CPB Contractors Pty Ltd v Holcim (Australia) Pty Ltd
[2020] WASC 406
•13 NOVEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CPB CONTRACTORS PTY LTD -v- HOLCIM (AUSTRALIA) PTY LTD [2020] WASC 406
CORAM: ALLANSON J
HEARD: ON THE PAPERS
DELIVERED : 13 NOVEMBER 2020
FILE NO/S: CIV 1224 of 2019
BETWEEN: CPB CONTRACTORS PTY LTD
Plaintiff
AND
HOLCIM(AUSTRALIA) PTY LTD
Defendant
Catchwords:
Practice and procedure - Summary judgment - Where plaintiff claims for breach of warranty under contract contained in a purchase order - Where claim brought more than six years after alleged breach - Where plaintiff claims that on proper construction of contract the cause of action was conditional on the amount of loss being first valued under the contract and cause of action did not accrue until after valuation - Turns on own facts
Practice and procedure - Summary judgment - Where plaintiff claims for breach of obligation to pay claim for default under contract - Where contract did not provide for making or payment of claim - Where no implied term pleaded - Turns on own facts
Legislation:
Limitation Act 2005 (WA), s 13
Rules of the Supreme Court 1971 (WA), O 16 r 1, O 20 r 19
Result:
Summary judgment for defendant
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Clyde & Co (Perth Office) |
| Defendant | : | Hotchkin Hanly |
Case(s) referred to in decision(s):
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312
Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689
ALLANSON J:
Background
On 6 February 2019, CPB Contractors Pty Ltd (CPB) commenced these proceedings by writ with indorsed statement of claim. CPB claims against Holcim (Australia) Pty Ltd (Holcim) for damages in breach of contract, alternatively misleading or deceptive conduct.
The claim relates to a written agreement, or agreements (the Contract), by which Holcim agreed to supply goods to CPB for the purpose of the construction of wind turbine generator foundation pedestals at a wind farm in Geraldton.[1] The goods were identified in the Contract as grade N32 concrete, that is, having a concrete strength of 32 MPa at 28 days.
[1] Statement of claim [3].
In particulars of the Contract, CPB pleads two Purchase Orders dated 11 January 2012 and 20 January 2012.[2]
[2] The Purchase Orders and other documents are in the name of Leighton, with Holcim being the Supplier.
CPB pleads express written terms of the Contract, including:
5.3.By clause 1.3, the Contract contained the entire agreement between the plaintiff and the defendant and any terms that may have been attached or embodied in the defendant's tender or offer or other correspondence are deemed to have been withdrawn in favour of the terms stated in the Contract;
5.4.by clause 2.2, the defendant warranted that the concrete would:
5.4.1.comply with any drawings, specifications or other technical documents included with or identified in the Contract or otherwise identified by the plaintiff;
5.4.2.comply with all relevant standards and statutory requirements; and
5.4.3.be new (unless stated otherwise), of good merchantable quality, free of defects and fit for their intended purpose.[3]
[3] Statement of claim [5].
By cl 7 of the Contract, if Holcim failed to supply goods that met the requirements of the Contract, CPB could, at its discretion and without obligation, remedy that failure on behalf of Holcim and the costs of doing so would be valued under cl 5.1(b).[4]
[4] Statement of claim [5.7].
CPB claims that in the period from on or about 25 January 2012 to 1 May 2012, Holcim prepared, delivered and poured the concrete for CPB under the Contract.[5] CPB alleges that 'in the preparation, delivery and pouring of the concrete', Holcim breached (the warranties in) cl 2.2 of the Contract by failing to supply grade N32 concrete, having strength of 32 MPa at 28 days, in accordance with the terms of the Contract, and supplied concrete that was defective and not fit for the intended purpose.[6]
[5] Statement of claim [7].
[6] Statement of claim [8].
CPB pleads that, by reason of Holcim's default, it was delayed in achieving Practical Completion under the Head Contract, and was forced to take steps to mitigate its loss, including by accelerating the works.[7] CPB was required to undertake rectification works,[8] and incurred loss and damage in its attempt to accelerate the works to meet the scheduled date for Practical Completion.[9]
[7] Statement of claim [9].
[8] Statement of claim [10].
[9] Statement of claim [11].
In February 2013, CPB submitted a claim to Holcim for the costs incurred by reason of Holcim's default pleaded in par 8 of the statement of claim 'pursuant to clause 7 and clauses 5.1(b) ‑ (c) of the Contract in the amount of $8,410,573'. CPB pleads that, in breach of the Contract, Holcim failed to pay the sum claimed.[10]
[10] Statement of claim [12].
