Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 4]
[2020] WASC 382
•23 OCTOBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BUILT ENVIRONS WA PTY LTD -v- PERTH AIRPORT PTY LTD [No 4] [2020] WASC 382
CORAM: KENNETH MARTIN J
HEARD: 16 SEPTEMBER 2020
DELIVERED : 23 OCTOBER 2020
FILE NO/S: CIV 1513 of 2016
BETWEEN: BUILT ENVIRONS WA PTY LTD
Plaintiff
AND
PERTH AIRPORT PTY LTD
Defendant
Catchwords:
Practice and procedure - Pleading strike out application against aspect of last iteration of statement of claim - Asserted failure to disclose reasonably arguable cause of action - Re-sequencing claim for disruption damages - Asserted loss of productivity by plaintiff builder - Legal characterisation dispute - Claim said by defendant to be a disguised 'global claim' or 'total costs claim' - Pleading prerequisites for that type of claim missing - Plaintiff argues its damages claim is orthodox and properly pleaded - Claim of reasonable mitigation by modified efforts to schedule and perform work in face of denial of access breaches at site - Reasonable arguability of claim
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr S Doyle QC & Mr T J Porter |
| Defendant | : | Mr D Miller SC & Mr V Ghosh |
Solicitors:
| Plaintiff | : | Baker McKenzie - Brisbane |
| Defendant | : | King & Wood Mallesons |
Case(s) referred to in decision(s):
Andros Springs (Owners) v World Beauty (Owners) The World Beauty [1969] 3 All ER 158
British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673
Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 2] [2019] WASC 76
Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 3] [2019] WASC 399
Day v William Hill (Park Lane) Ltd [1949] 1 KB 632
DM Drainage & Constructions Pty Ltd as trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd [2014] WASC 170
John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2004] ScotCS 141; [2004] BLR 295
John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (1996) 8 VR 681
Lodder v Slowey [1904] AC 442
Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 93 ALJR 1164
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603
KENNETH MARTIN J:
The plaintiff's statement of claim was yet again amended on 22 May 2020, this time by the filing of a second further amended substituted statement of claim (2FASSOC). As CMC case manager of this action since 2016, previous interlocutory reasons of mine in this action have dealt with anterior versions of the plaintiff's statement of claim. In particular, I previously upheld the defendant's challenges brought against aspects of former pleadings concerning alleged drawing deficiencies - culminating in reasons of 7 November 2019, see Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 3] [2019] WASC 399 and striking out that aspect of the pleading as it was at that time.
Nevertheless, there are still ongoing pleading issues remaining in controversy between the parties.
Relevantly, I am dealing with the defendant's chamber summons of 25 June 2020 seeking to strike out a distinct component of the 2FASSOC - referred to as a 'Re‑sequencing claim' at between pars 20 through 49 of this aspect of the pleading.
The defendant's chamber summons as filed also addressed a further aspect of disputation - namely, as to an unanswered request for further and better particulars in respect of 2FASSOC par 82(b)(ii), issued as regards further details sought as to alleged misleading and deceptive conduct. However, that aspect of the application was effectively resolved without debate at the hearing of the application, on the basis that particulars were agreed to be provided, in accord with the defendant's request, by 19 October 2020.
Therefore, the one substantially controversial aspect of the present strike out application concerns the defendant's contention that the Re‑sequencing claim fails to disclose a reasonably arguable cause of action, or alternatively as pleaded, is insufficiently clear and therefore is legally embarrassing - with consequence it ought be struck out on either basis.
The strike out application is resisted by the plaintiff.
Affidavit materials read and relied upon
For the defendant in advancing its present strike out application it relied on and read two affidavits of Ms Juliana Nicole Jorissen, a partner of the defendant's lawyers of record, sworn respectively on 11 May 2020 and then 3 July 2020. A later affidavit of Mr Stuart Jonathan Cobbett sworn 15 September 2020, another of the defendant's legal team, was also read.
Resisting the application the plaintiff read and relied upon the affidavit of Ms Aleisa Jane Crepin, a partner of the plaintiff's lawyers of record, sworn 15 September 2020.
Much of the content of these affidavits is communications passing between the solicitors of record for the respective parties - to which it is unnecessary to make any substantive reference.
