Built Environs WA Pty Ltd v Perth Airport Pty Ltd - [2018] WASC 25

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BUILT ENVIRONS WA PTY LTD -v- PERTH AIRPORT PTY LTD [2018] WASC 25

CORAM: KENNETH MARTIN J

HEARD: 14 DECEMBER 2017

DELIVERED : 25 JANUARY 2018

FILE NO/S: CIV 1513 of 2016

BETWEEN: BUILT ENVIRONS WA PTY LTD
Plaintiff
AND
PERTH AIRPORT PTY LTD
Defendant

Catchwords:

Practice and procedure - Strike out application by a plaintiff - Denial of site access claim by plaintiff - Suggested failure to disclose arguable defence in one paragraph of defence and counterclaim pleading - Defence pleas concerning earlier contractual relationship at airport site between the same parties - Basis for defendant referring to earlier contract at airport site said to be irrelevant by plaintiff - Defendant's plea said to be relevant to plaintiff's knowledge of delay in progress of works at airport site general - Inseparability of contextual references to earlier contract - Earlier contract relevant to plaintiff's state of knowledge in preparing Contract Programme - Strike out application dismissed - Turns on own facts

Legislation:

Nil

Result:

Strike out application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr S M Davies SC & Mr C P Russell
Defendant: Mr J A Thomson SC & Mr M R Collins

Solicitors:

Plaintiff: Baker McKenzie - Brisbane
Defendant: King & Wood Mallesons

Case(s) referred to in judgment(s):

