James Point Pty Ltd v The Minister for Transport [No 3]
[2018] WASC 277
•6 SEPTEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: JAMES POINT PTY LTD -v- THE MINISTER FOR TRANSPORT [NO 3] [2018] WASC 277
CORAM: VAUGHAN J
HEARD: 13 AUGUST 2018
SUPPLEMENTARY SUBMISSIONS FILED ON
20 AUGUST 2018 AND 23 AUGUST 2018
DELIVERED : 6 SEPTEMBER 2018
FILE NO/S: CIV 2812 of 2011
BETWEEN: JAMES POINT PTY LTD
Plaintiff
AND
THE MINISTER FOR TRANSPORT
First Defendant
THE MINISTER FOR LANDS
Second Defendant
THE STATE OF WESTERN AUSTRALIA
Third Defendant
Catchwords:
Practice and procedure - Pleadings - Whether pleading should be struck out as not disclosing a reasonable cause of action - Whether pleading should be struck out as an abuse of process - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 20 r 19
Result:
Application allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | D Hughes & N W Kalmund |
| First Defendant | : | K M Pettit SC & A Shuy |
| Second Defendant | : | K M Pettit SC & A Shuy |
| Third Defendant | : | K M Pettit SC & A Shuy |
Solicitors:
| Plaintiff | : | Hotchkin Hanly |
| First Defendant | : | State Solicitor's Office |
| Second Defendant | : | State Solicitor's Office |
| Third Defendant | : | State Solicitor's Office |
Case(s) referred to in decision(s):
Alcatel Australia Ltd v Scarcella (1988) 44 NSWLR 349
Alstrom Ltd v Yokogawa Australia Pty Ltd [No 7] [2012] SASC 49
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345
Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Batistatos v Road and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Bell Group NV (in liq) v Insurance Commission of Western Australia [2017] WASCA 229
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
Campbell v Backoffıce Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
Coal Hub Pty Ltd v NSL Consolidated [No 4] [2018] WASC 41
Commonwealth v Albany Port Authority [2006] WASCA 185
CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [2017] WASC 112
CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [No 2] [2017] WASCA 123
Dedert Corporation v United Dalby Bio-Refinery Pty Ltd [2017] VSCA 368
Do Carmo v Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Gemmell Power Farming Co Ltd v Nies (1935) 35 SR (NSW) 469
General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125
Heartlink Ltd v Jones [2007] WASC 254; (2007) 35 WAR 190
Heimann v Commonwealth of Australia (1940) 58 WN (NSW) 2
James Point Pty Ltd v The Minister for Transport [2015] WASC 323
Kenny v State of South Australia (1987) 46 SASR 268
Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 644, 25 August 1986)
Mahenthirarasa v State Rail Authority of New South Wales (No 2) [2008] NSWCA 201; (2008) 72 NSWLR 273
Mineralogy Pty Ltd v State of Western Australia [2005] WASCA 69
Moore v Inglis (1976) 9 ALR 509
Morgan v Banning (1999) 20 WAR 474
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Perdaman Chemicals & Fertilizers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 12] [2013] WASC 245
Perpetual Trustees Victoria Ltd v Allen [2012] WASC 258 (S)
Polar Aviation Pty Ltd v Civil Aviation Safety Authority [2012] FCAFC 97; (2012) 203 FCR 325
Robertson v Purdey [1906] 2 Ch 615
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79; (2016) 50 WAR 226
Sirius International Insurance Co v FAI General Insurance Ltd [2004] UKHL 54; [2005] 1 WLR 3251
The Minister for Transport v James Point Pty Ltd [2016] WASCA 202; (2016) 341 ALR 705
Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212
Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507
Victim Compensation Fund Corp v Brown [2003] HCA 54; (2003) 201 ALR 260
Visy Board Pty Ltd v Attorney-General (1984) 2 FCR 113
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378
Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509
Wolfe v Permanent Custodians Ltd [2013] VSCA 331
VAUGHAN J:
Overview
These reasons provide my determination on the two outstanding aspects of the defendants' application by chamber summons dated 12 July 2018. The application was for further and better particulars, or alternatively, to strike out certain paragraphs of the plaintiff's fourth substituted statement of claim dated 5 May 2017 (Fourth SSOC). Both outstanding matters are by way of strike out rather than for particulars.
Two discrete issues arise:
(1)Whether the alleged implied term pleaded at par 9 of the Fourth SSOC ‑ in the nature of an implied duty to co‑operate ‑ should be struck out under O 20 r 19(1)(a) of the Rules of the Supreme Court 1971 (WA) as not disclosing a reasonable cause of action.
(2)Whether pars 24 ‑ 30 of the Fourth SSOC, and par 33 so far as it picks up those paragraphs, should be struck out under O 20 r 19(1)(d) of the Rules of the Supreme Court 1971 (WA) as an abuse of process on the basis that they are pleaded in violation of an undertaking by the plaintiff proffered to and accepted by the court on 23 November 2012.
For the reasons that follow the par 9 alleged implied term is reasonably arguable. Whether the term should be implied is properly a matter for trial. The application to strike out the term fails. The application to strike out pars 24 ‑ 30 and 33 of the Fourth SSOC also largely fails. This is because the undertaking, on its proper construction, does not bear the meaning for which the defendants contend. The prohibition is significantly less extensive than that contended for by the defendants; the scope of the restraint effected by the undertaking does not encompass the assertion of claims or causes of action that were not pleaded in the proceedings in which the undertaking was proffered and accepted.
However, in one minor respect the pleading in the Fourth SSOC is in violation of the undertaking. That aspect of par 33 of the Fourth SSOC will be struck out with liberty to re-plead.
Background
The defendants' chamber summons raised a number of pleading and particularisation points which, pre‑hearing, were placed into 14 groups. One aspect fell away before the hearing. Eleven were heard and determined orally on 13 August 2018. Those matters concerned more routine questions as to particularisation of the plaintiff's case and whether, as pleaded, a reasonable cause of action was disclosed.
The remaining two matters as addressed in these reasons were more fundamental and required more detailed consideration.
In addition, as to the undertaking point, at the conclusion of the oral submissions-in-chief of senior counsel for the defendants I raised whether the application was correctly brought under O 20 r 19(1)(a) ‑ at that time the contention being that the pleading disclosed no reasonable cause of action insofar as it was allegedly in violation of the undertaking. The defendants then applied to amend the grounds of their application to raise a challenge based on abuse of process. That was allowed but only on the proviso that the plaintiff was given an opportunity to respond to the altered basis on which the defendants sought to strike out pars 24 ‑ 30 and par 33 so far as it picked up those paragraphs.
The time necessarily required to afford the plaintiff a proper opportunity to consider the amended basis of the defendants' application necessitated deferral of these reasons.
I have already recounted matters relating to the background to the dispute between the parties, the course of the litigation and the claim as propounded in the Fourth SSOC in the course of giving oral reasons on 13 August 2018. I do not intend to repeat that material here. The oral reasons have been transcribed and provided to the parties on a 'not for publication' basis. These present reasons should be read together with the material as essayed in my oral reasons of 13 August 2018.
For present purposes it suffices to state that on 20 December 2000 the plaintiff, James Point Pty Ltd, and the defendants, the Minister for Transport and the State of Western Australia acting through the Minister for Lands, entered into an agreement referred to as the 'Operating Agreement'. By the Operating Agreement the plaintiff agreed to construct, own and operate a port at James Point near Kwinana and to provide port services at that port on the terms and conditions set out in the agreement. The plaintiff purports to have terminated the Operating Agreement on 23 October 2012. In 2011 the plaintiff commenced proceedings claiming damages for breach of the Operating Agreement.
This is not the first interlocutory dispute between the parties. A summary dismissal application, as propounded by the defendants on a limited basis, was dismissed by Martino J on 3 September 2015.[1] An appeal from that decision was dismissed on 29 November 2016.[2]
[1] James Point Pty Ltd v The Minister for Transport [2015] WASC 323.
[2] The Minister for Transport v James Point Pty Ltd [2016] WASCA 202; (2016) 341 ALR 705.
Martino J's reasons for decision contain a succinct account of the material express terms of the Operating Agreement that are at the core of the dispute between the parties.[3] His Honour also provided an overview of the then statement of claim.[4] At that time the statement of claim was a document dated 8 July 2015 described as a further re‑amended third substituted statement of claim. However, the architecture of that statement of claim, as described in pars 13 ‑ 20 of Martino J's reasons, are broadly reflective of the structure that is now pleaded in the Fourth SSOC.
[3] James Point Pty Ltd v The Minister for Transport [5] ‑ [12]. See also The Minister for Transport v James Point Pty Ltd [7] ‑ [10].
[4] James Point Pty Ltd v The Minister for Transport [13] ‑ [20].
There are, however, some material additions in the Fourth SSOC; notably the pleas in pars 8 ‑ 10. Those pleas provide:
8.The benefit which the Plaintiff was to receive under the Agreement was the right to construct, own and operate the Port generally as identified in the Concept Design and to provide Port Services in connection with this Port.
9.It was an implied term of the Agreement that the Defendant would do all such things as were necessary on their part to enable the Plaintiff to construct, own and operate the Port generally as identified in the Concept Design, and to provide Port Services at the Port.
Particulars
The term is implied in law.
10.The obligations included in paragraph 7(j), (k), (l), (n) and 9 above were:
(a)continuing obligations and the Defendants remained bound to comply with those obligations at all relevant times prior to the termination of the Agreement;
(b)alternatively, obligations to do a definite act or acts within a reasonable time of the Commencement Date, having regard to the Latest Commercial Operations Date as extended from time to time.
The 'Commencement Date' is said to be 26 January 2001 (par 11). The concept of 'Latest Commercial Operations Date' is a defined term in the pleading (par 7(f)) but not in the Operating Agreement itself. The Latest Commercial Operations Date was said to be the date on which the Operating Agreement would terminate. This was the date five years from the Commencement Date if Stage 1 of the port was not operational at that time. However, it could become such later date as was consented to under the Operating Agreement (par 7(f)). Various extensions were pleaded with the final extension of the Latest Commercial Operations Date being pleaded to be 30 June 2011 (par 13).
Additional background is best referred to as I turn to consideration of the two remaining aspects of the application.
The implied duty to co‑operate
The plaintiff's pleading of an implied term
I have already recounted the plea made by the plaintiff in par 9 of the Fourth SSOC. As particularised, the plaintiff said that the term was implied in law. The defendants contend that, in the circumstances as pleaded, the alleged implied term in par 9 is not reasonably arguable.