For the purposes of evaluating a strike out application advanced upon the basis of a contended failure to disclose a reasonably arguable cause of action, and put against the as pleaded Re-sequencing claim, further evidence is not generally admissible (see Rules of the Supreme Court 1971 (WA) (RSC) O 20 r 19(2)). Conceptually, the plea under challenge must be, in effect, taken at its highest as it presents. However, documents referred to by the pleading may be legitimately referred to in the evaluative process: see Day v William Hill(Park Lane) Ltd[1949] 1 KB 632.
As usual in this litigation there was a sequence of complex written submissions exchanged between the parties for this application on both sides. To that end, before hearing oral arguments, I held the defendant's outline of written submissions of 3 July 2020 (15 pages). That was responded to by the plaintiff's outline of submissions in response of 20 July 2020 (15 pages). There followed a defendant's reply submission of 30 July 2020 (9 pages). Finally delivered, was a plaintiff's responsive submission of 24 August 2020 (3 pages) directed at defending the suggested alternative basis for the Re‑sequencing claim under 2FASSOC par 45B.
First unique feature: dispute of legal characterisation as to global claim, or not
The Re-sequencing claim of the plaintiff as pleaded manifests two relatively unique characteristics, as I will attempt to explain.
Underlying the defendant's basal challenge asserting that the pleaded Re‑sequencing claim seen within the 2FASSOC fails to exhibit a reasonably arguable cause of action - is a required exercise towards determining a true legal characterisation for this part of the plaintiff's pleaded claim.
The heart of the attack put now by the defendant, as to an absence of an arguable cause of action carries with it past echoes of familiarity from the desultory pleading history of this litigation so far. Essentially, the defendant's challenge is to the effect that by 2FASSOC pars 20 ‑ 49, the plaintiff, in truth, is advancing a claim for damages for multiple breaches of contract occurring at different times, but with only a rolled up and aggregated and undifferentiated pool of alleged end result financial damage. This plea, the defendant says, in effect, thereby betrays what is the true character of the plaintiff's claim as being a global, or modified total cost, claim. Allied to that, the defendant says that proper linkage as between a breach and to the resultant damage is wholly missing from these pleas.
The second limb to the defendant's attack contends that once the true legal characterisation of the plaintiff's pleaded Re-sequencing claim is accepted, there necessarily follows certain prerequisites towards a proper pleading of a global or a total cost claim, as necessarily required. They are wholly missing at this section of the pleading.
In brief summary, what is said by the defendant to be fatally missing is any plea made in specific terms that the Re-sequencing claim as advanced, is a global claim. Allied to that is a need for a plaintiff who is advancing a global claim to both plead and then to prove at the trial that there are no other possible causes of the claimed loss and damage over which it complains - other than from the breach conduct of the principal complained about.
Prerequisites for a proper pleading out of a global claim have been discussed in my earlier reasons in this litigation: see Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 2] [2019] WASC 76 (Built Environs [No 2]) at [42] - [47]. There, I undertook a task of examining those principles in that context of an earlier statement of claim and an earlier pleading attack, as was then brought by the defendant against what were the general drawing deficiency aspects in the plaintiff's then further amended substituted statement of claim. None of that is controversial now.
There is no present challenge and, hence, there was no real issue before me, over the required prerequisites for the proper pleading out of a global claim by the plaintiff.
That was because the plaintiff's core responsive position, put bluntly, is that it says is not advancing, in any shape or form, a global claim. Hence, its response is essentially that that the defendant's present interlocutory attempted characterisation of its pleaded Re‑sequencing claim under its 2FASSOC as a global claim is just wrong and completely misconceived.
The plaintiff's position is that it has merely pleaded at 2FASSOC pars 20 - 49 a straightforward breach of contract common law damages claim against the defendant.
Thus, there is, at root here, a fundamental clash over the true legal characterisation of the plaintiff's as pleaded 2FASSOC Re-sequencing claim.
In order to form a reliable view on a characterisation dispute, it is necessary to look very closely at the key Re-sequencing claim pleas made under the 2FASSOC. Before turning to specific paragraphs, I should first elaborate upon the nature of the divide between the parties by reference to their submissions.
The defendant's global claim characterisation challenge
Within the defendant's written submissions, under a heading 'The Resequencing Claim is a Global Claim', are found pars 31 and 32 of that first tranche of written submissions. They articulate the contended legal characterisation challenge, this way:
31.Here, the plaintiff's pleading alleges that multiple interacting events (the nine events pleaded at paragraphs [25] and [38] of the [2]FASSOC) resulted in multiple adverse impacts (the forty adverse impacts pleaded at paragraphs [36] and [40] and particularised in Schedules P and Q to the [2]FASSOC).
