JURISDICTION      : SUPREME COURT OF WESTERN AUSTRALIA

                                      IN CIVIL

CITATION               : JAKO INDUSTRIES PTY LTD -v- PERKINS (WA) PTY LTD [2026] WASC 158

CORAM                   : FORRESTER J

HEARD                    : 27 JANUARY 2026

DELIVERED           : 30 APRIL 2026

FILE NO/S               : CIV 1334 of 2024

BETWEEN               : JAKO INDUSTRIES PTY LTD

                                      Plaintiff

                                      AND

                                      PERKINS (WA) PTY LTD

                                      Defendant

Catchwords:

Application for declaration that Expert Determination of no force and effect – Contractual construction – Whether appointed expert acted as arbitrator rather than expert – Whether plaintiff was denied procedural fairness – Whether appointed expert was grossly negligent or grossly careless – Turns on own facts – Costs

Legislation:

Nil

Result:

Application refused

Category: B

Representation:

Counsel:

Plaintiff	:	Mr M L Bennett
Defendant	:	Mr T J Porter

Solicitors:

Plaintiff	:	Bennett
Defendant	:	HWLE Lawyers

Cases referred to in decision:

<CRJ>

Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49

Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314

Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [2025] WASCA 82

Muller v Dalgety & Co Ltd (1909) 9 CLR 693

Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160

Qld Power Trading Corp v Xstrata Qld Ltd [2005] QCA 477

Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 205

Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563

</CRJ>

Table of Contents

Introduction. 

The Subcontract 

Resolution Institute – Expert Determination Rules. 

Nature of the Dispute. 

Referral for expert determination. 

Expert Determination. 

Difference in quantities. 

Missing items. 

Quantities. 

Difference in rates. 

Unapproved work. 

Miscellaneous items. 

Outcome. 

Attachment 1. 

Proceedings. 

Jako’s submissions. 

Perkins’ submissions. 

Jako’s Reply. 

Disposition – claim that Mr Durning acted as an arbitrator 

Contractual construction – legal principles. 

Did Mr Durning act in the manner alleged by Jako?. 

Mr Durning did not undertake his own independent remeasurement of the works based on the as-installed drawings or at all (Further Amended Statement of Claim 11A.1) 

Mr Durning did not make his own independent assessment of the applicable rates (Further Amended Statement of Claim 11A.2) 

Mr Durning based his determination as to the disputed quantities and the applicable rates by considering which party’s measurement of quantities he considered more likely to be correct (Further Amended Statement of Claim 11A.3) 

Mr Durning considered Jako bore the onus of proof and found in favour of Perkins wherever he was not satisfied that Jako had proved its case on the balance of probabilities (Further Amended Statement of Claim 11A.4) 

Mr Durning determined questions of credibility and fact on the papers without giving Jako an opportunity to cross-examine Perkins’ expert witness (Further Amended Statement of Claim 11A.5) 

Mr Durning preferred Perkins’ quantities on the basis expressed in ED [78] (Further Amended Statement of Claim 11B) 

Mr Durning preferred Perkins’ rates primarily because they were prepared by what Mr Durning considered to be ‘an appropriately qualified independent expert witness’ without applying his own expertise (Further Amended Statement of Claim 11C) 

Remaining particulars of claim that Mr Durning acted as an arbitrator (Further Amended Statement of Claim 11D) 

Did Mr Durning act as an arbitrator?. 

What are the differences between an expert determination and an arbitration?. 

What was the nature of the intended process in this case?. 

Did Mr Durning act in a manner not in accordance with the process agreed/ordered under the Subcontract and the Rules?. 

Did Mr Durning follow the process?. 

Conclusion as to claim that Mr Durning acted as an arbitrator or quasi‑judicially (Further Amended Statement of Claim 12A) 

Was the plaintiff denied procedural fairness?. 

Disposition – negligence claim.. 

Conclusion. 

FORRESTER J:

Introduction

1.         On 12 March 2020, Jako Industries Pty Ltd (Jako) and Perkins (WA) Pty Ltd (Perkins) entered into an agreement for the provision by Jako to Perkins of mechanical services works, for a defined sum, as part of the project known as 1910 Armadale Courthouse and Police Complex (Subcontract).
2.         It was a term of the Subcontract that, in the event a dispute arose which the parties were unable to resolve by the negotiation procedure provided for by the Subcontract, and they were unable to agree on an alternative method of resolving the dispute, either Jako or Perkins could refer the dispute for expert determination.
3.         It is common ground that this matter was referred for expert determination in accordance with the Subcontract.
4.         In July 2023, the parties engaged a chartered quantity surveyor, Mr Alex Durning, to make the expert determination.   On 7 February 2024, after the parties had submitted evidence and submissions to Mr Durning, Mr Durning provided his written Expert Determination to the parties.
5.         In these proceedings, Jako claims to have been denied a reasonable opportunity to present:

(a)       expert evidence in support of its claim; and/or

(b)       purely responsive expert evidence. 

6.         Jako also claims that Mr Durning failed to conduct the process of the Expert Determination as he should have, including by conducting it on the papers, and should not have arrived at the conclusions he did.  Further, Jako alleged that Mr Durning was grossly negligent in conducting the Expert Determination.
7.         For these reasons, Jako claims that the Expert Determination was not conducted in accordance with the Subcontract and is therefore not binding on the parties.  Jako seeks a declaration that the Expert Determination is of no force and effect, costs and such other relief as the court considers just.
8.         Perkins denies that Jako was denied procedural fairness in any respect, and submits that the Expert Determination process was carried out in accordance with the Subcontract, and was therefore validly carried out and is binding on the parties.  Perkins further claims that, by the operation of r 12 of the Resolution Institute Expert Determination Rules (Rules) (which the Subcontract provided applied), Jako is deemed to have waived its right to make any objection to the matter having been dealt with on the papers.  Perkins also denies that Mr Durning was negligent.
9.         Jako denies that it waived its right to object to the Expert Determination process.
10.         For the reasons which follow, the application for a declaration that the Expert Determination dated 7 February 2024 is of no force and effect is refused.

The Subcontract

11.         The Subcontract is comprised of the Formal Instrument of Agreement (Instrument), the General Conditions of Subcontract (General Conditions), and the Schedules to the General Conditions of Subcontract.^[1]   Schedule 9 provided for ‘Special Conditions of Contract’ which amended the General Conditions, and which prevailed in the event of any inconsistency.
12.         Pursuant to cl 4(c) of the Instrument, in consideration of payment of the Subcontract Sum, Jako agreed to perform the Subcontract Works expeditiously and within the Subcontract Period.
13.         Variations to the Subcontract Works were only permitted as directed by Perkins.^[2]   The General Conditions provided a process by which Jako was to submit a quotation for any proposed Variation^[3] but, if Perkins did not accept any such quotation, it was to be valued in accordance with cl 12, which provided that Perkins would determine the amount by which the Subcontract Sum would be adjusted and on what basis, if the adjustment could not be agreed between the parties.^[4]
14.         Clause 33 of the General Conditions dealt with Dispute Resolution.  The General Conditions provided that every endeavour would be made to resolve any Dispute on its merits by negotiation, but a process was set out in the event that it could not be so resolved.
15.         It is common ground that the matters in issue between the parties constituted a ‘Dispute’ under the agreement.
16.         On a Dispute arising, a party was required to give the other party a Notice of Dispute which adequately identified and provided details of the Dispute, including the legal basis for the claim and the amount claimed, or the best estimate of the likely amount of the claim.^[5]   The General Conditions then provided for up to two settlement meetings to take place.  If negotiation failed to resolve the dispute, the parties were required to engage in good faith discussions to agree on a process to resolve the Dispute.^[6]
17.         The process for expert determination was then set out in cl 33.6 to cl 33.8 of the General Conditions:

33.6     Expert Determination

(1)       If the Dispute is not resolved or the parties have not agreed on a method of resolving the Dispute within 15 Business Days of the Second Settlement Meeting, either Party may refer the Dispute to expert determination.

(2)       Subject to clause 33.8, the cost of the Expert must be shared equally by the parties irrespective of the expert’s determination. 

(3)       If the Parties fail to agree as to the Expert, a person nominated by the President at the time of the Resolution Institute (WA Chapter) must choose the expert on the basis of the type of Dispute and the nature of the expertise necessary to consider the relevant issues. 

(4)       An Expert must:

(i)           have suitable and reasonable qualifications as well as commercial and practical experience in the area of the Dispute;

(ii)          be independent of each Party and not be, or have been, an employee, agent, contractor, advisor, or consultant of either Party;

(iii)         have at least 10 years’ post qualification experience in his or her expert field; and 

(iv)         have no interest or duty which conflicts or may conflict with the Expert’s function as an expert.

(5)       The Expert will not act as an arbitrator.

(6)       The determination of the Expert will be final and binding on the parties except for fraud or gross negligence.

(7)       Each Party must use its reasonable efforts to provide the Expert with any information reasonably required by the Expert and in any event each Party must provide the Expert with its preferred position in relation to the Dispute based on its understanding of the relevant facts.

(8)       The Dispute is to be resolved:

(i)           according to the rules of the Resolution Institute (WA Chapter), current as at the date the Expert Determination Notice is given (Expert Determination Rules); and 

(ii)          the Parties must abide by the Expert Determination Rules and must procure the Expert’s agreement to resolve the Dispute according to those rules.

(9)       The Expert must give reasons for the decision.

33.7     Frivolous, vexatious and baseless Dispute

Where the Expert determines that the Dispute is without factual basis or legal basis or the subject matter of the dispute is frivolous, vexatious or baseless then the respondent to the dispute is entitled to legal and other costs at an amount to be assessed by the expert.

33.8     Bar to proceedings 

Save for the matters contained in clause 33.9 neither party may commence legal proceedings in relation to any dispute unless the procedure stated in this clause 33 has been strictly followed.

18.         There is no issue in these proceedings that Mr Durning was properly qualified and appointed in accordance with the General Conditions.  The issues relate to the process applied by him, how that process was arrived at, the manner in which Mr Durning arrived at his decision, and the basis of his decision.

Resolution Institute – Expert Determination Rules

19.         The Rules, referred to in cl 33.6(8) of the General Conditions, commenced on 3 August 2016.^[7]
20.         Pursuant to r 3 of the Rules, the parties agreed that Mr Durning was deemed to be an expert in the subject matter of the Dispute, and, unless otherwise agreed in writing, the Expert Determination shall be final and binding between the parties.
21.         The Rules relevantly set out the applicable procedure in the following terms:

PART II THE PROCEDURE

RULE 5 Role of the Expert

1.         The Expert shall determine the Dispute as an expert in accordance with these Rules and according to law.

2.         The parties agree that:

a.            the Expert is not an arbitrator of the matters in dispute and is deemed not to be acting in an arbitral capacity;

b.           the Process is not an arbitration within the meaning of any statute.

3.         The Expert shall adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay and expense, so as to provide an expeditious cost-effective and fair means of determining the Dispute.

4.         The Expert shall be independent of, and act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with that of any opposing party, and a reasonable opportunity to make submissions on the conduct of the Process.

5.         Any dispute arising between the parties in respect of any matter concerning these Rules or the Process, (including the Expert’s jurisdiction) shall be submitted to and determined by the Expert.

RULE 6 General Duty of Parties

1.         The parties shall do all things reasonably necessary for the proper, expeditious and cost-effective conduct of the Process.

2.         Without limiting the generality of the foregoing, the parties shall:

a.            be represented at any Preliminary Conference or meeting convened by the Expert by a person or persons with authority to agree on procedural matters;

b.           comply without delay with any direction or ruling by the Expert as to procedural or evidentiary matters; and

c.            where appropriate, take without delay any necessary steps to obtain a decision of a Court on a preliminary question of jurisdiction or law 

…

RULE 8 Preliminary Conference 

1.         Unless otherwise agreed by the parties, the Expert shall convene a Preliminary Conference with the parties, in person or by teleconference, to be held as soon as practicable after reference of the Dispute to the Process.