The relevant express and implied terms of the Operating Agreement must be established before any question concerning the implied duty to co‑operate is considered.[5]
[5] Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79; (2016) 50 WAR 226 [90].
The impugned plea comes about in circumstances where the plaintiff has pleaded the parties' entry into the Operating Agreement. It is pleaded that the plaintiff and the defendants entered into an agreement pursuant to which the plaintiff was to construct, own and operate a multi‑function port, and to provide port services at the port at James Point near Kwinana (par 6).
At par 7 of the Fourth SSOC a number of express terms are pleaded. These include terms to the effect that:
(1)the Transport Minister appointed the plaintiff to construct the port and act as agent of the Department to operate the port and provide the port services (cl 2; par 7(a));
(2)the plaintiff was to design the port to be developed in stages as set out in a Concept Design (cl 4.2, 4.3; par 7(b));
(3)the port area was defined as a particular area comprising the 'Stage 1 Port Area' and, depending on certain events, other areas (cl 1.1; par 7(c));
(4)the plaintiff was required to obtain the written approval of the Department (not to be unreasonably withheld) to the design of each stage of the port (cl 4.7; par 7(d));
(5)the plaintiff was required to give the Transport Minister not less than 45 days' notice of the date it proposed to commence construction of Stage 1 (cl 5; par 7(e));
(6)if Stage 1 was not operational within five years after the Commencement Date then the Operating Agreement would terminate on that date or such later date as was consented to by the Department (cl 5.8; par 7(f));
(7)the plaintiff was required to promptly and diligently proceed to obtain all the approvals of Government Agencies for the construction and operation of the port and the provision of port facilities and to promptly and diligently proceed to apply for and obtain all necessary environmental approvals for the construction and operation of the port (cl 5.14, 5.15; par 7(h));
(8)upon receiving the notice that the plaintiff proposed to commence construction of Stage 1 the Transport Minister was required, among other things, to arrange for the excision of the port area from the Fremantle Port (cl 7.1; par 7(i));
(9)the State was required to provide road and rail improvements required for Stage 1 as described in the Operating Agreement or as might otherwise be agreed (cl 7.4; par 7(j)); and
(10)the State was required to facilitate the obtaining of all required approvals; but this obligation was not so as to prejudice the powers and obligations of the relevant Government Agencies (cl 7.5; par 7(k)).
Finally, as to the express terms of the Operating Agreement as pleaded by the plaintiff in the Fourth SSOC, the plaintiff pleaded that (at par 7(n)):
Each party was obliged to do anything another party reasonably required in writing to give full effect to the [Operating] Agreement and transactions it contemplated (cl 28). (emphasis added)
The alleged implied term as pleaded in par 9 of the Fourth SSOC was referred to in par 10. There it was said to be a continuing obligation (par 10(a)), or alternatively, an obligation to do a definite act within a reasonable time of the Commencement Date having regard to the time at which the Operating Agreement would otherwise terminate as extended from time to time (par 10(b)).
Thereafter, par 9 was relied on by the plaintiff as being one of the terms of the Operating Agreement breached by one or more of the defendants.
Specifically, the implied term pleaded in par 9 of the Fourth SSOC was said to have been breached by the defendants in:
•failing to design or build road and road improvements required for Stage 1 of the port (pars 14 and 15);
•failing to facilitate the gazettal of an amendment to the Metropolitan Region Scheme to re‑zone an area of a waterways reservation in the port area as required for Stage 1 of the port (pars 16, 19 and 22);
•failing to grant approval for the sale of certain land - referred to as the LandCorp Land - for the plaintiff (pars 29 and 33). (The LandCorp Land will be referred to in more detail subsequently. That land, and the plaintiff's claims made by reference to it, have significance to the undertaking point. For present purposes it suffices to state that the LandCorp Land was defined by terms of specific locations in Kwinana (par 23) and is said to be land on which the Operating Agreement contemplated that the port would be constructed and operated as part of Stage 1 (par 24));
•failing to give a direction to LandCorp requesting it to sell the LandCorp Land to the plaintiff or to lease the LandCorp Land to the plaintiff (pars 30 and 33);
•refusing to allow the plaintiff access to the LandCorp Land to undertake required geotechnical investigation (pars 32 and 33); and
•failing to direct LandCorp and the Fremantle Port Authority to sign a Metropolitan Region Scheme development application form regarding proposed reclamation work in the waterways reserve and adjoining earthworks to the LandCorp Land (pars 35 - 40).
The alleged implied term in par 9 of the Fourth SSOC is not the only term of the Operating Agreement relied on for the alleged breaches. Each of the alleged breaches is also said to be grounded in an express term of the Operating Agreement as pleaded. For example, as to the alleged failure to design or build road and rail improvements, the plaintiff also relies on cl 7.4 as pleaded in par 7(j) of the Fourth SSOC (referred to at par 19(9) above). The various alleged failures to facilitate gazettals, approvals and directions also rely on cl 7.5 as pleaded in par 7(k) of the Fourth SSOC (as referred to in par 19(10) above).
In the circumstances it might be questioned whether the alleged implied term to co‑operate adds much; or, conversely, whether its continuation causes any real detriment to the defendants.
Be that as it may, the defendants take the point, and the plaintiff does not yield. Accordingly, the issue must be resolved. But it should be appreciated that the defendants' challenge is at the level of whether the alleged implied term pleaded in par 9 is arguable. The defendants apply to strike out par 9 rather than the references to par 9 in the various breach pleas. Senior counsel for the defendants addressed me on that basis alone.
Thus the issue for determination is whether it is arguable that an obligation to co‑operate in the terms pleaded in par 9 is to be implied as a term of the Operating Agreement.
I refer to the issue as being whether the alleged implied term is 'arguable' as the defendants apply to strike out the plea on the basis that it discloses no reasonable cause of action. Accordingly, the plaintiff need not establish that the alleged term is to be implied; that is a matter for trial. At this interlocutory stage the defendants must show that the case is 'really not arguable' - or that the plea 'is so clearly untenable that it cannot possibly succeed'.[6]
Implied duty to co‑operate: the authorities
[6] Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 644, 25 August 1986) 6 ‑ 7.
The implication of a term that parties to a commercial contract will do all that is necessary to be done on their part to enable the other party to have the benefit of the contract is uncontroversial.
In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd Mason J stated:
[I]t is common ground that the contract imposed an implied obligation on each party to do all that was reasonably necessary to secure performance of the contract. As Lord Blackburn said in Mackay v Dick:
as a general rule ... where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect.
It is not to be thought that this rule of construction is confined to the imposition of an obligation on one contracting party to co-operate in doing all that is necessary to be done for the performance by the other party of his obligations under the contract. As Griffith CJ said in Butt v M'Donald:
It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.
It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of that party's obligations and are not fundamental to the contract. Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done, even if the consequence of his decision is to disentitle the other party to a benefit. In such a case, the correct interpretation of the contract depends, as it seems to me, not so much on the application of the general rule of construction as on the intention of the parties as manifested by the contract itself. [7] (citations omitted)
[7] Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607 - 608.
As appears from that passage, the rule is not confined to an obligation to co-operate to allow the other party to perform its obligations; it extends to requiring each party to do all things necessary on its part to enable the other party to have the benefit of the contract.
The following propositions as to the implied duty to co-operate emerge from the recent Court of Appeal decision in Bell Group NV (in liq) v Insurance Commission of Western Australia:[8]
(1)There is a well-recognised duty to co-operate implied into contracts generally as a matter of law (at [92]).
(2)The duty is directly related to contractual performance (at [93]).
(3)The law also implies a negative covenant not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract (at [94] - [95]).
(4)The implication of the duty of co-operation, as a term implied by law, is limited by the criterion of necessity (at [112] - [113]).
(5)A duty to co-operate, whether expressed positively or as a negative covenant, must relate to bringing about something which the contract requires to happen (at [113] - [114]).
[8] Bell Group NV (in liq) v Insurance Commission of Western Australia [2017] WASCA 229.
The implied term is not at large. It does not require that a party act generally to the benefit of the other party; the ambit of the duty to co‑operate is defined by what has been promised under the contract. The implication is that a party will do that which is reasonably necessary to secure to the other party the benefit of the particular contractual provisions. Thus the implied obligation does not extend beyond the subject matter and obligations of the contract; it supports the primary obligations under the contract.
As was stated in Wolfe v Permanent Custodians Ltd:
Although the duty to cooperate is broadly stated in Butt v McDonald, the scope of the duty is defined by what has been promised under the contract; it is not a general duty to ensure another party obtains an anticipated benefit.[9]
[9] Wolfe v Permanent Custodians Ltd [2013] VSCA 331 [28].
Although framed as a 'rule' in the passage I have referred to from Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd, the implied duty to co-operate is often referred to as a term implied in law.[10] Thus it may be excluded by express provision or as a result of inconsistency with the terms of the contract.[11] The implied duty to co-operate cannot overrule or override the express provisions of the contract.[12] It cannot be imposed on a party so as to compel that party to bring about a circumstance or result which the contract does not require.[13]
[10] See eg Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, 124 - 125; Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, 447 - 450.
[11] Byrne v Australian Airlines Ltd (449 - 450); Campbell v Backoffıce Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 [168].
[12] Alcatel Australia Ltd v Scarcella (1988) 44 NSWLR 349, 368; Servcorp WA Pty Ltd v Perron Investments Pty Ltd [82].
[13] Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (124 - 125); Servcorp WA Pty Ltd v Perron [83].
In short, the implied duty to cooperate does not rise above the promises made by the parties to the contract.[14]
Disposition of the implied duty to co‑operate point
[14] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 [109]; CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [No 2] [2017] WASCA 123 [77].
In contending that the alleged implied term in par 9 of the Fourth SSOC was not reasonably arguable senior counsel for the defendants emphasised two matters. First, that such a term could not be implied where it was inconsistent with an express term. Second, that such a term was confined to facilitation of an existing obligation.
In developing the second point senior counsel for the defendants referred to par 8 of the Fourth SSOC (referred to at par 13 above). It was said that in so identifying the 'benefit' that the plaintiff was to receive under the Operating Agreement the plea infected the rest of the pleading - in particular the alleged implied term at par 9. I understood counsel to be suggesting that the pleader of the implied term had fallen into the error of providing for an implied duty of co-operation by reference to what the plaintiff anticipated would be its benefit obtained through the Operating Agreement, rather than an implied term that facilitated the plaintiff in obtaining the benefit of the particular contractual provisions as promised under the Operating Agreement.
