Koolan Iron Ore Pty Ltd v GHD Pty Ltd

[2018] WASC 215

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   KOOLAN IRON ORE PTY LTD -v- GHD PTY LTD [2018] WASC 215

CORAM:   ALLANSON J

HEARD:   15 MAY 2018

DELIVERED          :   15 MAY 2018

FILE NO/S:   CIV 2690 of 2015

BETWEEN:   KOOLAN IRON ORE PTY LTD

Plaintiff

AND

GHD PTY LTD

Defendant

Catchwords:

Practice and procedure - Application for determination of preliminary issue - Turns on own facts

Legislation:

Australian Consumer Law 2010 (Cth), s 236, s 237
Fair Trading Act 1987 (WA), s 10, s 77, s 79
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 31 r 2, O 32 r 4
Trade Practices Act 1974 (Cth), s 52, s 82, s 87

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff	:	Mr S R Donaldson SC & Mr B A Millar
Defendant	:	Mr R Cavanagh SC & Mr S J Davis
Non Party	:	No appearance

Solicitors:

Plaintiff	:	Kennedys (Australasia) Pty Ltd
Defendant	:	Lander & Rogers
Non Party	:	No appearance

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

BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 2) [2012] WASC 321

Firstmac Fiduciary Services Pty Ltd v HSBC Bank of Australia Ltd [2012] NSWSC 1122

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546

Lane Cove Council v Michael Davies Associates Pty Ltd [2012] NSWSC 727

NEA Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70

Omega Air Inc v CAE Australia Pty Ltd [2015] NSWSC 802

Owners SP 62930 v Kell & Rigby [2009] NSWSC 1342

ALLANSON J:

The claim

1. These proceedings relate to the plaintiff's iron ore mining operation at Koolan Island.  The plaintiff, Koolan Iron Ore Pty Ltd (Koolan), seeks to recover losses suffered as a result of the collapse of the mine's seawall and consequent flooding of the main pit. The seawall was built to prevent sea water flooding the main pit and to allow mining at levels below the surrounding sea level.

2. Koolan pleads that the defendant, GHD Pty Ltd (GHD), undertook to provide engineering services in the design and construction of the seawall pursuant to a series of contracts:

   (1)an Investigations and Preliminary Design Contract;

   (2)a Detailed Design Contract;

   (3)a Seawall Construction Phase Services Contract; and

   (4)a Post Construction Monitoring Contract.

3. Koolan alleges that the Post Construction Monitoring Contract is to be inferred from conduct and is not subject to written terms.[1]  The other contracts were in writing.

   [1] Plaintiff's written submissions [17].

4. Koolan pleads that it was an express or implied term of each agreement that GHD was to carry out the engineering services exercising the degree of care and skill customary amongst competent engineers experienced in the performance of services of that kind.[2]

   [2] Plaintiff's written submissions [18].

5. In pt E of the statement of claim, Koolan pleads that GHD, by its conduct in purported performance of the contracts, made express or implied representations in trade or commerce that were misleading or deceptive in breach of the Trade Practices Act 1974 (Cth) s 52 and/or s 10 of the Fair Trading Act 1987 (WA).[3]

   [3] Plaintiff's written submissions [27].

6. Koolan pleads that in reliance on the representations it proceeded with the construction of the seawall in accordance with the Detailed Design, and proceeded with cut-back excavations without taking alternative or additional measures to protect the main pit of the mine from inundation. 

7. Koolan seeks to recover damages and or compensation pursuant to: (a) s 82 and/or s 87 of the Trade Practices Act; (b) sections 236 and/or 237 of the Australian Consumer Law; (c) in the alternative to (a) and (b), s 79 and/or s 77 of the Fair Trading Act.  I will refer to these collectively as the 'consumer law claims'.

8. Koolan also pleads causes of action in tort and breach of contract.

The defence

1. GHD, in its defence, denies the alleged breaches.  It alleges that the seawall failed as a consequence of the plaintiff's failure to carry out the cut-back excavations in accordance with its instructions, and otherwise generally denies that it failed to provide services to an appropriate standard.

2. The defendant also relies upon express terms which, if effective, would place monetary limits on the amount that can be recovered and time limits for the commencement of any action for recovery of damages arising from the performance of the contracts.[4]

   [4] Defence [18(a)(ii) ‑ (v)], [18(b)(ii) ‑ (iv)] and [18(c)(ii) ‑ (iv)]; Reply [1(a)] (Limitation Terms).

3. The parties remain in dispute as to whether the contractual arrangements between them applied to the contract for post‑construction monitoring.

