Downer EDI Mining Ltd v Iluka Resources Ltd
[2008] VSC 622
•5 August 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No 8268 of 2007
| DOWNER EDI MINING LTD | Plaintiff |
| v | |
| ILUKA RESOURCES LTD | Defendant |
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JUDGE: | VICKERY J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 4-5 AUGUST 2008 | |
DATE OF JUDGMENT: | 5 AUGUST 2008 | |
CASE MAY BE CITED AS: | DOWNER EDI MINING LTD v ILUKA RESOURCES LTD | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 622 | |
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Practice and Procedure – Building Case – Particulars of Statement of Claim – Purpose of Particulars – Provision of Witness Statements sequentially – Summaries of facts ordered with delivery of Witness Statements including further particulars.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Rudge SC with Mr A Thomas | Monahan and Rowell |
| For the Defendant | Mr D Levin QC with Mr D McAndrew | Clayton Utz |
HIS HONOUR:
This proceeding is large in scale. It promises to be extensive in factual detail and rich in legal analysis. The background facts which give rise to this dispute are as follows: the disputes have arisen between the parties in relation to what is called the Douglas Mining Project. This was a contract governed by a contract, CO555, dated 30 July 2004 which by its terms was said to be effective on 1 July 2004.
The company, Downer EDI Mining Pty Ltd (“the plaintiff Downer”) was engaged to design, procure and construct a mining unit plant and a wet concentrator plant at the Douglas Mine Centre near Balmoral which is situated approximately 75 kilometres southwest of Horsham, and a mineral separation plant at Hamilton. The agreed contract lump sum was $197,848,930. Prior to entry into the principal contract the position was that on or about 21 August 2003 Iluka Resources Ltd (“the defendant Iluka”) awarded another contract to Downer, numbered CO354. This was a contract awarded on a schedule of rates basis to prepare a detailed feasibility study to enable Iluka to determine whether or not to proceed with the project.
Further, on or around 8 January 2004 another contract was entered into known as an advanced works contract numbered CO521. This was also awarded to Downer by Iluka on a schedule of rates basis. The contract was to perform, amongst other things, advanced works including earthworks, concrete works and detailed design.
For the purpose of this contract on about 22 March 2004 Downer awarded a schedule of rates subcontract to a subcontractor, Abigroup Contractors Pty Ltd, in relation to the earthworks. Downer also entered into another subcontract on or about 17 May 2004 whereby it awarded a schedule of rates subcontract to Fitzgerald Constructions Australia Pty Ltd to undertake the design, supply, delivery and construction of various civil works for the project.
The litigation between the parties, Iluka and Downer, commenced in September 2007 when an application was made by Downer to restrain Iluka from calling upon security provided by Downer to Iluka under the principal contract. Following that a generally endorsed writ was issued by Downer on 4 October 2007.
The matter came before Habersberger J for directions on 26 October 2007. Pursuant to directions given on that day, Downer was to file and serve an amended writ and statement of claim by 30 November of that year and Iluka was to file and serve its defence and any counterclaim by 11 February of this year.
Following negotiations between the parties, the plaintiff Downer produced a proposed amended statement of claim which was dated 21 December 2007. This statement of claim included schedules A, B and C which purported to provide particulars of the allegations in the statement of claim.
The claims of the plaintiff pursuant to its writ and statement of claim amount to approximately $70 million. The defendant Iluka complains of alleged deficiencies in the particulars contained in the schedules provided with the statement of claim, being schedules A, B and C.
The defendant brings this application before the Court pursuant to rule 23.02 of the Rules of Court which relevantly provide as follows:
Where a pleading or any part of a pleading (a) does not disclose a cause of action or (c), may prejudice, embarrass or delay the fair trial of a proceeding, the court may order that the whole or part of the pleading be struck out or amended.
I accept that the purposes of pleadings are to serve at least four purposes, that is firstly, to define the issues for decision; secondly, to give fair notice of the case to be met; thirdly, to set limits to the action so as to enable other procedures such as discovery to take place and evidence to be provided; fourthly, a purpose of pleadings is to provide a record of the ambit of the dispute.
In this case, at the outset of the present application I directed that the proposed amended statement of claim be filed as the statement of claim in the proceeding which has occurred. Further, with the consent of both parties I also directed, pursuant to paragraph 17 of Practice Note No. 1 of 2008 that the proceeding be conducted in accordance with the provisions of this Practice Note, even though the proceeding was commenced prior to the operation of the Practice Note even thought the proceeding was commenced prior to its operation.
One of the claims made by Downer is a substantial claim for variations. There are some 73 claims for payments for variations which are made, totalling approximately $33 million in terms of claims. It is common ground that the general conditions of the contract provide a facility to claim variations, indeed so much is provided pursuant to general condition clause 40.
However, general condition clause 40 also provides for a number of preconditions to be met. In order to sustain a claim for a variation one of the key preconditions is that Iluka, as the principal, was to give a direction to Downer to undertake the variation. Pursuant to the contract, as Mr Rudge, senior counsel for the plaintiff, has pointed out, the definition of a direction was widely drawn. It was defined to include any “agreement, approval, authorisation, certificate, decision, demand, determination, explanation, instruction, notice, order, permission, rejection, request or requirement”.
Paragraphs 5, 6 and 7 of the statement of claim plead the variations. Paragraph 5 of the statement of claim provides that it was a term of the contract CO555 that the works could be varied and the particulars provided to paragraph 5 are simply that:
GCC clause 40: the plaintiff refers to and repeats paragraph 4A(o) above.
Then paragraph 6 pleads:
During the course of the works, (a), the superintendent or, alternatively, his representative, directed variations to the works.