The difficulty with that argument is that it overlooks the terms of the Operating Agreement as relied on elsewhere in the Fourth SSOC. What is pleaded at par 8 echoes what is pleaded to be the nature of the Operating Agreement at par 6. Importantly, at par 7(a) the plaintiff pleaded that:
the Transport Minister appointed the Plaintiff to construct the Port and act as agent of the Department to operate the Port and provide the Port Services … with effect from the Commercial Operations Date …
The Fourth SSOC otherwise pleads a number of the express terms of the Operating Agreement making provision for the means by which the plaintiff was to construct, own and operate the port and to provide port services at the port. (See eg the alleged express terms pleaded at par 7(b), (c), (d), (e), (h), (i), (k), (l) and (m).)
It is reasonably arguable that the alleged implied term pleaded in par 9 supports the primary obligations under the Operating Agreement as pleaded in par 7(a) of the Fourth SSOC. That is all the more so when par 7(a) is read in the context of par 6 and the other express obligations as pleaded in in par 7 of the Fourth SSOC. I do not accept the contention that the alleged implied term in par 9 is clearly untenable and doomed to fail because it is attached to a suggested contemplated benefit derived from the Operating Agreement rather than facilitating performance of the contractual provisions under the Operating Agreement.
There were two aspects to the defendants' inconsistency argument. First, inconsistency per se: the defendants contended that insofar as the obligation under cl 28 to do anything reasonably required was preconditioned on a request 'in writing' there was a clear inconsistency between the alleged implied term and the Operating Agreement. Second, it was contended that given cl 28 (and various express clauses such as the facilitation obligation in cl 7.5) the suggested implied term was not necessary as the Operating Agreement would be effective without it and any implied term could not rise above the express term.
Some care must be taken in assessing the question of possible inconsistency and lack of necessity at this interlocutory stage - a stage at which there has not been full examination and determination as to the relevant express and implied terms of the Operating Agreement.[15]
[15] Cf Servcorp WA Pty Ltd v Perron Investments Pty Ltd [90].
It should also be appreciated that the question of inconsistency and necessity involves more than pointing to cl 28 (as pleaded in par 7(n)) and the other various express terms. The observations of Buss JA (as his Honour then was) in Servcorp WA Pty Ltd v Perron Investments Pty Ltd demonstrates that the inquiry is more subtle:
… the mere fact that an express term deals with a particular subject matter is not, of itself, decisive against an implication which involves the relevant subject matter being dealt with more extensively, [although] an examination of the contract, in the context of the objective framework of facts within which it came into existence, may reveal that the express term was intended to cover the field that would otherwise be occupied, at least in part, by the alleged implied term. In those circumstances, there would be no room for the implication of the alleged term …
An implied term may grow out of an express contractual term. An implied term will not necessarily, in the relevant sense, contradict an express term merely because it modifies the effect of the express term, since every implied term will invariably have that effect. Similarly, an exception from the general effect of an express contractual term will not necessarily, in the relevant sense, contradict it.[16]
[16] Servcorp WA Pty Ltd v Perron Investments Pty Ltd [145] - [146].
Direct contradiction is one thing. In that case a suggested implied promise will be negated by an inconsistent express provision. But the circumstance that there is an express term dealing to some extent with the same subject as the alleged implied term is not sufficient, in every case, to negative the implied promise; it may appear that the express term is intended only to supplement the implied term rather than cover the field.[17]
[17] Gemmell Power Farming Co Ltd v Nies (1935) 35 SR (NSW) 469, 476 - 477.
The decision of Coal Hub Pty Ltd v NSL Consolidated [No 4][18] illustrates the point. In that case there was an express 'further assurances' clause. Like cl 28 (as pleaded in par 7(n) of the Fourth SSOC) the further assurances provision was expressed in terms of that which was reasonably required by one party of the other (although there was no specification that the requirement must be expressed in writing). Proceeding initially without regard to the further assurances clause, Banks-Smith J identified that the implied obligation to co-operate arose, it being necessary to imply such an obligation to which her Honour gave more precise content.[19] Banks-Smith J then noted that a question arose whether there was any real difference between the implied term as so found and the obligations under the further assurances term - stating that '[i]f there is no difference, there is no real role for the implied term'.[20]
[18] Coal Hub Pty Ltd v NSL Consolidated [No 4] [2018] WASC 41.
[19] Coal Hub Pty Ltd v NSL Consolidated [No 4] [162] - [166].
[20] Coal Hub Pty Ltd v NSL Consolidated [No 4] [170].
Banks-Smith J then reasoned as follows:
Clause 18 is a relatively standard 'further assurances clause'. It requires [party 1] to do and execute all deeds, acts, documents and things as may reasonably be required by [party 2] to effectively carry out and give effect to the terms and intentions of the Agreement. Therefore, what is required are reasonable steps. Again, if no time is stipulated for performance of any particular obligation, it is implied that it is to be done within a reasonable time. To that extent, the obligations under cl 18 and the implied term are potentially the same. However, cl 18 refers to conduct required by (relevantly) [party 2]. Under the implied term as I have expressed it, [party 1] is obliged to take certain steps regardless of whether [party 2] requires it. Therefore, there is room for the operation of both terms.[21]
[21] Coal Hub Pty Ltd v NSL Consolidated [No 4] [171].
There are other authorities in which the court has acknowledged the existence of the implied duty of co-operation alongside an express further assurances clause.[22]
[22] See eg Servcorp WA Pty Ltd v Perron Investments Pty Ltd [14], [149], [167] - [170] (although here a more precise negative covenant); Alstrom Ltd v Yokogawa Australia Pty Ltd [No 7] [2012] SASC 49 [631], [568] - [573], [1423].
In the present case the par 9 alleged implied term is expressed broadly and in an ambulatory fashion in the sense that its precise content will need to be assessed by reference to the specific alleged failure to act. What it might require in the various circumstances in which it is relied on throughout the Fourth SSOC will differ depending on the factual context (eg it may be material that the issue arises in the context of a required approval). Put alternatively, at trial it will be necessary to move from the general obligation to the particular and determine whether the conduct complained of constitutes a relevant breach of the alleged duty. Paragraph 9 of the Fourth SSOC may be criticised as to its form in that respect as well as in other respects. For example, I consider the obligation would be better expressed as an obligation to do things as reasonably necessary rather than just necessary.
These are matters of form rather than substance and cannot alone justify that the plea be struck out given the approach to pleading that is now accepted in this court.[23]
[23] See eg Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [4] - [8].
As to substance, the question is whether the alleged implied term in par 9 of the Fourth SSOC is not reasonably arguable or clearly untenable because it is inconsistent with cl 28 or not necessary as the Operating Agreement is effective in the absence of the suggested implied term (having regard to cl 28 and the various express terms as pleaded).
I do not accept the defendants' contention that the alleged implied term in par 9 is unarguable and clearly untenable as it is inconsistent with cl 28 of the Operating Agreement as pleaded in par 7(n). I accept that cl 28, on its face providing for further co-operation between the parties, constitutes an express contractual duty to co-operate. I also accept that it provides for a request in writing by one party requiring the other to do certain things. However, it is not beyond argument that cl 28 supplements the implied term rather than covers the field. When the court is appraised of the totality of the genesis of the transaction, the background, the context and what was required to enable the plaintiff to construct, own and operate the port and to provide port services at the port - all relevant to appreciation of the commercial purpose and object of the Operating Agreement[24] - it might be determined that there is room for operation of both terms (as in Coal Hub Pty Ltd v NSL Consolidated [No 4]).
[24] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
Put simply, the defendants' contention that the implied term is precluded because cl 28 deals with the same subject matter, but does so in a different way meaning that the alleged implied term is inconsistent with the express term, requires close examination of the terms of the Operating Agreement 'in the context of the objective framework of facts within which it came into existence'.[25] It is a matter for trial.
[25] See the passage from Servcorp WA Pty Ltd v Perron Investments Pty Ltd referred to at par 44 above.
The same goes for the defendants' lack of necessity argument. Whether the alleged implied term satisfies the necessity criterion given the various express terms, like the cl 28 inconsistency contention, involves an evaluative judgment sensitive to the facts. It is quintessentially an issue for trial. In any case I am not satisfied to the high degree of certainty that is required at the present interlocutory stage of these proceedings that the plaintiff's case is so clearly untenable that it cannot possibly succeed.
Accordingly, I would not strike out par 9 of the Fourth SSOC. It is reasonably arguable that, by virtue of the implied duty to co-operate, there was an implied obligation on the part of the defendants to the effect of that pleaded in par 9. Whether or not that is the case is a matter for trial.
The undertaking point
The undertaking and the factual context in which it was proffered and accepted
The defendants' undertaking contention arose out of the plaintiff's undertaking proffered to and accepted by the court on 23 November 2012. The undertaking was given in earlier proceedings between the parties, being action CIV 2529 of 2003. Accordingly, it is necessary to commence consideration of the undertaking point by explaining the nature of the plaintiff's claim in action CIV 2529 of 2003 and the circumstances in which the undertaking was given.
The plaintiff commenced action CIV 2529 of 2003 on 15 December 2003. The nature of the proceedings appears from the plaintiff's statement of claim in the action as filed on 28 April 2004.[26]
[26] Affidavit of Andrew Shuy sworn 26 September 2014 attachment 'AS‑2'.
The proceedings concerned the LandCorp Land (par 14(a)), as already referred to, together with what were referred to as 'Option Lots', which were said to be subject to an option to purchase between LandCorp and a third party (par 14(a)). The plaintiff pleaded that the purchase of the LandCorp Land and securing an option over the Option Lots was crucial to the strategic development of the port (par 15) (as distinct from the purchase or lease of the LandCorp Land).
The plaintiff pleaded that it offered to purchase the LandCorp Land with an option to purchase the Option Lots (par 26). It is pleaded that the Lands Minister approved entry into a contract (par 27). Thereafter, LandCorp made an offer (par 31) to which the plaintiff made a counter‑offer (par 32). By 22 October 2001 LandCorp is said to have recommended to the Lands Minister that approval be given to sale of the LandCorp Land and the grant of an option over the Option Lots (par 35). However, it is complained that the Lands Minister failed or refused to grant such approval (par 36). Finally, the plaintiff pleads that on or about 24 September 2003 it was informed that the Lands Minister decided to reject the recommendation (par 37).
I note that the defendants say approval was withheld for reasons including a policy against the sale of strategic industrial land, such land only being available for lease.[27]
[27] Affidavit of Andrew Shuy sworn 26 September 2014 par 11.
