Drilline Pty Ltd v Roy Hill Station Pty Ltd [No 2]
[2014] WADC 162
•24 NOVEMBER 2014
DRILLINE PTY LTD -v- ROY HILL STATION PTY LTD [No 2] [2014] WADC 162
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WADC 162 | |
| Case No: | CIV:1926/2013 | 9 SEPTEMBER 2014 | |
| Coram: | REGISTRAR KINGSLEY | 24/11/14 | |
| PERTH | |||
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed in part | ||
| PDF Version |
| Parties: | DRILLINE PTY LTD DARRYL JOHN MALLETT ROY HILL STATION PTY LTD |
Catchwords: | Practice Application to strike statement of claim Turns on own facts |
Legislation: | Nil |
Case References: | SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First plaintiff
DARRYL JOHN MALLETT
Second plaintiff
AND
ROY HILL STATION PTY LTD
Defendant
Catchwords:
Practice - Application to strike statement of claim - Turns on own facts
Legislation:
Nil
Result:
Application allowed in part
Representation:
Counsel:
First plaintiff : Mr R L Hooker
Second plaintiff : Mr R L Hooker
Defendant : Mr G Cobby
Solicitors:
First plaintiff : Hammond Legal
Second plaintiff : Hammond Legal
Defendant : Tottle Partners
Case(s) referred to in judgment(s):
SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56
1 REGISTRAR KINGSLEY: The plaintiffs seek to amend their statement of claim in terms of a minute of proposed amended statement of claim dated 31 July 2014 (the proposed SOC). The defendant opposes the amendments on the grounds that the amendments do not disclose a good cause of action, and are otherwise embarrassing and likely to delay the fair trial of the action.
2 In July 2013 the plaintiffs filed a statement of claim pleading that the plaintiffs provided services to the defendant pursuant to an unwritten, partly oral, and partly to be implied contract made between June 2011 and July 2012 (the Contract). The Contract was pleaded to be a construction contract within the meaning of the Construction Contracts Act 2004 (WA) (the CCA). The plaintiffs pleaded the Contract contained an implied term, either from common law or by operation of the CCA, that the defendant (Roy Hill) would reasonably remunerate the plaintiffs for their services.
3 Roy Hill brought an application to strike the statement of claim, and after argument, in an ex tempore decision given 5 February 2014, I granted the application, and gave leave for the plaintiffs to re-plead the statement of claim. In the 5 February 2014 hearing counsel for the plaintiffs' argued that the CCA had a limited role in the pleading in that the CCA only provided one source for the implication of a term that Roy Hill would reasonably remunerate the plaintiffs for the provision of the plaintiffs' services.
4 I concluded, in written reasons that the CCA could be used to support the implication of a term that the plaintiffs would be reasonably remunerated for the work done for Roy Hill.
5 The plaintiffs have now undertaken a substantial redraft of the statement of claim (the proposed SOC). In redrafting the proposed SOC, the plaintiffs have removed reference to the CCA. Roy Hill argues that the proposed SOC is again flawed because the contract between the first plaintiff and Roy Hill is a construction contract as defined in the CCA, and that no claim by the second plaintiff has been pleaded against Roy Hill.
The proposed SOC
6 The second plaintiff (Mallett) is a director and shareholder of Drilline and at all material times acted on behalf of Drilline in his dealings with, and work for, Roy Hill. Roy Hill operated Roy Hill Station, a pastoral station on which, amongst other things, Fortescue Metals Group and Hancock Mining conducted mining operations (Roy Hill's Operations).
7 The plaintiffs go on to plead that Roy Hill Operations included maintaining the roads that serviced the Cloudbreak and Christmas Creek Mines. In or about August 2011, Roy Hill appointed Drilline and Mallett as its agent to manage Roy Hill's Operations (the agency agreement). The agency agreement was partially written, partially unwritten, partially oral and partially implied from the course of dealings between Drilline and Mallett and Roy Hill between June 2011 and about July 2012 whereby Drilline and Mallett provided, and Roy Hill, accepted the services of the plaintiffs. The plaintiffs go on to plead that it was an express, or alternatively an implied, term of the agency agreement that Roy Hill would indemnify the plaintiff for the provision of their services, and reimburse the plaintiffs' for the expenses incurred in providing the plaintiffs' services. The implication of the term is particularised at par 7 of the proposed SOC.