2.         The purpose of the Preliminary Conference is to:

a.            discuss and agree on the issues in dispute, or formulate a procedure by which those issues can be clarified and agreed;

b.           plan and agree on how the Process should proceed, including a timetable for provision of submissions, documents and any other evidentiary material;

c.            make arrangements for Confidentiality Agreements to be signed by all persons taking part in the Process, in accordance with Rule 7;

d.           make such other planning and administrative arrangements as may be required in relation to the Process, including in respect of the terms of appointment of the Expert.

RULE 9 Conduct of the Process

1.         Subject to any rule of law or equity or written agreement of the parties to the contrary, and the requirements of Rule 5, the Expert shall make such directions or rulings in relation to the Process as he or she sees fit.

2.         Subject to any written agreement of the parties to the contrary, and without limiting the generality of paragraph 1 of this Rule, the directions and rulings made by the Expert may include directions or rulings in relation to:

a.            identifying or clarifying the issues in dispute, by preparation of a joint statement of issues or otherwise;

b.           provision of submissions, documents and any other evidentiary material relied upon by the parties;

c.            provision of any further submissions and evidentiary material which the Expert considers appropriate;

d.           meetings between the parties, their representatives and/or experts engaged by the parties, whether or not such meetings are attended by the Expert,

including the times by which any such steps shall be taken.

3.         If the parties agree in writing (in the Agreement or otherwise), the procedure in Schedule B shall apply.

RULE 10 The Expert’s Determination 

1.         As soon as reasonably practicable after receiving the submissions and evidentiary material from the parties pursuant to Rule 9, the Expert shall determine the Dispute between the parties and notify such determination in writing to the parties.

2.         Subject to any rule of law or equity or written agreement of the parties to the contrary, the Expert’s determination shall contain a statement of reasons in such form as the Expert considers reasonably appropriate, having regard to the amount and complexity of the Dispute.

3.         Subject to any rule of law or equity or written agreement of the parties to the contrary, the Expert’s determination may include for the payment of interest on any monetary sum determined, in such amount as the Expert considers reasonable.

4.         Where the Expert’s determination contains:

a.            a clerical mistake;

b.           an error arising from an accidental slip or omission;

c.            a material miscalculation of figures or a material mistake in the description of any person, thing or matter; or

d.           a defect of form,

the Expert may correct the determination.

PART III GENERAL

…

RULE 12 Waiver of Right to Object 

1.         Subject to any rule of law or equity or written agreement of the parties to the contrary, if a party to the Process takes part, or continues to take part, in the Process without making within a reasonable time thereafter any objection:

a.            that the Expert lacks substantive jurisdiction;

b.           that the Process has been improperly conducted, 

c.            that there has been any other irregularity affecting the Expert or the Process,

then that party shall be deemed to have waived its right to make such objection later, before a Court, unless it shows that, at the time it took part or continued to take part in the Process, it did not know and could not with reasonable diligence have discovered the grounds for the objection.

2.         Subject to any Statute Law or principle of common law or equity, or written agreement of the parties to the contrary, where the Expert rules that he or she has substantive jurisdiction and a party to the Process who could have questioned that ruling in a Court does not do so within any time fixed by the Expert (or if no time is fixed, within a reasonable time), then that party shall be deemed to have waived any right it may otherwise have had to later object to the Expert’s substantive jurisdiction on any ground which was the subject of that ruling, and shall be deemed to have submitted to the Expert’s jurisdiction. 

22.         There is no suggestion that the parties agreed that the procedure in Schedule B applied.

Nature of the Dispute 

23.         The nature of the Dispute can be adequately summarised by reference to the Expert Determination.
24.         Jako submitted a tender price of $5,965,000 to Perkins based on the issue for pricing Bill of Quantities (IFP BoQ).   Prior to the execution of the Agreement, an issue for construction Bill of Quantities was issued (IFC BoQ).  On the basis of alleged differences between the IFP BoQ and the IFC BoQ, Jako sought an initial increase to the Subcontract Sum of $3,635,675, and then a further increase of $329,565.   Thereafter, Perkins reassessed the Subcontract Sum over a period of time, but not in such a manner as to satisfy Jako’s claims.  Further, Jako’s costs were greater than the quoted sums, leaving Jako with an alleged shortfall of $1,339,896.59.
25.         Jako submitted that the Dispute should be resolved by pricing the IFC BoQ using the ‘as-installed’ mechanical drawings, and using some rates and prices which were different to those provided for by the Subcontract.
26.         On behalf of Perkins, it was submitted that the valuation of Jako’s work should be conducted on the basis of what Perkins termed its ‘Remeasured Bill of Quantities’ and on the basis of the rates and prices incorporated into, or in accordance with, the Subcontract.   Perkins submitted that, if its submission were to be accepted, the result should be a finding that Jako had been overpaid by $825,387.47.
27.         As part of its submission, Perkins alleged that Jako had carried out works which had not been approved by Perkins, and for which Jako was therefore not entitled to payment.  Jako denied this.

Referral for expert determination

28.         Jako signed an engagement letter dated 21 July 2023 in respect of the provision of the Expert Determination by Mr Durning on 24 July 2023.^[8]   Perkins signed an identical copy of the engagement letter dated 21 July 2023 on 25 July 2023.^[9]
29.         The engagement letter provided that Ankura Consulting (Australia) Pty Ltd would provide the following services:

Provision of an Expert Determination by Alex Durning in accordance with the Expert Determination Rules described in the Subcontract Agreement between Jako Industries and Perkins (Subcontract No. 1910‑0046).

30.         The engagement letter referred to cl 20.1(8)(ii) of the Subcontract Agreement.  In fact, the relevant provision of the Subcontract referring to the Rules was cl 33.6(8).  However, nothing was claimed to turn on this. 
31.         Mr Durning made orders on 23 August 2023,^[10] 8 September 2023,^[11] and 7 November 2023,^[12] the contents of which I will refer to below.
32.         The submissions of the parties were not tendered in evidence at the trial, although some were referred to in the Expert Determination.  Accordingly, where I refer below to a contention by one of the parties as part of the Expert Determination process, I am referring to Mr Durning’s summary of that contention as set out in the Expert Determination.

Expert Determination 

33.         Under the heading ‘Matters I am to Determine’, Mr Durning stated:

40.       I am to determine the final Subcontract Sum.  This involves determining a value for:

a.            the remeasurement of the Works.  The parties agree this is to be an as installed BoQ, based on the as installed drawings and valued in accordance with the pricing mechanism in the Subcontract.

b.           Variations (these being items not captured by the remeasurement).

41.       I am also to determine what payment is due and payable to either Jako or Perkins after accounting for the money already paid to Jako.

34.         Mr Durning noted in his reasons for decision that:

42.       The parties have submitted competing bills of remeasurement and ask me to prefer their submissions in entirety.

43        I disagree that it is correct for me to prefer the submissions of one party over the other in entirety.

35.         Mr Durning went on to explain that he had divided the submissions as to the overall disputed value (Disputed Value) into four ’causes of difference’, namely:

(a)       differences in quantity for an item, including alleged missing items and whether work should be deemed to be included;

(b)       differences in the applicable rate for an item;

(c)       Perkins’ alleged Unapproved Work (work alleged by Perkins not to have been completed by Jako, or alternatively not authorised by Perkins); and

(d)       miscellaneous items where Mr Durning was ‘unable to rationalise the cause of difference or prefer one party’s valuation over the other’ (either based on the submissions of the parties or by imputing his own knowledge), referred to by Mr Durning as an ‘Undefined Disputed Value’.^[13]

Difference in quantities 

Missing items 

36.         Mr Durning rejected Perkins’ contention that Jako was not entitled to payment for properly measurable items described in the Agreement but not in the Schedule 6 Bill of Quantities (also known as the IFP BoQ), on the basis that cl 9 of the Special Conditions of Contract operated, and that the parties had agreed that the IFC BoQ superseded the IFP BoQ.
37.         However, if the item was not required to be separately measured by the IFC BoQ or the Australian Standard Method of Measurement of Building Works (Sixth Edition) (ASMM),^[14] then Mr Durning determined that Jako was not entitled to payment for it.^[15]

Quantities 

38.         Mr Durning determined this part of the Disputed Value on the basis of whose quantities he considered to be more likely to be correct.   He expressed his reasons for doing so in the following terms:

(a)        It is consistent with the parties [sic] request that I prefer one measurement over the other.

(b)       It would be impractical for me to prepare my own independent remeasurement of the Works.   I say this because the time and cost associated with me remeasuring the Works is disproportionate to the component of the Disputed Value specific to differences in quantities.

(c)        In any remeasurement, unless a party provides its working files complete with extremely detailed sidenotes there is always a difficulty in understanding how that party has calculated its quantities.  I am not satisfied that there is sufficient clarity in the build up to either parties [sic] remeasurement to allow me to remeasure a representative sample and apply an adjustment factor to either parties [sic] remeasurement based on my findings.^[16]

39.         Mr Durning determined that he generally preferred the Perkins’ quantities, except for those for elbows and fittings.  His reasons for doing so were stated as being:

(a)        Perkins’ quantities have been prepared by an appropriately qualified independent expert witness.  I also note that these quantities have been prepared using electronic software to measure from an AutoCAD version of the as installed drawings.

(b)       Jako has not provided any independent expert opinion in support of its quantities.

(c)        Part of the disputed quantities relates to works that Jako states is not shown on the Drawings.  As the ‘performer’ of these works, Jako should have been able to identify and measure these works separately.  Jako has not done so.  Mr Anderson has included these works where he has identified these circumstances occur.

For the differences in quantity in the remeasurement of elbows and fittings I placed a persuasive value on the IFC BoQ (this being an independent measurement prepared by a Quantity Surveyor).^[17] (citations omitted)

Difference in rates 

40.         Mr Durning also ‘generally preferred the Perkins’ rates’.   Again, this was, in part, because they had been prepared by an appropriately qualified independent expert.   However, it was also because the main cause of the difference in the Disputed Value regarding rates was where Jako applied a new rate based on actual cost whereas, in Mr Durning’s view, Perkins’ calculations were more properly calculated in accordance with the Agreement.^[18]

Unapproved work

41.         Mr Durning rejected Perkins’ claim that Jako had not completed works for which it had claimed.^[19]   However, he accepted a claim by Perkins that one part of the work was ‘unapproved’ on the basis that it did not comply with the Agreement.^[20]

Miscellaneous items

42.         Mr Durning also accepted:

(a)       Perkins’ assessments in relation to items which Perkins claimed had been accounted for in its assessment for variations, and thus should not also be included as part of the Disputed Value; and 

(b)       the nett Perkins assessment of Undefined Disputed Items, on the basis that Perkins’ assessment was prepared by ‘an appropriately qualified independent expert witness’, and that, where he was unable to choose as between the parties’ submissions, his determination should be in favour of Perkins because Jako had failed to prove its case.^[21]

Outcome

43.         Mr Durning determined that the final sum payable by Perkins to Jako was $10,083.684, requiring Perkins to pay Jako a further $208,054 plus interest.^[22]

Attachment 1

44.         In a lengthy attachment entitled ‘Rationalising Disputed Value into Specific Causes and My Determination for Individual Packages’, Mr Durning provided more detailed reasons for his determination, broken down into 24 different categories.^[23]

Proceedings

45.         Jako seeks a declaration that the Expert Determination of Mr Durning is of no force and effect, such further or other order as to the court may seem just, and costs.

