City of Stirling v Dicom Awt Operations Pty Ltd

The City of Stirling brought proceedings against Dicom AWT Operations Pty Ltd regarding the interpretation of the terms of a Waste Supply Agreement. The primary dispute centered on the definition of "Final Completion" under the agreement and who determines when the facility can process waste at the specified rate of 55,000 tonnes per annum. The City argued that Final Completion occurs when the facility is certified under the DC Contract, while Dicom asserted that it is satisfied when the facility can process waste at the required rate. The case was heard in the Supreme Court of Western Australia.

The court had to determine the proper construction of the agreement, focusing on the definition of "Final Completion" and the respective roles of the parties in determining this milestone. The principles of contract construction, including the objective interpretation of the agreement and the importance of the commercial purpose, were applied. The court noted that the agreement was not well-drafted, but the parties agreed on the fundamental principles to be applied. The court considered whether the agreement was ambiguous and whether extrinsic evidence could assist in its construction.

The court found that the agreement was ambiguous regarding the determination of Final Completion. It considered the commercial purpose of the agreement and the need to avoid commercial nonsense. The court concluded that Final Completion occurs when the facility is certified under the DC Contract as being capable of processing waste at the specified rate. The court emphasised that the determination of Final Completion must be made by an independent third party and not left to the subjective satisfaction of Dicom.

The court granted the City's request for declarations regarding the definition of Final Completion and the process for determining it. The court emphasised that the agreement must be construed as a whole and that each part should have some operation. The court also noted that definitions in the agreement should be read in the context of the operative provisions. The final declarations provided clarity on the obligations of both parties and the process for determining Final Completion under the agreement.