8 The plaintiffs plead at par 8 that as a result of the relationship between the plaintiffs and Roy Hill, the plaintiffs are entitled to be reimbursed for all expenses incurred by them on behalf of Roy Hill for which Roy Hill has gained the ultimate benefit. The plaintiffs go on to plead in par 9 that from August 2011, Drilline and Mallett began managing Roy Hill's operation and particularises aspects of that management such as engaging third party suppliers, undertaking Roy Hill's administration and bookkeeping, facilitating the purchase and/or hire of plant and equipment for use by Roy Hill, supplying parts and equipment to Roy Hill, supervision and administration of Roy Hill Station and general management of Roy Hill's operation. In addition, at par 9(p) of the proposed SOC, there is a plea that Mallett performed the role of general manager at Roy Hill Station to which he was formally appointed by letter on 1 August (the year is not mentioned but presumably 2011). Collectively these particulars are defined in par 9 as 'the plaintiff's services'
9 Roy Hill terminated the agency agreement on 11 May 2012 with Drilline. Drilline and Mallett plead at par 11 that between September 2011 and June 2012 the plaintiffs invoiced Roy Hill for expenses and costs totalling $3,294,357.72 of which the plaintiffs allege an amount of $616,624.72 is still owing by Roy Hill to the plaintiffs.
The operation of the CCA
10 The principal objection of Roy Hill is that the contract pleaded to manage Roy Hill's Operations by the plaintiffs is governed by the CCA.
11 For the purposes of the CCA, a construction contract means a contract or other agreement, whether in writing or not, under which a person (the contractor) has one or more of these obligations:
1. to carry out construction work;
2. to supply to the site where construction work is being carried out any goods that are related to construction work by virtue of s 5(1);
3. to provide on or off the site where construction work is being carried out professional services that are related to the construction work by virtue of s 5(2).
4. to provide on the site where construction work is being carried out on site services that are related to the construction work by virtue of s 5(3)(b).
12 Section 5(1) CCA provides, relevantly for the purpose of this hearing, that goods are related to construction work if they are plant or materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of the construction work on the site of the construction work. Section 5(2) provides that professional services are related to construction work and relevantly for this application, services that are provided by a profession and that relate directly to construction work or to assessing its feasibility (whether or not it proceeds including surveying, planning, costing, testing, architectural design, plan drafting, engineering, quantity surveying and project management services, but not including accounting, financial or legal services). Section 5(3)(b) provides that onsite services are related to construction work if they are services that relate directly to construction work including the provision of labour to carry out construction work or services prescribed by the regulations to the onsite services related to construction work for the purposes of the CCA. Section 5(1)(c) CCA provides that goods are related to the construction work if they are plant and materials (whether supplied by sale, hire or otherwise) for use in connection with the carrying out of the construction work at the site of the construction work.
13 'Construction work' in s 3 is defined in s 4 CCA and that definition is in two parts. The first part is a definition of civil work which, relevantly for this application, includes a road and any works, apparatus, fitting, machinery, or plant associated with a road. The definition in s 4 CCA includes maintaining the whole or part of any civil works which includes a road. Section 4(2) CCA then goes on to define construction work as, again relevantly, constructing the whole or part of any civil works or a building or structure that forms or will form, whether permanently or not, and whether in Western Australia or not, part of land or the seabed, whether above or below it.
14 The plaintiffs' plea at par 4 of the proposed SOC is that the Roy Hill's operations included maintaining the roads that serviced the Cloudbreak and Christmas Creek Mines (the road maintenance works). Paragraph 9 of the proposed SOC goes on to plead that the plaintiffs began managing Roy Hill's operations in relation to the road maintenance work. At par 9 of the statement of claim the plaintiffs plead that from August 2011, in managing the Roy Hill's operations, which included maintaining the roads, the plaintiffs engaged third party suppliers to supply plant and machinery to Roy Hill, engaged third party suppliers to supply labour to Roy Hill and used Drilline's credit facilities to facilitate the purchase and hire of plant and equipment and labour for use by Roy Hill in the road maintenance work.
15 Drawing this together leads to the conclusion that the agency agreement entered into between Drilline and Roy Hill was a contract governed by the CCA. Civil works include road and construction work, which includes maintaining a road (s 4(1) (a) and s 4(2) (e) CCA). Thus the agency agreement fulfils the requirements of a construction contract as defined in the CCA.