This is, contextually, one of the matters relied on by the defendants in support of their preferred construction. In the defendants' reply submissions it is said that the defendants pleaded that the Minister refused to give approval to the sale and grant of an option for reasons that include a policy against the sale of strategic industrial land as such land was only available for lease.[28] In those circumstances the defendants attribute significance to the plaintiff later putting its case in terms of refusal to approve a sale or lease (see par 72 below) - the defendants suggesting the undertaking had a purpose, among other things, of holding the plaintiff to the subsequent plea and not being able to revert to the original plea. Similar to what is asserted in the reply submissions, in a strategic conference position paper dated 11 May 2018 the defendants stated that at par 15 of their defence in action CIV 2529 of 2003 they 'denied that the [plaintiff] needed freehold' (par 17).
[28] Defendants' Supplementary Submissions dated 7 August 2018 par 46(c).
That is not what was pleaded. The plea at par 15 of the defendants' defence dated 29 June 2004 put in issue whether certain materials represented that the purchase of the LandCorp Land and the grant of the option over the Option Lots was crucial to the plaintiff's port proposal. Accordingly, to the extent that the question of sale as against sale and lease is one of the contextual matters relied on by the defendants in support of its preferred construction, the defendants have, in my opinion, overstated the effect of the parties' respective positions in the 2003 proceedings.
Returning to the statement of claim in CIV 2529 of 2003, the plaintiff alleged that the refusal to approve the sale of the LandCorp Land and option in respect of the Option Lots constituted a breach of the Operating Agreement (par 43). The breach was said to be by the conduct of the Lands Minister for and on behalf of all the defendants as parties to the Operating Agreement.
The alleged breach was put on four bases:
(1)a breach of cl 7.5 - the facilitation obligation under the Operating Agreement (referred to at par 19(8) above) (see par 43(a));
(2)a breach of cl 28 - the requirement to do anything reasonably required to give full effect to the Operating Agreement and the transactions contemplated under the Operating Agreement (referred to at par 20 above) (see par 43(a));
(3)a breach of an implied term to co‑operate with the plaintiff to ensure that the plaintiff receives the full benefit of the transaction contemplated by the Operating Agreement (see par 43(a)). (In the statement of claim in action CIV 2529 of 2003 the implied term was pleaded as a term implied in fact rather than in law (par 30)); and
(4)a breach of the Operating Agreement on the basis that, having regard to various matters as pleaded, the parties contemplated that the sale of the LandCorp Land to the plaintiff and the grant of an option over the Option Lots to the plaintiff were transactions required to enable the plaintiff to take the full benefit of the Operating Agreement (see par 43(b)).
Three things should be noted about the claimed breaches of the Operating Agreement and the causes of action as pleaded in CIV 2529 of 2003. First, they were advanced as to both the LandCorp Land and the Option Lots. Second, they were advanced based on non-approval of the sale of the LandCorp Land and the grant of an option over the Option Lots as sought; nothing was advanced as to a potential leasehold interest. Third, they were advanced in terms of being single once and for all breaches constituted by the conduct in refusing to approve the sale of the LandCorp Land and the grant of an option over the Option Lot (see pars 35 - 37 and 43(a) - (b)).
The last point is worth emphasising. It is also necessary to emphasise the timing of the alleged breaches as formed the subject of CIV 2529 of 2003. As pleaded, the breaches are advanced in terms of the Lands Minister's refusal to approve the sale of the LandCorp Land and the grant of an option over the Option Lots as was advised by the letter dated 24 September 2003. Accordingly, the relevant causes of action were said to have accrued by the end of September 2003.
It is, in any case, evident that CIV 2529 of 2003 did not advance any cause of action accruing post-15 December 2003 (that being the date on which CIV 2529 of 2003 was commenced). A cause of action which arises after proceedings have commenced must be the subject of separate proceedings and cannot be added by way of amendment.[29] So, for example, where an action seeks to recover an amount payable annually, it is not possible to amend to include a claim for a further annual payment that has fallen due after the writ was issued.[30]
[29] Boase v Axis International Management Pty Ltd [No 2] [2012] WASC 334 [66].
[30] Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233, 234 - 235.
Among other things, by the statement of claim in CIV 2529 of 2003 the plaintiff claimed an injunction by way of specific performance requiring the Lands Minister to approve the sale of the LandCorp Land and the grant of an option in respect of the Option Land (prayer for relief (c)).
In addition, the plaintiff's proceedings in action CIV 2529 of 2003 raised an issue about access to the LandCorp Land. The statement of claim dated 28 April 2004 pleaded that access was sought by letter dated 6 November 2003 (par 39). It was refused (par 42). That was said to be a breach of the Operating Agreement as access was required for the purpose of geotechnical investigation (par 43(c)). Declaratory and injunctive relief was sought to enable the plaintiff to access the LandCorp Land (prayer for relief (a) and (b)).
Action CIV 2529 of 2003 did not advance beyond the stage of discovery.[31]
[31] Affidavit of Andrew Shuy sworn 26 September 2014 par 14.
On 27 September 2011 the plaintiff commenced these proceedings by filing a writ indorsed with a statement of claim. That statement of claim included references to the LandCorp Land. However, it did not seek the declaratory and injunctive relief sought in action CIV 2529 of 2003.[32]
[32] Affidavit of Andrew Shuy sworn 26 September 2014 par 16.
In late December 2011 the plaintiff filed a substituted statement of claim dated 22 December 2011. This pleaded that the plaintiff required the LandCorp Land to be made available to it by sale or lease for use in the port (par 90). In that substituted statement of claim the plaintiff did not seek the declaratory and injunctive relief sought in action CIV 2529 of 2003. However, the substituted statement of claim did refer to action CIV 2529 of 2003; it was said that those proceedings sought orders for the sale of the LandCorp Land and access to it and that the proceedings remained pending (par 101).
Between February and March 2012 there was correspondence between the court and the plaintiff's solicitors about action CIV 2529 of 2003.[33] By a letter dated 30 March 2012, a copy of which was sent to the defendants' solicitors, the plaintiff's solicitors informed the court that:
The matter [referring to action CIV 2529 of 2003] has been subsumed by further proceedings initiated in the Supreme Court [referring to these proceedings]. In that action, the question of the validity and currency of the Operating Agreement, upon which the above matter depends, is to be determined.
[33] Affidavit of Andrew Shuy sworn 26 September 2014 pars 19 ‑ 21.
On 23 October 2012 the plaintiff filed a further substituted statement of claim (Further SSOC) in these proceedings. At par 19 of the Further SSOC, the plaintiff pleaded that it required approval from the Land Minister for the LandCorp Land to be sold or leased for the duration of the port lease and for access to the land in the design process for the port. It was pleaded that there had been a breach of the facilitation obligation as to the LandCorp Land. The plea relied on cl 7.5 of the Operating Agreement which was pleaded in very similar terms to the present par 7(k). Importantly, however, in the Further SSOC, the plaintiff pleaded that it elected to terminate the Operating Agreement (par 36(c) and (d)). In accordance with that plea the plaintiff confined its prayer for relief to a claim for damages.
Conferral ensued between the solicitors for the plaintiff and the solicitors for the defendants as to the future maintenance of action CIV 2529 of 2003.[34]
[34] Affidavit of Cheyne Malcolm Beetham affirmed 12 July 2018 par 5.
On 15 November 2012 the defendants' solicitors sent the plaintiff's solicitors a draft proposed minute of consent orders for their consideration. The consent orders contemplated that action CIV 2529 of 2003 would be discontinued on terms that the costs of the action be costs in the cause in action CIV 2812 of 2011. However, leave to discontinue was to be given upon an undertaking of the plaintiff in terms as attached to the minute.
The contemplated undertaking was in terms that:
The plaintiff hereby undertakes to this Honourable Court and to the defendants that upon leave being granted to the plaintiff to discontinue these proceedings and these proceedings being discontinued, the plaintiff will not commence or continue any proceedings in this court or any other court:
1.asserting any claims or cause of action pleaded in these proceedings; or
2.seeking against the defendants any of the relief claimed in these proceedings;
other than:
(a)as a claim presently pleaded by the plaintiff against the defendants in the Further SSOC dated 23 October 2012 filed in Supreme Court action CIV 2812 of 2011; and
(b)in those proceedings, for relief limited to damages.
(In terms of the physical presentation of the undertaking the arrangement above is a faithful depiction of the arrangement and indenting of the various paragraphs save that the undertaking appears over two pages.)
Those terms were agreed. The plaintiff's solicitors signed the minute of proposed consent orders, and gave the undertaking on behalf of the plaintiff, on 15 November 2012. The minute of consent orders, signed on behalf of both parties, was filed on 16 November 2012.[35] On 23 November 2012 Registrar S Boyle made orders providing for the discontinuance of action CIV 2529 of 2003 on the undertaking of the plaintiff. The undertaking, as proffered to and accepted by the court, was in the terms that I have recounted at par 77 above.
The defendants' complaint as to alleged breach of the undertaking
[35] Affidavit of Cheyne Malcolm Beetham affirmed 12 July 2012 par 10.
The defendants accept that, on its proper construction, the undertaking permits the plaintiff to continue action CIV 2812 of 2011; but it is contended that the plaintiff may only assert in these proceedings those claims that were asserted in CIV 2529 of 2003 as the claims were pleaded in the Further SSOC dated 23 October 2012. In effect, on the defendants' construction, a previously asserted claim can only be asserted (in CIV 2812 of 2011) in the precise terms pleaded, as at 23 October 2012, in the Further SSOC.[36]
[36] Defendants' Submissions dated 12 July 2018 (Defendants' Submissions) par 73.
In other words, the defendants contend that the undertaking must be honoured by adherence in the continuation of action CIV 2812 of 2011 to the form of plea as to the LandCorp Land claim as pleaded in the Further SSOC dated 23 October 2012.[37] It is said that the plaintiff is confined in its case as to the LandCorp Land as was presently pleaded in the Further SSOC.[38]
[37] Defendants' Submissions par 85.
[38] Defendant's Reply Submissions dated 6 August 2018 par 47.
In short, on the defendants' construction, the plaintiff is bound to adhere to or abandon altogether the claim as pleaded in 2012 in the Further SSOC.[39] No alteration is permitted.
[39] ts 223.
