M+W Singapore Pte Ltd v Multiplex Constructions Pty Ltd - [2018] WASC 253

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   M+W SINGAPORE PTE LTD -v- MULTIPLEX CONSTRUCTIONS PTY LTD [2018] WASC 253
CORAM:   VAUGHAN J
HEARD:   16 AUGUST 2018
DELIVERED          :   21 AUGUST 2018
FILE NO/S:   CIV 3118 of 2017
BETWEEN:   M+W SINGAPORE PTE LTD
Plaintiff
AND
MULTIPLEX CONSTRUCTIONS PTY LTD
Defendant

FILE NO/S: CIV 1812 of 2016
BETWEEN: MULTIPLEX CONSTRUCTIONS PTY LTD
Plaintiff
AND
M+W SINGAPORE PTE LTD
Defendant

FILE NO/S: CIV 2406 of 2015
BETWEEN: M+W SINGAPORE PTE LTD
Plaintiff
AND
MULTIPLEX CONSTRUCTIONS PTY LTD
Defendant

Catchwords:

Practice and procedure - Vacation of consent order - Application for early trial or hearing of preliminary issue - Determination of who to be 'in the money' prior to determination of substantive dispute - Turns on own facts

Legislation:

Nil

Result:

Application for early trial granted
Consent order vacated to facilitate order for early trial

Category: B

Representation:

CIV 3118 of 2017

Counsel:

Plaintiff	:	MN Solomon SC & A Sinclair
Defendant	:	P O'Sullivan QC

Solicitors:

Plaintiff	:	Tottle Partners
Defendant	:	King & Wood Mallesons

CIV 1812 of 2016

Counsel:

Plaintiff	:	P O'Sullivan QC
Defendant	:	MN Solomon SC & A Sinclair

Solicitors:

Plaintiff	:	King & Wood Mallesons
Defendant	:	Tottle Partners

CIV 2406 of 2015

Counsel:

Plaintiff	:	MN Solomon SC & A Sinclair
Defendant	:	P O'Sullivan QC

Solicitors:

Plaintiff	:	Tottle Partners
Defendant	:	King & Wood Mallesons

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

Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
Alford v Ebbage [2002] QCA 194; [2003] 1 Qd R 343
Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47.
Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485
Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136; (2008) 249 ALR 458
Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115
Commonwealth of Australia 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
Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812.
Hutchinson v Nominal Defendant [1972] 1 NSWLR 443
Landsdale Pty Ltd v Moore [2009] WASCA 176
M+W Singapore Pte Ltd v Multiplex Constructions Pty Ltd [2018] WASC 108.
Moore v Stockland South Beach Pty Ltd [2011] WASC 337
R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389
Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98
Terravision Pty Ltd v Black Box Control Pty Ltd [2014] WASC 261
Trust Company (Nominees) Ltd v Angas Securities Ltd (No 4) [2016] FCA 1240
Woods v Sheriff of Queensland (1895) 6 QLJ 163

VAUGHAN J:

Nature of the application

The application before the court concerns three actions: CIV 2406 of 2015, CIV 1812 of 2016 and CIV 3118 of 2017. Each of those actions arises out of a subcontract by which M+W Singapore Pte Ltd (M+W) agreed to execute and complete mechanical services for Multiplex Constructions Pty Ltd (Multiplex) in relation to the Midland Health Campus project.
The plaintiff in CIV 2406 of 2015 and CIV 3118 of 2017, M+W, applies by a letter dated 24 July 2018 for orders that there be an early trial in respect of CIV 3118 of 2017 and certain paragraphs of the substituted statement of claim dated 22 March 2016 in CIV 2406 of 2015.
In the alternative, M+W applies for an order that there be a determination of a preliminary issue in those actions as to whether, on its proper construction, the subcontract permitted Multiplex to have recourse to a bank guarantee and two retention bonds given by M+W under the subcontract.
For the reasons I develop below it is in the interests of justice that there be an early trial as sought by M+W. I will so order. In order to permit such an early trial it will be necessary to vacate earlier orders of the court that are incompatible with the early trial. It is in the interests of justice that those orders be vacated and I will so order.

Factual background

The following facts appear to be largely uncontroversial based on the parties' pleaded cases in the various actions.
M+W is a company incorporated under the laws of the Republic of Singapore. M+W carried on business in Australia by providing mechanical services.
Multiplex is a construction company that was engaged to design, construct, complete and commission the Midland Health Campus project (project) at Midland in Western Australia.
By a written agreement dated 30 January 2013 M+W agreed to execute and complete mechanical services for Multiplex in relation to the project for the sum of $39,475,680 excluding GST (subcontract).
Under the subcontract M+W agreed to provide security to Multiplex in the amount of 5% of the subcontract sum. The contract also provided for a retention amount. The subcontract included a clause to the effect that Multiplex was entitled to set‑off or deduct against amounts due to M+W the amounts available if Multiplex exercised its rights under the security (cl 42.8).
In March 2013 M+W provided security to Multiplex in the form of a bank guarantee for $1,973,784 (security), a retention bond for $986,892 (retention bond) and a second retention bond also for $986,892 (second retention bond). The security was due to expire at 4.00 pm on the date of the issue of the Main Contract Completion Certificate. The retention bond was due to expire at 4.00 pm on the date following Practical Completion of the works contemplated by the subcontract. The second retention bond was only to be released at the end of a Defects Liability Period or a Further Defects Liability Period.
Around 9 June 2015 M+W extended the date for expiry of the security to 4.00 pm on the date 90 days after the date of issue of the Main Contract Completion Certificate and the date for expiry of the retention bond to 4.00 pm on the date 90 days after Practical Completion of the works contemplated by the subcontract.
The Main Contract Completion Certificate was issued on or about 11 June 2015.
On or about 24 August 2015 M+W made a payment claim under the subcontract and made a written request for the release of the security and retention bond. That request was not granted.
On 28 August 2015 Multiplex made demand on ANZ Banking Group Ltd for payment of the full amount secured by the security and the retention bond. It obtained payment of $2,960,676 on or about 1 September 2015.
On 7 December 2017 Multiplex made demand on the second retention bond for $986,892.