16 If a contract is a construction contract then div 2 headed 'Implied Provisions' applies. Section 16 CCA provides that the provisions in s 1 div 4 are implied in a construction contract that does not have a written provision about how a party is to make a claim on another party for payment. It appears the agency agreement did not contain any written provision about payment.
17 Schedule 1 div 4 at par 5 sets out the content of a claim for payment and div 5 provides for a response to the claims for payment.
18 Roy Hill argues that the proposed SOC does not disclose a reasonable cause of action as there is no plea that the plaintiffs have made a payment claim on Roy Hill. Further the disputed invoices could not constitute a valid payment claim as they do not disclose sufficient detail to allow Roy Hill to assess the claim.
19 The CCA establishes a fast track mechanism for the interim resolution of progress payment disputes. The objective of the CCA is to ensure, usually, that sub-contractors had the opportunity for payment, but the progress of the contract was not interrupted. However the CCA is not a code for payment of moneys under a construction contract. The CCA does not make it a precondition for bringing any action in a court of competent jurisdiction that a payment claim be made, and if disputed, be adjudicated.
20 Accordingly, whilst the purported agreement between the plaintiffs and Roy Hill is a construction contract, the fact there has been no payment claim does not mean there is no reasonable cause of action.
The Proposed SOC
21 Roy Hill further submits that the statement of claim is embarrassing in any event. No consideration for the agreement by Drilline or Mallett is pleaded and Roy Hill sites SAS Realty Developments Pty Ltd v Kerr [2013] NSWCA 56 at [62] in support. Roy Hill submits that, as a pleading point, it is necessary for the plaintiffs to plead the facts that constitute the consideration for the agency agreement.
22 The proposed SOC does not expressly identify the consideration leading to the agency agreement. The plea by Drilline that Roy Hill appointed Drilline and Mallett is its agents to manage Roy Hill's Operations, the fact the agency agreement is particularised, at least partially at par 9 of the proposed SOC, and that the plea Drilline managed Roy Hill's operations and Mallett managed Roy Hill station are sufficient, in my opinion, if accepted, to constitute valuable consideration.
23 However, I accept Roy Hill's submission that pars 6(e), 6(f) and 6(g) are embarrassing. Paragraph 6 pleads the agency agreement was partially written, partially unwritten, partially oral, and partially implied from the course of dealings between the plaintiffs and Roy Hill. There are no particulars to identify those parts of the agreement that are in writing. The plea that the agency agreement was partially unwritten does not add anything to the pleading, particularly with the subsequent plea that the agreement is partially oral and partially implied. In relation to the plea the agency agreement was partially oral there is no detail of those conversations that go to make up the oral content of the agreement. That being the case, I am of the opinion that pars 6 (e), 6(f), and 6(g) of the proposed SOC are embarrassing.
24 I do not consider par 6(h) embarrassing as that plea is adequately particularised. The law recognises that obligations may be implied in a contract to give the contract business efficacy. I am of the opinion that a reading of par 6(h) and par 7 adequately sets out the case Roy Hill has to meet.
25 Paragraph 7 provides that is was an express, or alternatively an implied, term of the agency agreement that Roy Hill would indemnify the plaintiffs for the provision of their services. The content of the express term could be the subject of particulars. In this third iteration of the statement of claim, Roy Hill could rightly expect that the content of the express term would be particularised within the plea.
26 Roy Hill argues that there is no scope for the implementation of terms as pleaded in pars 7 and 8 of the proposed SOC. This is because the effect of s 14 CCA, read with sch 1 div 2 is that a term that 'the contractor is entitled to be paid a reasonable amount for performing its obligations' is implied in any construction contact that does not have a written provision about payment.
27 I accept that submission. Pursuant to the CCA a term that a contractor is entitled to be paid a reasonable amount may be implied into a construction contract where there is no written provisions. That term, in my opinion, is adequately pleaded at par 7(a). I say it is adequate because Roy Hill, by now understands how the payment term may be implied by operation of law and by operation of the CCA.
28 Roy Hill submits that, by reason of the statutory implication, there is no scope to plea a common law implication. As the CCA is not a code it is open, in my opinion, for a plaintiff to plead the common law implication of terms.