CPB further pleads that by reason of Holcim's default pleaded in par 8 of the statement of claim and the rectification works, it suffered loss and damage in that it was unable to achieve the Scheduled Practical Completion Date; incurred costs by its attempts to accelerate the works; and was required to remain on site and continue to work under the Head Contract to reach Practical Completion for no less than 26 days.[11]
[11] Statement of claim [13].
CPB no longer pursues an alternative claim for misleading or deceptive conduct.[12]
The Head Contract
[12] CPB's submissions [8].
CPB pleads that it, and a consortium of others, entered into a Head Contract to perform work for Mumbida Wind Farm Pty Ltd.[13]
[13] Statement of claim [6].
The terms of the Head Contract included that CPB was to complete the Head Works by 14 December 2012, and was liable for liquidated damages for failure to complete by the Scheduled Practical Completion Date.
CPB was liable under its agreement with other members of the consortium for liquidated damages for delay caused by performance of the works for which it was responsible.
The chamber summons
On 12 February 2020, Holcim applied by chamber summons for orders that:
1.Pursuant to Order 16 Rule (1) of the Rules of the Supreme Court 1971 (WA) (RSC), judgment be entered for the Defendant and the action be dismissed.
2.Alternatively to paragraph 1 above:
(a)pursuant to Order 20 Rule 19(1)(a) of the RSC, the Statement of Claim be struck out;
(b)further or alternatively to sub-paragraph (a) above, pursuant to Order 20 Rule 19(1)(c) of the RSC;
i.the Statement of Claim be struck out;
ii.alternatively, paragraphs 3, 4, 8, 9, 10, 11, 13, 16 and 17 of the Statement of Claim be struck out.
Orders were made programming the application for hearing, anticipated to be in the first half of the year. COVID-19 intervened. On 31 March 2020, by consent, the court ordered that the application be determined on the papers.
Submissions were filed by both parties, with the last submissions filed on 29 June 2020.
The summary judgment application
The evidence
The affidavit in support of the application for summary judgment was sworn by Rachel Ann Todd, on 12 February 2020. Ms Todd is the general counsel and company secretary of Holcim.
Ms Todd attached the two Purchase Orders said to constitute the Contract (whether it be one or more agreements). The terms of purchase were identical in both Purchase Orders.
Clauses 5 and 7 of each Purchase Orders are central to the argument on this application:
5.Payment
5.1The rates stated in this Purchase Order are deemed to include for everything necessary (labour, plant, equipment and other things) for the Supplier to supply the Goods and to fulfil all of its obligations under this Purchase Order. Accordingly, the value of the Goods delivered to and accepted by Leighton shall be:-
(a)an amount calculated by multiplying the relevant quantity and rate for the Goods stated in this Purchase Order; less
(b)the reasonable costs incurred by Leighton in remedying any default by the Supplier of its obligations under this Purchase Order; and/or less
(c)the amount of any costs, losses or damage suffered by Leighton if the Supplier does not fulfil its obligations under this Purchase Order or otherwise.
5.2Unless stated or agreed otherwise by Leighton, payment for the Goods shall only be made for those Goods delivered to and accepted by Leighton and for which the Supplier has submitted a payment claim setting out the value of those Goods as described in clause 5.1.
5.3Subject to clauses 6, 7 and 8, unless stated otherwise, payment shall be made by the Friday following the 45th day from the last day of the month in which the Supplier's payment claim is received by Leighton for Leighton's determination of the value of the Goods delivered to and accepted by Leighton.
…
7.Default
Without limiting Leighton's rights under clause 8. If the Supplier fails:-
(a)to supply Goods to meet the requirements of this Purchase Order;
(b)to supply Goods within the time required by this Purchase Orders;
(c)to remove rubbish or other items belonging to the Supplier from the Delivery Address; and/or
(d)to comply with any other obligation it has under this Purchase Order,
then-
(e)Leighton may, at its discretion, without obligation, remedy that failure on behalf of the Supplier and the cost of doing so shall be valued under clause 5.1 (b); and
(f)any cost, loss and/or damage that Leighton has incurred or is likely to incur as a result of the Supplier's default shall be valued under clause 5.1(c).
Clause 8 provides for CPB's right, at its sole discretion, to terminate the Purchase Orders, including in the event that Holcim fails to comply with its obligations under the Purchase Orders.
In opposition to the application, CPB rely on the affidavit of Thomas Edmund Muttrie, affirmed 8 April 2020. Mr Muttrie is employed by CPB as a Commercial Manager.
