M+W Singapore Pte Ltd trading as M+W Australia v Multiplex Constructions Pty Ltd formerly known as Brookfield Multiplex Constructions Pty Ltd - [2018] WASC 108

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   M+W SINGAPORE PTE LTD trading as M+W AUSTRALIA -v- MULTIPLEX CONSTRUCTIONS PTY LTD formerly known as BROOKFIELD MULTIPLEX CONSTRUCTIONS PTY LTD [2018] WASC 108
CORAM:   MASTER SANDERSON
HEARD:   28 MARCH 2018
DELIVERED          :   12 APRIL 2018
FILE NO/S:   CIV 3118 of 2017
BETWEEN:   M+W SINGAPORE PTE LTD trading as M+W AUSTRALIA
Plaintiff
AND
MULTIPLEX CONSTRUCTIONS PTY LTD formerly known as BROOKFIELD MULTIPLEX CONSTRUCTIONS PTY LTD
Defendant

Catchwords:

Summary judgment - Application by plaintiff - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	Mr M N Solomon SC
Defendant	:	Mr P O'Sullivan QC

Solicitors:

Plaintiff	:	Tottle Partners
Defendant	:	King & Wood Mallesons

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

Nil

MASTER SANDERSON:

Given that I have concluded summary judgment should not be granted in this matter, it is inappropriate that I rehearse in detail arguments which will be put by the parties at trial. However, in deference to the full and complete argument provided by both counsel, I will identify the issues between them and state briefly why I am satisfied the defendant's position is arguable.
By chamber summons filed 9 January 2018, the plaintiff sought from the defendant the sum of $986,892 plus damages to be assessed. The parties had entered into a subcontract agreement related to the Midland Health Campus. The defendant was the head contractor and the plaintiff was to provide mechanical services as a subcontractor. A copy of the subcontract appears as attachment 'BMH‑2' to the affidavit of Bryan McDonald Hamilton sworn 9 January 2018 and filed in support of this application.
The dispute relates to a security bond provided by the plaintiff to the defendant pursuant to the subcontract. Without going into details, it is sufficient if I say the amount claimed by the plaintiff against the defendant is the amount of the security which the defendant took pursuant to what it says were its rights under the subcontract. It was the plaintiff's position that the terms of the contract did not allow the defendant to call upon the security. As counsel for the plaintiff was at pains to point out, the application was based fairly and squarely on what he said was a proper reading of the contract. Counsel maintained there was no ambiguity in the way various clauses interacted and no facts needed to be proved to establish the correctness of the plaintiff's position.
Turning then to the subcontract, clause 5 deals with 'Security, Retention Moneys and Performance Undertakings'. Relevantly, clause 5.3 is in the following terms:
5.3Form of Security
At Brookfield Multiplex's absolute discretion, the security shall be in the form of cash or an approved unconditional undertaking given by an approved financial institution or insurance company approved by Brookfield Multiplex.
Brookfield Multiplex shall, in its absolute discretion, approve or disapprove of the form of an unconditional undertaking and the financial institution or insurance company giving it. The unconditional undertaking in the form of Annexure Part M is approved.
If the security is not transferable by delivery, it shall be accompanied by an executed transfer or such other documentation as is necessary to effect a transfer of the security. The costs (including all stamp duty or other taxes) of and incidental to the transfer are retransfer, shall be borne by the Subcontractor.
It is also worth noting in passing clause 5.6
5.6No injunction
(a)The Subcontractor must not take any steps whatever to restrain:
(i)Brookfield Multiplex from making any demand under security; or
(ii)the issuer of security from complying with any such demand.
(b)The Subcontractor agrees that damages will be an adequate remedy if Brookfield Multiplex makes any demand under security which it is not entitled to make.
On behalf of the plaintiff, it was submitted that clause 5.3 does nothing more than set up the form of the security to be given. It says nothing about the circumstances in which the security can be called upon. Those matters are dealt with in subsequent clauses of the subcontract. The first of these clauses is clause 42.8 which is in the following terms:
42.8Set Offs by Brookfield Multiplex
(a)Brookfield Multiplex may set-off or deduct from:
(i)any amounts due to the Subcontractor, including any amounts in any payment schedule issued by Brookfield Multiplex; or
(ii)the amount available to Brookfield Multiplex if it exercises its rights under security
any moneys due, or which may become due, from the Subcontractor to Brookfield Multiplex (whether under this Subcontract or otherwise).
(b)Even if an amount owed by the Subcontractor to Brookfield Multiplex under the Subcontract has not been included in a payment schedule by Brookfield Multiplex under this Subcontract, Brookfield Multiplex may separately recover the debt from the Subcontractor.
It was counsel for the plaintiff's submission that this clause does not actually entitle the defendant to exercise any rights in relation to the security. In other words, it is an enabling clause which operates if, and only if, some other provision of the contract allows the defendant to move against the security. Counsel submitted there are only two situations in which the defendant could move against the security. They are clauses 44.6 and 44.10. Those two clauses are in the following terms:
44.6Adjustment on Completion of the Work Taken Out of the Hands of the Subcontractor
When work taken out of the hands of the Subcontractor under Clause 44.4(a) is completed, Brookfield Multiplex shall ascertain the Losses suffered or incurred by it in completing the work and shall issue a certificate pursuant to this Clause 44.6 to the Subcontractor certifying:
(a)the amount of those Losses, and setting out the calculations employed to arrive at those Losses;
(b)the amount which would otherwise have been paid to the Subcontractor if the work had been completed by the Subcontractor; and
(c)the difference.
If the Losses incurred or suffered by Brookfield Multiplex are greater than the amount which would have been paid to the Subcontractor if the work had been completed by the Subcontractor, the difference shall be a debt due from the Subcontractor to Brookfield Multiplex. If the Losses incurred or suffered by Brookfield Multiplex are less than the amount that would have been paid to the Subcontractor if the work had been completed by the Subcontractor, the difference shall be a debt due to the Subcontractor from Brookfield Multiplex.
