalue but rather at reasonable prices. Hence, ADC submits that the Court must assume that a hypothetical contract will be kept and not broken.

(4) In any event, on ADC's submission, there was no proper basis for the referee to find that WIL would have consciously permitted a gross undervalue.

(5) The Court must assume reasonableness in the parties.

(6) The Court must assume that contracts are kept.

69 In my view, these submissions simply throw up the importance in each case of a close examination of all the facts. The suggested principles (5) and (6) have an obvious attraction, but depending on the precise issues which are live in a particular case, the way in which the principles are applied may well differ. Issues concerning implied terms are for example, obvious candidates for the application of such principles. But here the issue is as to whether and if so to what extent, the tribunal in examining the hypothetical scenario, is to be necessarily inhibited from carrying out a full and unfettered examination of what position as a matter of fact, an applicant would have been in, but for the occurrence of the misleading and deceptive conduct.

70 I note also that there is and always has been here a distinction between the two corporate entities, namely ACT and WIL.

71 Prior to the reference to Mr Morrisey, much attention had been given initially by Mr Yeldham QC and then by Giles J to the precise content of the misrepresentation held in fact to have been made by WIL in about January 1987. This was a representation in the real world. The representation was found following evidence having been given initially before Mr Yeldham QC and later before Giles J. The real world representation was that WIL represented in about January 1987 that it and ACT or one of them could do the work required by the contract for the price stipulated therein using a steel frame for the building. The finding was also that ADC relied upon the representation in entering into the contract with ADC.

72 It seems to me important to note that the context in which the representation was held to have been made is explained by Giles J both in his judgment of 14 October 1993 and in the reported judgment, as one in which Mr Fischer's concern was with endeavouring to understand how Whites could make a steel framed building viable. The crucial part of the discussion between Mr Fischer and Mr Amann referred to by Giles J in the extract from his judgment of 14 October 1993 above set out, involved that topic. It was in relation to that topic that Mr Fischer asked the question to which Mr Amann responded: "That is not your worry". It was after that answer that Mr Fischer had given evidence that he had said: "What about the details? How will you deal with the underside of balconies and fire-proofing for example" and that Mr Amann had said: "Don't you worry about it, it is all included in the price. We know what we are doing".

73 As Giles J points out in his judgment of 14 October 1993, WIL's primary submission to Giles J had been that all that Mr Amann told Mr Fischer was that the question of whether or not a steel framed building could be built for the price stated was a matter for the builder, and that there was "no representation in any relevant sense". WIL, as Giles J made plain, had pointed out that the contract was a fixed price contract whereby any cost over-run would be to the account of the builder and contained a provision that the parties thereto would not be bound by any external representations, and said that all that could have been represented was that the builder would comply with its contractual obligations.

74 Giles J in the judgment of 14 October 1993 had answered this submission in the words "perhaps that would be so if the conversation ended with the words, that is not your worry, but Mr Amann said more . . .".

75 There was no finding by Giles J in his judgment of 14 October 1993 or in the reported judgment, of any conversation between Mr Amann and Mr Fischer in which steel had not been part of the equation and in which Mr Fischer had given evidence that he was concerned with a White quotation to build in concrete.

76 In the result, the only representation which grounded the requirement for the reference to Mr Morrisey was that dealt with by Giles J in the judgment of 14 October 1993 and in the reported judgment. Hence, in the real world, Mr Fischer's evidence was accepted, namely "Had I not received the assurances that the project would be completed using steel frame for the agreed price, I would not have agreed to sign the contract". [reported judgment at page 368, right-hand column]

77 The crucial point, as it seems to me to bear in mind, is that both the terms of the reference to Mr Morrisey, as well as the applicable principles of law regulating the matters to be investigated by Mr Morrisey, effectively required Mr Morrisey to engage in the hypothetical world of endeavouring to bring down a finding as to what loss, if any, ADC had suffered by the representation which had been found. In that hypothetical world, Mr Morrisey was to determine a question of fact. The question was one which arose between ADC and WIL. The question was whether ADC's entry into the contract with ACT occasioned loss or damage (and the further question if damage had been occasioned, as to when the damage was suffered and the amount of damages).

78 The referee went about the exercise by endeavouring, on the evidence adduced before him, to discern and make a finding as to what would have occurred but for the contravention of Section 52 of the Act.

79 In that regard, the referee was perfectly entitled, on the evidence, to accept, as he did, Mr Fischer's evidence that it was only the concept of building in steel which engaged his concern - see referee's report page 83.

80 The referee was likewise entitled to accept WIL's submission, that `there were no representations which [Mr Fischer] needed to obtain if the price suggested was in the region of $20m and the method of construction proposed were in concrete', and to take into account that Mr Fischer had said that the mere fact that the other tenders were for a greater amount by more than $3m gave him no cause for concern - see report page 83.

81 It cannot be contended that the referee did not examine the question of whether the hypothetical scenario which he found would have necessarily involved an act of legal wrongdoing by WIL. That this question was examined appears from the agreement with and adoption by the referee of WIL's submissions put in the following terms:

(a) "Still less should one accept the ADC suggestion that Exxon would have been guilty of some other breach of S.52 in the event that it had put forward a price to build the residential tower in concrete".

[report page 82]

(b) "Counsel for ADC submitted in opening - that the only way that ADC could have been enticed to enter into a contract for the construction of the residential tower in concrete for $20 million would have been by ACT (a typographic error for WIL - see Transcript before the referee at page 58) making similar or misleading representations to ADC. He in effect submits that we would then have been back here anyway, presumably after Whites had performed in the same way under a contract to build in concrete". [report page 83]

[I interpolate to note the importance of the whole of the last full paragraph on page 83 of the report of which the passage set out in (b) above forms a part only. The paragraph goes on to note that WIL agreed with ADC's submission in part only. What WIL stated (and the referee accepted) was that "if the contract had been entered into for the construction of the residential tower in concrete at about $20 million, the contract would have produced similar difficulties for the White Group, and there is no reason to believe that subsequent events would have been different so far as the behaviour of Whites is concerned. The contract would have been . . ." grossly under priced, because it too, on the better evidence, would not have covered the costs of doing the work, and couldn't have been viable".

The part of ADC's submissions with which WIL disagreed (the referee again accepting WIL's submissions) was the submission that the only way that ADC could have been enticed into entering the concrete construction contract for $20 million involved WIL making similar misleading or deceptive representations to ADC. Hence the referee agreed with, accepted and adopted WIL's responsive submission that "Mr Fischer's evidence was that it was only the concept of building in steel which engaged his concern. There were no representations which he needed to obtain if the price suggested was in the region of $20 million and the method of construction proposed were in concrete". [emphasis added]]

82 Nor can it be contended that the referee did not examine the question of fact as to whether ACT would not have carried out the contract to construct in concrete.

- See the referee's acceptance and adoption of WIL's submission that `there is no reason to believe that subsequent events would have been different as far as the behaviour of Whites was concerned'. [report page 83]

- See also the referee's acceptance and adoption of WIL's submission that `If ADC had entered into a contract with ACT for the construction of the residential tower in concrete, for a closely similar price, it is likely that the same problems would have arisen as did arise'. [report page 82]

And note the referee's acceptance and adoption of WIL's submission on report page 83 which expressly adverted to the need to weigh the evidence by using the words `the better evidence' - "The contract would have been . . . `grossly underpriced, because it too, on the better evidence, would not have covered the costs of doing the work and wouldn't have been viable'."

83 Mr Gyles sought to submit that:

(1) a finding is to be found in the reported judgment of Giles J, namely that Mr Fischer's interest was in obtaining a contract which was viable;

(2) the suggested finding was binding upon the referee;

(3) the referee departed from the suggested finding.

84 I do not see this submission as of substance. Giles J did not deal with the hypothetical world but left determination of the relevant question to Mr Morrisey who was then faced with the task of examining what would have occurred had the contract which was in fact entered into, not been entered into. He carried out that exercise on the evidence and he found that if the breach of section 52 of The Trade Practices Act held to have taken place had not occurred, on the balance of probabilities, ADC would have entered into a similar contract with ACT for the construction of the residential tower in concrete for about the same price.

85 Mr Gyles' submissions which seek to rely upon the wrongdoer principle, fail at a threshold level because there was no necessity imposed by any principle of law that Mr Morrisey's decision carry with it or be predicated upon, legal wrongdoing of any type by WIL. The referee, in examining the hypothetical question posed, could have found that but for its reliance on the misrepresentation, ADC would have entered into the contract with ACT for construction of the project in concrete, but that such a contract would only have been entered into by ADC by reason of some form of legal wrongdoing for which WIL would have been liable. He made no such finding.

86 Nor did it follow from the fact that WIL had been found to have made a misrepresentation in breach of section 52 of the Act at a time when the steel construction had been the subject of discussion between Mr Fischer and Mr Amann, that where one assumes that no such misrepresentation had taken place at all, Mr Fischer would not have been prepared to proceed with ACT in entering into a contract involving concrete unless WIL was prepared to give an assurance that such contract price was viable.

87 Hence, when Mr Gyles submits that it did not lie in WIL's mouth to assert before the referee that the hypothetical would have involved a non-viable contract between its ultimate subsidiary ACT and ADC, or submits that the referee was not entitled to and ought not to have held that the hypothetical would have involved a non-viable contract, the submission fails at a factual level. The referee in fact found that the contract would have been underpriced and non-viable, but did not find facts which involved some form of legal wrongdoing by WIL. The referee expressly rejected ADC's submissions that Exxon would have been guilty of legal wrongdoing comprised of some other breach of s.52 in the event that it had put forward a price to build the residential tower in concrete. This plainly involved a decision on a question of fact before the referee.

88 Nor do I accept that the referee's finding miscarried because he was obliged by some principle of law to assume that the hypothetical contract for construction in concrete would be kept and not broken. To my mind that also simply raised a question of fact to be decided on the evidence.

89 ADC relies upon the maxim `nullus commodum capere potest de injuria sua propria' - `no man can take advantage of his own wrong'.

[Cf. Broom's Legal Maxims, 10th edition, Pakistan Law House, 1939 at 191 et seq., noting that this maxim, being `based on elementary principles, is fully recognised in Courts of law and equity, and indeed, admits of illustration from every branch of legal procedure'.]