The particulars provided under paragraph 6 are that:
The particulars of the directions are contained in schedule A.
Paragraph 6B then pleads:
Downer carried out the variations to the works as directed.
The particulars provided to that allegation are provided as follows:
Particulars of the variations to the works carried out by Downer as directed are contained in schedule A.
Finally paragraph 7, of the statement of claim pleads that:
Iluka has failed to pay Downer on account of the variations to the works carried out by it pursuant to either the directions of the superintendent or his representatives.
Again, particulars of the amounts claimed are said to be included in schedule A.
Schedule A is a document which lists in tabular form the 73 claims for variations which are made. The claims are listed in descending order of value commencing with item 2.1 at $10,015,730 down to item 2.73 which is a claim for $1,806. The total of the variations amounts to $33,269,260.
Further particulars in respect of the matters in the table in schedule A are provided in schedule A under the heading, "Further particulars". Although the subject matter of each claim is detailed with sufficient clarity, in my view, to undertake discovery, and in my view provide adequate particulars to enable a clear understanding of the content of the claim in each case, nevertheless the particulars fail to adequately specify the necessary prerequisite for making a claim for a variation, that is, a direction emanating from Iluka in each case.
Schedule B of the statement of claim relates to provisional sum claims. In my view this suffers from the deficiency that, in some cases, the particular contractual basis relied upon in making out each provisional sum claim is not defined with sufficient clarity.
In relation to Schedule C, this relates to the extension of time claims made by the plaintiff. Again in my view Schedule C in a number of cases suffers from the deficiency that the precise contractual or legal basis of the claims for extension of time is not specified with sufficient clarity.
I find however that not only are the particulars in Schedules A, B and C sufficient to define the subject matter adequately for the purposes of discovery, they are also adequate to enable a defence to be drawn, at least in rudimentary form, at this point.
In this matter I am not only obliged to consider the requirements for particulars under rule 13.02, and of course the grounds for striking out or amending particulars pursuant to rule 23.02. I am also obliged to consider the new Practice Note No. 1 of 2008. In particular I make reference to paragraph 2(d) of the Practice Note which requires Judges:
To be more active and proactive in exercising their powers in order to seek to achieve a just resolution of building disputes in a speedy and efficient manner.
I also make reference to Paragraph 2(e) which requires Judges to be mindful of the need to not only apply the resources of the parties properly, but also to avoid the Court needlessly undertaking exercises which are not warranted by the proceeding and to take into account all of those matters in proportion to the matters in issue. Paragraph 2(f) requires lawyers to be expected to approach their cases cooperatively and with the object of not using the resources of the Court and of the parties needlessly or in a manner which is out of proportion to the matters in issue and finally, paragraph 2(g) requires lawyers to be focussed on the central issues in the case. In my view, the object of giving fair notice to the defendant of the case it has to meet can be achieved in a manner which is consistent with the requirements of Practice Note No. 1 of 2008.
The manner in which I propose to approach the case to achieve those twin objects is by making directions to the following effect:
1.The plaintiff is to file and deliver its defence to the statement of claim now filed and dated 21 December 2007, save that the words in paragraph 25, "has suffered loss and damage" be deleted, and save that particulars are to be provided of the alleged lack of honesty, unfairness and unreasonableness referred to in paragraph 47.
2.The defendant is to file and serve its defence and any cross-claim by 4.00 pm on 5 September 2008.
3.The plaintiff is to file and serve its reply and defence to any cross-claim by 4.00 pm on 26 September 2008.
4.Thereafter the parties will undertake discovery by way of an exchange of lists of documents in response to lists of categories of documents provided by one party to the other.
5. The plaintiff then file and serve its witness statements.
6.At the same time as serving and filing its witness statements the plaintiff is to file and serve amended particulars which will be in substitution for the particulars presently provided by schedules A, B and C.
7.The amended schedule A particulars shall be in summary form and will summarise the facts relied upon to prove each variation, including the particulars of the directions given in each case by or on behalf of Iluka directing the variation.
8.The amended Schedule B particulars shall be in summary form and will summarise the facts relied upon to prove each provisional sum claim made, including precise particulars of the contractual basis for each such provisional sum claim.
9.The amended Schedule C particulars shall be in summary form and will summarise the facts relied upon to prove each extension of time claim, including precise particulars of the contractual and legal basis which shall include the central case law relied upon for each extension of time claim.
10.Thereafter the defendant will file and serve its witness statements.
11.The matter be re-listed for directions before me on a date to be advised on a Monday at 9.30 am after 26 September.
12.I direct that the order be drawn up by the solicitors for the plaintiff and signed by a Judge.
I invite the parties, in accordance with these directions, to draft precise orders which reflect what I have said and I will invite the parties to do that and present them to the Court. I think what I have said ought to be tolerably clear.
In this way, the defendant will have fair notice of the case it has to meet and that is the intention of the ruling. The procedure will also have the following advantages in terms of efficiency and cost which are required to be considered pursuant to Practice Note No. 1 of 2008.
First, in my view it will produce a set of particulars which will accord with the evidence proposed to be adduced, thereby avoiding unnecessary further amendment of particulars.
Second, it will produce a document which will be of actual use in the trial in summarising the evidence proposed to be adduced by the plaintiff. This will be of assistance not only to the Court but also to the parties in opening the case and in final address.
Third, the procedure will avoid the considerable expense of the production of particulars which are likely to be of little or no use in the conduct of the trial if ordered at this point.
Fourth, the process will encourage the parties to focus on the main issues in the trial and finally, the procedure in my view will reduce the risk of needless but costly pleading disputes brought before the Court relating to the adequacy of any further particulars to be provided.
With these advantages in mind I propose to make the orders which I have outlined.
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