Downer EDI Mining Pty Ltd v Wambo Coal Pty Ltd

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SUPREME COURT OF QUEENSLAND

CITATION:

Downer EDI Mining Pty Ltd v Wambo Coal Pty Ltd [2012] QSC 290

PARTIES:

DOWNER EDI MINING PTY LTD
ABN 49 004 142 223
(respondent/plaintiff)
v
WAMBO COAL PTY LTD ABN 13 000 668 057
(applicant/defendant)

FILE NO/S:

BS6563 of 2012

DIVISION:

Trial Division

PROCEEDING:

Application to stay proceedings

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

26 September 2012

DELIVERED AT:

Brisbane

HEARING DATE:

3 September 2012

JUDGE:

Martin J

ORDER:

The proceeding in this matter be stayed until there has been compliance with the dispute resolution procedures contained in clause 46 of the Operation Agreement exhibited to the affidavit of Joern Schimmelfeder filed in this proceeding on 22 August 2012 or further order.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – SETTLEMENT OF DISPUTES – where the contract stipulates a dispute resolution procedure (“DRP”) – where plaintiff brought action without full compliance with DRP – where defendant applies for stay of proceedings until there has been compliance – whether DRP is so vague and uncertain that it is unenforceable – whether procedures in DRP are unlikely to resolve the dispute and therefore futile

Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643, considered
Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194, considered
Huddart Parker Ltd v The Ship Mill Hill (1950) 81 CLR 502, considered
Straits Exploration (Australia) Pty Ltd v Murchison United NL (2005) 31 WAR 187, applied
Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563, applied

COUNSEL:

DJS Jackson QC with J Otto for the applicant/defendant
W Sofronoff SG QC with D Chesterman for the respondent/plaintiff 

SOLICITORS:

Middletons for the applicant/defendant
Clayton Utz for the respondent/plaintiff 

  1. The applicant/defendant (“Wambo”) applies for an order staying the proceeding commenced against it by the respondent/plaintiff (“DEM”) until there has been compliance with the dispute resolution procedure (“DRP”) in clause 46 of a contract between the parties referred to as the “Operation Agreement”.

  1. The bases for the application are:

(a)        the plaintiff DEM has not satisfied a condition precedent to its right to commence court proceedings in that it has failed to comply with the DRP;

(b)        alternatively, in the exercise of the court’s inherent jurisdiction, the court should require DEM to comply with the DRP and stay proceedings until that occurs.

  1. The application is opposed by DEM on these bases:

(a)        the DRP is so vague and uncertain that it is unenforceable;

(b)        there is no point in staying proceedings whether or not the DRP is enforceable as Wambo has, in discussions to date, been intransigent and unmoveable; and

(c)        it follows that the procedures in the DRP are unlikely to resolve the dispute and it would be futile and wasteful for compliance to be required.

Background

  1. In March 2008 DEM and Wambo entered into the Operation Agreement. Pursuant to that agreement DEM is to provide,…

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Details
Case
[2012] QSC 290
Decision Date

CaseChat Overview and Summary

Downer EDI Mining Pty Ltd (Downer) brought an action against Wambo Coal Pty Ltd (Wambo) in the Federal Circuit Court, seeking damages for breach of contract. Wambo applied for the proceedings to be stayed until Downer had complied with the dispute resolution procedure outlined in the contract. The court was required to decide whether the dispute resolution procedure was so vague and uncertain that it was unenforceable and whether the procedures were likely to be futile in resolving the dispute.

The court found that the dispute resolution procedure was not vague or uncertain, but rather clearly outlined the steps that needed to be taken to resolve the dispute. The court also found that the procedures were likely to be effective in resolving the dispute, as they provided a structured and formal process for the parties to follow. The court noted that the procedure allowed for the parties to attempt to resolve the dispute through negotiation and mediation before resorting to more formal dispute resolution methods. The court further found that the procedure provided for the appointment of an independent expert to review the dispute and make recommendations, which was likely to assist in resolving the dispute.

Accordingly, the court granted Wambo’s application for a stay of proceedings until Downer had complied with the dispute resolution procedure. The court held that it was in the interests of justice to stay the proceedings until Downer had followed the agreed upon dispute resolution procedure, as it was likely to be more effective in resolving the dispute than the court’s involvement. The court emphasised the importance of parties adhering to the terms of their contracts and the benefits of attempting to resolve disputes through alternative dispute resolution methods before resorting to litigation.

The court ordered that the proceeding in this matter be stayed until there has been compliance with the dispute resolution procedures contained in clause 46 of the Operation Agreement. The court further ordered that the stay would remain in effect until such time as Downer had complied with the dispute resolution procedure or until further order of the court.

Orders

Orders of the court

The proceeding in this matter be stayed until there has been compliance with the dispute resolution procedures contained in clause 46 of the Operation Agreement exhibited to the affidavit of Joern Schimmelfeder filed in this proceeding on 22 August 2012 or further order.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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