Jako’s submissions

46.         Jako’s primary submission was that, contrary to his obligations, Mr Durning acted as an arbitrator and not as an expert, and as such the Expert Determination was not in accordance with cl 33.6(5) of the General Conditions and was therefore not final and binding on the parties.
47.         Jako complained that Mr Durning acted as an arbitrator because he:

(a)       did not undertake his own independent remeasurement of the works;

(b)       did not make his own independent assessment of the applicable rates;

(c)       based his determination as to the disputed quantities and the applicable rates by considering which party’s measurement of quantities he considered more likely to be correct;

(d)       considered Jako bore the onus of proof and found in favour of Perkins wherever he was not satisfied that Jako had proved its case on the balance of probabilities; and

(e)       determined questions of credibility and fact on the papers without giving Jako an opportunity to cross‑examine Perkins’ expert witness.^[24]

48.         Jako further complained that Mr Durning acted as an arbitrator because he preferred Perkins’ quantities because:

(a)       Mr Durning considered they had been prepared by an ‘appropriately qualified independent expert witness’ and not by applying his own expertise;

(b)       Jako had not provided any independent expert opinion in support of its position; and

(c)       he considered Jako should have been able to identify and measure the part of the disputed quantities that Jako alleged was not shown on the as-installed drawings.^[25]

49.         Jako further claimed that, in making his determination, Mr Durning preferred Perkins’ rates primarily because they were prepared by an appropriately qualified independent expert witness, without applying his own expertise.^[26]   Jako claimed that in so doing, Mr Durning acted as an arbitrator.
50.         Mr Durning was also alleged to have acted as an arbitrator in that he failed to:

(a)       conduct an on-site inspection of the works;

(b)       provide Jako an opportunity to adduce oral evidence or cross‑examine Perkins’ expert witness;

(c)       inform Jako that he would not conduct his own remeasurement of the works or independent assessment of the rates; and

(d)       inform Jako that he would resolve the dispute on the papers, based only upon his assessment of the submissions and evidence submitted on behalf of Jako and Perkins.^[27]

51.         In Jako’s submission, in conducting himself in this manner, Mr Durning acted as an arbitrator, contrary to the Subcontract, and was therefore required to afford Jako procedural fairness in making the Expert Determination.  Jako then contended that Mr Durning failed to afford Jako that procedural fairness by:

(a)       failing to inform Jako that he would not conduct his own remeasurement of the works and that he would instead act quasi‑judicially by determining the dispute based upon Jako’s and Perkins’ competing evidence and submissions;

(b)       denying Jako a reasonable opportunity to adduce expert evidence in support of its remeasurement of the works under the Subcontract or purely responsive expert evidence; and

(c)       denying Jako a reasonable opportunity to cross‑examine Perkins’ expert or adduce oral evidence.^[28]

52.         Jako submitted that the Expert Determination was therefore of no force and effect.
53.         Further, Jako submitted that, in carrying out the Expert Determination in the manner set out above, Mr Durning was grossly negligent, and the Expert Determination was therefore of no force and effect.   The basis on which Mr Durning was alleged to have been grossly negligent was:

(a)       he preferred Perkins’ quantities except for the quantities of elbows and fittings;^[29]

(b)       in doing so, failed to afford any, alternatively sufficient, weight to the fact that Jako had been responsible for the installation of the mechanical services works the subject of the as installed drawings and so had firsthand knowledge of the quantities;^[30]

(c)       thereby failed to afford sufficient weight to Jako’s quantities;^[31]

(d)       failed to independently utilise his expertise so as to confirm quantities;^[32]

(e)       did not consider whether it was reasonable to apply new rates for new works where Jako had incurred increased material costs due to a delay in the timing of the works on the erroneous basis that cl 2.1(3) of the Subcontract provided that the Subcontract Sum was not subject to adjustment for the rise or fall in costs for any cause whatsoever;^[33] and

(f)        thereby failed to properly apply cl 12.1(1)(b) of the Subcontract by failing to consider the extent to which it was reasonable in the circumstances of the dispute to use rates or prices in Schedule 6 BoQ for similar work instead of new rates and prices.^[34]

54.         Jako claimed that for these reasons, for failing to conduct his own independent remeasurement of the works, and for denying Jako procedural fairness as set out in paragraph [50] above, Mr Durning breached his duty to exercise reasonable skill and care in making his Expert Determination and did so in a manner which was grossly negligent.   Alternatively, Mr Durning was grossly careless in making his Expert Determination.  Accordingly, the Expert Determination was not made in accordance with the Subcontract.^[35]
55.         Jako also contended that it was denied procedural fairness in that it sought an extension of time to 8 December 2023 to provide its reply and to include a report from an independent expert witness in its reply, but was only granted an extension to 13 November 2023, to include only a purely responsive independent expert report.^[36]   Jako alleged that the extension was insufficient and, further, that Mr Durning was then on notice that Jako had not adduced any lay or expert evidence in support of its as‑installed bill of quantities.   For those reasons, Jako alleged it was denied a reasonable opportunity to adduce expert evidence in support of its remeasurement of the works, and purely responsive expert evidence.^[37]

Perkins’ submissions

56.         Perkins submitted that Mr Durning carried out the Expert Determination in accordance with the Subcontract, including the Expert Determination Rules, and that the parties agreed upon the process by which Mr Durning was to proceed to make the Expert Determination, including that the Dispute was to be determined on the papers.
57.         Perkins contended that at no time did Jako make any objection to the process pursuant to r 12 of the Rules, as it was both entitled and obliged to do if it wished to maintain an objection.
58.         Perkins submitted Mr Durning was not grossly negligent in making the Expert Determination.
59.         Accordingly, Perkins submitted, the Expert Determination was final and binding on Jako.

Jako’s Reply

60.         Jako denied that it was required to raise any objection pursuant to r 12 of the Rules, on the basis that the Subcontract provided to the contrary.  Further, Jako did not waive its right to contend that Mr Durning was grossly negligent.  Further, in the alternative, Jako could not with reasonable diligence have foreseen that Mr Durning would purport to act as an arbitrator until after he delivered the Expert Determination.

Disposition – claim that Mr Durning acted as an arbitrator

Contractual construction – legal principles 

61.         The ordinary principles of contractual construction are well‑established and need not be repeated.  They were most recently summarised in Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd.^[38]

Did Mr Durning act in the manner alleged by Jako?

62.         The first principal issue for determination in this proceeding is whether Mr Durning acted as an arbitrator rather than an expert, and, if so, whether that leads to the result that the Expert Determination was not conducted in accordance with the Subcontract.
63.         In order to address this issue, it is necessary to determine whether:

(a)       Mr Durning actually acted in the manner that Jako alleged in each of the particulars of its claim as set out in the Further Amended Statement of Claim; 

(b)       the manner in which Mr Durning did act was in accordance with the Subcontract; and

(c)       Mr Durning’s conduct was, therefore, as an arbitrator and not an expert.

Mr Durning did not undertake his own independent remeasurement of the works based on the as-installed drawings or at all (Further Amended Statement of Claim 11A.1)

64.         In the Expert Determination, Mr Durning stated that he determined the part of the Disputed Value relating to disputed quantities based on whose quantities he considered to be more likely to be correct.   He stated that he applied that approach because it was consistent with the request of the parties to prefer one measurement over the other,^[39] and further that:

It would be impractical for me to prepare my own independent remeasurement of the Works.  I say this because the time and cost associated with me remeasuring the Works is disproportionate to the component of the Disputed Value specific to differences in quantities.^[40]

65.         There is therefore no dispute that Mr Durning did not undertake an independent remeasurement of the works in relation to the disputed quantities, in the sense that he did not conduct the entire exercise of remeasuring the quantities afresh.
66.         However, to the extent that Jako submits that, in failing to undertake an independent remeasurement of the quantities, Mr Durning failed to exercise his expertise, skill and judgment, I address that issue below at paragraphs [96] – [118].

Mr Durning did not make his own independent assessment of the applicable rates (Further Amended Statement of Claim 11A.2)

67.         Mr Durning stated that he had ‘generally preferred the Perkins rates’ for two reasons:

ED [85]. Firstly, because they have been prepared by an appropriately qualified independent expert witness.

ED [86]. Secondly, the main cause of the Disputed Value regarding rates is where Jako seeks to apply a new rate based on its alleged actual cost whereas Perkins’ new rate is calculated on a pro-rated basis by reference to an existing rate in the Schedule 6 BoQ.

68.         Mr Durning found that the approach adopted by Perkins in calculating new rates was in accordance with the relevant clause of the General Conditions, and Jako’s approach was not.  He gave detailed reasons for this finding.^[41]
69.         Jako did not identify what more Mr Durning was expected to do in order to make his own ‘independent assessment’ of the applicable rates.  In my view, having determined, on the basis of his expert opinion, that Perkins had approached a matter in accordance with the Subcontract, Mr Durning was entitled to adopt that assessment.
70.         However, that is not the end of the matter.  The approach adopted was expressed in general terms.  There were instances in which Mr Durning did not prefer the approach adopted by Perkins in calculating rates.  For example, in section 11 of Attachment 1, Mr Durning accepted that Jako was entitled to apply a new rate, rejecting the rate applied by Perkins.^[42]   In section 12, Mr Durning considered that an increase in the Subcontract rates was appropriate for one of the items, rejecting Perkins’ submission in part.^[43]
71.         In these circumstances, I have concluded that Mr Durning did conduct an independent assessment of the appropriate rates to be applied.

Mr Durning based his determination as to the disputed quantities and the applicable rates by considering which party’s measurement of quantities he considered more likely to be correct (Further Amended Statement of Claim 11A.3)

72.         Mr Durning did say that his determination for the part of the Disputed Value that related to disputed quantities was based on whose quantities he considered to be more likely to be correct.^[44]   However, he did not say that his determination as to the applicable rates was made in that manner, and there is no evidence that he did so.
73.         To the extent that Jako suggests that in adopting this approach as to quantities, Mr Durning failed to apply his own expertise, I address that below at paragraphs [96] – [118].

Mr Durning considered Jako bore the onus of proof and found in favour of Perkins wherever he was not satisfied that Jako had proved its case on the balance of probabilities (Further Amended Statement of Claim 11A.4)

74.         In support of this claim, Jako relied upon statements of Mr Durning at ED [110].  It is appropriate to set out the preceding paragraph as well:

ED 109.  Where I have categorised items as an Undefined Disputed Value in a package, I have applied the nett Perkins assessment of these items in my Determination. 

ED 110.  I do this because of the following general points regarding determining issues involving questions of credit: 

a.         Perkins measurement and pricing has been prepared by an appropriately qualified independent expert witness; and 

b.        Regardless, my Determination is to be made on the balance of probabilities.  Thus, where I am unable to choose between the parties [sic] submissions (i.e. a 50/50 scenario arises), my Determination should be in favour of Perkins because I have concluded Jako has not proven its case.

75.         Counsel for Jako submitted:

[Mr Durning] can’t decide matters simply on an onus judgment unless he frames it in a particular way that says, ‘the issue has been raised, ergo the evidentiary onus on the claimant has been discharged.  I’ve looked at the evidence.  I apply my own expert assessment of that evidence in a particular way to reach a conclusion.’^[45]

76.         Jako’s submission was, in effect, that Mr Durning was meant to apply ‘his expertise, not a balance of probabilities,’^[46] and that ‘[a]dopting Perkins’ submissions in all instances where the parties’ contentions were evenly balanced is not an independent assessment.’^[47]
77.         In my view, this is not an accurate reflection of what Mr Durning said, or did, and considerably overstates the application of ED [110(b)] in the Expert Determination process.
78.         ED [110] related only to a relatively small part of the Dispute as to quantities.  Mr Durning made clear that he only adopted the approach set out in ED [109] – [110] in relation to one of the four categories into which he had divided the ’causes of difference’ in the disputed values.  That category was ‘Undefined Disputed Value’, relating to miscellaneous items where he was:

unable to rationalise the cause of difference or prefer one party’s valuation over the other (either based on the submissions of the parties or by imputing my own knowledge).^[48]

79.         By this statement, Mr Durning made clear that he only applied the approach criticised by Jako in cases where he had no other means of resolving the issue, including imputing his own knowledge.
80.         When it was pointed out to counsel for Jako that he was relying only on the summary of findings, and that there was also Attachment 1, which set out more detailed reasons for Mr Durning’s assessment, counsel referred to section 19.2 of Attachment 1 of the Expert Determination, which stated as follows:

A243.  Perkins has identified that there are multiple Variations that include amounts related to the disputed works. 