The plaintiff characterises the defendants' argument as one which construes the undertaking as evincing an objective intention by the parties to freeze the pleadings in their 2012 form.[40] I agree that is the necessary consequence of the construction for which the defendants contend. The defendants contend that the undertaking was framed in the terms employed to hold the plaintiff to the form of allegation as to the LandCorp Land which then appeared in the Further SSOC.[41]
[40] Plaintiff's Supplementary Submissions dated 20 August 2018 par 4.
[41] Defendants' Submissions par 79.
The defendants allege that all of the pleas in pars 24 - 30 of the Fourth SSOC are in violation of the undertaking - and also par 33 insofar as it picks up those paragraphs. It is said that this is the case as the plaintiff seeks, in relation to the LandCorp Land, to continue the proceedings by way of the Fourth SSOC as a claim that will:[42]
(1)abandon the plea at par 19 of the Further SSOC dated 23 October 2012 that the plaintiff needed approval from the Land Minister under s 17A of the Western Australian Land Administration Act 1997 (WA);
(2)re‑characterise the alleged breach at par 22 of the Further SSOC dated 23 October 2012 from a once and for all breach to a continuing breach;
(3)introduce a new claim in pars 30 and 33 as to a failure to issue a written direction to LandCorp under s 24A(1) of the Western Australian Land Authority Act 1992 (WA);
(4)introduce new allegations based on the alleged implied obligation pleaded in par 9 of the Fourth SSOC; and
(5)delete without replacement the plea at par 24 of the Further SSOC dated 23 October 2012 as to the alleged causal effect of the alleged breaches as to the LandCorp Land.
Does the Fourth SSOC advance different claims?
[42] Defendants' Submissions par 74.
At the oral hearing the plaintiff did not contest the defendants' contention that the Fourth SSOC departed from the claim in the Further SSOC dated 23 October 2012 (although that issue was raised in the plaintiff's supplementary submissions).[43] Rather, the plaintiff contested the defendants' construction of the undertaking. It might, however, be questioned whether the pleaded case in the Fourth SSOC represents such a material departure as the defendants say is the position.
[43] Plaintiff's Supplementary Submissions dated 20 August 2018 pars 3 - 4.
To explain why this is so it is necessary to give closer consideration to the plaintiff's pleadings as to the LandCorp Land.
Both statements of claim start out by identifying the LandCorp Land.[44] The Fourth SSOC then pleads that the Operating Agreement provided for the construction and operation of the port on the LandCorp Land (par 24). There is no equivalent plea in the Further SSOC, although the particulars to par 19(a) do suggest that the plaintiff informed the State that its proposed development of the port would include the LandCorp Land. But the plea in par 24 of the Fourth SSOC is by way of context rather than a new claim or cause of action.
[44] Further SSOC par 18; Fourth SSOC par 23.
The Fourth SSOC then pleads that on a proper construction of the Operating Agreement the State was obliged to facilitate the sale or lease of the LandCorp Land to the plaintiff (par 25). There is no equivalent plea in the Further SSOC. Again, however, the plea is one of context rather than a claim or cause of action. As will be seen, it is only the conduct in pars 29 - 32 of the Fourth SSOC that is said to constitute a breach of the Operating Agreement.
Paragraph 26 of the Fourth SSOC refers to a 2 May 2001 offer to purchase the LandCorp Land. There is no plea in the Further SSOC that is in those express terms. But such an allegation is encompassed within par 20 of the Further SSOC, which refers to 2001 negotiations to purchase the LandCorp Land. The Fourth SSOC then pleads that before 25 December 2004 the sale of the LandCorp Land required approval of the Land Minister (par 27).[45] While there is no plea in the Further SSOC in those exact terms, par 19(a) refers to the plaintiff requiring approval from the Land Minister for the LandCorp Land to be sold or leased. Reference is made to s 17A[46] of the Western Australian Land Administration Act 1997 (WA). Section 17A is also particularised in par 27 of the Fourth SSOC as the source of the requirement for approval (and par 29 puts the eventual breach plea in terms of non-approval pursuant to s 17A).
[45] Section 17A of the Western Australian Land Administration Act 1997 (WA) was amended with effect from 25 December 2004: Western Australian Land Authority Amendment Act 2004 (WA) s 18.
[46] The actual plea is as to s 17A of the 'Land Act' which is defined to mean the Land Administration Act 1997 (WA). That must be an inadvertent error; there is no such provision. The pleader must have intended to refer to s 17A of the Western Australian Land Authority Act 1992 (WA).
The Fourth SSOC then pleads that in September 2001 LandCorp sought approval for the sale and recommended that approval be given (par 28). There is no analogue in the Further SSOC, although par 21 refers to such a recommendation being made on or about 22 October 2001. Again, however, this is a contextual matter only.
The first conduct alleged to constitute a breach is pleaded at par 29 of the Fourth SSOC. This is the failure, between 21 September 2001 and 25 December 2004, by the Lands Minister to grant s 17A approval for the sale of the LandCorp Land. There is a broadly equivalent plea in par 22 of the Further SSOC, although it is temporally limited to 24 September 2003 (there being no allegation of continuing breach in the Further SSOC).
Paragraph 30 of the Fourth SSOC alleges failure by the Land Minister to give a direction under s 24A[47] of the Western Australian Land Authority Act 1992 (WA). There is no equivalent plea in the Further SSOC; the breach in par 22 of the Further SSOC relies on s 17A of the Western Australian Land Authority Act 1992 (WA).
[47] While the plea is as to s 24A that provision deals with consultation between the board and the Minister. It appears that the plaintiff has in mind s 24 of the Act which provides that the Minister may give directions in writing to the Authority which, subject to various matters, are to be given effect to. For present purposes nothing turns on this.
In pars 31 and 32 of the Fourth SSOC reference is made to the plaintiff seeking access to the LandCorp Land to carry out geotechnical investigation work and access being refused. Later, at par 33, this is said to be a breach of the Operating Agreement. Essentially the same allegation is made at par 23 of the Further SSOC. It might be that this is the reason why the defendants did not contend that pars 31 and 32 were in violation of the undertaking. That said, in the Fourth SSOC this claim is now also put on a continuing breach basis and by reference to the par 9 implied term. The defendants rely on those features of the Fourth SSOC, among others, to contend that the recast pleas concerning the alleged failures to grant s 17A approval are in violation of the undertaking.
Why what is pleaded in pars 31 and 32 of the Fourth SSOC is consistent with what the defendants contend to be permitted on their construction of the undertaking, but that which is pleaded in par 29 is not, was never explained. Perhaps it is because par 23 of the Further SSOC pleaded that that following the alleged failure to give access to the LandCorp Land the defendants 'continues [sic] to withhold that permission'.
The breach plea in the current pleading is at par 33 of the Fourth SSOC. This relies on the conduct pleaded at pars 29 ‑ 32. Ignoring, for present purposes, the access allegations, there is said to be a breach of the cl 7.5 facilitation term (refer to para 19(10) above) and the implied duty to co-operate as pleaded in par 9. The Further SSOC only relied on the cl 7.5 facilitation term (par 23). And, at this time, the allegation of breach was not advanced on the basis that there was a continuing breach (cf par 10(a) of the Fourth SSOC). The breach was put in terms of a refusal to grant approval pursuant to s 17A, notice of which was given by letter dated 24 September 2002 (Further SSOC par 22).
Having contrasted the Further SSOC pleading as to the LandCorp Land with the present pleading in the Fourth SSOC, I reject the plaintiff's submission that 'the plea is unchanged'.[48] Nor is it correct to say that the claim has merely undergone 'a refinement'.[49] But the departure is less radical than suggested by the defendants.
[48] Plaintiff's Supplementary Submissions dated 20 August 2018 par 4.
[49] Plaintiff's Supplementary Submissions dated 20 August 2018 par 4.
These proceedings, by the Fourth SSOC, assert claims and causes of action as to alleged breach by the Transport Minister and the Lands Minister of the Operating Agreement (as to both cl 7.5 and the alleged implied term at law as pleaded in par 9) in relation to the LandCorp Land in the following ways:
(1)in not granting approval pursuant to s 17A for the sale of the LandCorp Land to the plaintiff - a continuing breach between 21 September 2001 and 25 December 2004 (pars 29 and 33);
(2)in not giving a direction under s 24A (sic - meaning s 24) to LandCorp requiring it to sell or lease the LandCorp Land to the plaintiff - a continuing breach from 21 September 2001 (pars 30 and 33); and
(3)in not giving the plaintiff access to the LandCorp Land to undertake geotechnical investigations - a continuing breach from around 23 December 2003 (pars 31, 32 and 33).
A component of the first claim is found in the Further SSOC (pars 19 - 22). The Further SSOC alleged a breach of cl 7.5 in refusing to grant s 17A approval to the sale of the LandCorp Land as notified on 24 September 2003. The second claim was not made in the Further SSOC; nor was it made in the pleading in CIV 2529 of 2003. A component of the third claim is found in the Further SSOC (pars 19 and 23). The Further SSOC alleged a breach of cl 7.5 in refusing to grant access to the LandCorp Land to conduct geotechnical investigations as notified on 24 September 2003 (albeit there is reference to the defendants continued withholding of permission). However, it is to be recalled that the pleas in pars 31 and 32 stand outside the defendants' strike out application.
In the preceding paragraph I use the word 'component' as the Fourth SSOC pleads multiple causes of action as to the claims whereas the Further SSOC put each claim in terms of a single cause of action. There are multiple causes of action in the Fourth SSOC as: (1) an additional alleged term is said to have been breached (the par 9 implied term); and (2) the Fourth SSOC alleges continuing obligations and ongoing breaches rather than the single once and for all breach as alleged in the Further SSOC (at least as to the refusal to grant s 17A approval to the sale of the LandCorp Land).
Approach to construction of the undertaking
The defendants did not advance any submissions as to the approach that should be adopted in construing the undertaking. The plaintiff suggested that the undertaking should be interpreted in the same manner as a contract as it was part of a consent order and represented an agreement between the parties.[50] There is authority that supports the plaintiff's position.[51] Accordingly, I intend to adopt that approach.
[50] Plaintiff's Submissions dated 30 July 2018 par 30.
[51] Sirius International Insurance Co v FAI General Insurance Ltd [2004] UKHL 54; [2005] 1 WLR 3251 [18].
The applicable principles as to construction of a commercial contract are well settled. Reference need only be made to Electricity Generation Corporation v Woodside Energy Ltd,[52] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[53] and Black Box Control Pty Ltd v Terravision Pty Ltd.[54] The meaning of the undertaking is to be determined objectively by reference to its text, context and purpose. As the undertaking represented part of a compromise between commercial parties, its meaning is to be determined by what a reasonable business person would have understood the terms to mean having regard to the text, context and purpose. In that respect the undertaking is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience.