Procedural background

Three actions have arisen out of these events.
On 4 September 2015 M+W commenced action CIV 2406 of 2015. In that action M+W disputes Multiplex's entitlement to call on the security and the retention bond.
On 21 January 2016 M+W filed an amended statement of claim in action CIV 2406 of 2015 introducing additional claims for money due for maintenance works, variations and delay costs.
On 3 March 2016, subsequent to a change in legal representation, M+W filed a notice of discontinuance as to the new claims introduced by the amended statement of claim dated 21 January 2016. The notice of discontinuance was filed based on M+W's new solicitors' view that it would be preferable, in terms of case management, to keep the security and retention bond claims separate from all other claims.
On 22 March 2016 M+W filed a substituted statement of claim in CIV 2406 of 2015. On 13 April 2016 Multiplex filed its defence. On 22 April 2016 M+W filed its reply to the defence.
On 17 May 2016 Multiplex commenced a separate action, CIV 1812 of 2016, claiming liquidated and unliquidated damages based on M+W's alleged breach of the subcontract and indemnities provided by M+W under the subcontract. Among other things, Multiplex alleges that M+W delayed the Practical Completion date and otherwise failed to complete the works contemplated by the subcontract in accordance with the requirements of the subcontract.
On 20 May 2016, at the request of the parties, CIV 2406 of 2015 was admitted into the Commercial and Managed Cases List (CMC List) of Martino J.
On 24 June 2016 Multiplex filed its statement of claim in CIV 1812 of 2016. The statement of claim pleads at par 25 that if in CIV 2406 of 2015 it is held that Multiplex wrongfully made demand on the security and retention bond then the amount of the security and retention bond should be deducted from Multiplex's claims in CIV 1812 of 2016.
On 22 July 2016 M+W filed a defence and counterclaim in CIV 1812 of 2016. M+W's counterclaim makes claims similar to those that were previously made and then discontinued by it in CIV 2406 of 2015.
On 4 August 2016, at the request of the parties, CIV 1812 of 2016 was admitted into the CMC List of Martino J.
On 15 August 2016 the court made orders programming an application by Multiplex for consolidation of CIV 2406 of 2015 and CIV 1812 of 2016. There had earlier been an exchange of views by correspondence, and also at a without prejudice conferral conference, as to the question of consolidation. M+W's solicitors had suggested that the issues in CIV 2406 of 2015 were confined and it was entitled to have a trial of that action at the earliest possible time. M+W did not agree to consolidation but agreed to having the two actions case managed together.
Subsequently, the consolidation application was listed for hearing at 10.30 am on 26 October 2016.
On 1 September 2016 Multiplex filed a consolidation application by chamber summons seeking orders to the effect that actions CIV 2406 of 2015 and CIV 1812 of 2016 be consolidated and carried on as one action or, alternatively, orders to the effect that those actions be heard and tried together. Multiplex filed submissions in support of its application on 21 September 2016.
Between 21 and 27 September 2016 the parties' respective solicitors exchanged without prejudice correspondence. Self‑evidently that is not before me. However, it resulted in the parties agreeing a minute of proposed consent orders. On 27 September 2016 the parties provided that minute to the court. It included the following orders:
(1)Action CIV 1812 of 2016 and action CIV 2406 of 2015 be heard and tried together.
(2)The evidence given in each of action CIV 1812 of 2016 and action CIV 2406 of 2015 be treated as the evidence in the other action.
The court made orders in those terms on 28 September 2016. The hearing listed for the consolidation application was retained by the court and listed instead as a strategic conference for CIV 2406 of 2015 and CIV 1812 of 2016.
On 24 October 2016 M+W filed a position paper for the strategic conference. Within its position paper M+W proposed a possible preliminary determination of the questions of construction in relation to the security‑related provisions of the subcontract. On 25 October 2016 Multiplex filed its position paper for the strategic conference. Among other things Multiplex's position paper expressed that it would be undesirable to have a preliminary determination of the construction issue in CIV 2406 of 2015. Notably the position paper did not suggest that an order for determination of a preliminary issue as proposed was precluded by the consent orders of 28 September 2016. Indeed, the position paper contemplated that further consideration might be given to the possible determination of proposed preliminary issues following a mediation.
The parties subsequently filed in CIV 1812 of 2016 an amended statement of claim dated 7 November 2016, an amended defence and counterclaim dated 10 November 2016 and a reply and defence to the amended defence and counterclaim dated 5 December 2016.
The parties attended private mediation on 14 March 2017 and 5 December 2017 in an attempt to resolve the disputes. The mediation was unsuccessful.
On 8 December 2017 the parties were notified by the court that CIV 2406 of 2015 and CIV 1812 of 2016 had been reallocated into Chaney J's CMC List.
On 13 December 2017 M+W commenced action CIV 3118 of 2017 against Multiplex seeking the return of the second retention bond funds. On 19 December 2017 Multiplex filed a conditional appearance in that action.
On 9 January 2018 M+W made an application for summary judgment in CIV 3118 of 2017 supported by an affidavit of Bryan McDonald Hamilton.
Also on 9 January 2018 the solicitors for Multiplex wrote to the solicitors for M+W attaching a minute of proposed programming orders for Multiplex's application to consolidate each of the proceedings. The letter stated that the solicitors for Multiplex had been instructed to make an application for CIV 3118 of 2017 to be heard and determined with CIV 2406 of 2015 and CIV 1812 of 2016. The solicitors for M+W responded stating that they considered such an application to be premature. However, on behalf of M+W it was said that it would agree orders in similar terms to those made on 28 September 2016 (ie the actions be heard and tried together and evidence in one be evidence in the other) if the summary judgment application was successful.
The court heard the summary judgment application on 28 March 2018.
On 12 April 2018 Master Sanderson dismissed the summary judgment application without determining the construction of the relevant provisions of the subcontract. In doing so, the learned master concluded that Multiplex's position was arguable on the basis that while the subcontract was based on the Australian Standard General Conditions of Subcontract for Design and Construct AS4303‑1995, it had been adapted to suit the purposes of M+W and Multiplex, and so potentially provided Multiplex with greater rights than the Australia Standard. This, it was said, might impact on the way the security‑related provisions of the subcontract are to be construed.[1]
[1] M+W Singapore Pte Ltd v Multiplex Constructions Pty Ltd [2018] WASC 108 [11].
On 30 January 2018 M+W filed a re‑amended defence and counterclaim in CIV 1812 of 2016. On 16 February 2018 Multiplex filed its amended reply and defence in the same action.
On 30 April 2018, at the request of the parties, CIV 3118 of 2017 was admitted to the CMC List and allocated to Archer J.
On 2 May 2018 the court notified the parties that CIV 2406 of 2015 and CIV 1812 of 2016 had been reallocated into my CMC List.
On 2 May 2018 the parties agreed and filed a minute of proposed orders in CIV 3118 of 2017 requesting that the matter be reallocated to my CMC List to enable it to be heard and tried with CIV 2406 of 2015 and CIV 1812 of 2016. The minute included orders to the effect that CIV 3118 of 2017 be heard and tried with the other two actions. Those orders were proposed to give effect to the January 2018 understanding that if the summary judgment application was unsuccessful M+W would agree to those orders.
On 7 May 2018 I made orders reallocating CIV 3118 of 2017 into my CMC List. However, no orders were made to the effect that CIV 3118 of 2017 be heard and tried with the other two actions. I was not prepared to make those orders on the papers, even though the parties consented to them, in circumstances where I had no real understanding of the issues in the various actions. I indicated through my associate that the actions would be case managed together and orders as to whether the actions ought to be heard and tried together could be considered at a later date.
On 11 May 2018 Multiplex filed its defence in CIV 3118 of 2017.
A strategic conference in respect of each of the actions was listed before me on 10 July 2018.
Subsequently, M+W filed its current application to have an early trial of CIV 3118 of 2017 and parts of CIV 2406 of 2015 or, alternatively, to have the construction issue the subject of those actions determined as a preliminary issue.