4. The parties also apparently dispute whether the contractual terms, properly construed, would operate to limit or deny recovery under the consumer law claims.

5. In practical terms, assuming that liability would otherwise be found under the consumer law claims, and the matters in the two preceding paragraphs were found in favour of GHD, the effect of the pleaded defence is that the amount recoverable on a claim of about $155 million (and continuing costs) would be limited to $0, or, at most, about $1.5 million.

The preliminary issue

1. The plaintiff has applied for the determination of a preliminary issue by a single judge, alternatively for the issue to be reserved to the Court of Appeal:

   Whether the contractual terms pleaded in paragraphs 18(a)(ii) to (v), 18(b)(ii) to (iv) and 18(c)(ii) to (iv) of the defence are effective insofar as they purport to exclude, limit or otherwise alter the Plaintiff's rights and remedies or the Defendant's obligations and liabilities (including as to time limits for such exercise), arising pursuant to sections 82 or 87 of the Trade Practices Act 1974 (Cth), sections 79 or 77 of the Fair Trading Act 1987 (WA) or sections 236 or 237 of the Australian Consumer Law for contraventions by the Defendant of section 52 of the Trade Practices Act 1974 (Cth), section 18 of the Australian Consumer Law, or section 10 of the Fair Trading Act 1987 (WA).

2. The issue is of general importance.  While the wording may differ, clauses intended to have the same effect are to be found in other contracts.

3. The defendant submitted that, as far as it is aware, the decided cases which considered similarly worded limitations generally support its position.[5]  The plaintiff submitted those authorities were not consistent with the principles set out in decisions of intermediate courts of appeal.[6]

   [5] See Owners SP 62930 v Kell & Rigby [2009] NSWSC 1342 (McDougall J); Lane Cove Council v Michael Davies Associates Pty Ltd [2012] NSWSC 727 (Sackar J); Firstmac Fiduciary Services Pty Ltd v HSBC Bank of Australia Ltd [2012] NSWSC 1122 (Sackar J). Cf the comments of Ball J in Omega Air Inc v CAE Australia Pty Ltd [2015] NSWSC 802 at [31], citing the above decisions and Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 39 FCR 546 (FCAFC).

   [6] See NEA Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70 [112], [156] - [159]; Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd.

The principles

1. The court has power to order that an issue of law or fact be separately determined at any stage of the proceedings.[7] There was no real difference between the parties regarding the principles to be applied in this application.  The principles guiding the exercise of the discretion have been set out in earlier decisions of this and other courts.  They were recently summarised by Pritchard J in BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 2)[8] and I respectfully adopt what her Honour said there. The plaintiff submits that principles of positive case flow management, set out in O 1 r 4A and r 4B of the Rules, have affected a significant shift in the approach to applications for the trial of preliminary issues.

   [7] See Rules of the Supreme Court 1971 (WA) O 31 r 2 or O 32 r 4.

   [8] BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 2) [2012] WASC 321 [26] ‑ [27].

2. A keystone of the court's positive case flow management system is the use of mediation as a mechanism to assist parties to resolve commercial disputes as early as possible and thereby save time, costs and resources that would otherwise be involved in determination of matters through the trial process.

3. The plaintiff does not contend that the resolution of the issue defined in the preliminary question will dispose of all matters in dispute between the parties.  It primarily supports the application on the basis that an answer to the preliminary question will assist the parties in their consideration of a settlement of the claim in mediation. 

4. I do not accept the plaintiff's arguments for several reasons.  First, this is an important question of law for this action and, perhaps, more generally.  It is unlikely to be finally resolved by this application.  The likelihood of an appeal means that a significant interruption to the progress of this matter towards trial is likely.  Second, the parties are sophisticated litigants, well advised and represented by senior counsel.  The issue is not novel.  The parties and their advisers are in a good position to assess the risks of their competing positions for the purpose of settlement negotiations.  Third, the issue requires the resolution of a contested question of construction about whether the contractual terms pleaded, properly construed, apply to claims under the consumer laws.  Fourth, there is a dispute about whether the post construction monitoring claims are subject to a written contract containing the relevant terms, or whether that work was done pursuant to an inferred contract with no such terms.

5. Because there are factual issues which need to be resolved, particularly in relation to the Post Construction Monitoring Contract, I do not believe it is a suitable matter to be reserved to the Court of Appeal.

6. On balance, I am not satisfied that the potential benefit to the parties in settlement negotiations is sufficient to overcome the problems inherent in attempting to resolve the question in the manner proposed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

ZW
ASSOCIATE TO THE HONOURABLE JUSTICE ALLANSON

20 JULY 2018