A244.  Jako has not provided any justification to persuade me that the claimed items are additional to that assessed as a Variation. 

A245.  Thus, I agree with Perkins assessment for the disputed value. 

A246.  For the above reason I did not include any part of the disputed value in my Determination.

81.         Counsel for Jako submitted that, in this section, Mr Durning ‘weighs up evidence … and makes a conclusion consistent with what he writes in ED [110]’.^[49]   He submitted that Mr Durning used the same language in section 21.2 of Attachment 1, at ED [262] – [263].^[50]
82.         This submission cannot be accepted.  Sections 19.2 and 21.2 of Attachment 1 related to issues with variations and disputed rates.  The amounts referred to in these sections of the Expert Determination did not fall within the category of Undefined Disputed Value, which was the only category to which Mr Durning applied the approach criticised by Jako.   This was made particularly clear by the summary table at section 3.7 of the Expert Determination.
83.         More broadly, however, at sections 19.2 and 21.2 of Attachment 1, and elsewhere, Mr Durning did approach the matter on the basis that if Jako had not proved its claim in respect of a particular item, that claim failed.
84.         Mr Durning identified that, on some occasions, Jako had failed to provide any ‘justification’ for a claim, or had not ‘substantiated’ a claim, and in those circumstances found in favour of Perkins in respect of that claim.^[51]
85.         Mr Durning did identify an item where Jako was entitled to apply a new rate, and found that Jako’s new rate should apply, because Perkins ‘has not provided any justification to persuade me that the claimed new rate is unreasonable.’^[52]   He also found that, in the absence of an express reference to a duplication in the payment for a variation item, it was likely that Perkins’ claim of duplication did not occur.^[53]   Accordingly, I do not accept that he relied solely upon an application of the onus of proof without also applying his expertise.
86.         Apart from those instances, however, generally, Mr Durning did make determinations in respect of the claims on the basis that Jako was obliged to substantiate its claim on the balance of probabilities and, where it had failed to do so, its claim should be denied.
87.         The real issue is whether Mr Durning failed to apply his expertise in making his determinations on this basis.  I will deal further with this issue below at paragraphs [96] – [118].

Mr Durning determined questions of credibility and fact on the papers without giving Jako an opportunity to cross-examine Perkins’ expert witness (Further Amended Statement of Claim 11A.5)

88.         It is not disputed that Mr Durning did not offer Jako the opportunity to cross-examine Perkins’ expert witness before making determinations of fact.
89.         Jako also complains that Mr Durning made determinations on questions of credibility.  This complaint is based on Mr Durning’s statements at ED [109] – [110].  For convenience, I will repeat those paragraphs:

ED 109.  Where I have categorised items as an Undefined Disputed Value in a package, I have applied the nett Perkins assessment of these items in my Determination.

ED 110.  I do this because of the following general points regarding determining issues involving questions of credit:

a.         Perkins measurement and pricing has been prepared by an appropriately qualified independent expert witness; and 

b.        Regardless, my Determination is to be made on the balance of probabilities.  Thus, where I am unable to choose between the parties [sic] submissions (i.e. a 50/50 scenario arises), my Determination should be in favour of Perkins because I have concluded Jako has not proven its case.

90.         Counsel for Jako submitted that determination of which party’s assessment was to be preferred by Mr Durning was not a credit issue and, in making an assessment as to credit, he was not acting as an expert.  I will deal with the second aspect of this submission below.
91.         As to the determination of which party’s assessment was to be preferred, the only issue of credit related to the weight to be placed on the opinion of Perkins’ expert.   There were many references in the Expert Determination, including that at ED [110.a], to the effect that Mr Durning regarded Perkins’ expert as ‘independent’ and ‘appropriately qualified’ and therefore considered that his opinion was worthy of being attributed weight in the determination process.
92.         Conversely, Mr Durning found that Jako’s witness, Mr Tatam, was not an expert in respect of most of the matters with which his report purported to express an expert opinion.^[54]  As Mr Durning made clear, he did not regard Jako as having provided any ‘independent expert opinion’ in relation to those matters.^[55]  This was not an assessment as to credit; it was an assessment as to a lack of relevance.
93.         Counsel for Jako submitted that Mr Durning found that Jako was not an expert, and in doing so made an adverse credit finding against it.^[56]  However, apart from the finding that Jako did not submit an independent expert report, there is no indication in the Expert Determination that Jako submitted expert evidence as to the quantities, or claimed expertise in that area.   The only reference to Jako’s expertise in any field appeared at ED [95], in which Jako’s submission was said to have been that it was an expert in ‘mechanical services’.  This was the same expertise Mr Tatam had, which Mr Durning had dismissed as irrelevant for most (but not all) of the matters he had to decide.   Accordingly, on the evidence before me, I do not accept that he made a finding as to Jako’s credit or that of its expert.
94.         Further, in my view, Mr Durning’s reference to ‘credit’ as it applied to ED [110.b] was not apt.  His determination that, in the event that he was unable to determine an issue, it followed that Jako had failed to meet its onus of proof was not a decision as to credit at all.
95.         I accept that Mr Durning did, in effect, determine questions of credibility on each occasion on which he gave weight to the Perkins’ expert report on the basis that it was prepared by an independent, appropriately qualified expert.
96.         It is also correct to say that Mr Durning did not offer Jako the opportunity to cross-examine Perkins’ expert before making this assessment.

Mr Durning preferred Perkins’ quantities on the basis expressed in ED [78] (Further Amended Statement of Claim 11B)

97.         Jako asserts, as particulars of its claim, that Mr Durning acted as arbitrator and not expert, and that Mr Durning preferred Perkins’ quantities because:

(a)       they had been prepared by what Mr Durning considered to be an ‘appropriately qualified independent expert witness’ and not by applying his own expertise;

(b)       Jako had not provided any independent expert opinion in support of its quantities; and

(c)       Mr Durning considered Jako, as the ‘performer’ of the works, should have been able to identify and measure the part of the disputed quantities that related to work that Jako stated was not shown on the as-installed drawings.^[57]

98.         The particulars are drawn, in part, from ED [78].
99.         Counsel for Jako relied on the statements made by Mr Durning at ED [76] – [78] of the Expert Determination in support of his broad submission that Mr Durning ‘abandon[ed] applying his own expertise’.^[58]   Those paragraphs stated:

ED 76.    My Determination for the part of the Disputed Value that relates to disputed quantities is based on whose quantities I consider to be more likely to be correct i.e. Jako’s quantities or Perkins’ quantities.  I have applied this approach because:

a.         It is consistent with the parties [sic] request that I prefer one measurement over the other.

b.        It would be impractical for me to prepare my own independent remeasurement of the Works.  I say this because the time and cost associated with me remeasuring the Works is disproportionate to the component of the Disputed Value specific to differences in quantities.

c.         In any remeasurement, unless a party provides its working files complete with extremely detailed sidenotes there is always a difficulty in understanding how that party has calculated its quantities.  I am not satisfied that there is sufficient clarity in the build up to either parties [sic] remeasurement to allow me to remeasure a representative sample and apply an adjustment factor to either parties [sic] remeasurement based on my findings.

ED 77.    Except for quantities for elbows and fittings, I have generally preferred the Perkins quantities. 

ED 78.    I do this because: 

a.         Perkins’ quantities have been prepared by an appropriately qualified independent expert witness.  I also note that these quantities have been prepared using electronic software to measure from an AutoCAD version of the as installed drawings.

b.        Jako has not provided any independent expert opinion in support of its quantities.

c.         Part of the disputed quantities relates to works that Jako states is not shown on the Drawings.  As the ‘performer’ of these works, Jako should have been able to identify and measure these works separately.  Jako has not done so.  Mr. Anderson has included these works where he has identified these circumstances occur.

100.         As can be seen, Mr Durning did state at ED [77] that, except for quantities for elbows and fittings, he had generally preferred the Perkins quantities for reasons he identified at ED [78].  However, at no point did he say that he had not applied his own expertise in making his determination.
101.         Counsel for Jako was asked if Mr Durning’s determination of whose quantities he considered to be more likely to be correct included an application of his own expertise.  Counsel conceded there was ‘an argument for it’ but submitted that Mr Durning disclaimed the application of his own expertise in paragraphs ED [77] – [78].^[59]
102.         The mere fact that Mr Durning preferred the submission of a particular party, or the expert evidence of a particular expert, does not necessarily establish that he did not use his experience, knowledge and skill to determine the value of the works.
103.         It is to be observed that, prior to ED [78], at ED [43], Mr Durning had expressly stated that he did not consider it to be correct to prefer the submissions of one party over the other in entirety.  Further, at ED [76], he indicated that his determination for the part of the Disputed Value that related to disputed quantities ‘is based on whose quantities I consider to be more likely to be correct’.  In my view, both of these statements indicated that Mr Durning was applying his professional judgment and expertise to the exercise he was undertaking.
104.         Counsel for Jako allowed that Mr Durning would have been acting as an expert if he had instead expressly said: ‘In my expert opinion, having regard to the nature of the claim, I agree with Anderson’, or, ‘I agree with the Perkins submission’ (and actually applied this approach).  However, he argued that there was instead no evidence that Mr Durning applied any expert thought.^[60]
105.         I do not agree that it was necessary for Mr Durning to use the words ‘in my expert opinion’ in order to demonstrate that he was applying ‘expert thought’.  Mr Durning was a qualified expert, appointed as an expert, to make an expert determination.  In those circumstances, such statements as ‘in my expert opinion’ before each expression of an opinion would have been otiose and formulaic, at best.
106.         Scrutiny of the detailed reasons contained in Attachment 1 of the Expert Determination reveals that where Mr Durning preferred the Perkins’ quantities, he said that he agreed with the Perkins’ submission, or the Anderson report.^[61]  In my view, the word ‘agree’ in this context clearly conveyed the meaning that, having formed his own opinion, Mr Durning concurred with the Perkins’ submission or the Anderson report, as the case may be.  It did not convey that he simply ‘outsourced’ the formulation of the opinion to Perkins or its expert.
107.         On occasions, where he preferred Jako’s submission, Mr Durning used similar language,^[62] although he also found in Jako’s favour without using such language.^[63]
108.         At A[123], Mr Durning, having found that Jako had failed to justify its claim, said:

In these circumstances I consider it more likely than not that the claimed works fall inside the ambit of the $32,400 included in Perkins’ assessment.

109.         At A[283], Mr Durning referred to an alleged duplication and said:

Based on the amounts identified and the disputed value, I consider it likely that the duplication occurs.