Mr Muttrie's affidavit attached documents relating to the alleged breaches by Holcim, including a letter dated 30 August 2012, by which Leighton gave notice that Holcim may have supplied it with defective products and provided an estimate of the loss or damage it had suffered or was likely to suffer as a result.[14]
[14] Affidavit of Mr Muttrie, TEM 9.
Mr Muttrie deposed that on or about 7 February 2013, CPB sent an email to Holcim attaching claim documents for the cost of remediating the foundation pedestals and other loss and damage suffered as a result of the requirement for CPB to undertake remediation work. Mr Muttrie deposed that to the best of his knowledge and belief, Holcim has not paid the amount claimed.
The submissions
Holcim's submissions
Holcim submits that, pursuant to s 13(1) of the Limitation Act 2005 (WA), an action on any cause of action cannot be commenced if six years have elapsed since the cause of action accrued.
Holcim submits that an action for breach of contractual duty lies when the breach occurs. On CPB's pleaded case, the breaches are those pleaded at pars 8 and 9 of the statement of claim and occurred before 1 May 2012. Even if the allegations of fact pleaded by CPB are accepted in full, the cause of action pleaded against Holcim was, by 6 February 2019 when these proceedings were commenced, statute barred.
Holcim submits that, to the extent that CPB's claim appears to be based on the alleged breaches of Contract continuing until 7 February 2013, or a separate and further breach which arose on Holcim's failure to immediately pay the claim made on 7 February 2013:
(1)the only breaches pleaded are those in pars 8 and 9 of the statement of claim;
(2)paragraph 8 cannot be read as alleging a breach of the Contract continuing or occurring after 1 May 2012;
(3)paragraphs 9.1 and 9.2 do not plead any breach in addition to that pleaded at par 8;
(4)paragraphs 9.3 and 9.4 do not plead any breach at all.
The Contract, as pleaded, does not impose an obligation on Holcim to indemnify or otherwise make payment to CPB for loss or damage suffered as a result of some earlier breach. To the extent that CPB relies on cl 5.1(b) and (c), and cl 7 of the Contract, neither of those clauses makes failure to satisfy the demand issued by CPB a separate and further breach of the Contract.
CPB's submissions
CPB accepts that the cause of action in a claim in contract accrues on breach. Although its case in par 8 of the statement of claim appears to be a claim for breach of warranty - the warranties in cl 2.2 of the Contract - it now characterises the case differently.
CPB puts forward two arguments, based on the construction of the Contract, for why the cause of action did not accrue before 7 February 2013.
The first argument is that cl 7(a), (e) and (f) provide a contractual regime for dealing with default, and cl 7(e) and (f) confer on CPB an entitlement to payment on default, conditional upon a valuation being undertaken under cl 5.1(b) and (c). As the entitlement to payment is conditional, the fulfilment of the condition is an element of the cause of action and the cause of action does not accrue until the valuation is undertaken.
CPB argues that, were the cause of action to accrue at the time of the default itself, the valuation process would be rendered nugatory. On that basis, CPB submits that it was only when its claim was finalised and submitted to Holcim on 7 February 2013, in accordance with that valuation process, that the cause of action accrued.
CPB's second argument is that cl 5.1(b) and (c) and cl 7 of the Contract provide a contractual regime whereby CPB was entitled to be paid in respect of a default when three conditions were met: first, a default occurred; second, CPB either remedied the default or incurred, or was likely to incur, cost, loss or damage as a result of the default; third, the cost was valued under cl 5.1(b) and (c). The failure to pay the amounts claimed by CPB within a reasonable time, on those conditions being met, was a breach of an implied obligation to pay amounts claimed by CPB for remedying Holcim's default.
Consideration
The test for summary judgment is not in dispute. Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care. Summary judgment ought properly to be granted in only the clearest of cases, when there is a high degree of certainty about the ultimate outcome if the proceedings went to trial. Further, it is undesirable that limitation questions be decided in interlocutory proceedings except in the clearest of cases.
CPB does not rely on a continuing breach of contract which ran until 7 February 2013. Holcim may have anticipated an argument that was not made.
Rather, CPB contends that cl 7 created a regime for dealing which defaults under which the obligation to pay for breach of warranty was conditional so that the cause of action accrued only after the cost, loss or damage caused by the breach had been valued.
CPB's argument requires some flexibility with regard to the text of cl 7, read with cl 5.1(b) and (c).
The Purchase Orders contain terms for the description of the goods, delivery, delay, payment, GST, default, and termination.