90 The principle and its application to several areas of law has recently been discussed in the House of Lords by Lord Jauncey of Tullichettle in Alghussein Establishment v Eton College [1988] 1 WLR 587, with who's reasons Lord Bridge, Lord Elwyn-Jones, Lord Ackner and Lord Goff agreed. There the principle was expressed as providing `that a contracting party will not in normal circumstances be entitled to take advantage of his own breach as against the other party' (at page 591).

91 The principle is applicable to `various and dissimilar circumstances' [per Broome at page 195]. In particular, the maxim may apply:

(a) as a principle of construction. For example, a party to a contract who is bound by a condition may not take advantage of his or her own breach to annul the contract - New Zealand Shipping Co Ltd v Societe et des Ateliers et Chantiers de France [1919] AC 1 per Viscount Reading CJ at 723-4; Cheall v APEX [1983] 1 All ER 1130, H.L.(E.) per Lord Diplock at 188-9; Alghussein Establishment v Eton College per Lord Jauncey of Tullichettle. Likewise, in relation to construction of statutes, the legislature will be presumed, in the absence of some indication to the contrary, not to have intended that wrongdoers should benefit from their wrongdoing. See Grozier v Tate (1946) 16 LGR 57 per Owen J at 61; Allen v Bega Valley Council (Unreported, Supreme Court of NSW, 22 December 1994)

(b) as a principle of law. For instances in which a wrongdoer may not rely on his or her wrongdoing, see - Twycross v Grant (1877) 2 CPD 469; Twyne's Case 3 Rep. 80. Similarly, A will have no action in trespass against B, who lawfully enters to abate a nuisance caused by A's wrongful act - Perry v Fitzhowe 8 QB 757.

An analogous principle which finds application under this maxim, is the law relating to the "forfeiture rule" [which extends to rights deriving their existence from statute, for instance, to prevent a person who has murdered another from claiming as the beneficiary or next of kin of the deceased]. See Sinanian v EKS Carpentry Pty Ltd & Ors (Unreported, Supreme Court of NSW, 5 Sept 1997, Mason P, Beazley JA, Grove AJA) per Mason P at 6. The purpose and justification for this rule was stated in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410 as being to 'discourage breaking the law' (per Mason J at 427-8; Jacobs J at 432-3).'

92 Difficult hypothetical problems of application of the principle may be encountered, for example, in cases involving principles of assessment in deceit cases or in other cases of legal wrongdoing. Paragraphs 206 and 208 of Spencer Bower and Turner, `The Law of Actionable Misrepresentation' 3rd edition, Butterworths, state inter alia:

`Principles of assessment - II: Where fraud has induced contract

206. It is where the representee's alteration of position has assumed the form of a contract with the representor, or with a third person, and where usually there are two sides to the account, and a balance has to be struck, that nice questions as to the quantification of damages have generally arisen. But the rules applicable may now be said to be established. On one side of the account must be placed everything that the representee has paid, and the proved value of everything he is compellable to pay in the future, including the value (to be assessed) of any property or advantages, estimable in money, which he has transferred, or is compellable to transfer in the future, pursuant to the terms of the contract. On the other side is to be placed all money, or the value of all property which he has received, or is entitled in the future to receive (here again the present value is to be estimated), under the same contract. If the real value of the items on the credit side of the account is nil, which has not infrequently been found to be the case, the representee is entitled to the whole amount of the items on the other side, which is "the ultimate, final, highest standard of his loss".

On the other hand, if the credit items are a complete equivalent, he has sustained no damage at all.

208. . . . It is now well settled that the value of any property or rights or benefits received by the representee means their real or actual value, to be determined by reference to the evidence adduced, and without reference to current or market prices in the case of marketable securities, where such prices are wholly artificial, and the mere manufacture and creation of the very company or persons whose fraud has given the representee his right to damages; or, in other words, "value" means the price which the shares or other property would have fetched as between reasonable and honest sellers and purchasers, if the whole truth of the facts which the representors had perverted or concealed had been within the knowledge of those fixing the price.

93 In Twycross v Grant [1877] 2 CPD 469 an action had been brought by the plaintiff under the Companies Act 1867 to recover the amount paid by him on certain shares taken by him in the Lisbon Steam Tramways Company Ltd on the ground of the fraud of the defendants, who had been promoters of the company, in omitting from the prospectus two contracts entered into by them as promoters (one a contract between defendants Clark, Punchard and another, for the purchase of certain foreign concessions for the construction of tramways which the company was afterwards incorporated to make and work; the other, a contract between the defendants Clark, Punchard and Grant, as to certain payments to be made by Clark and Punchard to Grant, in consideration of his obtaining for them a contract from the company for the construction of the tramways), by means of which fraud the plaintiff had been induced to take the shares, which proved worthless. The jury had found that these contracts were material to be made known to the intended shareholders of the company.

94 At the trial, the judge directed the jury that if the real damage occasioned to the plaintiff by the defendants' fraud was the price he paid for the shares, then he was entitled to recover that amount. The jury then assessed the damages at the price paid by the plaintiff.

95 On appeal, the judgment of the Court (Lord Coleridge, CJ., and Grove and Lindley JJ) delivered by Lord Coleridge included the following:

`With respect to the damages, we think the verdict ought not to be disturbed. The principle we apprehend to be that the plaintiff is entitled to recover whatever damages he has sustained by reason of the fraud of the defendants. By the fraud of the defendants he was induced to pay 700l. for seventy shares in this company, and the whole of that money has been lost. That loss was the natural consequence of the acquisition and retention of shares in such a company as this.

It was indeed contended that 700l. could not be right, as the defendants were at all events entitled to be credited with the market-price of the shares when the plaintiff bought them; and reference was made, in support of the defendants' contention on this point, to Sedgwick on Damages, p. 556, and to Lord Campbell's observations in Davidson v Tulloch. No doubt, if the shares were really worth anything when bought, the defendants ought to have credit for what they were really worth. But the fact that they were quoted at a premium on the Stock Exchange is only evidence of value, not proof of it; and, if the jury thought (as they well might, and probably did,) that the quotation on the Stock Exchange did not shew a real, but only a delusive value caused by the fraudulent nature of the prospectus and the mode in which the shares were manipulated by the defendants and others in concert with them, the jury were not only justified in disregarding, but were bound to disregard, such delusive and factitious value; although, of course, if the plaintiff had sold his shares, he must have credited the defendants with whatever he might have realized by the sale.

There is no evidence whatever that the shares ever had any value except that which resulted from the wrongful acts of the defendants; and it would be contrary to all principle to allow them to take advantage of their own wrong, and claim credit for the market-price of the shares, when but for their own concealment of the contracts in question there is no reason to suppose that the shares would have had any market value at all. The defendants are not entitled to say to the plaintiff, "You might have sold your shares to some one as ignorant as yourself, or to some speculator in shares." The plaintiff was not bound to sell; and, after he discovered the fraud, he could not sell. . . .

It was further contended that the true measure of damages is, the difference between the value of what the plaintiff intended to get and the value of what he did in fact get. Adopting this principle, two results were contended for. First, it was said that the plaintiff intended to get shares in a company such as that described in the prospectus, and he got shares worth less than they would have been worth if the concealed contracts had not been entered into; and that the utmost measure of damage is, the diminished value of the shares consequent on the payment out of the capital of the company of the sums mentioned in the concealed agreements. Secondly, it was argued that as, according to the plaintiff's own contention, the company's undertaking was impracticable, the shares which he really intended to get were worthless, and that consequently he had sustained no damage at all by reason of the concealment of which he complains. But, in our opinion, the defendants are not entitled to avail themselves of the fact that the plaintiff intended to take shares in such a company as that described in the prospectus, or in the company unaffected by the concealed contracts. That intention was itself the result of the wrongful act of the defendants; and, as between the plaintiff and them, he is entitled to repudiate any intention of his own based on their fraudulent concealment. He is entitled to say that, but for their fraud, he would never have parted with his money. He has parted with it for shares as to which there was abundant evidence that they never had any real value at all; and his loss is the direct consequence of the defendants' conduct in issuing the prospectus. His slight and temporary profits hardly equal the ordinary interest of his money; and we think, therefore, there is no reason for disturbing the verdict of the jury either wholly or in part.'

[at pages 489-491, emphasis added]

96 I note also that in The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, Deane J at pages 118-119 in considering the burden of proof relating to assessment of damage, pointed out that in many cases, proof of the full extent of the loss or injury sustained would involve establishing an evidentiary foundation for positive and detailed ultimate findings by the Court upon the balance of probabilities in loss of chance situations. His Honour continued at pages 118 and 119 saying, inter alia:

`There are, however, cases where considerations of justice or the limitations of curial method render ultimate findings, about what would have been or will be, impracticable or inappropriate. In such cases, damages must be assessed on some basis other than findings about what would have ultimately happened if the repudiation or breach had not occurred or about the precise ultimate implications of the situation which exists after the repudiation or breach . . . If, for example, what the plaintiff has lost by reason of the defendant's repudiation or breach of contract is a less than 50 per cent but nonetheless real and valuable chance of winning some contest or prize, of being the successful tenderer for some commercial undertaking or of deriving some other advantage, in circumstances where a Court can decide that a proportionate figure precisely or approximately reflects the chance of success but can do no more than speculate about whether, but for the defendant's wrongful act, the plaintiff would have actually won the contest, prize or tender or derived the advantage, it would affront justice for the Court to hold that the plaintiff was entitled to no compensation at all for the lost chance of competing or striving or for the wasted expenditure which was incurred in obtaining or performing the contract. In such a case, considerations of justice require that the plaintiff be entitled to recover the value of the lost chance itself and that the defendant be not allowed to take advantage of the effects of his own wrongful act to escape liability by pointing to the obvious, namely that it is theoretically more probable than not at a less than 50 per cent chance of success would have resulted in failure. . . .'

97 I do not see any of the propositions established in the above cited authorities as in the circumstances of the present case, obliging the referee by a principle of law to assume that the hypothetical contract for construction in concrete would be kept and not broken. This is simply because before the maxim can be invoked, it is necessary to find that the particular circumstances would involve WIL taking advantage of its own wrong. The referee failed to find any facts which albeit in considering the hypothetical, were facts which involved some form of legal wrongdoing by WIL. Hence, on the facts, no question of WIL taking advantage of its own legal wrongdoing entered the equation.