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125

KENNETH MARTIN J: This action is a large and complex construction litigation dispute which, albeit commenced in 2016, is still progressing through its interlocutory pleading phases. There have been a number of pleading disputes which have arisen between the parties since inception of the action. As CMC case manager I am currently dealing with the plaintiff's chamber summons of 7 December 2017. It seeks that par 26 of the defendant's substituted defence and counterclaim (SDCC) be struck out.
The SDCC was filed by the defendant on 3 November 2017 in response to the plaintiff's substituted statement of claim (SSOC) which was filed on 4 September 2017.
The SSOC embodies the plaintiff's claim as a contractor brought against the defendant as owner and operator of the Perth Airport. It seeks relief arising out of an agreement in writing as entered between the parties on 6 February 2013 (defined in the pleading as 'the Contract'). Paragraph 3 of the SSOC describes this agreement as one under which the defendant had engaged the plaintiff:
[T]o carry out the partial design, procurement, fabrication, construction, installation and commissioning of the T1 Domestic Pier and International Departures Expansion at the Perth Airport.
The SSOC with its appended schedules runs to just shy of 200 pages. The SDCC with appended schedules consists of 224 pages.
By its prayer for relief under the SSOC the plaintiff seeks various declarations concerning the legal implications of the underlying project's drawings and specifications. They were incorporated into the parties' agreement. The plaintiff seeks to have them declared as inadequate or insufficient, on the basis of an asserted lack of sufficiently clear or coordinated information for the purposes of enabling steel work as a whole for the project to be properly completed.
That truncated summary is a gross understatement of what is a very complex dispute, but it will suffice for present purposes.
Another significant part of the plaintiff's SSOC grievances concern an alleged failure by the defendant to provide it with timeous site access - as was said to be promised under cl 8.1(a) of the Contract on the 'Site Access Date' (6 February 2013). Clause 8 is in elaborate terms. It is unnecessary to set out all its content, but under cl 8.1(e) the failure by the Owner (ie, the defendant) to provide access and possession at the promised time is not a breach of the Contract. It is, however, said to be a basis for the Contractor (ie, the plaintiff) to apply for an extension of time and to claim for delay costs.
By the SSOC further declarations are sought by the plaintiff, including relief arising from the plaintiff's efforts to mitigate the effects of the defendant's alleged access defaults, a declaration concerning an asserted 'constructive acceleration' via cl 21.2 of the Contract and also the plaintiff's claim to be paid reasonable remuneration for carrying out works under a revised sequencing regime eventually adopted to mitigate the asserted access delays said to be caused by the defendant. (See SSOC prayers for relief I, J and K.)
The present strike out application is brought well out of time. It requires leave in order for it to be heard. The potential merit and forensic trial utility of the potential excisement of the one challenged SDCC paragraph under attack in the context of the running of any future trial will be and is my guiding consideration in assessing that issue of leave. But first it is necessary to understand and contextually assess what is being complained about in what is a factually complex dispute.
As mentioned, the plaintiff's interlocutory strike out challenge is directed against only one paragraph within the SDCC, namely par 26.
Upon my enquiry, of course, it would appear that only subpars (a) to (c) of the impugned par 26 are actively challenged under the present application. I set out the content of par 26 of the SDCC a little later in these reasons.
For present purposes, I will begin by noting that the grounds of the present application, as explained under subpars 5(a) to (e) of the plaintiff's chamber summons, essentially assert that the defendant's par 26 SDCC plea refers to an earlier contractual arrangement of 30 August 2012 as had been entered between the same parties known as the CLF Contract.
The plaintiff's SSOC pleading is explicit at a number of places in first mentioning that earlier CLF Contract, albeit the reference is made in different contexts to that as is raised by the defendant under the SDCC at par 26.
For the purposes of the present application I was provided with a copy of the CLF Contract. Ms Jorissen's affidavit of 13 December 2017 attaches it as JNJ-5. At par 6 she describes it as a construction contract for a Combined Logistics Facility Service Yard and Loading Dock (at the Perth Airport site location).
The basis of the plaintiff's strike out challenge advances what appears at first blush to be a rather self‑evident legal point, to the effect that the contractual parties' rights and liabilities arising as between them under the Contract sued upon by CIV 1513 of 2016 must be confined only to rights and liabilities arising out of that Contract. The same parties' earlier CLF Contract, says the plaintiff, does not at all bear upon those subsequent contractual rights from the Contract. Paragraph 5(c) of the plaintiff's chamber summons crystallises the strike out grievance this way:
(c)By pleading at paragraph 26 of the SDCC that the Defendant did not prevent the Plaintiff from progressing the Work under the Contract, the Defendant has effectively pleaded that the Plaintiff's alleged responsibility for delays under the CLF Contract makes it responsible under the Contract for delays to the Work which were caused by the delays under the CLF Contract.
Accordingly, it is said by the plaintiff that par 26 of the SDCC is defective - by failing to disclose a reasonable defence or, alternatively, as being (legally) embarrassing.
That pleading challenge is elaborated upon by written materials as were provided by the plaintiff for this application, including in the passing correspondence in the nature of a suggested conferral as between the parties' respective legal representatives throughout 2017.
A previous plea (par 28) by the defendant within a predecessor defence and counterclaim pleading that was live prior to the arrival of the SSOC on 4 September 2017 (par 28) looks to have been very similarly structured as a plea to par 26. It had been the subject of correspondence by the plaintiff's legal representatives of 5 May 2017 (see Attachment JNJ‑1 to Ms Jorissen's affidavit of 12 December 2017) to the defendant's legal representative. It was then said:
1.2The rights and liabilities of the parties in respect of the CLF Contract governed by that contract. It is not open to plead, as your client has in paragraph 28 and elsewhere, that the Plaintiff 'caused' the delay in carrying out the Work under the Contract, the subject of these proceedings, because the Plaintiff did not (allegedly) complete the Combined Logistics Facility by the Date for Practical Completion as defined in the CLF Contract.
1.3If the Defendant has any rights arising from the alleged failure to complete the Combined Logistics Facility by the Date for Practical Completion as defined in the CLF Contract, those rights are defined in that contract.
As I have said, the plaintiff's basic proposition as to, in effect, the defendant conflating rights arising out of two different contracts (albeit contracts between the same parties and albeit entered into in respect of construction works at the same Perth Airport site) is straightforward. Indeed, I did not understand the defendant's written submissions or the oral submissions of senior counsel for the defendant to contend to the contrary.
However, the defendant makes, in effect, two discrete points in support of this impugned paragraph in its defence pleading (which has now become par 26 in the SDCC of 3 November 2017).
In essence, the defendant says that the progression of the plaintiff's implementation of the earlier CLF Contract at the airport site is inseparable from the overall context underlying the current dispute arising under the parties' agreement of 6 February 2013 (the Contract), the subject of this action. The defendant observes that various paragraphs in the plaintiff's SSOC have already made mention of the CLF Contract, in particular by pleas seen under par 25(d) of the SSOC and par 34(a)(iii).
More fundamentally, however, the defendant argues that it is heavily significant to the present action to ascertain as a matter of relevant fact the state of the plaintiff's knowledge obtained whilst a party to performing the CLF Contract, particularly the plaintiff's knowledge about the then encountered delays in the completion of works under that earlier CLF Contract.
The defendant says that the plaintiff's knowledge of delays in the progression of works under the CLF Contract is of significant relevance to the issues arising in the present action - in particular the defendant's pleas at pars 22 and 23 of the SDCC. These paragraphs concern the plaintiff's required submission of a contract programme - which when actually submitted by the plaintiff (but contrary, it is said by the defendant, to cl 21.2(b) of the Contract) did not provide the defendant with what were then realistic programme dates. That was in circumstances where the plaintiff, says the defendant, must surely have known by reason of its performance of the CLF Contract about the delays which had then been encountered.
Essentially, the defendant contends that, in breach of the Contract (the subject of this action), the plaintiff provided it with a non-realistic programme for approval under the Contract - a works programme (Contract Programme) that was prepared on the basis of false timing information despite the plaintiff surely being aware of delays at that time through its ongoing participation via the CLF Contract.
I set out below the defendant's SDCC pleas under pars 22 and 23, which encapsulates those counter‑allegations. But at the heart of the defendant's counter‑contention, however, is the argument that it is the state of knowledge of the plaintiff, as was gained from performing the CLF Contract that is significant here. That is said to be the relevance of the par 26 SDCC plea, rather than the defendant seeking to pursue a direct excursion towards evaluating wrongdoings or rights and liabilities arising under the earlier contractual relationship as between the same parties. The true par 26 issue of relevance, says the defendant, in effect, is purely one of the plaintiff's state of knowledge about the progress of the works at the airport site. Hence, it says that there is no basis for par 26 of the SDCC to be struck out as failing to disclose an arguable defence at this time.

