Drilline Pty Ltd v Roy Hill Station Pty Ltd

[2014] WADC 80

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   DRILLINE PTY LTD -v- ROY HILL STATION PTY LTD [2014] WADC 80

CORAM:   REGISTRAR KINGSLEY

HEARD:   5 FEBRUARY 2014

DELIVERED          :   4 JUNE 2014

FILE NO/S:   CIV 1926 of 2013

BETWEEN:   DRILLINE PTY LTD

First plaintiff

DARRYL JOHN MALLETT
Second plaintiff

AND

ROY HILL STATION PTY LTD
Defendant

Catchwords:

Application to strike or amend statement of claim - Turns on own facts - No new principles

Legislation:

Nil

Result:

Application allowed

Representation:

Counsel:

First plaintiff                 :     Mr R L Hooker

Second plaintiff            :     Mr R L Hooker

Defendant:     Mr S J Penrose

Solicitors:

First plaintiff                 :     Hammond Legal

Second plaintiff            :     Hammond Legal

Defendant:     Tottle Partners

Case(s) referred to in judgment(s):

Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337

1. REGISTRAR KINGSLEY: The first plaintiff, Drilline Pty Ltd (Drilline) and the second plaintiff, Darryl John Mallett (Mallett) plead that from June 2011, Drilline and Mallett provided services to the defendant Roy Hill Station Pty Ltd (Roy Hill) with regard to the road maintenance work, together with undertaking Roy Hill's administration and bookkeeping, providing staffing, repair the maintenance of Roy Hill's plant and machinery, supervision and administration of Roy Hill and general management of Roy Hill's operation, collectively referred to as 'the Plaintiff's Services'. Drilline pleads Roy Hill operated Roy Hill Station, a pastoral station on which mining operations were conducted. The mining operation included maintaining roads that serviced for the Cloudbreak and Christmas Creek Mines (defined as the Road Maintenance Works) and constituted, or alternatively included, construction work within the meaning of s 4 Construction Contracts Act 2004 (WA) (CCA).

2. Until about May 2012, Mallett performed the role of general manager of Roy Hill Station, a position to which Mallett was formally appointed by letter from a Ray Kennedy on behalf of Roy Hill on 1 August, the pleading does not state a year but presumably 2011.

3. Drilline and Mallett plead that from June 2011 to about July 2012, Drilline and Mallett contracted with Roy Hill and the contract was unwritten, partially oral, partially implied from the course of dealings between the parties between June 2011 and about July 2012 and was a construction contract within the meaning of s 3 and s 4, for the purposes of s 7 CCA.

4. Drilline and Mallett plead it was an implied term of the contract that Roy Hill would reasonably remunerate the plaintiff's for the provision of the Plaintiff's Services, the term being implied, at common law to achieve business efficacy, or alternatively by operation of s 14 and sch 1 div 2 of the CCA.

5. Drilline and Mallett plead that despite demand and in breach of the contract, Roy Hill owes the plaintiff $616,624.72.

6. Roy Hill has bought an application dated 29 August 2013 seeking leave to bring the application for orders that the plaintiff’s statement of claim be struck out, or alternatively, par 5 and pars 7 – 9 inclusive of the statement of claim be struck out.

7. The application was heard and I gave leave to bring the application and I struck the statement of claim.  I gave leave to the plaintiff to file and serve a fresh statement of claim.  I said I would provide my reasons subsequently and these are those reasons.

The issue of leave

1. In an affidavit sworn 29 August 2013, Gillian Anne Scott Bailey deposes that on 25 July 2013 a letter was sent from the defendant's solicitors to the plaintiff's solicitors and that there was no response to that letter.  On 1 August the defendant's solicitor sent another letter which was responded by the plaintiff's solicitor on 19 August.  The correspondence exchange between the respective solicitors goes into detail and evidence a meaningful engagement. I am satisfied that the delay has been explained. I will grant leave to bring the application.