29 At par 7(b) the plaintiffs plead the term as to indemnity and reimbursement by Roy Hill is implied at common law to give business efficacy to the agency agreement. Read as a whole I am of the opinion that plea is adequate and Roy Hill is not embarrassed by the plea.
30 Roy Hill submits that the implication of that term in the agency agreement does not disclose a reasonable cause of action because an agent may only be indemnified with respect to those liabilities incurred in the reasonable performance of the agency. The plaintiffs plead in par 7 of the proposed SOC that Roy Hill, through a director attended the offices of Drilline and authorised reimbursement or made payment of expenses incurred by the plaintiffs. On those facts it is open for a court to find that the liabilities have been incurred in the performance of the agency agreement. In my opinion there is no basis to strike par 7 as not disclosing a reasonable cause of action.
31 Drilline and Mallett plead they were appointed to manage Roy Hill's Operations. In par 9 of the proposed SOC, Drilline and Mallett plead they began managing Roy Hill's Operations which included engaging third party suppliers, undertaking Roy Hill's administration, facilitating the purchase and hire of plant and equipment for use by Roy Hill, supplying to Roy Hill parts and equipment, supervision and administration of Roy Hill Station and general management of Roy Hill's Operations. Implicit in that plea is that Drilline and Mallett were entering into agreements with third parties as agent for Roy Hill. Paragraph 11 pleads Drilline and Mallett invoiced Roy Hill for expenses and costs incurred by them on behalf of Roy Hill in carrying out services. At par 12 the plaintiffs plead that Roy Hill paid some of the invoices.
32 In my opinion the pleas in par 9 and 11 seek an indemnity from Roy Hill with regard to the moneys paid by Drilline and Mallett on Roy Hill's behalf in carrying out the agency agreement. Roy Hill does suggest in submissions that the claim of Drilline and Mallett is not limited to expenses and cites by way of example invoice 7125-300612. This invoice is a claim for on-costs of 20% on wages of Drilline's employees, which in Roy Hill's submission is remuneration, not an expense. In my opinion that is more of an issue of categorisation; is the 20% loading an expense incurred in performance of the agency agreement or not.
33 Roy Hill submits that par 8 of the statement of claim is embarrassing in that it pleads, as a result of the relationship between Drilline and Mallett and Roy Hill, that Drilline and Mallett are entitled to be reimbursed for all expenses incurred by them on behalf of Roy Hill, for which Roy Hill has gained the ultimate benefit.
34 As Roy Hill's counsel submits, it appears this plea may be a restitutionary claim, but as there is a valid and enforceable agreement governing Drilline and Mallett's right to payment, the restitutionary claim is not available unless the existing contract has been rescinded or discharged. Restitution is the remedy to a claim, in this matter, of unjust enrichment – that Roy Hill has gained a benefit at the plaintiffs' expense, and that enrichment is unjust. The remedy of restitution for unjust enrichment is available where there is no contract.
35 By pleading par 8 of the proposed SOC as 'Further, and in the alternative …' does make the paragraph embarrassing. If par 8 were in the alternative only there may be merit in the plea – with particulars being given. There is no role for the word 'Further' in par 8. In my opinion, par 8 is embarrassing to Roy Hill.
The Proposed SOC and Mallett
36 A careful reading of the statement of claim does not disclose any cause of action by Mallett against Roy Hill. Mallett simply pleads that he was appointed as manager of Roy Hill Station but that plea goes no further. The proposed SOC does not distinguish the claims of the plaintiffs against Roy Hill. The invoices pleaded appear to merge the claim for expenses by Drilline and the claim by Mallett for remuneration. There is no particularisation of the work done as general manager and the remuneration to be paid.
37 If Mallett is to maintain his plea against Roy Hill, it must be pleaded out. Further, the claims made by Mallett must be separately particularised as to the quantification of that claim and a separate prayer for relief.
Summary
1. Paragraphs 6(e), 6(f) and 6(g) of the proposed SOC are embarrassing.
2. Paragraph 7 of the proposed SOC is embarrassing is so far there should be particulars of the express terms.
3. Paragraph 8 of the proposed SOC is embarrassing by the use of the word 'further'.
38 Accordingly for these reasons the proposed SOC ought not be allowed in. I will hear counsel on the form of orders, and on the question of costs.
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