By cl 1.3, the Purchase Orders contain the entire agreement between CPB and the supplier. CPB does not plead any material facts by way of context or surrounding circumstances that would affect the meaning of the text.
Clause 5 is headed 'Payment'. The primary purpose of cl 5.1 is to determine the value of the goods delivered to and accepted by CPB for the purpose of determining the amount payable to a supplier. Value is calculated under cl 5.1(a) by multiplying quantity by rate, less the amounts in pars (b) and (c). To the extent cl 5.1 provides for a 'valuation' of costs on default by the supplier, it provides simply for deducting the 'reasonable costs' of remedying the default, or the amount of any cost, loss or damage suffered, from the calculated value of the goods.
Clauses 7 and 8 provide for failure by a supplier to comply with its obligations. Clause 7 gives CPB the right to remedy the default at the supplier's cost. Clause 8 gives CPB a right to terminate for breach.
While both cl 7 and cl 8 refer to CPB's costs being 'valued' under cl 5, the Purchase Orders do not provide any formula or process by which that value is to be determined. Other than the deduction in cl 5.1 in calculating the payment due to the supplier, the Purchase Orders do not provide for how CPB is to recover any cost, loss or damage it incurs on default.
The Purchase Orders contain no express term making CPB's entitlement to recover cost, loss or damage for default conditional on a 'valuation' first being made. CPB submits that the language of cl 7(e) and (f) is 'consistent' with that construction. But it does not identify what it is, in the text, which leads to that construction. The words 'the costs shall be valued' are not sufficient to support CPB's argument.
CPB refers also to the commercial purpose of the Contract. But I find nothing in the commercial purpose, or objects to be secured by the agreement in the Purchase Orders, to lead to the conclusion that the parties intended to alter the rights CPB has under the general law of contract to recover for breach. As Holcim submits, if CPB had paid an amount to Holcim, it could sue Holcim to recover that amount on the basis Holcim was not entitled to it, and the amount by which the total loss it suffered exceeded the sum paid to Holcim. If CPB had not paid any amount to Holcim, it could sue for the difference between the total loss suffered and the value of the goods supplied by Holcim.
I also do not accept CPB's submission that the reference to a process of 'valuation' rather than estimation requires a precision that can only be achieved by having regard to the actual work performed, so that a valuation is a condition of the right to recover costs or damages on default. First, the Purchase Orders contain no agreed process or formula for determining the value of remedial work. Second, as Holcim submits, cl 7(f) provides for the cost, loss or damage that CPB has incurred 'or is likely to incur'. The precision to which CPB refers is illusory. Third, the Purchase Orders do not purport to make the amount 'valued' by CPB under cl 5 binding on either party.
The alternative basis on which CPB puts its claim also fails.
CPB pleads that, in February 2013, Holcim breached the Contract by failing to pay the sum claimed by CPB in its claim sent on 7 February 2013.[15]
[15] Statement of claim [12].
CPB pleads no express term of the Contract by which Holcim was obliged to pay the amount claimed or valued by CPB upon default, within a reasonable time or otherwise. The whole of the Contract is in evidence, including the entire agreement clause in cl 1. There is no term to that effect. Clause 7 does not expressly impose an obligation on Holcim to pay that amount, on demand or otherwise.
It is not necessary to imply an obligation to pay on a claim or demand for the Contract to be effective. As Holcim submits, clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of the contract arising by operation of law.[16] The fact that the Contract does not expressly impose an obligation on Holcim to pay CPB on its claim for loss, is consistent with the parties' intention that CPB retained its rights conferred by law to recover losses it suffered as the result of a breach.
[16] Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689, 717 ‑ 718; Concut Pty Ltd v Worrell [2000] HCA 64;(2000) 75 ALJR 312 [23].
Finally, CPB does not plead an implied term having the effect it now asserts.
Conclusion
The questions raised on the application for summary judgment are limited and turn on construction of the terms of the Purchase Orders. I am satisfied that the case is clear and certain. Assuming all facts in favour of CPB, the breaches of warranty occurred in 2012. Holcim has a good defence to that claim based on CPB's failure to bring proceedings within six years, as required by s 13 of the Limitation Act.
There is no arguable case that, on the proper construction of the Purchase Orders, Holcim committed a further breach by failing to pay on the claim made in February 2013.
There should be summary judgment for Holcim.
It is unnecessary to consider the alternative application to strike out particular paragraphs of the statement of claim.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
Associate to the Honourable Justice Allanson13 NOVEMBER 2020
0