Legal Research
Cases
Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd

Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd

Link copied

Case Copied 26 July 2019 78 min read

Contents

On this page

Court of Appeal

Supreme Court

New South Wales

Summary available

Medium Neutral Citation: Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185
Hearing dates: 10, 11 April 2019
Date of orders: 26 July 2019
Decision date: 26 July 2019
Before: Bell P at [1];
Basten JA at [154];
Emmett AJA [178]
Decision:
1.   Appeal allowed with costs.

2.   Cross-Appeal dismissed with costs.

3.   Set aside the orders of the primary judge.

4.   Order that ASC pay Forgacs’ costs of the proceedings at first instance.

5.   Direct that the parties bring in short minutes reflecting the amount due to be paid by ASC to Forgacs in light of these reasons including any interest component.
6.   Liberty to apply in the event that the parties are unable to reach agreement in relation to order 5.
Catchwords:
CONTRACTS – ship construction – interpretation –contract to come into effect on the earlier of the date set out in a clause and the date on which the parties reached agreement on a particular matter – whether reaching agreement a condition precedent to contract coming into effect – where clause referred to two dates – later date was date on which one party acquired a right to terminate if agreement not reached – whether earlier or later date relevant date for commencement

CONTRACTS – termination – purported termination pursuant to contractual right – whether party had elected to affirm the contract – whether right to terminate exercised within a reasonable time – meaning of reasonable time – point at which reasonable time to be assessed – whether any difference between a reasonable time to exercise a right and a reasonable time to perform an obligation – Ballas v Theophilos (No 2) (1957) 98 CLR 193 considered
CONTRACTS – ship construction – interpretation –parties entered into an original contract and later into a second contract – where original contract entitled one party to liquidated damages – where second contract contained a release clause – whether, if second contract had been validly terminated, the release in the second contract would still be effective – where clause in second contract set “all” fees until a particular date at a certain rate – whether “all” captured fees from commencement of original contract or second contract
Cases Cited: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57
Ballas v Theophilos (No 2) (1957) 98 CLR 193; [1957] HCA 90
Caraher v Lloyd (Official Assignee) (1905) 2 CLR 480; [1905] HCA 18
Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20; [1952] HCA 26
Champtaloup v Thomas [1976] 2 NSWLR 264
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24
Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438
Cushman & Wakefield (NSW) Pty Ltd v Farrell [2017] NSWCA 24
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640;

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.

Keep reading for free

Create a free CaseChat account to read Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2019] NSWCA 185
Decision Date: 26 July 2019

CaseChat Overview and Summary

In the Court of Appeal of New South Wales, Donau Pty Ltd (as assignee of ASC AWD Shipbuilder Pty Ltd) appealed against a decision concerning a ship construction contract, while ASC AWD Shipbuilder Pty Ltd cross-appealed. The dispute centred on the interpretation of the contract, specifically regarding the date it was to come into effect and the validity of a purported termination.

The primary legal issues before the Court of Appeal were: (1) whether the parties reaching agreement on a particular matter constituted a condition precedent to the contract coming into effect, and if so, which of two specified dates was the relevant date for commencement; (2) whether ASC had elected to affirm the contract, and if not, whether its right to terminate had been exercised within a reasonable time; and (3) the scope of a release clause in a subsequent contract, particularly whether it captured fees from the commencement of the original contract or only the second contract.

The Court of Appeal reasoned that the contract's commencement date was not contingent on the parties reaching agreement on a particular matter, but rather on the earlier of two specified dates. It held that the later date, which provided a right to terminate if agreement was not reached, was not the relevant date for commencement. Regarding termination, the Court found that ASC had not elected to affirm the contract and that its right to terminate was exercised within a reasonable time, with the point at which reasonable time was to be assessed being the date of termination. The Court also determined that the release clause in the second contract, which set "all" fees at a certain rate until a particular date, did not capture fees from the commencement of the original contract.

Consequently, the Court of Appeal allowed the appeal with costs, dismissed the cross-appeal with costs, and set aside the orders of the primary judge. The Court ordered that ASC pay Forgacs’ costs of the proceedings at first instance and directed the parties to bring in short minutes reflecting the amount due to be paid by ASC to Forgacs, including any interest component, with liberty to apply if agreement could not be reached.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Cross-Appeal dismissed with costs.

3. Set aside the orders of the primary judge.

4. Order that ASC pay Forgacs’ costs of the proceedings at first instance.

5. Direct that the parties bring in short minutes reflecting the amount due to be paid by ASC to Forgacs in light of these reasons including any interest component.

6. Liberty to apply in the event that the parties are unable to reach agreement in relation to order 5.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185
Hearing dates:	10, 11 April 2019
Date of orders:	26 July 2019
Decision date:	26 July 2019
Before:	Bell P at [1]; Basten JA at [154]; Emmett AJA [178]
Decision:	1. Appeal allowed with costs. 2. Cross-Appeal dismissed with costs. 3. Set aside the orders of the primary judge. 4. Order that ASC pay Forgacs’ costs of the proceedings at first instance. 5. Direct that the parties bring in short minutes reflecting the amount due to be paid by ASC to Forgacs in light of these reasons including any interest component. 6. Liberty to apply in the event that the parties are unable to reach agreement in relation to order 5.
Catchwords:	CONTRACTS – ship construction – interpretation –contract to come into effect on the earlier of the date set out in a clause and the date on which the parties reached agreement on a particular matter – whether reaching agreement a condition precedent to contract coming into effect – where clause referred to two dates – later date was date on which one party acquired a right to terminate if agreement not reached – whether earlier or later date relevant date for commencement CONTRACTS – termination – purported termination pursuant to contractual right – whether party had elected to affirm the contract – whether right to terminate exercised within a reasonable time – meaning of reasonable time – point at which reasonable time to be assessed – whether any difference between a reasonable time to exercise a right and a reasonable time to perform an obligation – Ballas v Theophilos (No 2) (1957) 98 CLR 193 considered CONTRACTS – ship construction – interpretation –parties entered into an original contract and later into a second contract – where original contract entitled one party to liquidated damages – where second contract contained a release clause – whether, if second contract had been validly terminated, the release in the second contract would still be effective – where clause in second contract set “all” fees until a particular date at a certain rate – whether “all” captured fees from commencement of original contract or second contract
Cases Cited:	Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 Ballas v Theophilos (No 2) (1957) 98 CLR 193; [1957] HCA 90 Caraher v Lloyd (Official Assignee) (1905) 2 CLR 480; [1905] HCA 18 Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20; [1952] HCA 26 Champtaloup v Thomas [1976] 2 NSWLR 264 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 Cushman & Wakefield (NSW) Pty Ltd v Farrell [2017] NSWCA 24 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640;