Arguments

The plaintiff is well out of time to pursue a strike out application and accepts that it requires leave to advance the present application. But it says that leave should be granted, given a concise and, it says, obviously meritorious, indeed, self‑evident challenge with correlative case management benefits for a trial - arising out of summarily terminating scope for irrelevant, wasteful and costly excursions at the trial into looming at its performance of the earlier CLF Contract.
On the other hand, the defendant, as seen, says that the matters which it has sought to plead under SDCC subpars 26(a), (b) and (c) are essentially uncontroversial facts, very easily proved at trial (if not admitted). So the defendant says that a future trial is not at all in jeopardy of 'running off the rails' by allowing it to advance its foreshadowed knowledge of timing arguments as against the plaintiff under par 26 of the SDCC.
It is necessary to address the particular pleaded paragraphs bearing on the current application before I can explain why I have not been persuaded by the plaintiff that the defendant's pleas as to the plaintiff's state of knowledge arising out of it performing the CLF Contract are so misconceived and untenable that they may safely be summarily terminated at this time.
In what is obviously a contract construction dispute of some magnitude and complexity as between sophisticated commercial parties, it is simply too dangerous at present, in my view, to render such a summary determination - curtailing the scope of the defendant's potential evidence at the future trial. Of course, I presently reach no final determinations concerning the longer term final merits or demerits of the arguments and counter‑arguments presently advanced on each side. At present the plaintiff accepts it has not surmounted the high legal threshold required of it, that is, demonstrating that the defendant has an untenable defence under par 26 of the SDCC: see Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.