32.Properly construed, the multiple events constitute multiple breaches of contract. However, the plaintiff asserts that the events somehow form part of a single, continuing breach of contract.
Answering that challenge, the plaintiff's outline of 20 July 2020 at pars 29 - 32 responds:
29.The defendant's breach of contract is pleaded at [25B]. It is alleged that the defendant breached the obligation pleaded in [24E] because, by reason of the restricted Site access it gave (which is pleaded at [25]), the plaintiff could not commence and perform the works in accordance with the Agreed Sequence ([25A]).
30.The plaintiff does not plead that the instances of restricted Site access that are pleaded in [25] are themselves breaches of contract. The plaintiff's claim for breach of contract arises when, by reason of the restricted access, it was prevented from performing the works in accordance with the Agreed Sequence.
Causation and Loss
31.At [45A] the plaintiff alleges that, by reason of the breach alleged in [25B], it suffered loss and damage. That loss and damage is the additional cost the plaintiff incurred performing the works other than pursuant to the Agreed Sequence.
32.The damages recoverable for that breach are limited (or governed) by the principle of mitigation. A plaintiff cannot recover for a loss which in fact it avoids, or which it would have avoided by acting reasonably. Its damages from the breach will include costs incurred in taking those reasonable steps to mitigate its loss: Orchard Holdings Pty Ltd v Paxhill Pty Ltd [2012] WASC 271, [413]; Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603, [134].
At [46], the plaintiff adds in response, as regards asserted reasonable conduct by it, in the way of mitigating its exposed position:
... [T]he matters in [38] are not pleaded as giving rise to a separate breach of contract, they are pleaded as circumstances supporting the allegation that the adoption of the Modified Revised Sequence was necessary to mitigate the effect of the breach in [25B].
I now turn to the Re-sequencing claim pleas themselves and their precise content.
The Re-sequencing claim pleas in the 2FASSOC
The plaintiff makes a plea of a relevant contractual obligation binding the parties under par 24A, by reference to terms of the parties' construction contract of 6 February 2013 as earlier identified in pars 3 and 4 of the 2FASSOC. References also follow to alleged express and implied terms emerging from within that written construction contract and pleaded across the ensuing 67 subparagraphs of par 5 - being pars 5(a) to (ooo).
The plaintiff points to a contended breach of obligation by a plea seen under par 24B, as regards Site (as defined) access said to be needed by it in order enable it to perform Works in accord with an Agreed Sequence (both as defined), and also in accord with a Construction Phrasing Methodology, Tender Program and a Program (all, as defined).
The plaintiff then pleads that a co-operation obligation was contractually owed to it by the defendant (via 2FASSOC par 5(p) under par 24E) and then, a contended breach of that co-operation obligation at par 25. This is by reason of the defendant allegedly not making the required Site access available for particular areas at required particular times - see the table at par 25(c), providing particulars of delayed Site access on 13 occasions, as between March 2013 and October 2013.
The plaintiff then pleads under its par 25A that, by reason, in effect, of the multiple denials to it of Site access when needed, that it could not 'commence' various Works as specified under par 25A(a) and (b).
Next, it pleads, under par 25B:
By reason of the matters pleaded in paragraph [25A] above, the Defendant breached the [contended co-operation] obligation pleaded in paragraph [24E].
Somewhat out of chronological order, but insightful as to what it pleaded, I briefly divert to highlight that par 45A says:
By reason of the breach pleaded in [25B], and in the circumstances particularised in paragraphs [26] to [40] above, the Plaintiff suffered loss and damage.
That all presents as complicated (especially par 25A) but, nevertheless, an otherwise unremarkable looking common law breach of contract and breach damages plea.
I will need to refer back to 2FASSOC pars 26 to 40. But before that I should also expose at this stage the plaintiff's ultimate prayer for relief, manifesting under a heading 'Re-sequencing claim', by Prayer E. It seeks, in unremarkable terms:
Damages for breach by the Defendant of its obligation to co‑operate or, alternatively, damages for breach by the Defendant of its obligation to issue or cause to be issued, a Variation Direction.