98 This case is not, it seems to me, one in respect of which the circumstances are such that, using the above quoted words of Deane J in Amann, `considerations of justice or the limitations of curial method render ultimate findings about what would have been . . . impracticable or inappropriate'. Clearly, WIL committed a wrongful act by making the real world misleading and deceptive misrepresentation in breach of s.52. But in assessing what, if any, loss ADC could prove it suffered by reason of the misleading and deceptive conduct of WIL, the referee was not invited by WIL to take into account on the hypothetical, any factual integer which itself, as for example occurred in Twycross, was the result of a wrongful act of WIL. The point is that the referee was not obliged as a matter of legal principle, or considerations of justice, to find that for ACT to have underquoted on the hypothetical contract for construction in concrete, necessarily had to involve any form of legal wrongdoing by WIL.

99 The curial procedures adopted by the referee in investigating as a matter of fact:

(a) what contract, if any, ADC would have entered into or how ADC would otherwise have acted but for WIL's misleading and deceptive conduct;

(b) with which entity any such contract would have been entered into and for what form of construction and at what price;

(c) whether such contract would have been entered into with ACT to carry out the construction for a price which would not have been viable;

(d) if affirmative to (c), whether in order for such a contract to have been entered into, WIL would have committed a form of legal wrongdoing;

were neither impracticable nor inappropriate.

100 Ultimately, the referee did not find that for ACT to have underquoted on the hypothetical contract for construction in concrete necessarily had to, or would have, involved any form of legal wrongdoing by WIL.

101 Mr Gyles sought to place some reliance upon TCN Channel 9 v Hayden Enterprises (1989) 16 NSWLR 130 where an action for damages had been brought by the respondent for breach of contract.

102 The respondent, Hayden Enterprises Pty Ltd (Enterprises), was a company beneficially owned by Mr Michael Walsh who was its managing director. Enterprises, the parent company of the group, employed Mr Walsh, and carried on the business of providing his services as radio announcer and television compere.

103 Mr Walsh was also the principal of Hayden Productions Pty Ltd (Productions) which carried on business as a producer of television programmes.

104 The contracts in question were each entered into on 15 February 1985 between TCN Channel 9 Pty Ltd (Channel 9) and Enterprises as to one such contract, and between Channel 9 and Productions, as to the second such contract. The Enterprises contract provided for Enterprises to make Mr Walsh available to Channel 9 as a compere of the Mike Walsh Show for the years 1985 and 1986. The Productions contract provided for Productions to produce the Mike Walsh Show for those years, and also to produce, in association with Channel 9, a day time programme, the Midday Show, for the years 1985 to 1989.

105 Channel 9 repudiated its agreement with Enterprises in August 1985.

106 The Productions Agreement included a clause directed to the position where the Enterprise Agreement came to an end, in which event Channel 9 was given an option to terminate that part of the Productions Agreement which related to the Mike Walsh Show. The critical question concerned the construction of the words `comes to an end'. Channel 9 submitted that those words encompassed every way in which the contract might come to an end in relation to the Mike Walsh Show including termination of the contract by a repudiation on the part of Channel 9 accepted by Productions.

107 At trial, Carruthers J gave judgment in favour of Enterprises. The judgment was upheld by the Court of Appeal (Hope, Priestley and Meagher JJA), who found that in the contextual and interrelated contractual background of the provision, and applying the rule that no wrongdoer should be permitted to take advantage of his or her own wrong, the words `comes to an end' required to be construed so as to exclude from their meaning any termination of the agreement of which the substantial cause was the repudiation.

108 To my mind, nothing in the decision affects my reasons earlier set out. The Court of Appeal in TCN Channel 9 applied the wrongdoer maxim as a principle of construction in a situation where the legal wrongdoing in the form of the repudiation by a relevant defendant had, on the evidence, in fact taken place. The issue in question in the present case raises a question of fact on the hypothetical, namely whether it involved legal wrongdoing of WIL. The question of principle is not one of construction, but is whether, bearing in mind the issues for determination by the referee, by operation of a principle of law, the wrongdoer maxim necessarily constrains the selection and use of a hypothetical comparison for the purposes of the assessment of damages.

109 Mr Gyles also sought to rely on Bennett v Minister of Community Welfare [1992] HCA 27; (1991-92) 176 CLR 408 where an action for damages had been brought by the appellant in relation to loss suffered following the failure of the respondent to discharge a relevant duty of care.

110 In 1973, the appellant, then being a ward of the State of Western Australia, was injured at the institution where he was in care while using a circular saw without a proper guard. It was common ground that he was entitled and would have sought to recover damages for negligence from the Minister of Community Welfare if he had known of such an entitlement. It was also accepted that the Director of Community Welfare was under a duty to obtain independent legal advice for the ward about his right to recover damages. The Director failed to discharge this duty. Before the expiration of the limitation period, the wardship ceased and the former ward obtained legal advice. He was incorrectly advised that he had no cause of action against the Minister. It was only after his action became statute-barred, that he received proper advice and sued the Minister for damages in relation to the loss suffered by the Director's failure to obtain independent legal advice.

111 At the trial, Nicholson J held that Bennett was not entitled to recover damages in relation to the failure to provide proper legal advice before the limitation period expired. An appeal to the Full Court of the Supreme Court (Pidgeon and Seaman JJ, Rowland J dissenting) was dismissed.

112 The appeal was allowed by all members of the High Court (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ). It was held that the Director's breach of duty was a causal factor which continued to operate until the limitation period expired and was not superseded as the sole cause of the subsequent loss by the incorrect legal advice obtained after the wardship ceased.

113 In their joint judgments, Mason CJ, Deane and Toohey JJ said at 413:

`In the present case, the Director's breach of duty satisfies the "but for" test, subject to two assumptions. If we assume that the Director had obtained correct independent legal advice as to the appellant's rights and that the appellant (or an appropriate person acting on his behalf) had acted on that advice by commencing an action within time, the relevant loss would not have occurred.'

114 Their Honours stated that in relation to the first assumption, the Director's duty was to obtain legal advice from a `competent legal practitioner based on adequate and accurate instructions'. Similarly, McHugh J noted at 429 that `if the Director had performed his duty, he would have arranged for the appellant to consult a legal practitioner of reasonable competence and skill in the field of negligence law and would have ensured that the practitioner was briefed with a full and accurate account of the facts of the case'.

115 It is these latter statements which are said to go to the issue in question in the current proceedings. Mr Gyles sought to gain support from the fact that the hypothetical used by the Court to assess damage in Bennett assumed the appellant would be given `proper' advice and indeed, did not even entertain the `improper' alternative. The submission was that it followed that in the present case, the hypothetical alternative was similarly constrained. Mr Gyles contended that by analogy the referee was bound as a matter of legal principle, to consider only those hypothetical contracts that were `proper', that is, properly priced.

116 To my mind, this is not a submission of substance. In Bennett, the Director of Community Services was obliged to arrange `proper' advice in order that he discharge his duty, a duty that was specific in that case to the relationship of guardian - ward. The issues for determination before the referee are plainly distinguishable from the issues in Bennett.

117 In the result, I reject ADC's submission that the referee erred by finding a hypothetical alternative scenario wherein ADC, instead of being mislead into the non-viable ACT contract which had involved steel by the misrepresentation of WIL as to the viability of that contract, would have entered into another contract, also with ACT, which would also have been underpriced by WIL/ACT, and which would therefore have been equally non-viable, and would have carried the same adverse financial consequences for ADC.

118 To my mind, the referee approached the matter correctly in principle.

The Alleged Findings Contrary to Suggested Uncontradicted Evidence of Mr Huntstead

119 I turn then to examine in more detail, the submission that the critical finding by the referee that ADC would have entered into a similarly underpriced contract with ACT for concrete (`the critical finding'), was contrary to the uncontradicted evidence.

120 The referee's finding here was that there would have been an alternative contract with ACT for concrete and that it would have been underpriced and therefore non-viable to at least the same degree as the contract in steel, so that the contract for concrete would probably have failed in precisely the same way as the contract for steel and caused the same loss.

121 The finding at page 84 is in terms:

`If there had been no breach of s. 52 of the Trade Practices Act, it seems to me that, on the balance of probabilities, ADC would have entered into a similar contract with ACT for the construction of the residential tower in concrete for about the same price and that, in the circumstances, ADC suffered no loss as a consequence of WIL's breach of s. 52.'

122 The position before the referee was that there were two witnesses called by WIL on the topic of WIL's hypothetical price for a contract in concrete. The first was Mr Huntstead, WIL's Manager Central Engineering, also being Mr Amman's immediate superior, who was responsible for recommending to the directors the offer to be submitted to ADC, including the hypothetical offer under consideration.

123 The other witness was Mr Amman, who was a senior estimator but was not the person responsible for submitting tenders to ADC and was not responsible for recommending to WIL's directors that any offer be submitted to ADC.

124 Only Mr Amman's evidence was referred to by the referee and there was no reference anywhere in the report to the evidence given by Mr Huntstead.

125 At page 74 of the report, the referee first sets out a section of Mr Amman's evidence and then states that he accepts that evidence. The section of evidence so accepted read as follows:

`From mid 1985 until March 1987, I was employed as a senior estimator in the construction division of White Industries Limited.

In the period between 5 January 1987 and 28 January 1987, I was engaged full time in the preparation and review of the tender for the Quadrant project.

That tender was based on a concrete car park, steel frame residential tower and a steel framed office building.

The concept of constructing the residential tower in structural steel rather than in reinforced concrete was conceived by me in or about late December 1986 or early January 1987.

I calculated the tender price of $18,485,000 submitted by White Constructions (ACT) Pty Ltd ("Whites (ACT)") on 28 January 1987. That price was subsequently increased on 3 February 1987 by $1,050,000 to produce a final contract sum of $19,535,000 . . .

If I have been instructed to calculate the tender price on the assumption that the residential building was to be constructed using reinforced concrete rather than structural steel, but with the building otherwise being the same in all respects . . . the tender price which I would have calculated would have been lesser than the tender price submitted to ADC by $66,710".

