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AGC Industries Pty Ltd v Karara Mining Ltd

AGC Industries Pty Ltd v Karara Mining Ltd

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Case Copied 3 May 2019 75 min read

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   AGC INDUSTRIES PTY LTD -v- KARARA MINING LTD [2019] WASC 140
CORAM:   ALLANSON J
HEARD:   27 & 28 FEBRUARY, 1 - 3, 7 - 10, 13 - 17 MARCH, 21 APRIL, 22 & 23 JUNE 2017
DELIVERED          :   3 MAY 2019
FILE NO/S:   CIV 1997 of 2013
BETWEEN:   AGC INDUSTRIES PTY LTD
Plaintiff
AND
KARARA MINING LTD
Defendant

Catchwords:

Contract - Where plaintiff contracted with defendant to carry out construction project at mine operated by defendant - Where parties entered Early Works Contract and Main Works Contract - Where plaintiff provided workforce and was reimbursed direct costs and corporate overhead and profit (COP) - Where rate of COP in Main Works Contract varied if plaintiff achieved completion of part of works by specified milestone dates

Misleading or deceptive conduct - Whether defendant engaged in misleading or deceptive conduct in pre-contractual representations - Proof of oral representations - Whether representations were made as to future matters - Where plaintiff alleged it would have negotiated alternative contract but for representations - Whether plaintiff has proved loss

Contract - 'Prevention principle' - Where plaintiff alleged defendant caused delay which prevented it from meeting the contractual milestones and earning a higher rate of COP - Whether prevention principle may found cause of action for damages for lost opportunity to earn higher rate of COP

Contract - Implied duty of cooperation - Where plaintiff alleged defendant caused delay which prevented it meeting milestone dates and earning increased rate of COP - Content of implied duty to cooperate - Whether plaintiff proved defendant's conduct caused it to miss milestone dates - Whether defendant liable for breach of contract for conduct causing delay

Contract - Operation and construction of exclusion clause - Where contract excludes liability for consequential loss - Whether defendant liable for damages for loss of opportunity to earn higher rate of COP

Contract - Where contract provided for plaintiff to carry out works as directed by defendant - Where defendant allocated work to another contractor - Whether plaintiff had fixed scope of work - Whether defendant in breach for removing work from scope of work for reallocation to another contractor - Whether plaintiff has proved loss - Whether liability excluded as liability for consequential loss

Contract - Where parties agreed the contract could only be varied in writing - Whether contract varied by payment of allowance outside terms of contract - Whether defendant estopped from denying variation

Contract - Where defendant made monthly progress payments - Where payments on account - Where defendant disputed liability to pay allowance - Whether defendant entitled to deduct amounts paid as allowance from subsequent payment claim as a correction of error in earlier payment or to set off disputed amount

Contract - Whether defendant liable for costs incurred by plaintiff in refinancing due to delayed payment - Whether consequential loss - Whether interest prescribed in contract the sole remedy

Contract - Time bar - Whether defendant can rely…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] WASC 140
Decision Date: 3 MAY 2019

CaseChat Overview and Summary

AGC Industries Pty Ltd brought proceedings against Karara Mining Ltd, alleging a range of contract and tortious claims arising from a construction project at Karara Mining’s mine. The claims related to alleged misleading or deceptive conduct, failure to cooperate, breach of contract, and the operation and construction of an exclusion clause. AGC contended that Karara’s conduct had caused it to miss contractual milestones, preventing it from earning a higher rate of corporate overhead and profit (COP), and had led to additional costs due to delayed payments and refinancing. Karara defended the claims, arguing that AGC had failed to prove the necessary elements of its claims and that any losses were excluded by the contract.

The court was required to determine whether Karara engaged in misleading or deceptive conduct, whether the prevention principle could be used to found a cause of action for lost opportunity to earn a higher rate of COP, the content of the implied duty of cooperation, and the enforceability of the exclusion clause in the contract. The court also needed to consider whether the contract had been varied, whether Karara was entitled to deduct disputed amounts from subsequent payments, and whether Karara was liable for costs incurred by AGC in refinancing due to delayed payment.

The court found that AGC had not proved that Karara made misleading or deceptive representations that induced AGC to enter into the contract. The court held that the prevention principle did not provide a basis for damages for lost opportunity to earn a higher rate of COP. The court also determined that the implied duty of cooperation did not extend to preventing delay and that AGC had not proved Karara’s conduct caused it to miss milestone dates. The exclusion clause was held to exclude liability for consequential loss, and the court found that the contract had not been varied by the payment of an allowance. Karara was held to be entitled to deduct disputed amounts from subsequent payments and was not liable for costs incurred by AGC in refinancing due to delayed payment. The court found that the claims were subject to a contractual time bar.

The court dismissed all of AGC’s claims.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The fact that a party's counsel or instructing solicitor has charged at a rate higher, or even significantly higher, than the scale does not of itself justify the lifting of the scale.[649][649]See, for example, Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) [7] (Le Miere J); Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [30] (Beech J); The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [No 2] [2014] WASC 345 (S) [10] (Edelman J). In Flotilla Nominees Pty Ltd v Western Australian Land Authority, Pullin J considered, specifically, the question of increasing hourly rates in the manner sought by the defendant. His Honour said:… there should be no expectation that, as a matter of course, rates in the costs agreement which are above scale will be ordered to be the rates to apply in taxation as between party and party. There would have to be evidence justifying the higher rate. The whole point of the existing scale is that the rates are struck by reference to what is being charged within the profession. It is true that the hourly rates can only be an average or mean of the upper rates determined in the survey, and there will be some cases where the unusual complexity or importance of the case warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate. In some cases not involving unusual complexity or importance, the higher rates paid will not be recoverable. A party is always entitled to the luxury of retaining the highest paid practitioners in the conduct of their case, but they cannot always expect to recover these costs from the other party. If the hourly rates in the scale are thought by parties or practitioners to be too low for work which is not of unusual complexity or importance, then submissions should be made to the Legal Costs Committee to increase the rates in the scale.[650][650] Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [22]. The defendant relied on an affidavit of Anthony David Bereyne, sworn 10 October 2019. The evidence of Mr Bereyne was that Jackson McDonald acted for the defendant pursuant to a retainer agreement, including a disclosure letter, by which the defendant expressly agreed the rates and billing by time costing. That, of course, is a matter of agreement between Jackson McDonald and the defendant. The retainer agreement was a general retainer for work described in the disclosure letter 'and any other work you may expressly ask us to do from time to time'. The defendant agreed that Jackson McDonald may appoint the partners or employees it thought appropriate to do the work. Mr Bereyne managed the defendant's conduct of the litigation from the outset. He acted as junior counsel from about 1 February 2017 until the end of the trial on 23 June 2017. During that period, Mr Pratt's role included acting as instructing practitioner attending trial. The disclosure letter stated that Jackson McDonald would charge the 'standard hourly rates' of 'other lawyers' working on the matter. The rates to be charged by Mr Bereyne and Mr Pratt were not stated, at least in the copy of the letter in evidence.