[52] Electricity Generation Corporation v Woodside Energy Ltd [35].
[53] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [50].
[54] Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42].
As to the last point it is accepted that:
… if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate' …[55]
[55] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.
Moreover, the undertaking should be construed practically, so as to better give effect to its purpose. The undertaking was extracted as part of a commercial arrangement to end action CIV 2529 of 2003 and condense the litigation between the parties so that it was reposed solely in action CIV 2812 of 2011. As the undertaking is part of a commercial arrangement it is inappropriate to adopt a narrow or pedantic approach to its construction.[56]
[56] Mineralogy Pty Ltd v State of Western Australia [2005] WASCA 69 [15].
There was, however, a dispute as to whether I should determine the proper construction of the undertaking on a final basis.
The plaintiff submitted that the application should fail if I was persuaded that there was a reasonably open interpretation of the undertaking on which the impugned paragraphs did not violate the undertaking.[57] The contention was that I should approach the question on a 'General Steel standard'.[58] However, the defendants contended that the question could not be left for trial as that would defeat the purpose of the undertaking.[59] That contention was reiterated in supplementary submissions.[60] In effect the defendants contended that the undertaking should be construed on a final basis.
Disposition of the undertaking point
A preliminary question: should the application be entertained?
[57] Plaintiff's Supplementary Submissions dated 20 August 2018 pars 1 - 2.
[58] Referring to General Steel Industries Inc v Commissioner for Railways [1964] HCA 69; (1964) 112 CLR 125, 129 - 130.
[59] ts 233.
[60] Defendants' Supplementary Submissions dated 23 August 2018 pars 8 - 9.
As a preliminary matter the plaintiff contended that the application should not be entertained. Self-evidently the application was brought outside the time limits provided by O 20 r 19(3) and O 21 r 3(3) of the Rules of the Supreme Court 1971 (WA). The plaintiff acknowledged that I had permitted other aspects of the application to proceed despite non-compliance with the applicable time limits and had given reasons for doing so. The plaintiff did not seek to challenge that earlier ruling or the reasons given for the ruling. However, the plaintiff contended that I had not ruled on its specific objection to this aspect of the strike out application.[61]
[61] Plaintiff's Supplementary Submissions dated 20 August 2018 par 5.
Specifically, as to the undertaking point, the plaintiff noted that the complaint now made by the defendants as based on the undertaking was not made in the defendants' summary dismissal application before Martino J and was inconsistent with the basis on which the appeal from that decision was conducted. It was said that this was a strong discretionary reason for dismissal of that part of the application.[62]
[62] Plaintiff's Submissions dated 30 July 2018 par 34.
I agree that I have not ruled on this submission and it is open to the plaintiff to seek to resist the application on this basis.
I also accept that the defendants could, and probably should, have raised their complaint based on the undertaking in the summary dismissal application before Martino J. It potentially could have been an answer to the plaintiff's contention that no limitation issue arose because there was arguably a continuing breach.[63] The agitation of the undertaking point is also inconsistent with the basis on which the appeal was conducted - the appeal itself contemplating further amendment to the pleading to more precisely articulate the plaintiff's allegation of continuing breach.[64] I have been informed that the point was overlooked at the time the summary dismissal application was brought and determined.
[63] James Point Pty Ltd v The Minister for Transport [35] - [36], [44], [50] - [51].
[64] The Minister for Transport v James Point Pty Ltd [6], [11], [12] - [15].
Litigants such as the defendants are model litigants.[65] In so acting as a moral exemplar there is an accepted obligation of conscientious compliance with procedures designed to minimise cost and delay;[66] and, I would add, making appropriate use of the resources available to the court - which in the present case should have seen the undertaking point being raised in the context of the defendants' summary dismissal application. It is unfortunate that the point was overlooked in the application before Martino J. I accept, however, that the matter was one of mere oversight and involved no breach of the model litigant standard.
[65] See eg Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 [239] - [240]; Mahenthirarasa v State Rail Authority of New South Wales (No 2) [2008] NSWCA 201; (2008) 72 NSWLR 273 [15] - [22].
[66] Kenny v State of South Australia (1987) 46 SASR 268, 273.
The defendants' failure to raise the undertaking point in a timely way is unsatisfactory. That is all the more so when it could, and probably should, have been raised in the context of the summary dismissal application. I am, however, persuaded that I should entertain the application. Accordingly, to the extent necessary, I will extend the time for the bringing of the application.
I have come to the conclusion that I should proceed to determine the application on its merits for three reasons.
First, as I observed in the 13 August 2018 ruling, the nature of the claim made by the Fourth SSOC is such that the future conduct of the proceedings are likely to consume substantial resources, both of the parties and of the court. This is large and complex litigation in which the expert evidence is likely to be considerable and where the parties have conservatively estimated a potential trial of some 10 weeks. If the undertaking point is good then various important aspects of the claim will fall away.
In balancing the objects of case management as enshrined in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) the interests of justice favour determination of whether the undertaking prevents continuation of the relevant aspects of the pleaded case ‑ despite the defendants' unsatisfactory conduct - because that may significantly reduce the issues for determination and the call on the public and private resources that determination of the litigation will require.
Second, the allegation made is that the plaintiff is in breach of an undertaking given to the court and consequentially that the continuation of the proceedings in their current form involves an abuse of process. That is a very serious allegation. If there is an abuse of process then there is no discretion whether or not to make an appropriate order to remedy the abuse.[67] The nature of the allegation is such that, in my view, its spectre should not remaining hanging over the plaintiff's litigation for any longer than is necessary. The allegation should be determined if it is otherwise appropriate to do so.
[67] Batistatos v Road and Traffic Authorityof New South Wales [2006] HCA 27; (2006) 226 CLR 256 [7]; Commonwealth v Albany Port Authority [2006] WASCA 185 [83].
Third, if I was not to entertain the application it is inevitable that the defendants would plead by way of defence and counterclaim their contention that those aspects of the Fourth SSOC were in violation of the undertaking. No doubt injunctive relief would be sought to prevent the plaintiff relying on those aspects of the Fourth SSOC. The defendants could then seek to have that the question determined as a preliminary issue or on a trial of a separate issue. It is not difficult to envisage other procedural mechanisms by which the defendants may seek to have the contention determined and do so before determination of these proceedings, eg some form of claim for an anti-suit injunction. The question must be confronted sooner or later. I see no advantage to the parties or the court in simply deferring the determination.
In all the circumstances I consider it is necessary to take a pragmatic attitude as to whether or not to allow the defendants to agitate the undertaking point by way of the present strike out application.
I accept the essential premise of the plaintiff's contention that in bringing the application now the defendants have acted belatedly and unsatisfactorily. I should not be understood to be condoning in any way the manner in which the defendants have approached the undertaking point. Nevertheless, considering the wider interests of justice, I am satisfied that the application addressing the undertaking point should be determined on its merits rather than simply being dismissed in the exercise of discretion as is suggested by the plaintiff.
Approach to construction: final determination or reasonably arguable position?
For very similar reasons I am persuaded that I should construe the undertaking on a final basis.
Where, in a strike-out application, a point of law arises which can appropriately be decided at the interlocutory stage, the court may determine the point, thus avoiding the need for and the expense of trial.[68] Whether it is appropriate to decide the question will turn on considerations such as whether the question may depend on further evidence and findings of fact.
[68] Polar Aviation Pty Ltd v Civil Aviation Safety Authority [2012] FCAFC 97; (2012) 203 FCR 325 [43] ‑ [44].
So too, when an interlocutory application depends on the construction of a contract a determination may be made whether to construe the contract on a 'prima facie' or 'reasonably arguable' basis, on the one hand, or a final basis, on the other. Much will depend on the context in which the question arises. For example, on an application for an interlocutory injunction to restrain recourse to security the court will determine a controversial issue of law if the determination of that issue is a necessary step to a conclusion whether an applicant is entitled to the injunction unless, in the particular circumstances of the case, it is not practicable or appropriate to do so.[69]
[69] Dedert Corporation v United Dalby Bio-Refinery Pty Ltd [2017] VSCA 368 [99] - [101]; CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [2017] WASC 112 [65].
The present case is one in which the defendants assert that the proceedings amount to an abuse of process because certain pleas are made in violation of an undertaking given to the court. The undertaking also provides in its terms that the undertaking was given to the defendants. Let it be assumed that the defendants' undertaking point is good. If the impugned pleas are made in violation of the undertaking it ought to be accepted that they are liable to be struck out as an abuse of process.
Abuse of process occurs in any circumstance in which the use of the court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute.[70] The onus of satisfying the court that there is an abuse of process is a heavy one.[71] The power to dismiss proceedings as an abuse of process should be exercised with caution[72] and only in the most exceptional or extreme case.[73] However, proceedings will constitute an abuse of process if they are clearly doomed to fail[74] or are plainly unsustainable.[75]
[70] Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 [25]; Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44; (2016) 259 CLR 212 [69].
[71] Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 529.
[72] Moore v Inglis (1976) 9 ALR 509, 516.
[73] Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 392.
[74] Walton v Gardiner (393).
[75] Perpetual Trustees Victoria Ltd v Allen [2012] WASC 258 (S) [23].
If the impugned pleas are made in violation of the undertaking they are clearly doomed to fail and are plainly unsustainable. Allowing the plaintiff to continue with the pleas in breach of the undertaking would be unjustifiably oppressive to the defendants and would bring the administration of justice into disrepute. Accordingly, they ought to be struck out as an abuse of process.
Resolving the construction question on a 'reasonably arguable' basis, and holding over a final determination for trial, may permit the alleged abuse of process to continue. If the defendants are correct in their preferred construction of the undertaking it would be to permit the very abuse that the defendants allege. It will do so with the consequences I have already described as to the application of significant resources to the proper preparation and presentation of the defendants' case in answer to the impugned pleas.
Accordingly, in the particular circumstances of these proceedings, I should determine the proper construction of the undertaking unless it is not practicable to do so.
There is no suggestion that there is any further surrounding evidence that might be relevant to understanding the genesis of the undertaking, ie its background, the context in which it was provided and its purpose and object. In that regard there is a clearly established documentary record which is self-explanatory and does not require oral clarification. The plaintiff did not suggest that the question of construction depended on any additional material extrinsic to the undertaking. In any case, the plaintiff was provided with an opportunity after the hearing to adduce any further affidavit material that bore on the question, given the changed basis on which the application was pursued. No additional affidavit material was provided.