Description of each action

CIV 2406 of 2015 - M+W Singapore Pte Ltd v Brookfield Multiplex Constructions Pty Ltd

This action concerns Multiplex's call on the security and the retention bond on 28 August 2015.
M+W claims that, on a proper construction of the subcontract, Multiplex was not entitled to call on the security and retention bond. Multiplex denies M+W's construction and claims that it was so entitled. As this is the issue M+W seeks to have adjudicated at an early trial, or alternatively as a preliminary issue, I will develop the construction issue that arises for determination. That said, it is unnecessary to do so at length. The nature of the issue has already been described by Master Sanderson in his reasons dismissing M+W's summary judgment application in action CIV 3118 of 2017.[2]
[2] M+W Singapore Pte Ltd v Multiplex Constructions Pty Ltd [3] - [11].
As the learned master's reasons for decision describe, there are a number of provisions in the subcontract that potentially concern the parties' obligations and entitlements as to security. These include cl 5.3, cl 5.6, cl 42.8, cl 44.6 and cl 44.10. It is unnecessary to repeat those clauses as they are set out in full in the master's reasons.
It is common ground between the parties that neither cl 44.6 nor cl 44.10 are relevant in the circumstances of the case. M+W's contention is that, on the proper construction of the subcontract, those provisions are the only source of Multiplex's contractual right to have recourse to the security and retention bond under the subcontract. Accordingly, on M+W's case, Multiplex's recourse to the security and retention bond was wrongful.
Multiplex says that cl 44.6 and cl 44.10 do not provide the universe of provisions by which it may have recourse to security under the subcontract. Multiplex points to cl 42.8 which reads:
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.
Multiplex relies on cl 42.8(a)(ii). It says that clause provides it with an additional and independent contractual entitlement to have recourse to the security. M+W disputes that reading of cl 42.8. M+W says that the clause does not entitle Multiplex to exercise any rights in relation to the security. It is said to be a mere enabling clause which operates if, and only if, some other provision of the subcontract allows Multiplex to move against the security.
M+W says that, as to the potential operation of cl 42.8(a)(ii), it accepts that various Payment Schedules relied on by Multiplex constitute 'moneys due, or which may become due' for the purpose of cl 42.8. Accordingly, on M+W's case, the question of entitlement to have recourse to the security boils down to a single question of construction which I summarise as:
Does cl 42.8(a)(ii) on its proper construction permit Multiplex to have recourse to the security and the retention bond where:
(1)Multiplex has not exercised its rights under cl 44.4(a) to take out of the hands of M+W the whole or part of the work under the subcontract; and
(2)Multiplex has not exercised its rights to terminate the subcontract under one or more of cl 16(g), 44.4(b) or 44.9?
The references to cl 44.4(a), on the one hand, and cl 16(g), cl 44.4(b) and cl 44.9, on the other, are explained by those clauses being referred to in cl 44.6 and cl 44.10 respectively.