126 ADC submitted before me as follows:

`Mr Amman said what he would have done if he had been instructed to recalculate for concrete instead of steel. For this purpose, he carried out only a "quick calculation" [transcript 243 line 24], adjusting the actual steel tender by deletion of items referable to the use of steel and substitution of items referable to the use of concrete. He did not purport to say, and was not in a position to say, what (if any) price WIL would have submitted had ADC declined to proceed with the ACT contract in steel, either because Mr Fischer had not received the assurances he wanted or because he had not been sufficiently persuaded by them.'

[ADC's submissions paragraph 12]

127 ADC submitted before me in relation to Mr Huntstead inter alia as follows:

`He was WIL's manager, central engineering, Mr Amman's immediate superior and responsible for recommending to the directors the offer to be submitted to ADC including the hypothetical offer under consideration. [Huntstead transcript 23912, Amman transcript 2428 line 5.]

His evidence was that, if WIL were asked to change back from steel to concrete, he would not have recommended Mr Amman's figures be submitted to ADC; rather, he would "certainly" have retendered the entire project in concrete from "square one", "from scratch", he would not have been content merely with adjustments either from the steel price, or indeed from the concrete price which had been submitted by WIL back in 1985: Transcript 2393 lines 27-35, 2394 lines 20-22, 2400 lines 39-45, 2401 lines 36-57, 2403 lines 7-22. [Note that in re-examination at transcript 2407-2409, Mr Huntstead was asked a number of questions about what he had meant by `going back to scratch' in a different context, namely in the context of working up the actual price in steel, as distinct from the hypothetical alternative price in concrete if steel had been rejected. The only evidence in re-examination on what he meant by `going back to scratch' in the latter context is (at the most) at transcript 2409 line 45; 2410 line 2, which does not in any way detract from the evidence in cross-examination].

Mr Huntstead regarded Mr Amman's exercise as only a '15 minute exercise in logic' which might have been carried out only if ADC had asked how much extra concrete would cost `as a guess' [transcript 2401 line 44-54].

The exercise carried out for the purpose of making an alternative offer to ADC would have been carried out very carefully, properly costing all direct costs, allowing an appropriate amount for overheads (5%), and being very careful to make sure that items of cost did not slip through the cracks in this hypothetical situation of suddenly being asked to go back to an all concrete building - indeed WIL would have been better placed to provide a proper price in concrete then in steel [transcript 2400 lines 47 - 2401 line 31].

Having done this and submitted the price to ADC, [Mr Huntstead] would have had no hesitation in supporting it as an adequate one [transcript 2403 lines 24-33].

Mr Huntstead's evidence was not contradicted by other evidence. It was not referred to in the WIL submissions `adopted' by the referee.'

[ADC's submissions paragraphs 13-14]

128 As has already been noted, the manner in which the referee proceeded here was to set out ADC's submissions in his report from pages 74 to 78 and then to set out WIL's submissions from pages 78 through to 83 and then to follow at the top of page 84 with a paragraph reading:

`I agree with the WIL submissions set out above and I adopt the same. If there had been no breach of s. 52 of the Trade Practices Act, it seems to me that, on the balance of probabilities, ADC would have entered into a similar contract with ACT for the construction of the residential tower in concrete for about the same price and that in the circumstances ADC suffered no loss as a consequence of WIL's breach of Section 52.'

129 In purporting to quote from ADC's submissions, the referee at page 77 of his report made some important omissions. Exhibit P2 before me was an extract of ADC's submissions in chief to the referee and this may be compared to page 77 of the referee's report.

130 To enable a reader of this judgment to follow the omission, I shall set out hereunder a section from page 77 of the referee's report and I shall include in square brackets the sections from ADC's submissions which are not to be found at page 77 of the report:

`Even if WIL had had a further chance, there is no basis for finding that it would have put in a price for a concrete project significantly lower than other tenderers.

[Mr Huntstead, who was responsible at the time, would have "gone back to square one and had the job retendered from scratch", properly costing all direct costs, allowing an appropriate amount for overheads and a 5% profit margin, being very careful (as one would expect, if his first proposal had been rejected as not viable). He would not merely have made adjustments from the 1985 concrete tender, nor from the under-priced steel tender; transcript 2393.27, 2400.39-2401.54. In that event, WIL is likely to have tendered more than the estimates of Mr Copping and Mr Makin ($22.48m and $22.42m respectively), which allowed only 3% margin. Thus, there is no reason to think that, after a careful re-pricing, WIL would have had any significant price advantage over other tenderers.]

If [(contrary to Mr Huntstead's evidence)] WIL had merely adjusted its under-priced steel tender, and come up with an under-priced concrete tender, ADC would have viewed it with understandable suspicion, and would have required to be satisfied that Whites this time knew what they were doing and could do what they said and would have required WIL to give sufficient assurances to that effect [(Mr Fischer Exhibit P6 paras 5, 6; Mr Ward Exhibit P9 para 2, transcript 857.21-.48)]. Would Mr Fischer have been satisfied, and would he have received the assurances? This is conjecture upon conjecture.

One is on much firmer ground finding on the balance of probabilities that, if Mr Fischer had not received or accepted WIL's assurance about the viability of its steel proposal, he would have lost confidence in WIL, and looked elsewhere.'

131 Mr Gyles submitted that the referee's failure to advert to Mr Huntstead's evidence compounded by his selective quotation from ADC's submissions omitting the references to Mr Huntstead ought be regarded as follows:

1. As showing that there was no factual foundation for the findings.

2. As giving rise to legitimate apprehension by ADC as to the referee's conduct.

3. As extraordinary.

4. As showing that the referee did not deal with Mr Huntstead's evidence and reject it but just ignored it.

5. As showing that the referee failed to deal with a crucial piece of evidence without explanation.

6. As showing that the referee failed to deal with all of the evidence on the relevant point, namely the evidence of Mr Amann and Mr Huntstead, in statements and in cross-examination.

7. As showing that by selectively quoting, the referee had omitted from the Record any reference to evidence.

8. As showing that the referee edited ADC's submissions in a way which does not properly reflect the submission and omits a submission which is contrary to his finding.

9. As amounting to an irregularity sufficient in itself to cause the Court to set aside the referee's report or findings.

10. As a course of conduct by the referee to avoid a serious embarrassment.

132 Mr Gyles submitted that if a referee sets out to give an accurate account of one party's submissions and omits a particular section and there is no rational explanation for this, this is a matter which raises a serious question of natural justice.

133 On Mr Gyles' submissions, all the Court requires to find here is that there was a patent misapprehension of the evidence and that the omission to refer to the evidence shows perversity or a manifest unreasonableness in fact finding and that on these bases the Court need go no further.

134 Mr Gyles' submission was that it was inappropriate conduct for a referee to deliberately omit material in coming to a finding without explanation and that this renders that finding unsupportable.

135 If a referee or judge was required to make a finding as between evidence given on a particular topic by witnesses A and B (a matter which would depend on the significance of the issue to the ultimate question for decision in the proceedings), and if there were no other evidence on that topic before the Court, then it would generally be necessary, it seems to me, for the Court to treat with the respective accounts given by such witnesses and to make appropriate findings as to reliability, or to make plain what were the respective contentions of the witnesses as to fact and what are the reasons for the referee or judge's findings. It might not always be necessary for the referee or judge to expressly refer to the evidence given by witness B, if the referee or judge's findings in favour of the version of fact given by witness A was supported by other evidence before the referee or judge which could explain that approach. But absent there being any other evidence before a referee or judge which could explain why the referee or judge had accepted witness A's version, it would seem to me to have been failure by a referee or judge to give reasons, for the referee or judge to simply completely omit any reference to witness B.

136 I note that in ECC Lighting Limited v McGurk [Unreported, Supreme Court of NSW, 22 December 1995, McClelland CJ,] his Honour expressed the view that `It is sufficient to say that it is not necessary for a judicial officer to deal with every factual issue which is thrown up in a case, a fortiori every factual issue which relates only to the credibility of a witness. The desirability of resolving any particular issue will depend on an assessment by the judicial officer of such matters as the significance of that issue to the ultimate questions for determination in the case and the degree of confidence with which a decision on that issue can be reached'. I do not read this passage as inconsistent with my view stated above.

137 Mr Rayment QC took the Court closely through the precise circumstances in relation to the submissions and evidence which had been before the referee.

138 Mr Copping, a quantity surveyor, had been the main expert called before Giles J by ADC. Giles J had referred to Mr Copping's evidence of the reasonable cost of the work at pages 366 and 367 of the reported judgment.

139 Mr Copping had worked out what the prices of the parties who put in tenders in 1985, translated to, for a price in concrete in January 1987. Mr Copping had, in short, given adjustments to prices which each party had put in, in 1985, to work out a notional price for each in concrete - that is to work out what the reasonable price in concrete would have been.

140 Paragraphs 9 to 14 of Mr Copping's statement of 21 April 1996 had been in the following terms:

`Likely Cost in Concrete - Based on Earlier Tenders

9. Further, I have been asked by the plaintiff to provide an opinion of an indicative cost of the works based on the tenders received by the Plaintiff on an early design concept of the Quadrant project in 1985 ("the Dysart" scheme).

10. Specifically, I was requested to:

(i) adjust the tenders for inflation or other price adjustment between 1985 and February 1987;

(ii) make allowance for the modifications to the "Dysart scheme" contained in Group Architects' drawings referred to in the Annexure marked "B" hereto ("the Group Architect's scheme").

(iii) make an allowance for my assessment of the likely cost to carry out and complete provisional sum items; and

(iv) make an allowance for the likely cost of the design work.

11. I have been advised by the plaintiff that seven tenders were received on or about 28 June 1985 by the plaintiff ranging from $17,900,000 to $22,855,246 and that all tenders included a provisional sum allowance of $3,863,700.00.

12. I have examined the drawings and design of the Dysart scheme that relate to the 1985 tenders together with the Group Architects' scheme modifications. I have not prepared a measured estimate, however, the scope of modifications in the Group Architects' scheme indicate potential savings in the order of 6-8% of the tender figures. The actual saving would likely be dependent upon the negotiation skills of the parties and the contractor's need for the project.