Otherwise, as has been seen, the undertaking itself is relatively short. Also, I have been assisted by comprehensive and well-structured written and oral submissions on the part of both the plaintiff and the defendant that address the proper construction of the undertaking. The construction question has been fully argued.
In the circumstances I consider it is practicable to determine the proper construction of the undertaking on a final basis. For the reasons given earlier it is appropriate that I do so.
Parties' contentions on the construction of the undertaking
Senior counsel for the defendants submitted that there was a five step process to determine the proper construction of the undertaking.[76]
[76] ts 222 - 223.
First, it was said that the undertaking prohibited something in the 2011 action (here referring to the chapeau of the undertaking). Second, it was said that the something prohibited was a 'claim' or a 'cause of action' - although counsel focussed on the term 'claim'. Third, by way of further explication of what the something prohibited was, senior counsel for the defendants said that it was something in the 2011 proceedings as was in the 2003 proceedings (here referring to pars 1 and 2 of the undertaking). Fourth, there was said to be an exception to the prohibition (counsel made reference to the word 'unless' but the term in the undertaking is 'other than'). Fifth, it was said that the exception to the prohibition is the claim as presently pleaded in the Further SSOC (here referring to par (a) of the undertaking).
Senior counsel for the defendant also contended that the undertaking came in two pairs: the prohibition in par 1 should be read with the exception in par (a); and the prohibition in par 2 should be read with the exception in par (b).[77]
[77] ts 222. See also ts 223, 236. The contention is echoed in the Defendants' Reply Submissions dated 7 August 2018 par 45.
Whether an undertaking will be required and, if so, the terms of the undertaking, involves the exercise of discretion so as to do justice between the parties. The question is fact specific. An undertaking not to bring further proceedings in respect of the causes of action in the action to be discontinued may be appropriate where the proceedings haven been on foot for a considerable time, discovery has been given, and the only objection is that an evidentiary deficiency might later be overcome.[101] So too an undertaking in wide terms may be appropriate to give effect to a compromise as to the whole of the claim brought by a plaintiff.[102]
[101] Heimann v Commonwealth of Australia (1940) 58 WN (NSW) 2, 4 - 5.
[102] Perdaman Chemicals & Fertilizers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 12] [15].
It is usual, however, that the undertaking is confined to the causes of action that are the subject matter of the action that is to be discontinued. See for example the orders made in Robertson v Purdey[103] and Heimann v Commonwealth of Australia.[104] For the potential injustice to a defendant in a plaintiff ceasing and then reviving proceedings is concerned with the lack of finality as to the subject matter of the discontinued proceedings. A defendant may legitimately seek to be put in the same position as if the proceedings had gone to trial and been determined in its favour. Accordingly, as is shown by the obiter observations of Martin CJ in Heartlink Ltd v Jones,[105] the appropriate scope of the undertaking to be provided as a condition of leave to discontinue will ordinarily be limited to that which would have been finally and authoritatively determined by the proceedings had they continued.
[103] Robertson v Purdey (619).
[104] Heimann v Commonwealth of Australia (4 - 5).
[105] Heartlink Ltd v Jones [49] - [53].
Two things may be drawn from the settled legal context that applied to the circumstances in which the undertaking was sought, proffered and accepted.
First, the context supports the proposition that a purpose of the undertaking was as contended by the plaintiff; it was to ensure that, with the exception of that which was pleaded in the CIV 2812 of 2011 proceedings by the Further SSOC, the claims in the CIV 2529 of 2003 proceedings were put to an end.
Having regard to the accepted legal principles pertaining to such undertakings, that was the only legitimate purpose of an undertaking provided in the context of an O 23 discontinuance. Further, having regard to the terms of the statement of claim in CIV 2529 of 2003 and the Further SSOC, such a purpose was of real utility; there were claims and causes of action in CIV 2529 of 2003 that were not replicated in the Further SSOC.
By contrast, the settled legal context does not support assigning to the undertaking a purpose that the plaintiff was bound to adhere to or abandon altogether the claim as pleaded in 2012 in the Further SSOC without alteration.
In the circumstances I accept that a purpose of the undertaking was to ensure that, post-discontinuance, the plaintiff could not assert claims or causes of action pleaded in CIV 2529 of 2003 in CIV 2812 of 2011 unless such claims were already on foot in the 2011 proceedings. Those other claims or causes of action as abandoned by the discontinuance of CIV 2529 of 2003 were not to be revived. That purpose is evident in the text of the undertaking on its natural and ordinary reading, the factual context and the settled legal context as to the type of undertaking that might justly be imposed as a condition for the grant of leave to discontinue.
Second, the context supports the natural and ordinary reading of the restraints portion of the undertaking in its chapeau and pars 1 and 2. It is entirely consistent with the settled legal context in which an undertaking is imposed as a condition for the grant of leave to discontinue that the undertaking restrain the plaintiff from asserting a claim or cause of action, or seeking the relief claimed, in CIV 2529 of 2003. It would be most unusual, however, if the undertaking was to capture and prevent the prosecution of claims and causes of action outside of those asserted and pleaded in CIV 2529 of 2003.
Context is also relevant to the defendants' preferred construction of the carve-out exception in par (a) - in particular the meaning to be ascribed to the words 'other than as a claim presently pleaded'.
The defendants contend that those words require adherence to the form of plea as to the LandCorp Land as pleaded in the Further SSOC. The choice is said to be to adhere to or abandon altogether the claim as pleaded in 2012. Necessarily, if that contention is permitted, amendment is impermissible. The pleadings are to be frozen in the form provided by the Further SSOC. To anyone engaged in commercial litigation in Western Australia post‑2010 that is an inconvenient and improbable result. Amendment of pleadings, without leave, is a common everyday occurrence and is facilitated by O 21 r 3 of the Rules of the Supreme Court 1971 (WA).
In all the circumstances it is difficult to see how a prohibition on amendment of the form or of the terms of the pleading in the Further SSOC is 'just'. In no way could it be said that at the time the undertaking was sought and provided the plaintiff had engaged in such a variety of amendments to its claim that it would have been just to confine the plaintiff to that pleaded case for all time. Indeed, even where a litigant has shown a proclivity to unmeritorious and uncontrolled amendment it would be an unusual step to shut out the litigant from ever further amending. The more appropriate course in those circumstances (which were not the present circumstances) is to only permit amendment by leave. The requirement that the terms for leave to discontinue be 'just' is one of the matters that conditioned the imposition of undertaking. Accordingly, in my opinion, the requirement that the terms of leave be 'just' informs the proper construction of the undertaking.
Nor, given the purpose of the undertaking as I accept it to be, is the outcome that amendment is impermissible in furtherance of the undertaking's purpose.
No doubt it might be that a party could undertake to only pursue a claim or cause of action on particular terms as pleaded, ie that there would be no alteration or amendment to the alleged material facts as pleaded in support of the cause of action. But given the commonly accepted entitlement to amend without leave it would be expected that such an inconvenient or unusual fetter on the ability of a litigant to conduct commercial litigation in this court would be spelt out in very clear terms. That is not the case with the undertaking.
The undertaking permits the plaintiff to assert a claim or cause of action in CIV 2529 of 2003 as a claim presently pleaded in the Further SSOC. That does not, in its terms, require that there be no alteration or amendment to the alleged material facts as pleaded in support of the cause of action. To the contrary, the ability to assert the claim or cause of action in CIV 2529 of 2003 by continuing that claim in CIV 2812 of 2011 (where it was pleaded in the Further SSOC) carries with it all the usual procedural rights and entitlements available to a litigant under the Rules of the Supreme Court 1971 (WA), including that of amendment.
Accordingly, I conclude that, properly constructed, the carve-out exception in par (a) of the undertaking does not have the meaning and consequence contended for by the defendants. It does not require that the plaintiff, in asserting now in CIV 2812 of 2011 a claim or cause of action pleaded in CIV 2529 of 2003, may only do so by adhering to the precise terms of that claim or cause of action as pleaded in the Further SSOC. Such a construction is, in my opinion, contrary to the purpose of the undertaking and the context (including the legal context) in which undertaking was sought, proffered and accepted by the court. It involves a narrow or pedantic approach, attributing an unwarranted significance to the use of the word 'presently', which is at odds with a fair reading of a commercial arrangement to bring CIV 2529 of 2003 to an end and collapse the whole of the controversy into CIV 2812 of 2011.
The consequence arising from the defendants' preferred construction is - to use the words in Australian Broadcasting Commission v Australasian Performing Right Association Ltd ‑ unreasonable, inconvenient and unjust. There is an alternate construction which ought to be preferred so far as it is commercially workable and consistent with the undertaking's purpose and the context in which it was provided.
The carve-out exception in par (a) of the undertaking does not prevent the plaintiff from amending the material facts on which it relies to assert a claim or cause of action previously pleaded in CIV 2529 of 2003 now continued in CIV 2812 of 2011. Rather, on the proper construction of par (a), the question to be asked is whether that claim was pleaded, as at the time of the acceptance of the undertaking, in the Further SSOC. If so the plaintiff may continue to assert the claim or cause of action in CIV 2812 of 2011 notwithstanding that it was discontinued in CIV 2529 of 2003.
Conclusion as to the proper construction of the undertaking
The purpose of the undertaking is established by its text and the context in which it was sought, proffered and accepted. The purpose of the undertaking was to ensure that post-discontinuance of CIV 2529 of 2003 the plaintiff could not assert claims or causes of action, or seek the relief claimed, in CIV 2529 of 2003 unless such claims were already on foot in the CIV 2812 of 2011 proceedings, were pursued in those proceedings, and were for relief limited to damages.
The undertaking is in two parts.
First, by the chapeau and pars 1 and 2 it establishes two restraints that operate on the discontinuance of CIV 2529 of 2003. The plaintiff is prohibited from asserting any claims or cause of action pleaded in CIV 2529 of 2003. The words 'claims' and 'cause of action' are used interchangeably as part of a composite expression. They refer to the factual situation which is alleged to entitle the plaintiff to relief. The plaintiff is also prohibited from seeking the relief claimed in CIV 2529 of 2003.
Second, if a restraint bites there is a single carve-out exception. By pars (a) and (b) a proceeding may be continued if it is a claim presently (ie as at the date of the undertaking) pleaded in the Further SSOC dated 23 October 2012. However, the claim or cause of action may only be pursued in proceedings CIV 2812 of 2011 and only for relief limited to damages.