110.         Mr Durning also disagreed with Perkins’ assessment as to quantities on a number of occasions, including at A[141], A[148], A[151], A[161], A[206] and A[235].
111.         In addition, part of the dispute related to whether Jako was entitled to payment for items which had been described in the Subcontract but not included in the Schedule 6 BoQ.  Mr Durning resolved this dispute by considering the terms of the Subcontract and their proper construction.^[64]
112.         On each of those occasions, Mr Durning was, in my view, applying his expertise and knowledge in the expert field to arrive at a decision.  That he had regard to the expert report submitted by Perkins, and Jako’s submission, is entirely what was intended by the parties.  So much was conceded by Mr Bennett.^[65]
113.         Counsel for Jako submitted that Mr Durning was meant to apply ‘his expertise, not a balance of probabilities.’^[66]   He argued:

The expert can be assisted by the opinion of expert witnesses to help form his own judgment, but his obligation as an expert is to apply his own expertise.  He disclaims applying his own expertise.  He says, ‘I’m not going to do a re-measurement.’^[67]

114.         Counsel acknowledged that this submission was limited to the issue of quantities, while submitting that was a large amount of Jako’s claim.^[68]
115.         However, as I have already observed, ED [110] related only to a relatively small part of the Dispute, namely the ‘Undefined Disputed Value’, relating to miscellaneous items where he was:

unable to rationalise the cause of difference or prefer one party’s valuation over the other (either based on the submissions of the parties or by imputing my own knowledge).^[69]

116.         By this statement, not only did Mr Durning make clear that he only applied the approach criticised by Jako in cases where he had no other means of resolving the issue, but also that he had not abandoned the approach of using his own knowledge to deal with the dispute.
117.         Further, for reasons which I set out below, it was entirely proper for Mr Durning to find in favour of Perkins, in the sense of disallowing a claim by Jako, if Jako had failed to prove its case in respect of a particular issue.
118.         Even where Mr Durning did have regard to the expert opinion and/or submissions made by one or other of the parties, his reasons made clear that he determined what matters to accept, and what to reject, using his experience, knowledge and expertise.  There are a number of examples contained in the report, including:

(a)       under the heading ‘Missing Items’ in section 3.2 of his report, Mr Durning disagreed with a submission made by Perkins and explained his reasons for doing so, which were based on his own interpretation of the ASMM and a clause of the Schedule 6 BoQ;^[70]

(b)       in the same section, Mr Durning referred to the general principles of remeasurement contracts^[71] and the practicality of the approach suggested by Perkins;^[72]

(c)       under the heading ‘Difference in rates’, Mr Durning referred to the three components of rates for the provision of equipment, and expressed his view that the labour and plant component was largely unchanged regardless of equipment size, which seemed inconsistent with Jako’s claim;^[73] and

(d)       at various points of the Expert Determination, Mr Durning said words to the effect that, if a proposition was to be accepted, he would have expected to see certain things.^[74]   Such an expectation can only have been based on his own experience and expertise in the relevant field.

119.         Accordingly, I do not accept that Mr Durning failed to apply his expertise in generally preferring Perkins’ quantities on the basis of his statement at ED [78] or otherwise.

Mr Durning preferred Perkins’ rates primarily because they were prepared by what Mr Durning considered to be ‘an appropriately qualified independent expert witness’ without applying his own expertise (Further Amended Statement of Claim 11C)

120.         To establish this particular, Jako relied upon ED [78.a].
121.         However, ED [78.a] does not say that Mr Durning preferred Perkins’ rates because they were prepared by an appropriately qualified independent expert witness, primarily or otherwise.  ED [78] relates to the issue of quantities.   As I have already found, in context, the paragraph also does not support the contention that Mr Durning did not apply his own expertise to the issue.
122.         Mr Durning’s decision as to rates was dealt with at ED [82] – [96] of the Expert Determination.
123.         Mr Durning did indicate at ED [83] that he had generally preferred the Perkins rates, and said at ED [85] that this was, in part, because they had been prepared by an appropriately qualified independent expert witness.
124.         However, Mr Durning went on to give a lengthy explanation as to why he considered that most of Jako’s new rates were not in accordance with the terms of the Subcontract, while Perkins’ rates were in accordance with the Subcontract.  He noted that on some occasions, despite being requested by Perkins to do so, Jako had failed to provide information to substantiate the claim to a new rate.
125.         While Mr Durning generally preferred Perkins’ rates, he did not universally do so.  For example, in Attachment 1 at A[179] ‑ [181], Mr Durning rejected Perkins’ rates, noting that Jako had provided a document in support of its claim.   He partially accepted Jako’s claim for new rates in sections 12 and 13 of Attachment 1.
126.         In section 14 of Attachment 1, Mr Durning noted that Jako had failed to provide any justification for the application of its claimed new rates, and thus agreed with Perkins’ assessment.   However, he also made some observations as to the apparent lack of reasonably valid cause for the fact that the claimed rates were substantially higher than the Subcontract rates.
127.         In section 20 of Attachment 1, the parties agreed that a new rate should apply.  Mr Durning, after considering the materials before him, agreed that Jako’s new rates should be applied.
128.         All of these decisions were plainly made on the basis that Mr Durning, applying his knowledge and expertise, had judged that respective party’s assessment to be appropriate, and agreed with it.
129.         Accordingly, I do not accept that Mr Durning failed to apply his expertise to the part of the Expert Determination in relation to rates.

Remaining particulars of claim that Mr Durning acted as an arbitrator (Further Amended Statement of Claim 11D)

130.         The remaining particulars of the claim that Mr Durning acted as an arbitrator and not an expert are not factually in dispute.  Mr Durning did not:

(a)       conduct an on-site inspection of the works;^[75]

(b)       provide Jako an opportunity to adduce oral evidence or cross examine Perkins’ expert witness;^[76]

(c)       inform Jako that he would not conduct his own remeasurement of the works or independent assessment of the rates;^[77] or

(d)       inform Jako that he would resolve the dispute on the papers, based only upon his assessment of the submissions and evidence submitted on behalf of Jako and Perkins.^[78]

Did Mr Durning act as an arbitrator?

131.         It is now necessary to turn to the question of whether, by engaging in the conduct I have found established, either individually or in combination, Mr Durning became an arbitrator, rather than an expert.
132.         Jako contended that if Mr Durning did act as an arbitrator, that would not be in accordance with cl 33.6(5) of the General Conditions, or r 5(2) of the Rules, and the Expert Determination would therefore not be valid.
133.         Perkins argued that the purpose of cl 33.6(5) and r 5(2) of the Rules was not to prevent Mr Durning acting in an arbitral manner, but to ensure that the general and informal power by the expert was not governed or confined by arbitration legislation.  Further, and in any event, it denied that Mr Durning did act as an arbitrator.

What are the differences between an expert determination and an arbitration?

134.         In Shoalhaven City Council v Firedam Civil Engineering Pty Ltd,^[79] a majority of the High Court cited with approval the following observation of Chesterman J in Zeke Services Pty Ltd v Traffic Technologies Ltd:

The evident advantage of an expert determination of a contractual dispute is that it is expeditious and economical.  The second attribute is a consequence of the first: expert determinations are, at least in theory, expeditious because they are informal and because the expert applies his own store of knowledge, his expertise, to his observations of facts, which are of a kind with which he is familiar.^[80]

135.         In Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd,^[81] Muir JA said:

The differences between an expert determination and an arbitration are succinctly explained in the following passage from Hudson’s Building and Engineering Contracts:^[82]

If a person is appointed, owing to his skill and knowledge of the particular subject, to decide any questions, whether of fact or of value, by the use of his skill and knowledge and without taking any evidence or hearing the parties, he is not, prima facie, an arbitrator.

It has been held that if a man is, on account of his skill in such matters, appointed to make a valuation, in such manner that in making it he may, in accordance with the appointment, decide solely by the use of his eyes, his knowledge and his skill, he is not acting judicially: he is using the skill of a valuer, not of a judge.  In the same way, if two persons are appointed for a similar purpose, they are not arbitrators but only valuers.  They have to determine the matter by using solely their own eyes and knowledge and skill.

If, on the other hand, a person is appointed with the intention that he should hear the parties and their evidence and decide in a judicial manner, then he is an arbitrator, although mere absence of a hearing, provided it does not result in any unfairness to the parties, will not necessarily invalidate an award.  Obviously this must depend on the subject-matter of the dispute and the terms of any written pleadings or submissions to the arbitrator.

A generally similar formulation appears in Russell on the Law of Arbitration.^[83]

Judicial definitions of ‘arbitration’ normally place emphasis on the judicial nature of the arbitrator’s role.  In Qld Power Trading Corp v Xstrata Qld Ltd^[84] Williams JA, with whose reasons the other members of the Court agreed, said:^[85]

[9]       As long ago as 1886 Lord Esher MR provided a definition of an arbitration and it has stood the test of time.  He said in Re Carus‑Wilson and Greene (1886) 18 QBD 8 at 9:

If it appears from the terms of the agreement by which a matter is submitted to a person’s decision, that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry, and hear the respective cases of the parties, and decide upon evidence laid before him, then the case is one of an arbitration.

136.         In Northbuild, the issue was whether the parties, in agreeing on a change of procedure to allow for cross‑examination of witnesses, had, as a result, altered the agreement from that of expert determination to arbitration.
137.         Muir JA observed that, while the basic differences between the two processes could be readily stated, either one could have characteristics of the other.  For example, he said, an expert may be required to act impartially or require or have the right to the benefit of evidence and/or submissions without becoming an arbitrator.^[86]
138.         As to the judicial nature of the role of an arbitrator, Muir JA said:

The judicial process, normally, if not invariably, requires the adjudicator to determine the dispute on the basis of evidence placed before the adjudicator by the parties.  The judicial process does not contemplate a right on the part of the adjudicator to make his own independent investigations.  A process under which the adjudicator ‘could undertake his own investigations without disclosing them to the parties and generally could determine (the matter) according to his own experience without being constrained by the contentions of the competing parties’ is more distant again from a judicial process.^[87]

139.         In the case between Jako and Perkins, the parties were as one in submitting that the process was intended to be one of expert determination, and, if it had proceeded under their agreement, would have remained an expert determination.  However, Jako claims that, by dealing with the matter as he did, Mr Durning altered the process to one of arbitration.

What was the nature of the intended process in this case?

Provisions of the Subcontract 

140.         The prescribed manner of proceeding in this case did not permit the intended conduct of the expert determination process to be comfortably categorised as either expert or arbitrator purely on the basis of the distinctions set out in Hudson.  Mr Durning was not engaged to decide any questions without taking any evidence or hearing the parties (thus falling within Hudson’s categorisation as ‘expert’), and he also was not engaged to hear the parties and decide the matter in a judicial manner (such as to make him an ‘arbitrator’).
141.         The distinction in Hudson, of course, turns on the basis on which the person was engaged.  Jako accepts that Mr Durning was engaged as an expert, but alleges his conduct became that of an arbitrator.
142.         Clause 33.6(5) of the General Conditions was an agreement as between the parties that the expert appointed under the Subcontract ‘will not act as an arbitrator’.
143.         The full meaning of subclause 33.6(5) is difficult to discern.  Clearly, it at least expresses the intention on the part of the parties that the expert not act as an arbitrator.  However, in the absence of a definition of the term ‘arbitrator’, there is an issue as to whether the subclause actually reflects an intention that the expert not be permitted to act in an arbitral manner and/or an intention that he not be considered to be acting in an arbitral manner, or whether its intention and effect was simply to exclude the operation of arbitration legislation.
144.         In Legal and General Life of Australia Ltd v A Hudson Pty Ltd,^[88] the NSW Court of Appeal was called upon to consider whether a valuation made by an expert was voidable for mistake.  The contract, a lease, provided for determination of a certain value of premises by a qualified valuer ‘acting as an expert and not as an arbitrator’.
145.         McHugh JA (as his Honour then was) found that the valuer had made a mistake.  In the course of considering whether that mistake was sufficient to avoid the valuation, McHugh JA referred to the terms of the contract to the effect that the decision of the valuer was ‘final and binding on the parties’ and said:

The rent review clause makes the decision of the valuer ‘final and binding on the parties to this lease’.  Nothing in the lease suggests that it was not to be final and binding if it was the result of error or mistake or was unreasonable.  The decision – whatever it is – is to bind the parties.  It is true that the valuer is ‘acting as an expert and not as an arbitrator’.  But those words which have been commonly used in agreements since the Common Law Procedure Act 1854 serve the purpose of excluding the provisions of the Arbitration Act 1902.  They avoid the necessity for the valuer to hear evidence and the parties and to determine judicially between them.  They enable him to rely on his own investigations, skill and judgment: Re Dawdy (1885) 15 QBD 426 at 429, 430.  Indeed they reinforce the view that the parties, as between themselves, rely on the honest and impartial skill and judgment of the valuer.^[89]

146.         Pursuant to cl 33.6(8) of the General Conditions, the Dispute was to be resolved according to the Rules.  In those circumstances, the agreement between the parties as to the expert determination process incorporated the Rules.   Accordingly, determining the meaning of the phrase ‘the Expert will not act as an arbitrator’, can only be determined by considering the Subcontract and the Rules together.
147.         Subrule 5(2) provided:

The parties agree that: 

a.         the Expert is not an arbitrator of the matters in dispute and is deemed not to be acting in an arbitral capacity; 

b.         the Process is not an arbitration within the meaning of any statute. 