The ensuing relief plea by an alleged Re-sequencing breach, in respect of the failure of the defendant to issue a variation direction, can be seen under par 45B. This is said to be pursued in the alternative to par 45A.
Schedule R
Particulars of damage provided by par 45A display a key reference within that plea. This aspect of the plea featured heavily in the verbal arguments of counsel as to the true characterisation of the plaintiff's breach damages claim - and effectively argued by the defendant to be an unlabelled global claim. The given particulars to par 45A read:
The Plaintiff's loss is the difference between the cost of performing the Work under the Contract in accordance with the Agreed Sequence as detailed in the Construction Phrasing Methodology, the Tender Program and the Program and the cost of performing the Work under the Contract in accordance with the Revised Sequence and the Modified Revised Sequence. This amount is particularised in Schedule R.
Schedule R is eventually located at page 195 of the 2FASSOC, under a heading 'Resequencing Quantum Breakdown'.
Schedule R has been adjusted and amplified somewhat by the most recent iteration of this pleading. Most notably have been added a series of preface paragraphs adding some new text, seen presenting under subheadings, 'Contract Price', 'Revised Price due to Re‑sequencing' and 'Price'.
During the course of senior counsel for the plaintiff's arguments at the hearing, it seemed to be accepted that the observed use of the word 'Price' at places in Schedule R was not fully appropriate (see ts 537). Instead, the intended concept sought to be referred to was, he seemed to accept, was that of 'Cost' - as regards the extra costs said to be suffered by the plaintiff, arising as a consequence of the Re‑sequencing breach conduct of the defendant complained about.
Nevertheless, 2FASSOC Schedule R culminates in a numerical claim for a 'Total (Daily Delay cap applied to Delay Costs)' of some $31,336,486.
Accepting a need for some later clarification over an intended use of the word 'Cost' in Schedule R at places (effectively, in lieu of 'Price'), I will set out below some of the preface pleas from Schedule R (referencing columns in the table):
Revised Price [Cost] due to Re‑sequencing:
The Revised Price [Cost] due to Re-sequencing for each trade package is based on a disruption analysis which calculates the loss of productivity suffered by each of the trade packages during the construction of the International Terminal expansion building by using an industry standard technique known as the measured mile approach.
Using the outcome of the disruption analysis for each trade package, the relevant composite rates and prices in the Priced Bill of Quantities have been re‑rated (or uplifted) using a calculation disruption factor to produce a Revised Price which reflects the extent of disruption experienced by reason of the Re‑sequencing undertaken by the Plaintiff, as pleaded in [25C] to [40] above, in order to attempt to mitigate the effect of the breach pleaded in [25B].
Price [Cost]:
The Price [Cost] for each trade package is the difference between the Revised Price [Cost] due to Re-sequencing and the Contract Price.
There follows in Schedule R a table spanning across various description trades spanning pages 195 ‑ 196. It is not necessary to elaborate on those aspects of the table.
Observations on the legal characterisation debate over a global claim
In summary, the first unique aspect of the current application to strike out (on a basis of the pleading failing to disclose a reasonably arguable cause of action), is a heavily disputed true legal characterisation of the Re-sequencing claim pleas as being a global claim, or not. The plaintiff steadfastly resists any such attempted legal characterisation, contending it has pleaded merely a standard claim for common law damages by the breach of the co-operation obligation term in the parties' agreement in respect of its Re-sequencing grievances.
The plaintiff accepts it will, therefore, carry the burden to prove at trial a necessary causative linkage as between the alleged co-operation failure breach conduct over which it complains, to all the Schedule R damages consequences, as alleged. If the plaintiff, in relation to any aspect of its contended damage, fails at the trial to show the necessary causation of such losses, then it will fail in such respects.
In other words, the plaintiff's currently stated position on its Re‑sequencing claim plea is that it seeks to derive no forensic advantage whatsoever from a concessional approach to causative proof of its damage at the trial - as the law permitting such global claims in the area of building disputes would appear to tolerate, albeit rather, suspiciously as Byrne J has explained. See John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (1996) 8 VR 681 at [23] as regards global claims and total cost claims - with Byrne J observing there as to the need for 'a great deal of caution, even distrust', about them.
Second unusual feature: mitigation
The other unique feature of the Re‑sequencing claim as pleaded manifests under pleas seen commencing at par 25C, towards the plaintiff's asserted attempts, it says, to reasonably mitigate the effects of the defendant's cooperation breach arising out of Site access delays.