On the proper construction of the undertaking the plaintiff is not prohibited from amending the material facts on which it relies to assert a claim or cause of action previously pleaded in CIV 2529 of 2003 subsequently continued in CIV 2812 of 2011 pursuant to the carve-out exception. The reference to 'presently pleaded' in par (a) reinforces that the CIV 2529 of 2003 claims and causes of action that may be asserted are those pleaded, at present (ie at the date of the undertaking), in the Further SSOC.
Application of the proper construction of the undertaking
Having established the meaning of the undertaking, it remains to be determined whether the pleas in pars 24 - 30 of the Fourth SSOC, and par 33 so far as it picks up those paragraphs, are in violation of the undertaking.
This ought to be addressed in a number of steps:
(1)The initial step is to identify the relevant claim or cause of action being asserted in CIV 2812 of 2011 (to be carried out by reference to the impugned paragraphs within the Fourth SSOC).
(2)In terms of the undertaking, the first question is whether that claim or cause of action was pleaded in CIV 2529 of 2003. (While, in theory, there might also be consideration of whether what is sought was relief claimed in CIV 2529 of 2003, that does not arise. None of the impugned pleas concern relief.) If the claim or cause of action being asserted in CIV 2812 of 2011 by the impugned paragraphs is not a claim or cause of action that was pleaded in CIV 2529 of 2003 that is the end of the inquiry. Such a claim or cause of action is not in violation of the undertaking.
(3)Where, due to a positive answer to the first question, the restraint is activated, a further question then arises: is the claim or cause of action one that was pleaded in the Further SSOC? If yes, the carve-out exception will apply (there is no doubt that the further conditions of pars (a) and (b) are met). If no, the assertion of the claim or cause of action is in breach of the undertaking.
I reviewed the pleadings at pars 23 - 33 of the Fourth SSOC at pars 85 - 98 above. At par 96 above I identified the claims or causes of action asserted by the plaintiff in relation to the LandCorp Land in the Fourth SSOC. I will not repeat that analysis. Importantly, due to the plea at par 10(a) of the Fourth SSOC, what is asserted in the Fourth SSOC are a series of ongoing continuous breaches - multiple breaches ‑ over an identifiable time period. That period extends past the issue of the writ in CIV 2529 of 2003.
The allegations as to failure to give the plaintiff access to the LandCorp Land to conduct geotechnical investigations are outside the strike out application. Accordingly, they need not be further considered. This leaves two categories of claims or causes of action as asserted in CIV 2812 of 2011:
•The alleged failure to grant approval pursuant to s 17A of the Western Australian Land Authority Act 1992 (WA) for the sale of the LandCorp Land to the plaintiff - a continuing breach between 21 September 2001 and 25 December 2004 (Fourth SSOC pars 29 and 33).
•The alleged failure to give a direction under s 24A (sic ‑ meaning s 24) of the Western Australian Land Authority Act 1992 (WA) to LandCorp requiring it to sell or lease the LandCorp Land to the plaintiff - a continuing breach from 21 September 2001 (Fourth SSOC pars 30 and 33).
It is convenient to deal first with the second category of claims or causes of action as asserted in CIV 2812 of 2011. A claim or cause of action based on alleged failure to give a direction under s 24 to LandCorp requiring it to sell or lease the LandCorp Land to the plaintiff was never pleaded in CIV 2529 of 2003. (See the review of the statement of claim in CIV 2529 of 2003 at pars 57 - 69 above and in particular the identification of the causes of action asserted in CIV 2529 of 2003 as set out in pars 63 - 64 above.) The pleas in the Fourth SSOC advancing claims and causes of action based on a failure to give a direction under s 24 are not in violation of the undertaking. They will not be struck out.
The position as to the alleged failure to grant approval for the sale of the LandCorp Land pursuant to s 17A of the Western Australian Land Authority Act 1992 (WA) is more nuanced.
Claims or causes of action to that effect were certainly pleaded in CIV 2529 of 2003. Indeed, as referred to at pars 63 - 66 above, that was the heart of the subject matter of CIV 2529 of 2003, although CIV 2529 of 2003 also asserted the same claims or causes of action as to the Option Lots in addition to the LandCorp Land. In any case, I consider that there are causes of action within this category now pleaded in the Fourth SSOC that were earlier pleaded in CIV 2529 of 2003.
Accordingly, the restraint in par 1 of the undertaking will bite as to some of the causes of action as now pleaded in pars 29 and 33 of the Fourth SSOC.
Specifically, the restraint will bite to the extent there is overlap as between the claims or causes of action in CIV 2529 of 2003 and the claims or causes of action in the Fourth SSOC. There is such an overlap in respect of those claims or causes of action based on the refusal to approve the sale of the LandCorp Land as advised by the letter dated 24 September 2003 as grounded on: (1) an alleged breach of cl 7.5 of the Operating Agreement; and (2) an alleged breach of the implied duty to co-operate.
As to the implied duty to co-operate, I have noted that in CIV 2529 of 2003 it was pleaded as a term implied in fact whereas in the Fourth SSOC it is pleaded as a term implied in law. In terms of assessing whether this is, in substance, the same claim or cause of action, that is a distinction without a difference. Essentially it is the same claim or cause of action.
There is, however, no overlap - and the restraint is not activated ‑ to the extent that the claims or causes of action in the Fourth SSOC accrue at a time other than that of the refusal relied on in the statement of claim pleaded in CIV 2529 of 2003. For it must be remembered that the Fourth SSOC alleges continuing obligations and a series of ongoing breaches; the allegation in the Fourth SSOC is of a series of breaches between 21 September and 25 December 2004 (par 29), not just the one-off breach that forms the subject matters of the four breaches of the Operating Agreement pleaded in the statement of claim dated 28 April 2004 in CIV 2529 of 2003 (see pars 35 - 37 and 43).
The point is easily illustrated by noting that the plea in par 29 of the Fourth SSOC (when read with par 33) alleges continuing breaches up to 25 December 2004. But in CIV 2529 of 2003 the claim or cause of action was a single, once and for all, breach. Indeed, in CIV 2529 of 2003 there could be no causes of action that accrued post-15 December 2003. That is when the writ was issued; and, as mentioned previously, causes of action arising after the proceedings have commenced must ordinarily be the subject of separate proceedings. So, for example, there is no overlap with CIV 2529 of 2003 so far as the Fourth SSOC asserts claims or causes of action accruing post-15 December 2003.
Nevertheless, the restraint in par 1 of the undertaking is activated as to two of the claims or causes of action pleaded the Fourth SSOC: the refusal of s 17A approval insofar as that is alleged to be a breach of cl 7.5 of the Operating Agreement or a breach of the duty to co-operate as alleged to be implied in relation to the Operating Agreement. Is the assertion of those claims or causes of action permitted by the carve-out exception in par (a) of the undertaking? That depends on whether the claim or cause of action was pleaded in the Further SSOC.
The s 17A approval refusal claim or cause of action was pleaded in the Further SSOC so far as it was alleged that this constituted a breach of cl 7.5 of the Operating Agreement (Further SSOC pars 19 ‑ 22). Accordingly, to the extent that there is overlap here between the claims or causes of action in CIV 2529 of 2003 and the claims or causes of action in the Fourth SSOC, the assertion of the claim or cause of action is permitted by the carve-out exception in par (a) of the undertaking. The plea alleging breach of cl 7.5 in refusing to give approval under s 17A is not in violation of the undertaking and will not be struck out.
However, the s 17A approval refusal claim or cause of action as advanced in the Further SSOC did not rely on any breach of an implied duty to co-operate. That was not a claim or cause of action pleaded in the Further SSOC. Its assertion in CIV 2812 of 2011, or any other proceedings, is not authorised by the carve-out exception in par (a) of the undertaking.
It follows, in my view, that there is very small violation of the undertaking.
The undertaking is infringed to the extent that the pleas in pars 29 and 33 of the Fourth SSOC overlap with the allegation in CIV 2529 of 2003 that the s 17A approval refusal (as evinced in the 24 September 2003 letter) constituted an alleged breach of an implied duty to co‑operate. This does not infect the whole of the pleaded paragraphs. Self-evidently it does not affect pars 29 and 33 so far as the breaches pleaded in par 33 rely on an alleged breach of cl 7.5 as pleaded in par 7(k). Not does it affect the pleas so far as the Fourth SSOC advances ongoing continuing - or multiple - breaches. For example, none of the post-15 December 2003 claims or causes of action relying on the alleged implied duty to co-operate violate the undertaking; they are not within the restraint as they were not pleaded in CIV 2529 of 2003.
The violation of the undertaking means that the pleading in the Fourth SSOC cannot stand in its present form.
I consider the simplest way to eliminate the violation of the undertaking will be to strike out the reference to 'and 9' in par 33 of the Fourth SSOC. There will then be no claim or claim of action as to the s 17A approval refusal that relies on an alleged breach of an implied duty to co-operate. However, given the rolled‑up nature of the pleas in pars 29 and 33, it will also have the effect of removing claims or causes of action that are not in violation of the undertaking. Accordingly, the striking out of 'par 9' will be on terms that the plaintiff will have leave to re-plead.
The amended pleading ought to be formulated in conformity with these reasons, ie the plaintiff should ensure that there is no inadvertent violation of the undertaking in recasting the claims and causes of action that it asserts as against the defendants.
Conclusion and orders
Subject to hearing from counsel as to the precise terms, I will order that:
(1)To the extent required, the time for the plaintiff to apply to strike out the plaintiff's fourth substituted statement of claim dated 5 May 2017 is extended to 12 July 2018.
(2)The following words are struck out from par 33 of the plaintiff's fourth substituted statement of claim dated 5 May 2017, namely, 'and 9'. However, the plaintiff has liberty to re-plead to rely on an alleged breach of an implied duty to co-operate to the extent that doing so is in conformity with the plaintiff's undertaking as proffered to and accepted by the court on 23 November 2012 in Supreme Court action CIV 2529 of 2003.
(3)The defendant's application by chamber summons dated 12 July 2018 is otherwise dismissed.
I will hear from the parties as to costs including the appropriate costs orders as to the aspects of the application that were determined on 13 August 2018. I will also hear from the parties as to the time within which the plaintiff is to file an amended statement of claim and what other programming orders are appropriate for the future conduct of the proceedings.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CC
ASSOCIATE TO THE HONOURABLE JUSTICE VAUGHAN6 SEPTEMBER 2018
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