13. During the period June 1985 and February 1987, significant increases in building costs occurred. The National All Works Index issued by the then Department of Housing and Construction indicated that the index for the Australian Capital Territory rose from a level of 88 at 1 July 1985 to 103 at 1 January 1987, an increase of 17% for the period. Annexed hereto and marked "C" is a true copy of the published ACT indexes for 1 July 1985 and 1 January 1987.

14. Accordingly, in my opinion, an indicative cost estimate for February 1987 based upon the Dysart scheme tenders in 1985 (other than white Industries Ltd's tender) as adjusted by:

(i) the modifications referred to in the Group Architects' scheme;

(ii) escalation in building costs

(iii) the likely cost of provisional sum items; and

(iv) design costs

is as follows:

Second lowest tender:

(Leighton Contractors) $20,945,148.00

PLUS design fees 5% $1,047,257.00

SUB-TOTAL $21,992,405.00

LESS Provisional sum allowance (3,863,700.00

SUB-TOTAL $18,128,705.00

LESS savings @ 7% ($1,269,009.00)

SUB-TOTAL $16,859,696.00

PLUS escalation @ 17% $2,866,148.00

SUB-TOTAL $19,725,844.00

PLUS Provisional sums as per clause 4 $4,456,012.00

TOTAL $24,181,856.00

Highest Tender:

(Costains) $22,855,246.00

PLUS Design Fees, say 5% $1,142,762.00

SUB-TOTAL $23,998,008.00

LESS Provisional sum Allowance ($3,863,700.00)

SUB-TOTAL $20,134,308.00

LESS Savings, say 7% ($1,409,402.00)

SUB-TOTAL $18,724,906.00

PLUS Escalation @ 17% $3,183,234.00

SUB-TOTAL $21,908,140.00

PLUS Provisional Sums as per clause 4 $4,456,012.00

TOTAL $26,364,152.00

Accordingly, the range of indicative adjusted tender costs (other than White Industries Ltd's tender) is $24,181,856.00 to $26,264,152.00.'

141 When one applied to Mr Copping's reasoning the same adjustments to White's prices of 1985, the result is a figure of approximately $20m, being the equivalent of White's 1985 price for the work to be completed in concrete.

142 At pages 51 to 52 of the second defendant's submissions before me entitled `Overview of Submissions of Exxon', a section of Mr Rayment's oral submissions for ADC to the referee shortly before the referee reserved was set out. That section read as follows:

`There's a lot of transcript on this matter that gives difficulty to the case now made by ADC. Could we have a look, just before I go into it, at Mr Copping's reworking of the tender prices of 1985 in the light of the changes made other than the change to concrete. The document that I want to put before you is exhibit P17, Patrick Copping's report, where he has reworked the 1985 tenders in the light of the changes that were made to the project to make it cheaper. In that statement he's compared the 1985 tenders. He's taken the second lowest tenderer, Leightons, and then, for the sake of comparison, the highest tenderer, Costains. In paragraph 14 of this statement he said:

Accordingly, in my opinion an indicative cost estimate for February 1987 - that's the critical time -

-- based upon the Dysart scheme tenders in 1985 . . . design cost is as follows.

And he then starts off with the Leighton contractors amount. He allows 5 per cent for design fees, providing a subtotal of $21m, takes off the original PC sum, then he says that the savings have amounted to 7 per cent, so he takes the 7 per cent off. He then allows escalation at 17 per cent and brings back provisional sums as per paragraph 4 of this statement at $4,456,000, which then becomes a constant in the next analysis as well.

It so happens, Mr Referee, that if you apply the same analysis as Mr Copping there uses to the Whites original tender of $17,900,000, you produce a total figure of $20,702,760. These figures are all on the transcript. It's just arithmetical. I think my learned friend mentioned that he had checked this. At page 2981, Mr Liney helpfully said, "I have done it and come up with the same figure as Mr Goldstein". That same figure is $20,702,760. Just so that we may have it completely clear, I'll quickly put those figures on the transcript, if I may, so that we have a full record of them.

The White figure corresponding to the Leighton contractors figure of $25,945,148 is $17,900,000. 5 per cent for design fees is $895,000. The subtotal of those two figures is $18,795,000. You then subtract the same PC allowance of $3,863,700 to produce a subtotal of $14,931,300. You then take off 7 per cent of that figure by way of savings and that comes to $1,045,191, producing a subtotal of $13,886,109. You then add escalation of 17 per cent, or $2,360,639, to produce a subtotal of $16,246,748. Then you add back provisional sums as per paragraph 4 of the statement, $4,456,012, to produce a total sum of $20,702,760. That figure is the Whites constructed contract price, in our submission. It's a very similar figure when you change the PC sum that was included in the final Whites price to the price that was allowed for the construction in steel, as it happens.

If Whites were asked to give their concrete price in January 1987 and they went through the exercise described by Mr Copping, the figure they would have come up with on that basis would be, including his PC sums, $20,702,760, or, if you took the actual PC sums used in the Whites contract, it would come to $20,160,748.

Against that is the Leightons price, which remember was unavailable. Leightons had told Mr Ward that they were not interested at all in doing this job in January 1987. Mr Ward rang them and asked them whether they would give him a second price just before he entered into the contract with Whites, and he wrote a couple of letters to them. But he gave evidence that they said that they were not interested in quoting.'

143 Thus, before Mr Huntstead and Mr Amann had given evidence before the referee, there had been some evidence to support the referee's finding that the White's price would have been approximately that which Mr Huntstead and Mr Amann later gave evidence that the price would have been for concrete. Mr Rayment pointed out that the same evidence would simply have required Whites to be consistent with the prices Whites had been informing ADC of for the previous eighteen months.

144 The referee referred to Mr Copping's evidence in his report at pages 78 to 79. This was a section where the referee set out a segment of WIL's submissions. That section of WIL's submissions had read, inter alia:

`Another important matter was that Whites were the only builders in the field in 1986 and in early 1987. A belated attempt was made in January 1987 to obtain a check price from Leightons but that company would not provide a price. In any event, Fischer was not too enamoured with Leighton. ADC had time imperatives. It faced the prospect that the Commonwealth might forfeit the Lease unless there was a contract with an approved builder prior to 31 March 1987. ADC's second cheapest builder from 1985 was no longer interested. ADC did not wish to forfeit the Lease from the Crown. Another builder would need time before being able to (sic) a lump sum price. This project was not fully designed in 1987. Since detailed measurements were unavailable, other builders might have included a larger premium for contingencies. ADC has not found one builder to give evidence as to the price at which it would have offered to build this project in 1987. Mr Copping's adjustments to the 1985 prices produce a figure similar to the Whites price. That tends to confirm the reliability of Mr Copping's indicative prices as to the lump sum prices which the other tenderers would have quoted. A mid range figure is $25m. Tenders from others it called in 1987 would not have been for less than the range suggested by Mr Copping of $24-26m. At those levels, all would have been rejected by ADC. The only builder whose price was likely to have been acceptable to ADC on a lump sum basis was Whites; if not in steel, then for a similar sum in concrete.'

145 This section of course comprises part of the WIL submissions which the referee accepted and adopted at page 84.

146 I accept Mr Rayment's submission that it was sufficient for the referee to make his findings by applying the same analysis as Mr Copping had given in his evidence, to Whites' original tender. As Mr Rayment pointed out in the above extract from his oral submissions to the referee, the extrapolation is simply arithmetical. Importantly, this is an area in relation to which the referee's specialist background and expertise may be expected to be brought to bear. The question which remains, however, is whether in the light of Mr Huntstead's oral evidence, the referee was obliged to give reasons for accepting or rejecting all or part of Mr Huntstead's evidence.

147 Mr Rayment then submitted that a close examination of what had in fact occurred here was necessary as background material. That background he submitted, included the matters set out in the following paragraphs.

148 Whites had tendered for the job first in 1985.

149 Then the job had been shorn of some of its more expensive portions and Whites had retendered. This was after Mr Fischer's in-house employed architect had redesigned in part the Dysart design to make it cheaper.

150 A White's price was then given for the project as redesigned by the in-house architect.

151 Then, as the approach to the first contract took place in the last few months leading up to February 1997, Mr Amann, at the request of Mr Huntstead, had gone back and had repriced the price from scratch, to prepare the estimate that was finally given shortly before the contract was entered into.

152 The White's price was adjusted yet again.

153 Although Whites had been giving prices from time to time over an 18-month period, it had not simply adjusted its price for inflation and the incorporation of steel when the final price was given. It was priced from scratch. The residential tower was to have had the steel frame. Usually steel frames would only be found in office buildings. Because there was steel, the question arose as to how the contract could be made viable.

154 Mr Amann's original statement of 26 November 1994, appearing at page 98 of Exhibit D1, which had been before the referee, included a statement in paragraph 33 that in the period between 5 January 1987 and 28 January 1987, he had been engaged full time in the preparation and review of the tender for the quadrant project. He went on to say in the same paragraph, `The preparation of that tender included . . . pricing up the various work components from first principles'.

155 Hence, on Mr Rayment's submissions, Mr Amann had given evidence in his initial statement of November 1994 to that effect.

156 Mr Huntstead, in his initial statement dated 23 November 1994, had said in paragraphs 44 and 45 as follows:

'44. By the time that the contract for the Quadrant project was signed on 25 February 1987, the tender had been reviewed to varying degrees by at least four experienced personnel including Messrs Amann, Allen, Owen and myself. In addition Mr Graham had provided input into certain aspects of the tender. I formed the view that the basis upon which this project had been tendered was reasonable and that the project could be constructed for the price and within the time allowed.

45. The price for the quadrant project was determined from first principles. Fresh quotes were obtained. In some instances old quotes were simply updated. In addition spreadsheets showing trade summaries were also prepared.'

[Emphasis added]

157 There were then two further statements filed before the new referee, Mr Morrisey. Mr Amann's further statement was dated 21 August 1997 and is annexure `A' to the affidavit of Mr Earls, made on 3 December 1998. Mr Huntstead's further statement was dated 11 September 1997 and was Annexure `C' to Mr Earls' affidavit.

158 In Mr Amann's further statement, he had stated in paragraph 6 that if he had been instructed to calculate the tender price on the assumption that the residential building was to be constructed using reinforced concrete rather than structural steel, but with the building otherwise being the same in all respects, the changes to his calculations would have been in a particular form and he had then set them out. In short, the calculations meant a total increase in cost of some $492,000.

