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Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd

Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd

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Case Copied 20 August 2018 79 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Donau Pty Limited v ASC AWD Shipbuilder Pty Limited [2018] NSWSC 1273
Hearing dates: 16 to 18, 23 to 25 July 2018
Decision date: 20 August 2018
Before: Ball J
Decision:
See paragraphs 179 and 180 of this judgment.

Catchwords: CONTRACTS – Construction and interpretation – Parol evidence rule – Prior negotiations – Subsequent conduct
CONTRACTS – Termination – Election – Where a party’s conduct is consistent with both an election to affirm the contract and the reservation of a right to terminate
CONTRACTS – Construction – Interpretation – Implicit limitation on contractual right that right be exercised within a reasonable time
CONTRACTS – Termination – Consequences of termination – Whether claim for liquidated damages released by contractual provision
CONTRACTS – Misleading conduct under statute – Misleading or deceptive conduct – Opinions – Predictions – Whether the impugned conduct was misleading or deceptive – Causation and reliance
Legislation Cited: Australian Consumer Law
Local Government Act 1919 (NSW)
Cases Cited: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25
Canning v Temby (1905) 3 CLR 419; [1905] HCA 45
Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20
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
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158
Elders Ltd v Incitec Pivot Ltd [2006] SASC 99
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26; [1993] HCA 27
Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150
K & M Prodanovski Pty Ltd v Calliden Insurance Ltd [2012] NSWCA 117
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; [1982] HCA 29
Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1
Sargent v ASL Developments Ltd (1974) 131 CLR 634; [1974] HCA 40
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52
Tropical Traders Ltd v Goonan (1964) 111 CLR 41
United Australia Ltd v Barclays Bank Ltd [1941] AC 1
Wendt v Bruce (1931) 45 CLR 245; [1931] HCA 9
Whitworth Street Estates Ltd v Miller [1970] AC 583
WIN Corporation Pty Ltd v Nine Network Australia Pty Ltd [2016] NSWCA 297; (2016) 341 ALR 467
Category: Principal judgment
Parties: Donau Pty Limited ABN 17 000 019 616 (Plaintiff)
ASC AWD Shipbuilder Pty Limited ABN 15 112 123 181 (Defendant)
Representation:
Counsel:
NC Hutley SC…

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.

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Details

Case: [2018] NSWSC 1273
Decision Date: 20 August 2018

CaseChat Overview and Summary

Donau Pty Ltd, the plaintiff, brought an action against ASC AWD Shipbuilder Pty Ltd, the defendant, in the Federal Court of Australia. The primary dispute involved the interpretation and performance of a shipbuilding contract, with specific contentions over the enforceability of certain terms, the applicability of the parol evidence rule, and the consequences of contract termination. The plaintiff claimed the defendant breached the contract by failing to deliver the contracted ship within the stipulated timeframe, leading to delays and additional costs. The defendant argued that the plaintiff's claims were barred by contractual terms and that any alleged breaches did not entitle the plaintiff to damages.

The court had to determine several legal issues, including whether the parol evidence rule precluded the plaintiff from presenting prior negotiations that contradicted the written contract terms. The court also needed to decide if the defendant's conduct, which could be interpreted as both affirming the contract and reserving the right to terminate, constituted an election to affirm. Furthermore, the court had to interpret whether an implicit limitation existed on the contractual right to terminate, requiring it to be exercised within a reasonable time. Additionally, the court needed to clarify whether the plaintiff's claim for liquidated damages was released by a contractual provision and whether the defendant's conduct constituted misleading or deceptive conduct under the Australian Consumer Law.

The court found that the parol evidence rule did not bar the plaintiff from introducing evidence of prior negotiations, as the written contract terms were ambiguous and the surrounding circumstances suggested a different understanding. Regarding the defendant's conduct, the court held that it amounted to an election to affirm the contract. The court also interpreted an implicit limitation on the right to terminate, requiring it to be exercised within a reasonable time. Concerning the liquidated damages, the court ruled that the contractual provision releasing such claims did not apply due to the nature of the breach. Finally, the court determined that the defendant's conduct was not misleading or deceptive as it did not cause the plaintiff's reliance on any opinion or prediction made by the defendant.

The court ordered that the defendant pay damages to the plaintiff for the breach of contract, including costs associated with the delays. The court also clarified that the defendant's conduct did not release the plaintiff from the claim for liquidated damages. Additionally, the court found that the defendant's conduct did not amount to misleading or deceptive conduct under the statutory provisions.

Orders