148.         Again, the Rules make clear the intention of the parties that the expert is not an arbitrator, but, unlike the Subcontract, also provide that the expert is deemed not to be acting in an arbitral capacity.
149.         The purpose of subrule 5(2)a must be something more than to exclude the operation of arbitration legislation, for that is the purpose of subrule 5(2)b.
150.         The word ‘deemed’ can be used ‘for the purpose of creating a ‘statutory fiction’, that is, for the purpose of extending the meaning of some term to a subject matter which it does not properly designate.’^[90]   However, there is no presumption, or indeed any rule, that where the word ‘deemed’ appears, that is its effect.   It need not import artificiality or fiction; it may simply be the statement of an indisputable conclusion.^[91]   
151.         As Muir JA observed in Northbuild, requirements such as those contained in the Rules, that the expert act fairly and impartially as between the parties, to provide each party a reasonable opportunity to put its case and a reasonable opportunity to make submissions as to the conduct of the process^[92] do not necessarily mean an expert is acting in an arbitral manner and not as an expert.
152.         Further, subrule 9(1) of the Rules enabled the expert to make such directions or rulings in relation to the process as they saw fit.  Subrule 9(2) provided a non‑exclusive list of the types of directions or rulings which the expert might make, including as to the provision of ‘submissions, documents and any other evidentiary material replied upon by the parties’.  Subrule 2(d) plainly contemplated that the parties might engage experts.
153.         In my view, the combined effect of the provisions as to the role of the expert in the Subcontract and the Rules was to recognise that, regardless of the exact process which the parties agreed for the Expert Determination, the overarching agreement was that the parties intended for the expert to exercise their own expertise, skill and knowledge, and that the expert was not required to act in a judicial manner.  In my view, the purpose of subrule 5(2)a. was to put that beyond doubt.
154.         I am satisfied that a further purpose of subrule 5(2)a. was to recognise that, even where there was overlap between an expert determination process and acting in an arbitral manner (such as that contemplated in Northbuild), the parties intended that the process be regarded as an expert determination and accordingly did not require the expert to act in a judicial manner.

Process set out during the Expert Determination process 

155.         On 23 August 2023, Mr Durning made the following orders:

Having received a Minute of Proposed Directions, dated 23 August 2023 and signed by the parties’ solicitors, as to the next steps in this Expert Determination, I confirm the agreement between the parties and the basis upon which I am to proceed in the provision of my determination.

It is agreed that:

Issues in Dispute

1.         The Dispute requires the determination of:

(a)          the value of the Subcontract Works determined by reference to the:

(i)           as-installed quantities;

(ii)          rates which apply to the as-installed quantities;

(iii)         Variations which are not contained in the as‑installed quantities.

(b)          as a consequence, the ultimate flow of money that is to be awarded to either party taking into account monies paid to [Jako] by [Perkins].

Timetable

2.         By 25 August 2023, [Jako] provide to the Expert Determiner and to [Perkins] its Statement of Issues, Facts and Contentions dated 20 March 2023 (as issued to the previous Expert Determiner, Mr. John Fisher) amended to include the cross‑referencing and narration introduced in [Jako’s] submission filed 23 May 2023 and as varied by the inclusion of Payment Claims 33-37 (inclusive).

3.         By 8 September 2023, [Perkins] provide to the Expert Determiner and to [Jako], its submissions, together with any expert evidence and lay evidence it intends to rely on.

4.         By 29 September 2023, [Jako] provide to the Expert Determiner and to [Perkins] any reply, which shall be limited to responsive written submissions and any responsive lay evidence.

Other

5.         The Dispute is to be determined on the papers.

6.         In accordance with Rule 7 of the Expert Determination Rules, the parties agree to sign a Confidentiality Agreement in the form contemplated by that rule within 7 days of the date of this order.^[93]

156.         It is apparent from the content of Order 1 that, by the time it was made, Jako had already provided its set of materials, and that the next step was for Perkins’ response and evidence to be provided.   There is no evidence that Jako was denied any opportunity to provide any materials as part of its first set of materials.  
157.         On 8 September 2023, Mr Durning made orders extending the dates for compliance with Orders 3 and 4 of the orders made on 23 August 2023, such that Perkins’ submissions and evidence were to be provided by 19 September 2023 and Jako’s responsive written submissions and any responsive lay evidence were to be provided by 10 October 2023.^[94]
158.         On 7 November 2023, apparently in response to an application by Jako, Mr Durning ordered that:

1.         Subject to the application of the limitations to reply described in paragraphs 34 – 36 of [Perkins’] submission of 1 November 2023:

a.            the time for [Jako’s] reply is extended to Monday 13 November 2023.

b.           [Jako] is permitted to include a responsive expert report in its reply.  

2.         [Perkins’] request in paragraph 36(b) of its submission of 1 November 2023 (i.e., to have the opportunity to object to [Jako’s] reply within 14 days of its receipt) is granted.

3.         [Perkins] is granted the opportunity to provide a response to [Jako’s] reply.   [Perkins’] submission is to be issued within 21 days of its receipt of [Jako’s] reply.  

4.         The parties must strictly comply with the above timeframes.^[95]

159.         In the Expert Determination, Mr Durning stated that the parties had agreed the timetable for issuing submissions to him,^[96] and that the timetable was extended first by agreement, and then by his order.^[97]   Neither party took issue with that statement. 
160.         It is apparent that the parties agreed on the provision of expert evidence by Perkins^[98] and then ultimately Jako was allowed, pursuant to Mr Durning’s order, to submit responsive expert evidence in reply.^[99]
161.         Neither party complained that Mr Durning should not have made provision for the receiving of submissions, or evidence (either lay evidence or expert evidence).  
162.         Further, neither party complained, in these proceedings, that Mr Durning did not follow the Subcontract or the Rules in determining the process to be followed up until the point at which he was to actually make the Expert Determination.

Did Mr Durning act in a manner not in accordance with the process agreed/ordered under the Subcontract and the Rules?

163.         Jako’s principal complaint is framed in such a way as to allege Mr Durning acted as an arbitrator and not an expert.  In my view, given:

(a)       the overlap of characteristics between an arbitrator and an expert, which was specifically contemplated and accounted for by the Subcontract and the Rules; and 

(b)       my finding that the parties intended that, provided he was acting in accordance with the agreed process, Mr Durning was to be regarded as conducting an expert determination, regardless of whether aspects of it could otherwise be considered to be consistent with an arbitration,

 the real question is whether Mr Durning acted in a manner which was not in accordance with the process as agreed by the parties or ordered by Mr Durning; that is, in accordance with the Subcontract.

164.         Where an expert has not made a determination in accordance with a contract, the purported determination will not be binding.^[100]
165.         No complaint has been made that Mr Durning did not act in accordance with the Subcontract and the Rules in making orders in relation to the process to be followed.
166.         While Jako made claims in the FASOC to the effect that it was denied a sufficient extension of time and denied the opportunity to provide certain documents, it adduced no evidence in support of either of these claims.  I will deal further with this issue below when I deal with Jako’s claims of denial of procedural fairness.  

Did Mr Durning follow the process?

167.         I will address each allegation as to the conduct of Mr Durning which I have found to have been made out.

Further Amended Statement of Claim 11A.1 

168.         Jako contends the premise that Mr Durning was obliged, as an expert, to undertake an independent remeasurement of the works.  Whether such an obligation arose depends on the intentions of the parties as discerned from the terms of the Subcontract and Mr Durning’s engagement.
169.         The Letter of Engagement is silent on the nature of Mr Durning’s task.^[101]
170.         The Subcontract required the appointed expert to be qualified, independent and to have at least 10 years’ experience in their expert field, and to have no conflict of interest.^[102]   The expert was required to give reasons for their decision.^[103]   Otherwise, the Dispute was required to be resolved according to the Rules.^[104]
171.         There was no part of the Subcontract which expressly provided that the Expert Determination process required the expert to conduct an independent remeasurement of the works, and there was no evidence which indicated a variation of the Subcontract to that effect.
172.         The Rules expressly contemplated the filing of submissions and evidentiary material, including expert reports.^[105]   Otherwise, they did not provide for any particular manner of conducting the Expert Determination.  Further, the procedural orders did not provide for any particular means by which Mr Durning was to arrive at his decision, other than by him conducting it ‘on the papers’ and by reference to certain documents.
173.         It was common ground that Mr Durning was appointed on the basis of his expertise, skill and knowledge of the relevant subject area to make the Expert Determination, and that he would use his expertise, skill and knowledge in doing so.  However, that did not necessarily require him to carry out an independent remeasurement of the works.
174.         Mr Durning summarised the submissions of the parties as made to him in the following terms:

The parties have submitted competing bills of remeasurement and ask me to prefer their submissions in entirety.^[106]

175.         The submissions of the parties were not tendered in evidence.  However, neither party submitted to me that this statement was inaccurate in any way.   It is difficult to reconcile such a submission to Mr Durning with the submission now made by Jako that Mr Durning was required to conduct his own independent remeasurement.
176.         In my view, the following factors were inconsistent with a requirement that Mr Durning conduct an independent remeasurement or valuation of the works:

(a)       the failure of the parties to specify that Mr Durning was to independently remeasure the works;

(b)       the allowance for expert reports to be submitted by the parties.  If Mr Durning was obliged to independently value the works, it is difficult to see to what use he was meant to put the expert reports of the parties, which each appear to have offered opinions as to the proper value to be assigned to the works; and

(c)       the provision for Mr Durning to adopt an expeditious, cost‑effective and fair means of determining the dispute.^[107]   If Mr Durning was to independently conduct his own valuation, there could have been no alternative process open to him.  It is to be noted that Mr Durning found that it would have been impractical for him to prepare his own independent remeasurement of the works, because the time and cost associated with him doing so was disproportionate to the disputed value.^[108]

177.         For these reasons, I am not satisfied that it was a requirement of the Expert Determination that Mr Durning conduct an independent remeasurement of the works.  
178.         I have already determined, at [96] – [118] above, that Mr Durning did exercise his expertise, skill and judgment in conducting the Expert Determination.
179.         Accordingly, I am satisfied that Mr Durning complied with the process as set out in the Subcontract and the Rules in the manner in which he approached the determination of the quantities.

Further Amended Statement of Claim 11A.2

180.         I have found that Mr Durning did make an independent assessment of the applicable rates.  Accordingly, in my view Mr Durning did follow the process as set in this respect.

Further Amended Statement of Claim 11A.3

181.         The fact that Mr Durning based his determination as to the disputed quantities by considering which party’s measurement of quantities he considered to be more likely to be correct is, in my view, no more than an aspect of his decision not to undertake an independent remeasurement of the works.
182.         Further, as I have already found, in doing so, Mr Durning did not fail to exercise his expertise, skill and judgment in making his determination as to quantities.
183.         Accordingly, I do not accept this aspect of the Expert Determination was outside the process to be followed.