159 It is important to note that Mr Amann in this statement did not say anything about how he had originally calculated the quotation. He did not refer to the matter set out in his earlier statement made years earlier.

160 Mr Huntstead in his further statement had said:

`2 At no time during my negotiations with Australian Development Corporation Pty Limited ("ADC") from June 1985 until February 1987 was I informed by any of the other tenderers, or by ADC, that WIL's price was some $3 million lower than the nearest tenderer. In the period following the submission of our tender to ADC in June 1985, I was involved in the formulation of a number of cost saving proposals which had the effect of reducing our price from $17.9 million in June 1985 to about $16 million in May 1986. I refer to paragraphs 2 to 6 of my statement of 23 November 1994.

3. Between 21 January 1987 and 28 January 1987 I carried out a review of our proposal for the Quadrant project which had largely been prepared by Mr Robert Amann. That proposal was based on a steel framed residential tower. At the time I recall satisfying myself as to the reasonableness of that tender.

4. On or about 28 January 1987 I forwarded our offer of $18,485,000 to ADC. A copy of that offer is annexed hereto.

5. On or about 28 January 1987 I directed Mr Amann to forward a facsimile to ADC, a copy of which is annexed hereto and marked `B'.

6. I have been asked to assume that at or about the date, I asked Mr Amann to adjust the estimate to as to provide for the residential tower to be constructed in concrete.

7. I have read the statement of Robert Amann dated 21 August 1997. In my opinion the calculations undertaken by Mr Amann as to the additional direct costs of constructing the residential tower in concrete appear reasonable, based on individual rates at the time.

8. However, in addition to the direct costs identified by Mr Amann I would also have recommended an addition sum of $183,917 to cover additional time related overheads. This is because, in my opinion, the concrete framed residential tower would have taken about 2 months longer to construct than a steel framed structure. My calculation of the additional sum for time related overheads would have been as follows:

Amount allowed in tender for preliminaries = $2,207,000 (24 months)

Therefore monthly allowance for preliminaries = $91,958/month

Therefore additional allowance for 2 months = $183,917

Annexed hereto and marked `C' is a copy of my Final Tender Summary dated 28 January1987.

9. In addition to the amounts determined in paragraphs 7 and 8 above, I would also have recommended an additional sum of $33,831 as profit for the additional costs. This amount has been calculated as follows:

Direct costs as calculated by Mr Amann = $492,710

Additional preliminaries = $183,917

Sub total = $676,627

Allow 5% for profit on additional costs = $33,831

10. Accordingly, at or about 28 January 1987 I would have submitted a price of around $19,195,000 ($18,485,000 + $492,710 + $183,917 + $33,831) for constructing the residential tower in concrete rather than in steel.'

[emphasis added]

161 It is important to note in relation to Mr Huntstead's further statement, that he did not direct his mind to how Mr Amann had prepared the quotations which actually went to ADC in January 1987. In short, Mr Huntstead does not repeat his own evidence that this had been done from scratch - see his earlier statement.

162 One then turns to examine closely the transcript before the referee of Mr Huntstead. That transcript is part of Annexure `D' to Mr Earls' Affidavit.

163 I accept Mr Rayment's submission that the evidence given before the referee at page 2393 line 16 through to 35 does not suggest that Mr Huntstead was assuming that there had been fresh work carried out in January 1987 from scratch. It does appear from that transcript that Mr Huntstead's assumption was that all of the older quotations had been out of date and that Mr Huntstead in giving this evidence, had forgotten that in January 1987 they had gone back to scratch.

164 Mr Rayment's submission was that the referee did not actually have to refer to Mr Huntstead in his report because there was no relevant conflict between Mr Amann and Mr Huntstead or between Mr Copping and Mr Amann or between Mr Copping and Mr Huntstead. On Mr Rayment's submissions, they were all at one in having expressed the view that the price would have been approximately $20m, or in having given evidence which would support that proposition.

165 In short, Mr Rayment's submission was that there was evidence before the referee to support a finding that the price for which Whites would have quoted for concrete would have been approximately $20m and that such a finding could be approached by a number of routes.

166 Mr Copping, Mr Rayment pointed out, had carried out a theoretical exercise which produced the consequence that the price which Whites assert they would have given in concrete, was indeed the price which results from the extrapolation of their earlier prices when one allows for inflation and changes and similar. This, as Mr Rayment submits, shows that Whites' prices would in all likelihood have been about $20m.

167 Another route which Mr Rayment submitted was open to the referee to follow, was by reference to the procedure which had been followed from mid-1986 on, and which had involved the quotation of prices by Whites which started with Mr Amann recommending the price to Mr Huntstead, who in turn recommended it up the line. See page 101 of Exhibit D1, paragraphs 16-19 of Mr Amann's statement of 26 November 1994.

168 The same persons, namely Mr Amann and Mr Huntstead, were again called by WIL to say what they would have done had the change occurred back to concrete. Mr Rayment submitted that their evidence, properly understood, supports a finding that the price for which Whites would have quoted in concrete would have been $20m.

169 Mr Rayment's effective submission was that the referee did not require to refer to Mr Huntstead's evidence at all as the matter on a close examination of the transcript resulting in page 2417 had become a non-issue. Mr Rayment submitted that the Court should view what the referee had said at transcript page 2417 as indicative that Mr Huntstead's evidence was not of live significance for the referee or as an issue between the parties.

170 Mr Liney's cross-examination of Mr Huntstead, commencing at transcript page 2391 (forming part of annexure `D' to Mr Earls' affidavit), drew an answer at page 2393 lines 20 to 22, that it would not have been Mr Huntstead's recommendation that Mr Amann's calculations would have been submitted to ADC as an alternative. This was not, however, an answer to be viewed in isolation. It certainly seems to be inconsistent with Mr Huntstead's supplementary statement. It was, however, an answer on which ADC was entitled to place some reliance, and a piece of evidence to which the referee, it seems to me, ought to have referred in giving his reasons for coming to the critical finding.

171 Mr Liney continued later in his cross-examination of Mr Huntstead at transcript page 2399 lines 57 and following, to suggest to Mr Huntstead a real world scenario of what had happened back in 1987 in relation to the actual tender. The cross-examination then at transcript page 2400 lines 34 to 45, elicited evidence that had a concrete option been chosen, Mr Huntstead would have probably, and indeed almost certainly, have re-tendered the entire project `if it was to be considered only in concrete from square 1 from scratch in the original documents and re-tendered the whole project based on a concrete option with a concrete duration, etc.'

172 Later, Mr Liney's cross-examination at transcript page 2401 elicited the following answers:

`Q. I perhaps had misunderstood, as it were, where you were coming from when you came to give evidence today. So I take it that you don't - let me start again: Mr Amann has gone through this very complicated exercise of making adjustments from the steel price to come up with a concrete price. You don't thinks that's what would have happened at all?

A. No.

Q. And . .

A. Excuse me, if I may - had ADC asked us how much extra as a guess -

Q. Sure.

A. - It might - it would have been a 15 minute exercise. We might have said "That's about how much extra it would cost".

Q. Exactly.

A. But it would not be the basis of a detailed estimate and submission.

Q. Thank you. That's very helpful by way of clarification. I take it that insofar as Mr Amann has carried out this detailed adjustment exercise, that's not something that you've really gone into the details of?

A. I've looked at his figures. I've seen the logic behind his figures. I've agreed that the logic is reasonable and the costs appear to be pertaining as the costs at that time and for a 15 minute exercise in logic, it appears reasonable that that would have been of the order of the adjustments . . .'

173 At transcript page 2401 lines 52 and following, the cross-examination included the following:

`Q. So in the exercise that you think you would have done of going back to square 1 would not have been merely the 1985 tender, would it? You wouldn't have simply adjusted that. That would just be an adjustment?

A. The scope of works appeared to change between '85 and '86, indeed '86 to late '86. I think we would have tried to re-establish what concrete design was required and on the basis of that. We would have tendered on that basis. Whichever was the most recent and the viable option that was being desired at that stage . . .

Q. Let me take you perhaps just to paragraph 8 fairly briefly now. Since the exercise you have done there really is hypothetical in the extreme in the light of what you have said. You say in the first sentence that you would have recommended - and by the way you mean to Mr Allen?

A. I would have recommended to the Board of Whites. Yes. Mr Allen being the appropriate person. Mr Allen yes . . .'

174 In re-examination, Mr Rayment took Mr Huntstead back to his earlier statement and asked him in relation to paragraph 45 of that statement what this meant `in relation to going back to scratch or otherwise'. The answer recorded at transcript page 2407, going over to 2408 with following questions, was as follows:

`Q. What does that mean in relation to going back to scratch or otherwise?

A. That means that the original price [I interpolate that this referred to the 1985 price] was based on tender documents derived from first principles. As variations were proposed, those variations were adjusted to our original tender price and the material quotations and sub-contract quotations were reviewed at subsequent tender submissions, i.e. 1986 and early 1987. In other words, the tender price was essentially the same as - was based on the 1985 tender with adjustments as per quantity changes and scope changes. So we would have gone back to - we would have gone back and priced the variations from square 1 . . . and those prices were effected in a revised price to the ADC, in July '86 or June '86. I believe there was a re-submission based on an alternative design and that is would have been done from first principles, again using the 1985 tender as a base. So as I said in my statement. Fresh quotes were obtained. In some cases old quotes were simply updated and additional trade summaries were also prepared for the new scope of works.'

175 Mr Rayment then, in re-examination at page 2409 of the transcript asked, inter alia, the following questions:

`Q. In other words may we have it clear, what did happen when Amman recommended that the steel be used in respect to the actual tender that went in 1987? Was it the result of going back to scratch in part, in whole or what was the situation?

A. In part it would have been going back to square 1 in part.

Q. In part?

A. Yes. A lot of work goes into a tender in terms of a number of different areas and if a tender is varied by a particular amount such as concrete slabs in this case, you would go back and you would work out what the original concrete was. The original formwork was on the original design, price up a new design based on the new formwork allowance, the edge strips, the stairways, the columns on the new scheme and reprice it from scratch. So whereas the whole tender wouldn't be repriced from scratch, the whole element of concrete formwork and reinforcing steel would be looked at and an adjustment made on that component of the work.