The plaintiff pleads by 2FASSOC at pars 26 through 40 that, in effect, an adverse position it was put in by the defendant - by being wrongly denied access to parts of the Site at the times agreed upon - saw it then necessarily seek to mitigate the ongoing and anticipated delays it was faced with arising out of that Site access unavailability (see for instance, par 26(a)(ii)). The plaintiff pleads that it then attempted to perform the works under a different sequence to what had originally been agreed upon, and then, by what it refers to first, at par 30, as 'The Revised Sequence'.
The plaintiff advances to plead, in effect, that those first response efforts by it, in effect, failed ‑ see 2FASSOC par 38(c).
And so, by further attempts to mitigate its exposure to ongoing access delays, the plaintiff pleads that it then modified The Revised Sequence even further still, in order to ultimately try and perform the work in the stages as identified under par 39 - which it refers to as a 'Modified Revised Sequence'.
At par 40, the plaintiff pleads that the Modified Revised Sequence it followed became necessary, as its reasonable attempt to mitigate the adverse effects of the defendant's access denial breach pleaded under par 25B - which breach it says continued, as pleaded by par 38.
The end consequence of all these efforts by the plaintiff at reasonable mitigation to carry out the works as pleaded at par 40(b) is that eventually following a Modified Revised Sequence, in the end, that required the plaintiff to:
(b)... [P]erform the Works in a substantially different, and less efficient, manner to that contemplated by the Agreed Sequence as detailed in the Construction Phasing Methodology, the Tender Program and the Program.
Reference is given to particulars of such adverse impact to Schedule Q (found at 2FASSOC pages 187 through 194 across eight pages of jargon riddled narrative).
Observations on mitigation of damage plea
The plaintiff's mitigation of damage plea made under 2FASSOC par 25C (incorporating from their pleas collected under pars 26 ‑ 40), as to the financial loss and damage it sustained, arising out of its alleged reasonable attempts to mitigate the defendant's co-operation failure under the Site access delay conduct, whilst nevertheless maintaining efforts at performance of the Works, looks, on the face of it, to be arguable, as a matter of legal principle. That is so notwithstanding what looks to be an apparent dearth of case authority (at least, as cited to me) to support the invocation of mitigation of damage principles in prior building construction contract damages litigation.
Towards that legal principle, albeit decided in a wholly different surrounding factual environment, reliance was made by the plaintiff on observations by the High Court of Australia in Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 at [134] and applying Lord Haldane in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673:
... And it is not unjust even though there may well have been a range of figures within which settlement could reasonably occur and even though the decisions whether to settle and at what figure to settle are decisions over which the broker has no control. It is always necessary to recall that the broker was in breach of duty. There is no injustice in leaving the wrongdoer to bear the consequences of the decisions made in response to that wrongdoing by the party harmed ‑ so long as those decisions are reasonable. Reasonableness informs much of the law of contract and, in particular, the assessment of damages for breach. This means, for example, that if the party wronged has acted reasonably, the wrongdoer may be liable for all the loss that the plaintiff has suffered, even if the plaintiff's conduct has increased the loss. Conversely, the party wronged is not bound to take all possible steps to mitigate its loss, only those steps which are reasonable. (citations omitted)
In the maritime law context of course as regards repairs to a ship and losses sustained after wrongful collision damage at sea and necessary repairs: see Andros Springs (Owners) v World Beauty (Owners) The World Beauty [1969] 3 All ER 158, 160 per Lord Denning MR.
Such principles, of course, reflect a duty of care and breach situation. But, one may detect a coherent sentiment in common law of legal principle in allowing reasonable mitigatory losses incurred by a wronged party put in an invidious position by a contract breaker, or a tortfeasor as regards the resultant loss and damage to be reasonably compensated for by that wrongdoer under the common law as recoverable (damages).
Therefore, whilst factually here the mitigation pleas look to carry a certain element of novelty, invoked in the building construction dispute damages realm, evaluated as a matter of pure principle, that legal recovery notion underlying the plaintiff's mitigation pleas looks respectfully arguable. The principle is that a wronged party may recover its incurred loss and damage when acting reasonably to mitigate an exposed position. Inherent within that, I would observe, is that the wronged party was not, as it otherwise might have, seeking to terminate the ongoing performance of the construction contract for breach, in the face of a serious breach of an essential term.