M+W claims loss and damage in the amount of $2,960,676, being the amount obtained from ANZ Banking Group Ltd by Multiplex allegedly in breach of the subcontract.
Accordingly, the central issue in the action is the proper construction of the security‑related provisions in the subcontract; specifically whether, on such proper construction, Multiplex was entitled to call on the security and retention bond.
However, there is a further issue. That is whether, as at 28 August 2015, in the factual circumstances that then prevailed, Multiplex was required to return the security and the retention bond (meaning again that it was not entitled to have recourse to them). M+W accepts that this factual issue is not apt for an early trial or determination by way of preliminary issue. Rather, the factual issue is one that will be largely determined by the numerous factual issues that arise in action CIV 1812 of 2016.
On the pleadings in CIV 2406 of 2015 there is a further issue. Multiplex pleads that there was a term implied by operation of law that it was entitled to set-off or deduct any moneys due, or which may become due, from M+W to Multiplex from the security or the retention bond.[3] In its defence Multiplex relies on the alleged implied term to assert that it was entitled to make demand for the amounts secured by the security and the retention bond.[4]
[3] Defence to the Substituted Statement of Claim filed on 22 March 2016 dated 13 April 2016 par 4(g)(iii).
[4] Defence to the Substituted Statement of Claim filed on 22 March 2016 dated 13 April 2016 par 13(c)(iii)(D).
I raised this plea with senior counsel for Multiplex on the hearing of the application. After taking instructions senior counsel informed me that the implied term argument would not be pursued. Accordingly, it need not be further considered.

CIV 1812 of 2016 - Multiplex Constructions Pty Ltd v M+W Singapore Pte Ltd

M+W describes action CIV 1812 of 2016 as a factually complex dispute in which each side claims significant sums said to be owing under the subcontract. There does not appear to be any dispute as to that characterisation. The action has all the hallmarks of a long and complex building and construction dispute, one that will be factually dense and involve significant expert evidence.
Multiplex claims that M+W breached several terms of the subcontract in the following ways:
(1)M+W is alleged to have failed to execute and complete the work under the subcontract in accordance with the requirements of the subcontract.
(2)M+W is alleged to have failed to proceed with the work with due expedition and in accordance with the construction program.
(3)M+W is alleged to have failed to execute the work under the subcontract to Practical Completion by the Date for Practical Completion of 19 December 2014. It is said that Practical Completion was not achieved until 30 October 2015.
(4)M+W is alleged to have failed to perform the design obligations with the required professional skill, care and diligence.
(5)M+W is said not to have applied sufficient resources so as to perform the work under the subcontract and enable Multiplex to perform its work under the main contract efficiently, economically and within the timeframe contemplated by the subcontract.
(6)M+W is alleged to have failed to execute and complete its design obligations and produce certain documents to accord with the project requirements and to take into account the effect of or interface with the work of other subcontractors.
(7)M+W is alleged to have failed to ensure that the design, execution and completion of the subcontract works was fit for purpose and fulfilled the requirements of the subcontract.
(8)M+W is alleged to have failed to coordinate and integrate the works as required of it in relation to Multiplex and other subcontractors.
(9)M+W is alleged to have failed to schedule and manage coordination of other subcontractors.
(10)M+W is alleged to have failed to coordinate all services on the construction site to avoid clashes between the services, structure and architectural finishes.
(11)M+W is alleged to have failed to coordinate ceiling plans.
(12)M+W is said not to have rectified defects subsisting in the works under the subcontract.
Multiplex alleges that M+W's breaches caused delay and disruption to the progress and completion of the works under subcontract and of work being undertaken by other subcontractors. It is said that this caused Multiplex and other subcontractors to have to undertake additional and corrective work.
Multiplex claims it has suffered loss and damage in relation to claims made by other subcontractors for delay and disruption costs and for additional work required to be undertaken. Multiplex also claims liquidated damages for the alleged delay in practical completion.
Multiplex advances four heads of relief:
(1)First, Multiplex seeks damages for breach of the subcontract in the amount of $7,027,767 in respect of the loss and damage it is alleged to have suffered and $25,348 in respect of the alleged defects in the work of M+W.
(2)Second, Multiplex claims that M+W is liable under indemnities given in the subcontract to pay Multiplex $7,027,767 for losses alleged to have been suffered by Multiplex (this is in the alternative to the claim for damages).
(3)Third, Multiplex claims that M+W is liable to pay Multiplex the amount of $633,638 in respect certain alleged of backcharges.
(4)Fourth, Multiplex claims that M+W is liable for liquidated damages under the subcontract in the amount of $3,978,980.40 (being 10% of the subcontract amount).
For its part, M+W denies that it is liable in the ways claimed by Multiplex. While M+W admits the existence of relevant clauses and indemnities in the subcontract, it disputes Multiplex's construction of those clauses and the events giving rise to the purported breaches.
M+W also counterclaims against Multiplex. The counterclaim makes the following claims:
(1)M+W claims that under the subcontract Multiplex was to pay M+W $30,000 per month for carrying out maintenance of the works for 30 months from the date of Practical Completion and that those amounts remain unpaid.
(2)M+W says that the subcontract provides for M+W to carry out variations to the work under the subcontract in certain circumstances. M+W claims that it did carry out several variations. M+W claims that Multiplex has wrongfully refused to grant a fair and reasonable extension of time for the completion of those variations as required under the subcontract or to pay amounts totalling $1,143,525 in respect of the work carried out by M+W in relation to those variations.
(3)M+W claims that its final progress claim, submitted in the form of the M+W account dated 24 August 2015 in the amount of $16,748,079, remains unpaid by Multiplex.
M+W seeks the amounts flowing from those alleged breaches of the subcontract as its entitlements under the subcontract or, alternatively, as damages for breach of the subcontract. It also seeks a declaration as to the correct date on which it achieved Practical Completion of the works under the subcontract.
Multiplex denies each of M+W's claims made in the counterclaim and denies that M+W is entitled to any relief.