Particular pleaded paragraphs at issue

The impugned par 26 from the defendant's SDCC reads:
26.The Defendant did not prevent the Plaintiff from progressing the Plaintiff's Work under the Contract, pursuant to the Contract and the Contract Programme, in circumstances pleaded in paragraphs 19 to 24 above and in the following circumstances:
(a)the Plaintiff did not complete the Combined Logistics Facility by the Date for Practical Completion (as defined in the CLF Contract);
(b)the Plaintiff did not obtain any extension of time to the Date for Practical Completion under the CLF Contract, prior to submitting the Contract Programme or at all;
(c)as a result of not completing the Combined Logistics Facility by the Date for Practical Completion in accordance with the CLF Contract, the Plaintiff was unable to commit relocation of tenants from the existing International building into the Combined Logistics Facility and to allow the Works under the Contract to commence; and
(d)as alleged in paragraph 29 below, the Plaintiff did not properly manage the tenant decanting process under the Contract.
Preceding par 25 of the SDCC denies the plaintiff's plea under par 25 of its SSOC. There are following SDCC pleas post par 26 (seen at SDCC pars 27, 28, 29 and 30) which deal with aspects of the plea by the plaintiff made under par 25 of the SSOC.
It is necessary to examine the pleas in the SSOC under the heading 'Access Delays'.
Paragraph 25 of the SSOC contains seven subparagraphs (a) through (g). I will set out the chapeau to par 25 and ensuing subparagraphs (c), (d) and (g), noting that the combined matters as pleaded under all those SSOC subparagraphs are all termed 'Access Delays' by the plaintiff. Those components of SSOC par 25 relevantly provide:
25.The Defendant in breach of the terms pleaded in [earlier pleas under paragraph 5], prevented the Plaintiff from progressing its Work under the Contract, pursuant to the Agreement and the Contract Program, by failing to provide the Plaintiff with access to the Site in accordance with the terms of the Agreement, the Tender Program and, later, the Contract Program, in that:
…
(c)the Defendant failed timeously to relocate its Tenants from within the existing International Terminal building, which meant that the Site was not available to the Plaintiff to commence the Works inside the existing International Terminal building within the time stated in the Agreement;
(d)the works under the Combined Logistics Facility (CLF) agreement were not complete until on or around 30 August 2013, being almost eight months later than programmed under the Agreement, which meant that the Defendant failed to decant the Tenants using the Loading Bay Area and the Service Access Area to the CLF building until it was completed;
…
(g)the Defendant failed to provide timeous access to the International Departures Expansion building area, because the Defendant's road construction works south of grid line L23 remained incomplete and prevented a permanent access route to the Site from being established by the Plaintiff until on or about mid‑August 2013.
Two key things at minimum can be noted about the SSOC par 25, or at least from the aspects I have set out above.
First, there is a reference made to an alleged prevention of the plaintiff progressing its work under the agreement (ie, the Contract) and the Contract Programme in the context of what is a plea of a general failure to provide access. The significance lies in the observed reference by the plaintiff to the 'Contract Programme' as defined. Second, by subpar 25(d) it can be seen that it is the plaintiff who renders a first reference to the works under a Combined Logistics Facility agreement. That is, of course, done by the plaintiff in a context of those works being said by the plaintiff to be running eight months later than programmed with the ensuing causative consequences of that delay vis-à-vis an otherwise proposed relocation of (retail) tenants (at the airport site) to other areas over the course of any delay.
Those commencing SSOC references by the plaintiff are important in terms of subsequently evaluating the defendant's responsive pleas made under pars 22 and 23 of the SDCC. They concern the same Contract Programme and the asserted breach by the plaintiff relating to the parties' Contract of 6 February 2013, the subject of this action. Responsive pleas by the defendant under pars 22 and 23 of the SDCC are in these terms:
22.The Plaintiff's proposal of the Contract Program was a breach of the Contract because:
(a)it was a requirement of clause 21.2(b) of the Contract, properly construed or as a matter of implication (having regard to clauses 21.1(a)(iii) and (iv) of the Contract), that the Plaintiff was required to submit a program for approval which was based upon all available information; and
(b)in breach of the requirements of clause 21.2(b) of the Contract, the Plaintiff submitted a program which could not have been completed based upon all available information and which did not properly reflect dates which the Plaintiff reasonably anticipated (or ought to have anticipated) for access to the Site, practical completion and other milestones, and the Defendant approved that program upon the basis of the incorrect information as supplied by the Plaintiff.
23.Had the Plaintiff submitted a program in conformity with the requirements of clause 21.2(b) of the Contract, the approved Contract Program would have contained dates which were reasonably anticipated for access to the Site (after completion of the Combined Logistics Facility), practical completion and other milestones, and there would have been no delay and disruption to the Plaintiff in carrying out the Works under the Contract.

It will be recalled that the chapeau to the defendant's SDCC par 26 makes a direct reference to the circumstances as pleaded in pars 19 to 24 of the SDCC. It refers thereby to the two anterior SDCC paragraphs I have just quoted from concerning an alleged breach of cl 21.2(b) of the Contract - in reference to the plaintiff's as proposed Contract Programme and to the asserted breach in relation to that submitted Programme.

Conclusion

In short, at this interlocutory stage the pleaded defence and counterclaim position articulated under the defendant's SDCC at par 26 does not present as clearly untenable. Matters raised by the defendant concerning the CLF Contract could potentially bear relevantly upon the state of the plaintiff's knowledge of site delays in progress of the works and of the plaintiff's alleged breach - in terms of a preparation and submission to the defendant of a contract programme that was, when submitted, well out of a realistic temporal alignment with the true facts concerning the delayed state of the progression of the works at the airport site at the time and, in particular, as to encountered delays in completing the works under the CLF (to which the defendant was party) producing 'knock‑on', blow‑out delay consequences for other works the subject of the Contract, as the subject of the present action.
I reiterate that I am not rendering final conclusions about those foreshadowed arguments of the defendant. But at this early stage it is sufficient for me to say that the defendant has raised what I assess to be a respectably arguable basis to support the relevance of its SDCC par 26 plea.
In those circumstances, a summary excision of the plea under par 26 of the SDCC would be inappropriate.
Consequently, the plaintiff's strike out application must fail as a matter of merit.
Given my substantive evaluation as to the lack of merit in the strike out application as proposed, there can be no leave granted for an unmeritorious strike out application to be brought out of time by the plaintiff.
In consequence then, prima facie, the following orders seem appropriate:
(a)the plaintiff's application for leave to bring a strike out application to be advanced under its chamber summons of 7 December 2017 is dismissed.
(b)the plaintiff should pay the defendant's costs of the present application in the circumstances to be taxed; and
(c)limits otherwise applicable for a taxation of costs on an interlocutory application in chambers should be removed for the purposes of any such taxation given the complexities of the present application and a proper participation of senior counsel on each side of the argument - reflecting both the inherent importance of the application and its tactical significance within the overall litigation.
If necessary, I will hear the parties on the papers should there be any dispute over these dispositive orders once these reasons have been published to the parties.