Mid Coast Road Services wins NSW Supreme Court case against Port Macquarie-Hastings Council

Mr Pinson operates the Wauchope-based Mid Coast Road Services.

Despite winning damages and costs – believed to total around $750,000 – Mr Pinson said he was still hopeful of working with the council in the future.

“We are hopeful of rebuilding a working relationship with council,” he said.

“A good start would be to open the communication lines and start talking to them again.

“It would be good for the community to have a local contractor working with council, now that we have been cleared,” he said.

The long-running battle revolved around MCRS’s supply, delivery and laying of asphalt at works on Ocean Drive in 2012.

One of the aftermaths to the judgement was confirmation that the court case led the former owner of MCRS Peta Pinson to stand as a mayoral candidate in the September 2016 elections. Mrs Pinson polled about one-third of the vote which saw incumbent Peter Besseling returned to the post.

MCRS had won tenders with council in 2005 and 2008. It was also successful for a 2011 tender ‘having been recommended as the preferred supplier, inter alia, upon the basis of its stated favourable pricing service and its years of ‘excellent’ service’.

MCRS was contracted to supply, deliver and lay asphalt for a period of two years with a further one year option agreement.

It was a term of the 2011 agreement that MCRS comply with specifications identified as AUS-SPEC C245 (the C 245 Specification).

In his overview of the case, Justice Hall said in August 2011, MCRS undertook asphalt works on Ocean Drive, Lake Cathie. A short period after the works were undertaken, the shoulder of the roadway failed for reasons which were unrelated to the asphalt in its delivered condition that had been laid by MCRS.

“In these proceedings it was common ground that this work was done and that MCRS was not responsible for the failure of those works,” Justice Hall said.

In May 2012, council excavated and reconstructed the shoulder area in Ocean Drive. MCRS laid asphalt on Ocean Drive in late July 2012.

 In late 2012, Ocean Drive again showed signs of failure.

A dispute arose between the parties as to the cause of the failure at Ocean Drive following the 2012 works.

There was an issue as to whether those works were in compliance with one component of the C245 Specification.

More specifically, the issue was whether the asphalt supplied had a percentage of voids which complied with the C245 Specification, Justice Hall said.

In 2013, council advised MCRS that (a) the council had undertaken a review of the current tender contract specification for the supply and laying of asphalt and had determined that an alternative specification will be adopted for future works; (b) the council had determined that the option to extend should not be exercised; and (c) a new tender would be advertised in the coming weeks.

In April 2013, MCRS gave notice that it exercised the option to extend the 2011 agreement for a further 12 months. On that same date, the council asserted that the option to extend the contract had to be by mutual agreement.

It also advised that it had determined that re-tendering was appropriate.

No negotiations of further prices occurred. The council invited tenders for the period after 31 July 2013, identifying different specifications to be included in further contracts.

In particular, it sought compliance in any further supply with the provisions of the RMS 116 Specification rather than the C246 Specification.

While the initial term of the 2011 agreement extended to July 31, 2013, no further work was offered to MCRS by the council under the 2011 agreement after about May 27, 2013.

Justice Hall said council erred in its contention that MCRS was in breach of the tender agreement in relation to in situ voids in the asphalt laid in the 2012 Lake Cathie works.

“Accordingly, I am satisfied that there is no basis for a finding of a breach of an express or implied term of the 2011 Agreement by the plaintiff.

“I am in particular satisfied that MCRS complied with its contractual obligations with respect to the 2012 Ocean Drive works.

“The council’s assertions of breach were in my opinion without foundation,” he said.

In his conclusion, Justice Hall said the evidence showed that MCRS and council had a ‘satisfactory and, indeed, harmonious relationship prior to the dispute’.

“It is clear on the evidence that up to that time there had been no suggestion that council was considering altering or terminating the commercial relationship that it had enjoyed with MCRS,” he said.

“In those circumstances, I consider that on the probabilities, but for the 2012 dispute, there was a strong likelihood that council would have entered into a further contract with MCRS upon the exercise of the option provision and that the plaintiff is accordingly entitled to damages in respect of the option period, August 1, 2013 to July 31, 2014.

“I accept, for the reasons earlier stated, the assessment of the MCRS’ loss in respect of the option period. I have concluded that the evidence supports the conclusion that there was a strong likelihood that the council would have entered into a further agreement with the plaintiff for the first renewal period, which I assess as an 80% chance.

“In respect of the second renewal period, I consider that the chance of a renewal of the agreement is attendant with an increased level of risk or uncertainty.

“However, given the evidence of the prior relationship of the parties to which I have earlier referred, the chance of a second renewal should not be dismissed as so low as to be non-existent. I consider that an appropriate basis for an award of damages in respect of a second renewal period is a 60% chance of renewal.”

Justice Hall said he did not consider that the evidence is capable of supporting an award of damages for a loss of a chance in respect of the third and fourth renewal periods.

Justice Hall found that the plaintiff is entitled to an award of damages based on the assessed loss (prior to pre-judgment interest) in respect of the option period August 1, 2013 to July 31, 2014 of $117,406. Damages in respect of one renewal periods - loss of the chance for the first renewal period subsequent to the option period (above) estimated as an 80% chance; and, loss of the chance for a second renewal period subsequent to the option period (above) estimated as a 60% chance.

Council was also ordered to pay MCRS’s costs associated with the proceedings.

Port Macquarie-Hastings Council general manager Craig Swift-McNair said it is currently reviewing the Supreme Court of NSW ruling regarding the Mid Coast Road Services matter, and is awaiting further advice from our lawyers.

One of the sideshows to the court case was the decision by the former owner of MCRS, and wife of Craig, Peta Pinson to challenge for the mayoral position in the September local government elections.

Mrs Pinson stood on a need for change platform but, at the time, would not link her decision to run for public office to the court case.

But at Thursday’s media conference, Mrs Pinson confirmed her decision to contest the election was partly due to the court case.

“It wasn’t a vendetta. We needed to see change,” Mrs Pinson said.

“The court case was absolutely one of the reasons I stood. I am married to Craig and MCRS is his company. Craig has provided this council a decade of service and good service.

“And that was recognised in the judgement.

“With his years of excellent service, I could not stand back and watch a local businessman suffer for something that he had not done. And I also thought it was unjust.

“But it wasn’t just that issue. There are a lot of issues swirling around this area at the moment. People do contact me to talk about the issues that most concern them.”

During the pre-election period, Mrs Pinson said she was aware of these concerns but that people did not want to run (contest the election).

Mrs Pinson said she realised that the community needed to have some change.

“It didn’t necessarily have to come from a new face. I really believe the culture within council needed to change; then everything would change.”

She said that her husband had for four years tried to reason with council over the court case.