CIV 3118 of 2017 - M+W Singapore Pte Ltd v Multiplex Constructions Pty Ltd

This action arises out of Multiplex's call on the second retention bond for the full amount of $986,892.
M+W pleads the same construction of the relevant clauses of the subcontract as it does in CIV 2406 of 2015. It seeks the amount of the second retention bond, being $986,892, and damages for breach of the subcontract. However, in this action there is no factual issue akin to the additional factual issue that arises in action CIV 2406 of 2015.
Multiplex denies that the demand for payment of the second retention bond was wrongful and says it was entitled to make that demand.
As with CIV 2406 of 2015, the central issue in this action is the proper construction of the security-related provisions in the subcontract. As senior counsel for Multiplex noted in the course of oral submissions, the substantive point in CIV 2406 of 2015 is the same as that in CIV 3118 of 2017.

The evidence on the application

M+W's application is supported by an affidavit of Richard Michael Wilenski sworn 24 July 2018. Mr Wilenski is a partner at Tottle Partners, the solicitors acting for M+W.
Mr Wilenski's affidavit contains a summary of the procedural history to the application.[5] Mr Wilenski deposes that he was of the view that M+W's agreement to consent orders to the effect that each action would be heard together would not preclude M+W from seeking to have the contractual construction question in CIV 2406 of 2015 and CIV 3118 of 2017 determined as a preliminary issue.[6]
[5] Affidavit of Richard Michael Wilenski sworn 24 July 2018 pars 70 ‑ 79.
[6] Affidavit of Richard Michael Wilenski sworn 24 July 2018 pars 35, 58, 70.
Prior to the 10 July 2018 strategic conference I asked through my associate that the parties populate a strategic conference memorandum addressing case management items. Mr Wilenski deposes that as part of his preparation of that memorandum he again considered the preliminary issue first raised by M+W in its position paper for the strategic conference in October 2016. It is said that, after conferral with senior counsel, the solicitors and counsel for M+W came to the view that the preferable course of action for the case management of the contractual construction issue would be to have an early trial of CIV 3118 of 2017 and a partial early trial of CIV 2406 of 2015 because the matters that M+W is seeking to have determined are the ultimate issue in those proceedings.[7]
[7] Affidavit of Richard Michael Wilenski sworn 24 July 2018 par 75.
In accordance with the views set out in Mr Wilenski's affidavit, in the strategic conference memorandum, and at the strategic conference on 10 July 2018, M+W proposes an early trial of CIV 3118 of 2017 and a partial early trial of CIV 2406 of 2015.
Otherwise, Mr Wilenski's affidavit speaks to three further matters, namely:
(1)First, Mr Wilenski provides an estimate of the time required for the determination of the preliminary issue or the hearing of an early trial for CIV 3118 of 2017 and part of CIV 2406 of 2016. He suggests that it will likely take one day and no more than two days.[8]
(2)Second, Mr Wilenski deposes that in his view the determination of the preliminary issue or the hearing of an early trial will have no effect on the steps currently programmed through to 31 May 2019 in CIV 1812 of 2016. Conversely, Mr Wilenski deposes that if there is not an early trial or hearing of the preliminary issue then the whole of CIV 3118 of 2017 and the determination of the principal issue in CIV 2406 of 2015 will be significantly delayed pending the completion by the parties of unrelated procedural steps in CIV 1812 of 2016. It is also said that the matters to be resolved in CIV 1812 of 2016 do not affect the construction of the contractual provisions which would be determined in the proposed early hearing.[9]
(3)Third, Mr Wilenski identifies the bases on which an early trial or determination of the preliminary issue is desirable.[10]
[8] Affidavit of Richard Michael Wilenski sworn 24 July 2018 pars 82 - 83.
[9] Affidavit of Richard Michael Wilenski sworn 24 July 2018 pars 84 ‑ 87.
[10] Affidavit of Richard Michael Wilenski sworn 24 July 2018 par 88.
It is worthwhile to set out the matters advanced by Mr Wilenski in support of the application for an early trial or determination by way of preliminary issue. In doing so, I recognise that these are not matters of evidence. They are really matters of submission.
The matters said by M+W to justify the interlocutory relief that it seeks are:[11]
(1)It would recognise that the purpose of providing security is to determine which party is 'in the money' pending the final resolution of a dispute between the parties.
(2)The parties are well-versed in their arguments on the contractual construction issue, having already made relevant submissions in the summary judgment application concerning CIV 3118 of 2017.
(3)There are no contested factual or expert matters which are necessary for the determination of the contractual construction issue.
(4)There is no discovery necessary for the determination of the contractual construction issue.
(5)The determination of the issue could dispose entirely of CIV 2406 of 2015 and CIV 3118 of 2017 (in the event M+W is successful) and will still dispose entirely of CIV 3118 of 2017 and part of CIV 2406 of 2015 in the event that M+W is unsuccessful.
(6)The findings made by the court on the contractual construction issue would not be inconsistent with or somehow prejudice future findings to be made in CIV 1812 of 2016.
(7)There would be little, if any, prejudice to Multiplex, but there would be significant prejudice to M+W if there were not to be an early hearing. This is because if M+W is successful the funds it alleges to have been wrongfully obtained by Multiplex are to be paid back to M+W and not put back into any security regime under the subcontract.
(8)Subject to the availability of the court, the matter could be heard this year, whereas CIV 1812 of 2016 will not be heard until at least 2020.
[11] Affidavit of Richard Michael Wilenski sworn 24 July 2018 par 88.