Whether to strike out under RSC O 20 r 19
There is, of course, a second aspect to the strike out challenges, contending for a lack of detail in the plaintiff's Re-sequencing claim pleas, thereby rendering them vulnerable alternatively to being struck out on the further basis of legal embarrassment.
Presently, however, I am merely addressing the first challenge, grounded on whether or not the defendant can show, at the onerous interlocutory threshold for a strike out application to succeed, that the Re‑sequencing claim pleas seen under in the 2FASSOC, fail to expose a reasonably arguable cause of action. That first challenge, uniquely here, distils to whether or not the plaintiff's Re-sequencing claim is, as a matter of legal characterisation, correctly assessed as a global damages claim, or not.
If it is, in truth, a global claim, then as currently pleaded it is accepted as defectively pleaded. All arguments essentially began, proceeded and ended on that basis, with the plaintiff, of course, counter‑contending it wholly eschews all suggestions of it running a silent global damages claim by these pleas.
Global claims generally
It may be timely to add some general observations about global damages claims as encountered in building dispute litigation. In Built Environs [No 2], I applied what is, I assess, a binding Australian line of case authority, particularly from first instance decisions by Byrne J and by Beech J (as his Honour then was) - embodying an acceptance of such principles by this court and in other courts of the common law world.
It has to be said, however, that the treatment of this area by intermediate courts, particularly in Australia to date, looks to have been limited.
There also looks to be no High Court of Australia authority upon global claims. One day the need for coherence and clarity in the law generally may require this seemingly sui generis building disputes category of tolerated breach damages pursuit (allowing, it seems, a case to be proven at a somewhat less exacting standard than the norm) to all be re‑examined. This would essentially be an exercise as the High Court of Australia recently undertook in Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 93 ALJR 1164, toward a former sui generis building dispute line of alternate quantum meruit recovery and see at [50] and [69], reversing in the process one old and inconsistent Privy Council's decision Lodder v Slowey [1904] AC 442.
In DM Drainage & Constructions Pty Ltd as trustee for DM Unit Trust t/as DM Civil v Karara Mining Ltd [2014] WASC 170 at [54] - [55] Beech J had referred to a speech of Lord MacLean in John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2004] ScotCS 141; [2004] BLR 295 part 7 at [10]. The decision by Lords MacLean, Johnston and Drummond Young was by the Extra Division of the Inner House of the Court of Session (of Scotland). Under the commentary to the Building Law Reports at page 297 are found some useful observations in what is a unique area. As regards this Court of Session determination the commentary had observed:
It is easy to forget that there is no set of special principles for construction contracts when it comes to the question of causation. However, it is correct that their subject matter, or the physical carrying out of the works under the contract, is often much more complicated than other commercial contracts. It is this which gives rise to what is referred to in Britain and some Commonwealth countries as a 'global claim' and in America as a 'total cost claim'. In America the term 'modified total costs claim' is also used to describe the case where a contractor has been able to divide up his additional costs and only claims some of those costs from the employer.
Such observations focus attention on the rather special nature of global claims for damages arising under breached construction contracts. The principles concerning global claims or modified total claims seem invariably to be found stated in relatively straightforward language rendered at a high level.
But the actual application of those broad principles to a complicated set of underlying facts is a lot more challenging. The implicit assumption that there is a bright line distinction that presents as obvious and straightforward, is out of alignment with my day to day commercial litigation experiences. There are invariably grey areas that present. This is a good example.
For the present case, the plaintiff has for its Re-sequencing claim said explicitly it is pleading out only a standard breach of contract and consequently sustained loss case. It eschews any global claim around those Re-sequencing claim pleas.
Evaluating the present 2FASSOC iteration at face value, the elements of a normative breach of contract and damages cause of action are seen. Only if one accepts the defendant's legal characterisation argument to the effect that it is overwhelmingly clear that the true legal claim pleaded is a global claim, could the present strike out application succeed. That is not the position.
I assess this to be a very complex construction dispute. There may well be forensic challenges for this plaintiff on a final basis at trial in terms of it being successful and making good on its claim for compensation for alleged lost financial productivity. But it is the plaintiff's case to run at this stage.
Evaluation
At the end, I would assess the plaintiff's response position put up against the legal characterisation challenge by the defendant as arguable in principle. That, of course, does not mean that it will necessarily succeed at a trial.