Q. You have been saying this morning that something would have caused you to go back to scratch; is that in whole or in part that you were speaking about this morning, first of all, so far as the change?

A. Once again, we would have gone back to scratch. We wouldn't have probably looked at things like windows or doors or things like that. But we would have looked at the structural component again of the building.'

176 Debate took place before me as to whether this answer, recorded at page 2409 line 50 and following, insofar as it uses the words `we would have gone back to scratch' was to be construed by the referee as a statement by Mr Huntstead of what actually did take place or alternatively, of what would have taken place in the hypothetical scenario.

177 At transcript page 2409 line 36, Mr Rayment sought in re-examination, to ask the following question:

`Q. Mr Huntstead, may we clarify one other thing, please, about your evidence this morning about going back to scratch. You have told us what did happen when steel was recommended and that involved in effect going back to scratch on those items where steel was going in instead of concrete.'

178 Mr Rayment then asked at transcript 55:

`Q. Just disregard my summary, if you would and remember what you yourself have said about the matter if the matter of steel had never come up at all in late 1986. How would things have been different in relation to the . . . if the matter of steel had never come up at all. In 1986. How would things have been different in relation to this tender?'

179 This question then elicited an objection in respect of which the respective submissions are set out at pages 2411 through to 2418.

180 Mr Liney's objection appears to be based on the proposition that the whole of WIL's case had been built upon the foundation that the relevant question to ask was whether, if ADC had not been misled by White's misrepresentation into contracting for steel, they would have gone away and re-priced in concrete and if so what that re-pricing would have constituted.

181 Indeed, Mr Liney at transcript page 2417 line 1 in submission said: `There is nothing to be gained by going back to some time in 1986 and speculating as to what would have happened if steel never come up at all. That's no part of anybody's case . . .'

182 Mr Rayment in dealing with the objection at transcript 2417, completed his submissions by pointing out that the question which he submitted he was entitled to ask was `when he said that he would be going back to scratch, was he [assuming] that he was changing from . . . steel to concrete, or was he assuming that the question simply arose in the context of putting in a tender in concrete in the first place?'

183 Immediately following Mr Rayment's statement identifying the question which his clients sought to put was the following exchange:

`The referee: I thought from what I heard of his evidence that he made it pretty clear on that question?

Mr Rayment: But he was assuming the change.

The referee: What he would do. What part he would go back to scratch on?

Mr Rayment: Oh yes, he made it clear.

The referee: Change in the structure?

Mr Rayment: Yes. He made it clear that he would be looking at only the relevant bits.

The referee: Yes. That's what one would normally expect.

Mr Rayment: Yes.

The referee: I uphold the objection.'

184 To my mind this is not a situation in which the Court can glean from what the referee said at transcript at page 2417 an indication that Mr Huntstead's evidence was not of live significance for the referee, or was not evidence which went to a matter which remained a live issue between the parties. The Court is in the dark as to the referee's assessment of Mr Huntstead's evidence in terms of all the evidence before the referee in a situation in which there was evidence that it would have been his recommendation to the Board of Whites through Mr Noel Allen, the General Manager, New South Wales Construction, which would have been given. Further, on Mr Huntstead's evidence, Mr Allen's responsibility at the time was `to get the contract signed off'. See Mr Huntstead's evidence before the referee at page 2391.

185 I have not found the question of whether the referee ought be obliged to give reasons for how he assessed Mr Huntstead's evidence an easy one in this case. For that reason I have gone into considerable detail above in setting out how I understand the issue to be put by the respective parties.

186 There are undoubtedly factors which tend to support the view that the factual issue and the evidence adduced in relation to it, has been properly explored and considered by the referee and hence which would support a view that it is unnecessary to refer the matter back to the referee for his reasons relating to Mr Huntstead's evidence material to the critical finding.

187 Another factor which tends to support the view that it is unnecessary to refer the matter back to the referee is that the issue under consideration required the referee to bring to bear a real element of his own expertise in understanding the practices of quotations in the building industry weighed in the light:

(a) of detailed evidence as to how previous quotations had been prepared and revised;

(b) of the necessity to weigh statements by those involved at the time, as to what they now assert they would have done in an abstract situation.

188 I am also conscious of the fact that the referee was not bound to accept the evidence of any of Messrs Amann, Huntstead or indeed of Mr Fischer, on any aspect of the hypothetical question posed - all of the facts, matters and circumstances in evidence before the referee were to be weighed in balance and Mr Huntstead's evidence as to what he would have done or recommended if asked to requote in concrete, even had it been clear, which it was not, would not have required to be accepted by the referee.

189 I have also had in mind that there was, it seems to me, evidence before the referee namely that given by Mr Copping, that given by Mr Amann and that given, at least in his supplementary statement, by Mr Huntstead, which it seems to me was sufficient to entitle the referee to come to the so-called `critical finding'.

190 I hasten to add that I do not see the fact that the referee edited out of ADC's submissions those sections of the submissions which went to certain of Mr Huntstead's evidence, as supporting any inference of misconduct by the referee. This is particularly because the referee in fact made a practice throughout his report of setting out submissions in an edited fashion. To my mind, the referee's failure to include this portion of ADC's written submissions may well be explicable by the referee having at the time, intended to later refer to ADC's submissions as to Mr Huntstead and at that time to indicate what his views were with respect to those submissions. However, as is apparent from the report, the referee never in fact returned to these submissions.

191 Mr Huntstead's evidence appears to me to have been by no means clear or unambiguous and in any event, plainly involved the necessity to cope ex post facto with a hypothetical situation all the more confused as:

(a) Mr Huntstead appears under cross-examination to have incorrectly assumed that all of the older quotations had been out of date and to have forgotten that in January 1987 Whites had obtained fresh quotes.

(b) Mr Huntstead was asked by Mr Liney in cross-examination, certain questions seeking to test his views by reference to a context, including the findings in these proceedings, that the price submitted to ADC in 1987 was in fact several million dollars below a reasonable cost to carry out the work that was being tendered for.

192 It is of course important to note that the Court, in reviewing the report and deciding whether to adopt, vary or reject it, has a judicial discretion to exercise in a manner that is consistent both with the object and purpose of the Supreme Court Rules and with the wider setting in which they take their part - see Gleeson CJ in Super at page 563.

193 At the end of the day and whilst I acknowledge that the contrary view is clearly open, I am not comfortable with the referee having failed to even advert to Mr Huntstead's evidence and have reached the conclusion that the appropriate direction is that the referee ought be obliged to give his reasons relating to Mr Huntstead's evidence material to his critical finding, and that this matter is appropriate for reference back to the referee. Notwithstanding Mr Rayment's careful analysis of Mr Huntstead's cross-examination, it does seem to me that there is substance in Mr Gyles' submission that the referee's reasoning and failure to expressly specifically treat with Mr Huntstead's evidence, requires to be referred back to the referee. To my mind, this is a situation in which the referee's views on Mr Huntstead as a witness and the referee's acceptance or rejection in whole or in part of Mr Huntstead's evidence, ought to have been the subject of explicit reasons in the referee's report.

The Referee's Suggested Internal Contradictory Findings

194 These submissions [earlier set out in paragraph 51 of this Judgment and comprising paragraphs numbered 25 to 28 of ADC's submissions of 9 July 1998] focus on the apparent inconsistency of two sentences in the report. The last sentence appears at page 46 of the report at the end of the fourth paragraph and reads:

`I conclude, at least on the balance of probabilities, that present (sic) is a "no transaction" case, not a "successful transaction" case.'

195 The second sentence is to be found in the report at page 82 where, in repeating WIL's submissions with which the referee agreed and then adopted, the referee repeats the following portion of the submission:

`This is a case where the plaintiff cannot correctly say that but for the breach of Section 52, no contract at all would have been entered into with ACT.'

196 The burden of ADC's submission is simply that the later finding contradicts the referee's earlier independent finding, in the light of which earlier finding the later finding it is submitted, cannot stand.

197 Early in the report [at pages 6 to 7], the referee set out the alternative contentions of the plaintiff ADC and of WIL. He pointed out at page 6 that the plaintiff had submitted, inter alia that:

`It is important to recognise that the present is a "no transaction" case, not a "successful transaction" case. But for the misrepresentation there would have been no transaction with ACT.'

198 The referee at page 7 pointed out that WIL had submitted that:

`It will be apparent that one of our primary submissions is that this is not a "no transaction" case. We say that if the relevant misrepresentation had not be made, a slightly different contract would have been entered into between Whites and ADC . . .'

199 Mr Rayment submitted that in any event the use of the expression `a no transaction case' is somewhat bedevilling and may well be ambiguous. He submitted that precision of definition was particularly important here.

200 By way of example, Mr Rayment submitted that if one posited a customer entering into a fruit shop and the proprietor falsely representing that all the oranges in the shop had been picked that morning when in fact those oranges had been refrigerated for months, one might posit that the customer, on the basis of the representation, purchased an orange and later suffered ill effects because the orange was bad.

201 Using this example, Mr Rayment asked the question whether or not it could be properly described as a "no transaction" case.

202 If it were proven that but for the representation the customer would have purchased an apple in the same shop, Mr Rayment again posed the question as to whether this would be appropriately described as a "no transaction" case.

203 The submission, again using this example, was that in "no transaction" cases, one usually has only apples on sale. That may be the case, Mr Rayment pointed out, if the shop only sold apples and no other fruit. Then certainly, but for the misrepresentation, it could be proven that the customer would not have entered into the transaction - and in this sense Mr Rayment submitted it could be described as a "no transaction" case.

204 Mr Rayment's submission was that it was always clear before the referee that WIL's case was that the referee was bound to accept that but for the misrepresentation, the contract for in part building in steel, would not have been entered into.

205 In that sense, certainly Mr Rayment submitted the present was always on WIL's submissions to the referee, a "no transaction" case. But for the misrepresentation, the contract to build in steel would never have been entered into. Mr Rayment pointed out that Mr Yeldham QC had so found and that Giles J had adopted the finding in this respect.

206 Mr Rayment pointed out that WIL's case before the referee had always been that but for the misrepresentation, ADC would have entered into a different contract, namely a contract to build in concrete.