Further Amended Statement of Claim 11A.4

184.         Neither the Subcontract, the Rules, nor any agreement of the parties in the Expert Determination process expressly dealt with the issue of onus or standard of proof in the Expert Determination process.
185.         Jako did not specifically join issue with the general proposition that it bore an onus of proof.
186.         The Rules provided that the expert was to determine the Dispute as an expert in accordance with the Rules and according to law.^[109]
187.         Schedule B of the Rules suggest there is to be a ‘claimant’.  In this case, Jako was identified as the Claimant, and Perkins as the Respondent.^[110]   In the Dispute, Jako claimed it was entitled to $1,742,139 more than Perkins agreed it owed Jako.  As such, it would ordinarily be expected that Jako would bear the onus of proof, on the balance of probabilities.
188.         This is consistent with cl 12.1 of the General Conditions, which included a provision that, in the event of a variation, the Subcontract Sum would be adjusted by an amount agreed between the parties, or, failing such agreement, by an amount determined by Perkins in accordance with certain benchmarks.
189.         In my view, the fact that Mr Durning considered that Jako, as the claimant, bore the onus of proof was an entirely orthodox approach, taken in accordance with the requirement of the Rules that, in making the expert determination, Mr Durning act in accordance with the law.   Accordingly, in doing so, he did not act outside the process to be followed.

Further Amended Statement of Claim 11A.5

190.         Counsel for Jako relied upon the statement at ED [110], submitting that Mr Durning wrote in a manner ‘that’s unmistakenly that of an arbitrator’,^[111] when he made the statements, purportedly as to credit, at ED [110].
191.         I have found that Mr Durning did determine a question as to credibility on the papers, namely as to the independence of Perkins’ expert witness.  The complaint made by Jako in the FASOC is, specifically, that he did so without giving Jako an opportunity to cross‑examine that witness.  However, at the hearing, counsel for Jako did not appear to limit the criticism of Mr Durning regarding his finding as to credit to the fact that he made that finding without giving Jako an opportunity to cross-examine Perkins’ expert witness.  
192.         The submission, in its expanded form, seemed to be that, by making a decision as to credit, Mr Durning was making a judgment of an arbitral nature because, in counsel’s submission, in doing so Mr Durning had failed to apply his expertise.^[112]
193.         No authority was cited for the proposition that making an assessment as to credit in those circumstances involved a judgment of an arbitral nature and was not a characteristic of an expert determination.
194.         In any event, by providing that Mr Durning was entitled to take into account expert evidence, the parties were contemplating that Mr Durning evaluate it based on his skill, knowledge and expertise.   In turn, Mr Durning’s assessment as to the weight to be given to the expert evidence necessarily involved an assessment as to the credibility of that evidence.  As such, in my view, it was expressly within the contemplation of, and intended by, the parties that Mr Durning would engage in such an assessment.
195.         Having carefully analysed each of Mr Durning’s reasons for decision, I have already determined that, in making his decisions as to quantities, Mr Durning did not abandon the exercise of his expertise, skill and knowledge in making the assessments that he did.  That is so notwithstanding that he also made the impugned decision as to credit.  In those circumstances, I am satisfied that Mr Durning did not stray beyond the bounds of what was intended by the parties.
196.         The parties had expressly agreed to be bound by subrule 5(2)a. of the Rules, which deemed the expert not to be acting in an arbitral manner.  Accordingly, in circumstances in which Mr Durning’s conduct was within the bounds of what was intended by the parties, I do not accept that he was making a judgment of an arbitral nature.
197.         As to the claim in the FASOC that Mr Durning made a decision as to credit without giving Jako the opportunity to cross-examine Perkins’ expert, and thereby acted in an arbitral capacity and not an expert capacity, I do not accept this submission for three reasons:

(a)       the process as agreed and ordered was, without qualification, that the matter was to be determined on the papers;

(b)       a failure to offer Jako an opportunity to cross-examine Perkins’ expert does not mean Mr Durning acted in an arbitral capacity; and

(c)       as I have found, Mr Durning did exercise his expertise, skill and judgment in making his decision as to the weight to be given to Perkins’ expert report.

Further Amended Statement of Claim 11B

198.         Jako alleges that Mr Durning became an arbitrator, in part, because he preferred Perkins’ quantities because:

(a)       they had been prepared by what Mr Durning considered to be an ‘appropriately qualified independent witness’ and not by applying his own expertise;

(b)       Jako had not provided any independent expert opinion in support of its quantities; and

(c)       he considered that Jako, as the ‘performer’ of the works, should have been able to identify and measure the part of the disputed quantities that related to work that Jako stated was not shown on the as-installed drawings.

199.         Counsel for Jako did not develop his submissions as to how Mr Durning was acting as an arbitrator on any of the bases in (a), (b) or (c) above beyond the allegation that Mr Durning did not exercise his own expertise in determining quantities.
200.         I have already extensively reviewed the Expert Determination and explained why I do not accept that Mr Durning did not apply his own expertise, skill and judgment to the determination of quantities.
201.         Both parties intended that Mr Durning take the opinion of Perkins’ expert, and the submissions of the parties, into account.   Jako does not suggest that Mr Durning was wrong to find that Jako did not provide an independent expert opinion in support of its quantities.  Further, Mr Durning took an entirely orthodox approach to the onus of proof in the process.
202.         In addition, as I have found, Mr Durning’s statement at ED [78], which formed the basis of Jako’s complaint in this regard, was a statement as to the reasons Mr Durning had generally preferred the opinion of Perkins’ expert in relation to quantities.  However, as I have already identified, there were a number of occasions on which he did not prefer Perkins’ expert’s opinion.
203.         In those circumstances, I am not satisfied that, in preferring Perkins’ submissions or the opinion of Perkins’ expert, or in expressing agreement with them, in finding that Jako had not provided any independent expert opinion, and/or by finding that Jako should have been able to identify and measure its own works, Mr Durning was acting outside the process set in accordance with the Subcontract and the Rules.

Further Amended Statement of Claim 11D.1

204.         As a particular of Jako’s complaint that Mr Durning acted as an arbitrator and not an expert, Jako complains that Mr Durning did not conduct an on‑site inspection of the works.
205.         Order 1 included an order that the Expert Determination proceed on the papers.  When it was put to counsel for Jako that the parties had agreed that the matter would be assessed on the basis of the as‑installed drawings, counsel submitted that the as-installed drawings did not necessarily show ‘all of the incidental things’.^[113]   When counsel was asked if Mr Durning going to site would have been going outside the agreement by the parties that the matter would proceed on the papers, counsel replied:

When he sees that there’s a conflict between what’s claimed and an expert opinion and applying his expertise, he’s entitled to do whatever he wants.  He can say, ‘I’m going to go and have a look at it to determine it’ or the like.^[114] (emphasis added)

206.         It is difficult to reconcile this submission with the order that the matter proceed on the papers.  Further, if Mr Durning was ‘entitled to do whatever he wants’, he was also entitled not to conduct a site visit.
207.         There was also no evidence that conducting an on-site inspection would have resolved any of the issues which fell into this category.
208.         While I accept that counsel’s submission in this regard formed part of a broader argument that Mr Durning was not entitled to decide matters simply on an ‘onus judgment’, I have found that he did not do that, except in circumstances where he considered he had no other means of resolving the particular matter, including using his own knowledge.  In particular, I have found that he exercised his expertise and judgment in arriving at the Expert Determination.
209.         Accordingly, I do not accept that Mr Durning acted outside the process to be followed in this regard.

Further Amended Statement of Claim 11D.2

210.         Jako complains that, in failing to provide Jako an opportunity to adduce oral evidence or cross-examine Perkins’ expert witness, Mr Durning acted as an arbitrator and not an expert.
211.         Again, in circumstances in which the parties agreed that the matter was to proceed on the papers, it is plain that Mr Durning complied with the process to be followed.  This complaint must fail.

Further Amended Statement of Claim 11D.3

212.         I have found that Mr Durning did conduct his own independent assessment of the rates, so to the extent that this particular complains that he failed to inform Jako he would not do so, I put it aside.
213.         To the extent that the particular complains that Mr Durning did not inform Jako that he would not conduct his own remeasurement of the works, I have found that Mr Durning was not obliged to do his own remeasurement.  I have found that the parties intended that he review the submissions and expert evidence and determine the matter, having regard to his expertise, skill and judgment.   I have found that he did do that, in arriving at the Expert Determination.
214.         In those circumstances, I am not satisfied that in failing to inform Jako that he would not be conducting his own remeasurement, Mr Durning acted outside the process by which the Expert Determination was to proceed.

Further Amended Statement of Claim 11D.4

215.         Jako complains that Mr Durning failed to inform Jako:

that he would resolve the dispute on the papers, based only upon his assessment of the submissions and evidence submitted on behalf of Jako and Perkins.

216.         In light of the order that the matter proceed on the papers, this particular has no substance.

Conclusion as to claim that Mr Durning acted as an arbitrator or quasi‑judicially (Further Amended Statement of Claim 12A)

217.         Dealing with each matter individually, I have determined that Mr Durning acted at all times in accordance with the manner in which the Expert Determination was to proceed, as determined by the Subcontract and the Rules and the orders made in accordance with the Subcontract and the Rules.
218.         For the avoidance of doubt, I am satisfied that, whether considered individually or in combination, the particulars by which Jako alleges that Mr Durning acted as an arbitrator or quasi‑judicially, and not as an expert, fail to establish that Mr Durning acted other than in accordance with the process to be followed in making the Expert Determination.
219.         I am therefore not satisfied that Mr Durning acted other than in accordance with the Subcontract (and the Rules) in making the Expert Determination.
220.         It follows that I am not satisfied that Mr Durning acted as an arbitrator and not an expert in making the Expert Determination.

Was the plaintiff denied procedural fairness?

221.         Jako submitted that, by reason of the fact that Mr Durning was acting as an arbitrator or in a judicial or quasi‑judicial manner, he was obliged to afford procedural fairness to Jako in making his determination.
222.         I have found that Mr Durning was not acting in such a manner.  He was not obliged to act in a judicial manner by reason of his role as determined under the Subcontract and the Rules.
223.         In any event, I do not accept Jako was denied procedural fairness in the proceedings.  The process was set in accordance with the Subcontract and the Rules, and I have found that Mr Durning followed the process in accordance with the Subcontract and the Rules.
224.         It is convenient to deal here with Jako’s claim that it was denied procedural fairness in that Mr Durning denied Jako a reasonable opportunity to adduce expert evidence in support of its remeasurement of the works under the Subcontract and purely responsive expert evidence.^[115]
225.         Jako adduced no evidence in support of this claim.   There was no explanation as to why it did not adduce expert evidence as part of its initial submission.  There was no evidence adduced that it sought to adduce expert evidence at a later stage, but was denied the opportunity.   There was no evidence that the time granted by Order 3 was insufficient for it to adduce the responsive expert evidence.
226.         The evidence before me was limited to the Expert Determination, the Rules, the Subcontract, the Letters of Engagement of Mr Durning signed by each of the parties, and the Orders made by Mr Durning.  None of those exhibits provided any substantiation for Jako’s claim in this regard.
227.         In the circumstances, this part of Jako’s claim has no merit.
228.         Having regard to my findings above, it is unnecessary for me to deal with Perkins’ claim that Jako waived its right to object to the procedure pursuant to r 12 of the Rules.