Finally, on behalf of M+W, Mr Wilenski asserts that the procedural course adopted is consistent with the court's case management principles to dispose efficiently of the business of the court, maximise the efficient use of judicial resources, and facilitate the timely disposal of business.
The evidence for Multiplex consisted of an affidavit of Juliana Nicole Jorissen sworn 6 August 2018. Ms Jorissen is a partner of the firm King & Wood Mallesons, the solicitors for Multiplex.
Ms Jorissen's affidavit confirmed the background to the project and the various bank guarantees. Otherwise Ms Jorissen's affidavit attached a series of certified Payment Schedules - 27, 28 and 29 - by which Multiplex certified that M+W owed Multiplex various amounts. It was said that Multiplex called on the security and the retention bond because M+W had not paid the certified amounts under Payment Schedules 27, 28 and 29. So too the second retention amount was applied against the amounts certified under Payment Schedules 27, 28 and 29.
Having provided a summary of the relevant procedural events, Ms Jorissen then set out the reasons why Multiplex said that the court should not grant M+W's application. They were:
(1)The hearing of the proposed early trial or preliminary issue would require a trial length of at least two days to deal with factual issues necessary to determine the construction issue.[12]
(2)The early trial or trial of the preliminary issue would not shorten the trial time of action CIV 1812 of 2016. In particular, it would remain necessary to determine whether M+W owed Multiplex any amount pursuant to Payment Schedules 27, 28 and 29.[13]
(3)The early trial or preliminary issue determination would not determine all issues in action CIV 2406 of 2015.[14]
(4)Multiplex's position as to overall resolution of the dispute between the parties, including as to settlement negotiations, would not be affected by whether M+W succeeded in its construction argument.[15]
(5)Multiplex would consider an appeal if M+W succeeded in its construction argument. It was said that this would result in further significant delay to the progression and determination of the substantive dispute the subject of action CIV 1812 of 2016.[16]
[12] Affidavit of Juliana Nicole Jorissen sworn 6 August 2018 par 19.
[13] Affidavit of Juliana Nicole Jorissen sworn 6 August 2018 par 20.
[14] Affidavit of Juliana Nicole Jorissen sworn 6 August 2018 par 21.
[15] Affidavit of Juliana Nicole Jorissen sworn 6 August 2018 par 22.
[16] Affidavit of Juliana Nicole Jorissen sworn 6 August 2018 par 23.
In its position paper of 25 October 2016 Multiplex had earlier set out its reasons for not agreeing with M+W's contention that there was utility and benefit to both the court and the parties in having a preliminary determination as to the construction issue. Some of those are echoed in Mr Jorissen's affidavit. Others are not. For example, the position paper made no reference to the possibility of an appeal fragmenting resolution of the dispute; nor did it assert that an early trial or partial resolution would have no impact on settlement prospects.
Rather, the position evinced in the position paper appeared to be based on a belief, among other things, that determination of the construction issue as a preliminary point could only determine which party should be 'in the money' pending final determination of the controversy and would resolve nothing if Multiplex was successful. At par 14 the position paper recorded the following reasons, among others, for resisting a preliminary determination of the construction issue:
(c)a preliminary determination of the issues proposed will, in substance, achieve only a resolution as to which party should hold the funds paid to Multiplex under the security pending determination of the merits of all issues in dispute between the parties;
(d)the actions should be able to be progressed reasonably quickly and are likely to be able to be advanced to a final hearing of all issues in the reasonably short term;
…
(g)determination of the preliminary issue will not dispose of the actions or substantially narrow the issues for trial;
(h)the outcome of the proposed preliminary determination will not assist in resolving the wider issues between the parties or in saving time and costs and the Court's resources. It will still be necessary to proceed to trial in relation to the wider issues between the parties. The parties will still need to complete discovery and produce lay and expert evidence in relation to those matters; and
(i)determination of the preliminary issue is a matter that benefits only M+W if it is wholly successful and the Court determines that Multiplex must repay the funds received under the security and that such should not be held in escrow pending determination of the wider claims between the parties. In the alternative event that Multiplex is wholly successful, the effect is that nothing will be resolved. The status quo will remain and the entirety of the issues between the parties will remain to be determined.[17](emphasis added)
[17] Multiplex's Position Paper dated 25 October 2016 par 14.

Disposition

As a preliminary matter, Multiplex observed that the application for an early trial was predicated on the court making an order vacating par 1 of the orders made 28 September 2016 (the orders that actions CIV 2406 of 2015 and CIV 1812 of 2016 be heard and tried together). By reference to the well established principles as to the circumstances in which the court may revisit and vacate an interlocutory order Multiplex contended that the interests of justice did not justify the revocation of the earlier consent order which contemplated CIV 2406 of 2015 being heard and tried together with CIV 1812 of 2016.
The relevant principles were synthesised by Corboy J in Commonwealth Bank of Australia Ltd v Saraceni[18] in terms that I adopt. Essentially:
(a)A court may discharge or vary an interlocutory order in its inherent jurisdiction.
(b)That will be so even if the order was made by consent.
(c)An order that has been entered may be discharged or varied.
(d)The court may vary or discharge an order that deals with 'substantive' rather than 'procedural' rights and obligations.
(e)The overriding consideration is the 'interests of justice' in the particular case.
[18] Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115 [9] - [10].