But at this interlocutory point it is for the plaintiff to plead out and advance its case as it sees fit. The plaintiff steadfastly resists the defendant's attempted legal characterisation contention as to it running a 'phantom' global claim. Saying that, the plaintiff necessarily accepts it will carry at a trial the orthodox burden of proof at the civil standard, in terms of proving causation of all aspects of its claimed loss and damage at the proper degree of proof. Its presently seen reasonable mitigation plea is not obviously untenable, in my view.
A hefty component of the 'phantom' global claim characterisation challenge as raised by the defendant was directed at Schedule R. By par 34 of its first tranche of submissions the defendant said:
The breakdown by trade package, rather than by reference to the events that underlie the breach of contract claim or the cost of the alleged adverse impacts in Schedule P and Q, provides no intelligible basis to assess causation. What starts as a collection of alleged individual breaches that give rise allegedly to global impacts affecting productivity of an individual trade package are then in turn somehow globally aggregated further with other similarly alleged global impacts on other trade packages to form an overarching global 'disruption' or loss of productivity claim.
The defendant added at par 44:
The Schedule R methodology does not link any loss claims to any [of] the specific access delays (as pleaded in [25] and [38]) or specific adverse impacts (set out in Schedules P and Q). The loss is simply a global - total costs - figure.
Nevertheless, against that challenge at Schedule R, the plaintiff responded at par 49 by its first tranche of submissions:
Plainly, the defendant does not accept that the methodology particularised by the plaintiff in Schedule R accurately measures the loss caused by the breach. But that is not a basis for a strike out. It merely identifies a matter that will be a subject of disputation.
At the end, I must accept that submission conducted at the interlocutory level. If the chosen path by which the plaintiff goes about seeking to prove its damages (on a basis of an asserted loss of productivity) at the trial is insufficiently persuasive to establish causatively that it sustained loss and damage arising out of the defendant's breach conduct contended, then the plaintiff might only obtain notional damages for such breach. So it would substantively fail, economically, at trial. Again, it is for a plaintiff to run its case as it sees fit.
The plaintiff, as I see it, has presently nailed its colours to the mast in terms of seeking to show at a trial its substantial causative loss and damage arising out of the defendant's breach on the basis of its reasonable mitigation efforts in the face of the alleged continuing co-operation breach by the defendant as regards delayed Site access.
Assessed at the level of arguability as is required under the present application, it is simply not possible to conclude that the plaintiff's pleaded Re‑sequencing claim is so untenable that it fails to display a reasonably arguable cause of action. I do not accept that the defendant has shown that the plaintiff is obviously running a global damages claim under the impugned pleas. Correlatively, by its stance as articulated now, the plaintiff will not be able to pursue a global damages claim at the trial over its Re-sequencing claim.
Alternate claim regarding variation
As mentioned, the defendant challenges the 2FASSOC par 45B alternate case for damages on the Re‑sequencing claim as advanced by the plaintiff, which contends for damages grounded upon argued breach by the defendant for failing to issue a variation direction under the contract for the work done under the Modified Revised Sequence. However, that challenge seems to depend upon the same inter‑related arguments of legal characterisation as to a contended global claim and on arguments over such a claim. But essentially, for the very same reasons as I have not allowed the defendant's primary challenge, I do not accept the defendant's argument to that end to be so obvious and overwhelming as to sustain the striking out of the alternate plea.
Conclusions
Consequently, all of the defendant's strike out application as regards the defendant's assertions of a failure to disclose a reasonably arguable cause of action towards the plaintiff's Re‑sequencing claim, as formulated, must be dismissed.
A fall back challenge of the defendant as regards legal embarrassment in terms of an asserted lack of detail in the Re‑sequencing claim, by my assessment, did not feature convincingly as part of the defendant's submissions: see pars 66 through 69 of the defendant's first tranche of submissions. Albeit complex, I do not assess the pleas as so lacking in essential details as to be defective in that regard. Saying that, I do not rule out scope for the defendant to seek some reasonable further particulars of the Re-sequencing claim as currently pleaded and particularly for Schedule R (which ought be corrected in the respects earlier discussed as between the terms 'Price' and 'Cost').
Otherwise, the defendant's application must be dismissed. Taxed costs should follow that event to the successful plaintiff by reason of it resisting the pleading challenges of the defendant on this application.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IH
Research Orderly to Justice Kenneth Martin
23 OCTOBER 2020
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