The substantive issues

1. The principal argument of Roy Hill’s counsel is that Drilline and Mallett have not pleaded a reasonable cause of action.  Roy Hill's counsel submits that the raising of a payment claim that complies with the CCA is an essential precursor to any debt arising in relation to an agreement governed by the CCA.  Roy Hill's counsel submits that by virtue of the implied term in div 3 and div 4 of sch 1 of the CCA, a party to a construction contract is entitled to make a claim for progress payment by submitting a payment claim.  However, the payment claim must comply with the requirement of the CCA.  Roy Hill's counsel submits that Drilline and Mallett have not pleaded that a payment claim was provided to Roy Hill in accordance with the CCA before payment was required.  Further, as it has not been established that payment was due pursuant to the terms of the contract, Roy Hill's counsel submits Drilline and Mallett do not have a legal basis for their claim.

2. Counsel for Drilline and Mallett submit that the cause of action is not premised on the operation of the CCA.  The CCA only provides a limited role of providing one source for the implication of a term that Roy Hill would reasonably remunerate Drilline for the provision of the plaintiff's services.  Counsel for Drilline and Mallett submit that Roy Hill's strike‑out application misconceives the role of the operation of the CCA in this context.

3. Drilline and Mallett plead an unwritten, partially oral contract evidenced by a course of conduct and call upon the CCA as a source, other than business efficacy, for the implication of a term that Roy Hill would reasonably remunerate Drilline and Mallett for their services.

4. I was wrong when, in my extempore reasons, I determined that Drilline and Mallett, in a fresh pleading, could not raise the assistance of the CCA.

5. Turning to the pleading as a whole, I am aware of the modern approach to pleadings. In Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82 the Chief Justice comments [8]:

   Only where the criticisms of a pleading significantly impact upon the proper presentation of the case and its presentation at trial should these criticisms be seriously entertained.

6. Subsequent decisions support the proposition that unduly technical and costly disputes about non‑essential issues are to be avoided and that the discretionary power to strike out pleadings should be employed sparingly.

7. Drilline and Mallett's pleading at par 5 is that, pursuant to an unwritten, partially oral and partially implied contract, Drilline and Mallett provided services to Roy Hill from June 2011 to about July 2012.  However, there is no particularisation of what was done in provision of each service.  In my opinion, for Roy Hill to understand the case it has to meet, and how the claim of $616,624.72 is made up and allocated between Drilline and Mallett, there ought to be particularisation of the services detailed in par 5 of the statement of claim.

8. Further, it is important to detail the services rendered pleaded in par 5 to support the plea that the contract can be partially implied from the course of dealing between Drilline and Mallett and Roy Hill between June 2011 and July 2012.  Thus, in my opinion, it is important for Roy Hill to understand the nature of the services so that it may understand how the implication arises from the course of dealing.

9. Drilline and Mallett plead that the unwritten contract was a construction contract for the purposes of the CCA, and seek to plead the operation of s 14 and sch 1 div 2 of the CCA as support for the implication of a term Roy Hill would reasonably remunerate Drilline and Mallett.  On that I have no issue.

10. In relation to the common law implication of the term that Roy Hill would reasonably remunerate Drilline and Mallett as stated in par 8 of the statement of claim, in my opinion it is still the case as stated in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 and Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 that the five tests for implication of a term must be pleaded, that is:

    1.It must be reasonable and equitable.

    2.It must be necessary to give business efficacy to the contract.

    3.It must be so obvious that it goes without saying.

    4.It must be capable of clear expression.

    5.It must not contradict any express term of the contract.

11. In my opinion it is not enough to simply plead a term is to be implied.  As there must be some deficiency in the consensual agreement between the parties to imply a term it is not enough that the term is reasonable, the term must be necessary and obvious.

12. Finally the statement of claim of Drilline and Mallett introduces an element of confusion between Drilline and Mallett.  It would appear from par 5h of the statement of claim that Mallett was appointed by contract in the form of a letter from Ray Kennedy on behalf of Roy Hill on 1 August, on a year to be determined, to perform the role of general manager.  That relationship of Mallett with Roy Hill would appear to be a different relationship from that pleaded in pars 5a ‑ 5g of the statement of claim.  In my opinion that separate contract between Mallett and Roy Hill ought to be separately pleaded.

13. I am mindful because of the error I fell into that Drilline and Mallett may need to revisit their pleading.  To enable counsel for both parties to consider my reasons I have listed a directions hearing for 24 June 2014 at 10.00 am.  If this date is not convenient I would expect the instructors of both counsel to contact the listings clerk.