After referring to a statement that the power to discharge or vary an order should be exercised with care and only in the most unusual circumstances, Corboy J stated:
It may well be that a discretion to discharge or vary an interlocutory order according to the interests of justice in the particular case should not be further circumscribed by imposing a requirement that the power only be exercised in the most unusual circumstances. However, I accept that the interests of justice must encompass the interests of the parties and the public in the efficient management of the interlocutory processes involved in civil litigation. Efficient and economical case management will generally require interlocutory disputes and associated issues to be finally determined as they arise. It is, in my view, in that sense that it may be said that the circumstances in which a court will revisit an interlocutory order that it has previously made will be rare.[19] (emphasis added)
[19] Commonwealth Bank of Australia Ltd v Saraceni [11].
The power to revisit is more readily exercisable in the context of an interlocutory order as compared with a final order. In the former case 'the finality of litigation does not weigh so heavily in the scales'.[20] So too, the power is more readily exercisable where the order deals with procedural matters rather than substantive rights and obligations.[21]
[20] Trust Company (Nominees) Ltd v Angas Securities Ltd (No 4) [2016] FCA 1240 [28].
[21] Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [25].
The fact that the order was made by consent is relevant. The nature and terms of the agreement to consent to particular orders may well affect how the court's discretion is exercised.[22] This is all the more so where the consent order gives effect to an agreement that disposes of an interlocutory application as was the position in the instant case. I agree with Corboy J that efficient and economical case management generally requires that interlocutory disputes be finally determined as they arise; it follows that agreements resolving such disputes should generally be respected and maintained. But it is well established that the court has power to revisit a consent interlocutory order even if made pursuant to an agreement between the parties.[23] Where a consent order is made to resolve an interlocutory dispute there is not such paramountcy of finality as applies to a consent order made in implementation of an agreement to finally resolve proceedings.[24]
[22] Alford v Ebbage [2002] QCA 194; [2003] 1 Qd R 343 [61], [71] - [72] (a case involving the analogous circumstance of seeking to be released from an interlocutory undertaking given pursuant to a contract).
[23] R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389, 393 (referred to with apparent approval in Commonwealth of Australia v Albany Port Authority [24]).
[24] Trust Company (Nominees) Ltd v Angas Securities Ltd (No 4) [33].
Multiplex's focus on whether M+W made good its application for vacation of par 1 of the orders made 28 September 2016 passed over an unusual feature of the application before me: there were no orders contemplating that the actions be heard and tried together that affected CIV 3118 of 2017.
In one sense this was entirely serendipitous. M+W had consented to such orders; they were submitted to the court as proposed consent orders pursuant to O 43 r 16 of the Rules of the Supreme Court 1971 (WA). I had simply stood over the making of such orders until I was satisfied that they were appropriate (not then having an understanding of the issues in the various actions). Had I made the orders as requested then M+W would have been in the position of having to seek that they be vacated. However, the orders not having been made, M+W did not have that difficulty to contend with.
Insofar as there was agreement between the parties as to the proposed consent orders affecting CIV 3118 of 2017 that agreement does not bind the court. Moreover, while senior counsel for both parties accepted that there was an 'agreement' in the general sense, in the course of oral submissions senior counsel for Multiplex accepted that he could not point to any consideration moving from Multiplex such that the agreement constituted an enforceable contract.
Accordingly, while I should (and do) have regard to the fact that M+W was originally prepared to consent to orders that CIV 3118 of 2017 be heard and tried with the other two actions - meaning that the position advanced by M+W on this application is somewhat opportunistic - M+W's application for an early trial in respect of CIV 3118 of 2017 falls to be considered on the basis that it does not require the vacation of any existing orders.
The position in CIV 3118 of 2017 has implications for the vacation of par 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016. While the touchstone of 'interests of justice' should not, in my view, be curtailed by any particular requirements, but rather is dependent on close consideration of all the relevant circumstances, often it will not be in the interests of justice to revisit an interlocutory order in the absence of new facts coming into existence or being discovered which render adherence to the order unjust.[25]
[25] Cf Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 178.
Accordingly, before revisiting an interlocutory order it is common to look for a change of circumstances making it just that the further continuance of the order should be varied, suspended or discharged.[26]
[26] See eg Woods v Sheriff of Queensland (1895) 6 QLJ 163, 165; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443, 447 - 448; Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485, 492 - 493.
Senior counsel for M+W submitted that if a change in circumstances was required then the advent of CIV 3118 of 2017 fulfilled that requirement.
Senior counsel for Multiplex resisted that submission. Senior counsel for Multiplex accepted - correctly in my view - that a change in circumstances was not required. Senior counsel for Multiplex submitted, and I accept, that the overarching consideration is the interests of justice in the particular circumstances of the case. But it was said that, while acknowledging that the events the subject of CIV 3118 of 2017 constituted a new factual issue, the substantive point in CIV 2406 of 2015 was the same as that in CIV 3118 of 2017. Accordingly, there was no relevant change in circumstances.
I accept that the substantive point in CIV 2406 of 2015 is the same as that in CIV 3118 of 2017. But I do not accept that is determinative of whether there is a relevant change in circumstances and where the interests of justice lie. M+W has made application for an early trial in respect of CIV 3118 of 2017. Whether there should be an early trial of CIV 3118 of 2017 - or whether, as Multiplex contends, it should be heard and tried together with the other actions including CIV 1812 of 2016[27] - has not been the subject of earlier curial determination. That question remains to be determined on its merits as part of this application. If it is found that there should be an early trial, and orders to that effect are to be made, then that will constitute a relevant change in circumstances vis-à-vis the 28 September 2016 orders. There will be a new fact which will render unjust the continued operation of par 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016.