If the Subcontractor is indebted to Brookfield Multiplex, Brookfield Multiplex may retain Constructional Plant or other things taken under Clause 44.5 until the debt is satisfied. If after reasonable notice, the Subcontractor fails to pay the debt, Brookfield Multiplex may sell the Constructional Plant or other things and apply the proceeds to the satisfaction of the debt and the costs of sale and if those moneys are insufficient, Brookfield Multiplex may have recourse to retention moneys and, if they are insufficient, then to security under the Subcontract. Any excess shall be paid to the Subcontractor.
44.10Rights of the Parties on Termination
If the Subcontract is terminated pursuant to Clause 44.4(b) or 44.9, the rights and liabilities of the parties shall be the same as they would be at common law had the defaulting party repudiated the Subcontract and the other party had elected to treat the Subcontract as at an end and recover damages.
If the Subcontract is terminated pursuant to Clause 16C(g), the rights and liabilities of the parties shall be the same as they would be at common law had the Subcontractor repudiated the Subcontract and Brookfield Multiplex had elected to treat the Subcontract as at an end and recover and damages.
If Brookfield Multiplex has terminated the Subcontract, Brookfield Multiplex may also, without payment of compensation, take possession of the SDC Documents.
If Brookfield Multiplex repudiates this Subcontract and the Subcontractor has terminated this Subcontract, the Subcontractor shall only be entitled to claim general damages and will not be entitled to claim on a quantum merit basis, which election the Subcontractor hereby irrevocably makes.
If the Subcontract is terminated pursuant to Clause 44.4(b), 44.9 or 16C(g), Brookfield Multiplex shall ascertain the Losses suffered or incurred by it in completing the work and shall issue a certificate to the Subcontractor certifying:
(a)the amount of those Losses, and setting out the calculations employed to arrive at those Losses;
(b)the amount which would otherwise have been paid to the Subcontractor if the work had been completed by the Subcontrator; and
(c)the difference.
If the Losses incurred or suffered by Brookfield Multiplex are greater than the amount which would have been paid to the Subcontractor if the work had been completed by the Subcontractor, the difference shall be a debt due from the Subcontractor to Brookfield Multiplex. If the Losses incurred or suffered by Brookfield Multiplex are less than the amount that would have been paid to the Subcontractor if the work had been completed by the Subcontractor, the difference shall be a debt due to the Subcontractor from Brookfield Multiplex.
If the Subcontractor is indebted to Brookfield Multiplex, Brookfield Multiplex may retain Constructional Plant or other things onsite until the debt is satisfied. If after reasonable notice, the Subcontractor fails to pay the debt, Brookfield Multiplex may sell the Constructional Plant or other things and apply the proceeds to the satisfaction of the debt and the costs of sale and if those moneys are insufficient, Brookfield Multiplex may have recourse to retention moneys and, if they are insufficient, then to security under the Subcontract. Any excess shall be paid to the Subcontractor.
It was common ground between the parties that in the circumstances of this case, neither clause 44.6 or 44.10 were relevant. That being so, the plaintiff said the circumstances in which the defendant could call upon the security had not been triggered and the defendant had not been entitled to call upon for payment pursuant to the security.
The Approved Form of Unconditional Undertaking/Bank Guarantee formed part of the subcontract. (Annexure to the Australian Standard General Conditions of Subcontract for Design and Construct Part M). It is in very wide terms. Relevantly, it reads:
If the Financial Institution is notified in writing purporting to be signed by or on behalf of Brookfield Multiplex that Brookfield Multiplex demands payment to be made of the whole or any part of the Amount, the Financial Institution agrees that such payment will be made to Brookfield Multiplex forthwith without reference to the Subcontractor and notwithstanding any notice given by the Subcontractor to the Financial Institution not to make that payment.
The Financial Institution may at any time, without being required to do so, pay to Brookfield Multiplex the Amount less any sum or sums previously paid by the Financial Institution under this undertaking or any lesser sum specified by Brookfield Multiplex. Upon making such payment, the Financial Institution will cease to have any liability whatsoever under this undertaking.
It was the defendant's position that the form of the guarantee was so wide, it provided an unfettered right to access the security and that right was not conditioned by clauses 44.6 or 44.10. Furthermore, it was the defendant's argument that the terms of clause 42.8(a)(ii) were permissive and the broad right contained in that clause was not conditioned by the subsequent clauses 44.6 and 44.10.
The subcontract between the parties in this case is what both counsel referred to as a 'bespoke subcontract'. That is to say, although it is based on the Australian Standard General Conditions of Subcontract for Design and Construct AS4303-1995, it has been adapted to suit the purposes of the plaintiff and the defendant. Some provisions have been omitted and some new provisions have been added. For instance, the 'no injunction' provision found in clause 5.6 of the parties subcontract is not present in the Australian Standard version. Equally, provisions in clause 5 of the Standard which require the head contractor to take certain steps before calling upon the security is absent from the parties subcontract. It is arguable the scope of the parties subcontract provides that the defendant with greater rights than the Australian Standard. If that is so, it may impact upon the way clause 42.8 is to be construed. I should emphasise I am making no finding on this issue but simply pointing out the defendant's position is arguable.
For these reasons, I am not satisfied that the plaintiff's case is so strong the defendant has no arguable defence. I will dismiss the application. The costs of the application should be costs in the cause.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
ASSOCIATE TO MASTER SANDERSON
11 APRIL 2018