207 In the result, on Mr Rayment's submissions as I understood them, there was some looseness of precision in the referee's use of the words `no transaction case' in certain of the passages in the report. For example, when the referee at page 6 of the report set out the plaintiff's submission that `it is important to recognise that the present is a "no transaction" case, not a "successful transaction" case', Mr Rayment submitted that the use by the referee of the words `a "no transaction" case' seems to have been clearly to suggest that there would have been no dealing at all, that is to say, that but for the misrepresentation, ADC would not have entered into any form of contract to build the project.

208 Mr Rayment's submission, which it seems to me has substance, is that it is important to return to focus upon what the referee found as to the relevant facts. I accept Mr Rayment's submission that, focussing on the facts found by the referee, it is clear from the passage at report page 82, that the referee, in adopting WIL's submission that the plaintiff could not correctly say that but for the breach of s. 52, no contract at all would have been entered into with ACT, the referee was making plain that he was accepting the second defendant's submission earlier set out at page 7 of the report, namely that if the relevant misrepresentation had not been made, a slightly different contract would have been entered into between Whites and ADC.

209 I accept this submission by Mr Rayment.

210 Mr Rayment also submitted that the last sentence of the fourth paragraph on page 46 of the report did not flow in any sense from the earlier sentences in that paragraph and could effectively be disregarded in terms of understanding the whole of the report.

211 To my mind, Mr Rayment's submissions here are of substance. It may be that the last sentence in paragraph 4 on page 46 of the report is sufficiently unimportant in the context of the whole of the report that it may be disregarded. On the other hand, it may be that the referee's use in that place in the report of the term `a no transaction case' is explicable in some way by reference to the referee's contraposition in the sentence of that expression with the expression `a successful transaction case'.

212 No case has been made out for an exercise of the Court's discretion by ordering that the matter be remitted to the referee to require an explanation as to the use by him of the sentence in the report. Nor has the issue otherwise raised a question requiring a rejection of the report.

The Referee's Suggested Misapprehension of the Evidence of Mr Fischer

213 ADC's submissions earlier set out in paragraph 52 of this Judgment as numbered paragraphs 29 to 33 inclusive, to my mind have no substance. The referee clearly accepted WIL's submission that Mr Fischer's evidence on the points set out in the last paragraph on page 79 of the report and following through the whole of page 80 of the report should be rejected. ADC's submission before me amounts to asking the Court to accept evidence of Mr Fischer that was rejected by the referee.

214 The referee plainly rejected Mr Fischer's evidence that he would have only proceeded to contract with ACT for concrete if he had obtained appropriate assurances from WIL.

215 The referee had the opportunity to listen to the evidence given by Mr Fischer and to determine whether or not to accept that evidence or whether to reject the evidence on the basis that it was self-serving and contrary to the probabilities. WIL in its submissions to the referee, clearly treated with Mr Fischer's evidence and with the context. The referee clearly adopted and accepted and agreed with WIL's submissions on the point. ADC's submissions suggesting the misapprehension by the referee of the evidence of Mr Fischer are rejected, the matter essentially being one of fact determined by the referee.

216 ADC's further submissions as to the suggested misapprehension by the referee of the evidence of Mr Fischer (see ADC's submissions paragraphs 34 to 37 inclusive, earlier set out in paragraph 52 of this Judgment), again in my view, are not submissions of substance as to my mind, they simply seek to have this Court accept evidence by Mr Fischer which the referee clearly determined to reject. There was evidence from Mr Fischer before the referee to the effect of that generally set out in paragraph 34(a) and (b) of ADC's submissions. I do not accept the submission that the referee misstated the evidence of Mr Fischer in a material way or that there is any ground for the submission that there was no basis for the finding that Mr Fischer had no concern about price except in the context of a steel frame. I do not accept the submission that the referee's rejection of Mr Fischer's evidence that he would have required assurance from WIL was unsound and should be rejected as put in paragraph 37 of ADC's submissions.

The Referee's Suggested Failure to Deal with Arguable Points

217 ADC's submissions in respect of this matter were set out in ADC's submissions, paragraphs numbered 38 to 43 earlier set out in paragraph 53 of this Judgment.

218 The submission that the reference miscarried, or that the referee failed to consider or deal with evidence supporting the WIL submissions which the referee adopted, namely that:

(a) ADC had time imperatives which made a hypothetical alternative contract with ACT most likely.

(b) ADC had budgetary constraints such that it would not have been willing or able to countenance prices for concrete that were properly assessed and viable,

are in my view without substance.

219 As to the time imperatives issue, this was a matter put to the referee by WIL. The report sets out the relevant correspondence running from late 1986 up to February 1987 from prior to page 19 and from page 19 up to about page 46. That correspondence includes, as Mr Rayment pointed out in his submissions, reference to the Notice given by the Department of Territories to ADC dated 21 November 1986, whereby the Commonwealth indicated that it intended in pursuance of the powers contained in sub-clause 4(a) of the Crown Lease to the property, to determine the lease for failure to comply with the conditions contained in sub-clause 2(c) of the lease. The correspondence includes reference in the 4 December 1986 letter from ADC to the Department of Territories, to ADC's indication that it was in a position to commence by 1 April 1987, providing it received all necessary approvals from various Government Departments and instrumentalities in Canberra promptly.

220 At page 33 of the report, the referee set out detail of the new lease granted to ADC with date of commencement on 24 December 1986 for a term of 96 years, which required commencement of the building to take place on or before 31 March 1987 with damages of $1 million for failure to do so.

221 Clearly enough, the referee had before him, evidence to support his finding that ADC had time imperatives which made a hypothetical alternative contract with ACT most likely. It had been put to Mr Fischer in cross-examination (see report page 57) that considerable time pressure had been placed upon him and paragraph 16 of his statement had been put to him where a reference was put to him in cross-examination that he had two minutes to midnight when the Company might lose one million dollars. To my mind, the submission that the referee failed to reveal his process of reasoning in the report on the topic of ADC's time imperatives which made a hypothetical alternative contract with ACT most likely should be rejected, bearing in mind the detailed way in which the referee, albeit by way of adopting WIL's submissions, set out the reasoning processes and factual matters supporting his relevant findings.

222 Nor do I accept that the process of reasoning by the referee in relation to the finding that ADC had budgetary constraints such that it would not have been willing or able to countenance prices for concrete that were properly assessed and viable is of substance. Here again, a careful reading of WIL's submissions leading up to and following page 79 of the report, shows that the referee's reasoning was set out.

Conclusion as to ADC's Submission as to No Admissible Evidence or no Sufficient Admissible Evidence

223 In the result, I reject ADC's submission that there was either no admissible evidence or no sufficient admissible evidence upon which the referee could have found that WIL would have consciously permitted its subsidiary to enter into a hypothetical alternative contract at a gross undervalue or that ACT would have breached the hypothetical contract with the same consequences as found in relation to the actual contract.

Submissions as to the Precise Orders Which Should be Made

224 I understand it to be common ground between both parties that as between ADC and ACT, the referee treated the proceeding as an ex-parte enquiry - ACT having appeared albeit briefly on the first day of the reference, having indicated that it was not proposing to participate and then having departed.

225 In short, I understand both parties before me to accept that the referee in his short report in relation to ADC's case against ACT, did not take into account and paid no regard at all except in one minor aspect, to the evidence adduced by WIL or to the submissions adduced by WIL, which evidence and submissions of course were addressed on issues live between WIL and ADC.

226 Nothing in the short report by the referee in terms of ADC's case against ACT could be said to answer or to deal with:

(a) any of the submissions which WIL made to the referee on damages, or

(b) any of the evidence adduced by WIL on quantum in the case litigated between ADC and WIL.

227 Hence, the referee has never carried out assessment of damages as between ADC and WIL in any respect, or purported to do so by reference to his manner of dealing with ADC's case against ACT.

228 There was, it seemed to me, some confusion as to precisely what Mr Rayment would seek should ADC succeed in all or in part before me. At one level he submitted that if the Court determined to adopt the report, then the suit should be dismissed as against WIL and ought make costs orders in favour of WIL in terms of all costs of the proceedings including the Yeldham reference, all sets of proceedings before Giles J, the Morissey reference and these proceedings as well as all reserved costs.

229 At another level, Mr Rayment at one stage submitted, as I understood him, that bearing in mind the fifty days or thereabouts of evidence adduced before the referee and against the event that there may be an appeal, it was appropriate for the referee, notwithstanding his finding as against WIL of no loss, to have also determined, were he wrong in his no loss decision, what was the quantum of loss or damage occasioned to ADC, and the question of when the damage was suffered including the time bar issue. Mr Rayment put that the referee should have determined these matters to avoid any prospect that after successful appeals or ultimate appeals from the referee's decision, those matters would have to again be referred back to the referee.

230 Mr Gyles submitted that ADC accepted that technically, no finding of damage or loss had been made against WIL by the referee. He submitted that if ADC persuaded the Court that the report was flawed and that one or other of what ADC put forward as the appropriate bases for assessment of damages were accepted by the Court, then ADC would wish to have the opportunity of persuading the Court that the material before the referee, and the referee's findings in relation to ACT, at least gave a basis on which the Court could itself make the necessary decisions. He accepted that there could not be said to be any estoppel operating as against WIL in terms of the material before the referee and that there might need to be further evidence called before the Court.

231 To my mind, the question whether there should be referred back to the referee any matter other than that seeking the referee's reasons relating to Mr Huntstead's evidence referred to above, should presently be left open so that counsel can address on those matters, having had an opportunity to read this judgment.

ADC's Case Against ACT

232 Mr Rayment did not appear for ACT and did not therefore address any submissions in relation to ADC's case against ACT. He did, however, submit that if the Court determined to refer any matter back to the referee in relation to ADC's case against WIL, then it might be prudent to await completion of the referee's further attention to those matters before entering any judgment in favour of ADC against ACT. Here again, I will hear the parties after they have had an opportunity to read this judgment in relation to whether either wishes to address any different submission as to what should now occur with respect to ADC's claims against ACT.

I certify that paragraphs 1 - 232 and the appended

extracts from the judgment of Giles CJ Comm Div

of 30 June 1996 and from the Referee's Report of

1 June 1998 are a true copy of the reasons for

judgment herein of The Hon. Justice Einstein

_________________________________

Judy Kleem

Associate

8 February 1999

LAST UPDATED: 14/04/1999