Disposition – negligence claim

229.         For its claim of gross negligence, or, alternatively, gross carelessness, Jako claims^[116] that in his determination, Mr Durning failed to undertake his own independent remeasurement of the works, based on the as‑installed drawings or at all,^[117] and further:

12.1     preferred Perkins’ quantities except for the quantities of elbows and fittings (at [77]);

12.2     in so doing, failed to afford any, alternatively sufficient, weight to the fact that Jako had been responsible for the installation of the mechanical services works the subject of the as installed drawings and so had firsthand knowledge of the quantities;

12.3     thereby failed to afford sufficient weight to Jako’s quantities;

12.4     failed to independently utilise his expertise so as to confirm quantities;

12.5 did not consider whether it was reasonable to apply new rates for new works where Jako had incurred increased material costs due to a delay in the timing of the works on the erroneous basis that clause 2.1(3) of the subcontract provided that the subcontract sum was not subject to adjustment for the rise or fall in costs for any cause whatsoever (at [90]); [EX-002, page 12] and

12.6 thereby failed to properly apply clause 12.1(1)(b) of the subcontract by failing to consider the extent to which it was reasonable in the circumstances of the dispute to use rates or prices in Schedule 6 BOQ for similar work instead of new rates and prices. [EX-002, page 31].^[118]

230.         Further, it claims that Mr Durning denied Jako procedural fairness by:

12C.1  failing to inform Jako that he would not conduct his own remeasurement of the works and that he would instead act quasi‑judicially by determining the dispute based upon Jako and Perkins’ competing evidence and submissions;

12C.2  denying Jako a reasonable opportunity to adduce expert evidence in support of its remeasurement of the works under the subcontract or purely responsive expert evidence;

12C.3  denying Jako a reasonable opportunity to cross-examine Perkins’ expert or adduce oral evidence.^[119]

231.         Jako also claims that by reason of the matters pleaded in FASOC 12 and 12C, Mr Durning was grossly careless in making the Expert Determination, which amounts to gross negligence for the purposes of cl 36.6(6) of the Subcontract.^[120]  This appears to be a typographical error, intended to mean cl 33.6(6) of the Subcontract, which provided:

(6)       The determination of the Expert will be final and binding on the parties except for fraud or gross negligence.

232.         I have found above that Mr Durning acted in accordance with the Subcontract, and the process which was properly established in accordance with the Subcontract.
233.         It follows that Mr Durning could not be grossly negligent (or grossly careless) in preferring Perkins’ quantities except for the quantities of elbows and fittings, to the extent that he did so.
234.         Jako’s complaint that Mr Durning failed to afford any, or sufficient, weight to the fact that ‘Jako had been responsible for the installation of the mechanical services works the subject of the as installed drawings and so had firsthand knowledge of the quantities’ and ‘thereby failed to afford sufficient weight to Jako’s quantities’ is the same, in substance, as its complaint that Mr Durning was not entitled to prefer Perkins’ quantities in the Expert Determination and that he failed to apply his own expertise, skill and knowledge in making the Expert Determination.
235.         In circumstances in which I have found that, to the extent that Mr Durning did prefer Perkins’ quantities, he did apply his own skill, knowledge and expertise in making the Expert Determination, and that he was entitled to make the findings that he did, in accordance with the Subcontract and the process established in accordance with the Subcontract, the claim of gross negligence, or gross carelessness made on that basis must fail.
236.         Jako also claimed that, in failing to consider whether it was reasonable for Jako to apply new rates for new works due to a delay in the timing of the works, because of his erroneous interpretation of cl 2.1(3) of the Subcontract, Mr Durning was grossly negligent or grossly careless.
237.         This claim was not developed in written or oral submissions.
238.         Firstly, Mr Durning concluded that the appropriate basis on which to determine most of the disputed rate items was in accordance with cl 12(1)(b)(ii) of the Subcontract.^[121]  If that provision did not apply, then, pursuant to cl 12(1)(b)(iii), Perkins was to determine reasonable rates and prices, which were to include a reasonable amount for off-site overheads and profit.
239.         Mr Durning’s interpretation of cl 2.1(3) of the Subcontract was stated to be an additional reason why he concluded that Jako was not entitled to apply new rates.^[122]  The primary reason he concluded that Jako was not entitled to apply new rates was that cl 12(1)(b)(ii) set out the basis on which the rates were to be set.
240.         Further, Mr Durning considered that, on other occasions, despite having been requested to provide cost information to substantiate a new rate, Jako did not do so, which may have been detrimental to its case.^[123]
241.         Jako has not alleged, either in the FASOC or in its written or oral submissions, that where Mr Durning determined that cl 12(1)(b)(ii) applied, he was incorrect in doing so.
242.         Clause 2.1(3) of the Subcontract provided:

The Subcontract Sum is not subject to rise or fall in costs for any cause whatsoever, including changes in the cost of labour, plant, tools, equipment, goods, materials, taxation (other than GST) excise, duty, fees and charges.

243.         The clause is unambiguous in its terms.  Further, it must be read in conjunction with the rest of the Subcontract, which includes cl 11 and cl 12, as to Variations and Valuation, which sets out the basis on which prices are to be adjusted.  There is no basis for the submission that delay was a reason which permitted Jako to charge rates other than in accordance with cl 12.1(1)(b)(ii) in circumstances where that subclause applied.  
244.         Accordingly, even if Mr Durning did exclude any claim to new rates based on delay on the basis that cl 2.1(3) of the Subcontract prevented Jako from making such a claim, I am not satisfied that Mr Durning erred in doing so.   It follows that I am not satisfied that he was negligent or careless in doing so.
245.         Finally, to the extent that Jako claims that Mr Durning was grossly negligent or careless in denying Jako procedural fairness, I have already found, at [220] – [226], that he did not deny Jako procedural fairness as alleged.   Accordingly, I also dismiss this part of Jako’s claim.

Conclusion

246.         The application for a declaration that the Expert Determination dated 7 February 2024 is of no force and effect is refused.
247.         There is no apparent basis for anything other than the usual order as to costs.   However, I will give the parties an opportunity to be heard before making a final order to that effect.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

BF

Associate to the Hon Justice Forrester

30 APRIL 2026

^[1] Formal Instrument of Agreement (Instrument), cl 3.1.

^[2] General Conditions, cl 11.1(1).

^[3] General Conditions, cl 11.4.

^[4] General Conditions, cl 12.1.

^[5] General Conditions, cl 33.2.

^[6] General Conditions, cl 33.3 – cl 33.4.

^[7] Exhibit 1.

^[8] Exhibit 30.

^[9] Exhibit 31.

^[10] Exhibit 24.

^[11] Exhibit 25.

^[12] Exhibit 26.

^[13] Exhibit 14, Expert Determination (ED) [47].

^[14] Referred to at Schedule 6 of the General Conditions, cl 3 (Schedule of Rates), item 27/1B.

^[15] Exhibit 14, ED [59] – [75].

^[16] Exhibit 14, ED [76].

^[17] Exhibit 14, ED [78] – [79].

^[18] Exhibit 14, ED [82] – [96].

^[19] Exhibit 14, ED [97] – [104].

^[20] Exhibit 14, ED [105].

^[21] Exhibit 14, ED [110].

^[22] Exhibit 14, ED [113] – [115].

^[23] For convenience, and to distinguish the paragraphs of the Attachment from the Expert Determination paragraphs already set out above (and prefixed ‘ED’), I will prefix the Attachment paragraphs with ‘A’.

^[24] Further Amended Statement of Claim dated 30 January 2025 (FASOC) 11A.

^[25] FASOC 11B, citing Exhibit 14, ED [78].

^[26] FASOC 11C, citing Exhibit 14, ED [85].

^[27] FASOC 11D.

^[28] FASOC 12C.

^[29] FASOC 12.1, citing Exhibit 14, ED [77].

^[30] FASOC 12.2.

^[31] FASOC 12.3.

^[32] FASOC 12.4.

^[33] FASOC 12.5, citing Exhibit 14, ED [90].

^[34] FASOC 12.6.

^[35] FASOC 13 – 14.

^[36] FASOC 10E – 10G.

^[37] FASOC 10H – 10I.

^[38] Mirabela Nickel Ltd (in liq) (receivers and managers appointed) v Mining Standards International Pty Ltd [2025] WASCA 82 [115] – [116].

^[39] Exhibit 14, ED [76(a)].

^[40] Exhibit 14, ED [76(b)].

^[41] Exhibit 14, ED [87] – [96].

^[42] Exhibit 14, ED [176] – [182].

^[43] Exhibit 14, ED [187] – [192].

^[44] Exhibit 14, ED [76].

^[45] ts 19 – 20.

^[46] ts 14.

^[47] Jako’s opening submissions [77].

^[48] Exhibit 14, ED [47(d)].

^[49] ts 16 – 17.

^[50] ts 18.

^[51] See, for example, Exhibit 14, A[122], A[128], A[133], A[140], A[159], A[173], A[191], A[197], A[202], A[212], A[226], A[231], A[244], A[262].

^[52] Exhibit 14, A[253].

^[53] Exhibit 14, A[265].

^[54] Exhibit 14, ED [8].

^[55] Exhibit 14, ED [78.b].

^[56] ts 14.

^[57] FASOC 11B, citing Exhibit 14, ED [78].

^[58] ts 13.

^[59] ts 13.

^[60] ts 18.

^[61] Exhibit 14, A[5], A[43], A[65], A[69.a], A[78], A[89], A[93.a], A[97.a], A[109.a], A[114.a], A[135], A[143], A[153.a], A[159], A[167.a], A[173] – [174], A[191], A[197], A[212], A[245], A[275.a], A[293].   The references are to determinations of quantities, not rates, on the basis that the particulars are confined to the determination as to quantities.

^[62] Exhibit 14, A[34], A[53], A[57].

^[63] For example, Exhibit 14, A[36], A[42], A[59], A[64], A[74], A[76], A[85], A[86], A[104], A[107], A[164], A[181], A[190], A[196], A[206], A[237], A[267], A[273].

^[64] Exhibit 14, ED [59] – [75].

^[65] ts 14 – 15, 19.

^[66] ts 14.

^[67] ts 14 – 15.

^[68] ts 15.

^[69] Exhibit 14, ED [47].

^[70] Exhibit 14, ED [60] – [64].

^[71] Exhibit 14, ED [65].

^[72] Exhibit 14, ED [74].

^[73] Exhibit 14, ED [91].

^[74] See, for example, Exhibit 14, ED [25], ED [55], ED [92], ED [102].

^[75] FASOC 11D.1.

^[76] FASOC 11D.2.

^[77] FASOC 11D.3.

^[78] FASOC 11D.4.

^[79] Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 205 (Shoalhaven).

^[80] Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563, 570 [27].

^[81] Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd [2008] QCA 160 (Northbuild).

^[82] 11^th Ed Vol 2 (Hudson).

^[83] 20^th Ed pages 53, 54.

^[84] Qld Power Trading Corp v Xstrata Qld Ltd [2005] QCA 477.

^[85] Northbuild [88] – [90].

^[86] Northbuild [92] – [96].

^[87] Northbuild [103].

^[88] Legal and General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 (Legal and General Life of Australia Ltd).

^[89] Legal and General Life of Australia Ltd (336).

^[90] Muller v Dalgety & Co Ltd (1909) 9 CLR 693, 696 (Griffith CJ).

^[91] Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49, 65 (Windeyer J).

^[92] Rule 5(4).

^[93] Exhibit 24.

^[94] Exhibit 25.

^[95] Exhibit 26.  Neither party’s submissions were tendered in evidence at the trial.

^[96] Exhibit 24.

^[97] Exhibit 14, ED [3] – [4].

^[98] Order 1.

^[99] Order 2.

^[100] Shoalhaven [27].

^[101] Exhibit 30 and Exhibit 31.

^[102] Clause 33.6(4).

^[103] Clause 33.6(9).

^[104] Clause 33.6(8)(i).

^[105] Schedule B, items 1 – 5.

^[106] Exhibit 14, ED [42].

^[107] Rule 5.3.

^[108] Exhibit 14, ED [76].

^[109] Rule 5.1.

^[110] Exhibit 24.

^[111] ts 13.

^[112] ts 14.

^[113] ts 19.

^[114] ts 19.

^[115] FASOC 10 – 10I.

^[116] FASOC 13.

^[117] FASOC 11A.1.

^[118] FASOC 13, 12.

^[119] FASOC 13, 12C.

^[120] FASOC 14.

^[121] Exhibit 14, ED [82].

^[122] Exhibit 14, ED [89] – [90].

^[123] Exhibit 14, ED [92].