[27] See Multiplex's Submissions dated 13 August 2018 pars 44 - 45.
The same point can be put in another way.
Once it is accepted, as both parties do, that precisely the same construction issue arises in CIV 2406 of 2015 and CIV 3118 of 2017, then it would defy all notions of modern case management to determine the issue in CIV 3118 of 2017 in isolation. It would be inimical to the interests of justice to proceed with an early trial in CIV 3118 of 2017 but leave the same issue, between the same parties, for subsequent determination in a joint trial of actions CIV 2406 of 2015 and CIV 1812 of 2016 at some future date (even if, as a matter of practicality, the determination in CIV 3118 of 2017 may be dispositive due to the operation of the doctrines of issue estoppel and abuse of process). To do so would be antithetical to efficient and economical case management and contrary to the objects in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA).
If it is appropriate to order an early trial in CIV 3118 of 2017 then it will be in the interests of justice to vacate par 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016. That step will be necessary to facilitate making appropriate orders so that the construction issue in CIV 2406 of 2015 may be tried together with CIV 3118 of 2017.
Accordingly, I consider that the correct approach to the application is to determine whether M+W has made good its application for an early trial in CIV 3118 of 2017. If so, there is a relevant change in circumstances (to the extent one is required) and in any case it will be in the interests of justice to vacate par 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016. Orders should then be made for the construction issue arising in CIV 2406 of 2015 to be tried together with CIV 3118 of 2017.
In coming to this conclusion I have taken into account the facts that: (1) the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016 were consent orders; and (2) those consent orders followed agreement between the parties resolving a contested interlocutory application for the consolidation of the two actions.
Ordinarily, in assessing the interests of justice, considerable weight would be given to those two matters. Often those matters would be decisive. Indeed, had there never been an action CIV 3118 of 2017 those facts may well have seen me refuse an application for the determination of the construction point as a preliminary issue. I appreciate that Mr Wilenski has deposed to a belief that the consent orders would not preclude M+W seeking to have the construction question determined as a preliminary issue. I do not doubt that belief is held. Mr Wilenski's subsequent actions are consistent with it. However, there is considerable force in the submission of Multiplex's senior counsel to the effect that the orders as agreed were incompatible with any such trial of preliminary issue.
In the particular and somewhat unusual circumstances before me, assuming I would order an early trial in CIV 3118 of 2017, I consider the usual weight to be afforded to the undoubted public and private interest in the consensual resolution of an interlocutory dispute not being disturbed is not decisive. Rather, balancing the various interests, those interests are overcome and outweighed by a countervailing interest in efficient and economical case management.
I turn then to consider whether M+W has made good its application for an early trial in CIV 3118 of 2017.
M+W did not address the principles that apply on whether to make such an order. However, the tenor of its written submissions were to address the considerations that are commonly applied in determining whether to order the trial of a preliminary issue. Those were the principles relied on by Multiplex.[28] I intend to assess the application by reference to those principles.
[28] Multiplex's Submissions dated 13 August 2018 pars 14 - 24.
There are four reasons why the principles that apply on whether to order a separate trial are appropriate. First, while CIV 3118 of 2017 constitutes a stand-alone proceeding, there is a wider controversy between the parties (CIV 1812 of 2016) the resolution of which would, in practical terms, subsume all the issues in the three actions. Second, in CIV 2406 of 2015 M+W seeks a partial early trial; in effect it seeks a separate trial of the construction question. Third, M+W suggests that the practical effect of the orders it seeks for an early trial are no different to an order for the trial of a preliminary issue. Fourth, in the alternative M+W seeks orders for the trial of a preliminary issue and refers to the usual principles that apply on such an application.[29]
[29] M+W's Submissions dated 13 August 2018 par 15.
The question for the court is whether it is satisfied that it is 'just and convenient' that there be a trial of separate issues.[30] Alternatively, the question has been expressed in terms of what is in the 'interests of justice' in the particular case.[31]
[30] Moore v Stockland South Beach Pty Ltd [2011] WASC 337 [32].
[31] Landsdale Pty Ltd v Moore [2009] WASCA 176 [22].
The starting point is that ordinarily the trial of an action should include all issues arising in the proceedings. The attraction of the separate trial of issues is often illusory; it is a course that often causes the very delay, additional expense and uncertainty of outcome it was intended to avoid. Accordingly, an application for the trial of separate issues is to be approached with caution.[32]
[32] Landsdale Pty Ltd v Moore [19] - [21].
Many of these cautions are made in the particular factual context of the proceedings before the court. The potential complications associated with a separate trial of issues or the trial of a preliminary issue are more acute where the claim is a tortious one. By contrast the proposed separate trial in these actions is as to a question of the proper construction of a single contractual provision.
The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues.[33] The statement of relevant considerations distilled by McKechnie J in Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd[34] is commonly referred to in assessing the appropriateness of a trial of separate issues.[35] Those matters are:
[33] Landsdale Pty Ltd v Moore [21].
[34] Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47 [4].
[35] See also Terravision Pty Ltd v Black Box Control Pty Ltd [2014] WASC 261 [7] - [9].
•A separate trial of issues is only appropriate in clear and simple cases.
•Separate trials of issues should only be embarked upon when the utility, economy and fairness are beyond question.
•The fact that the resolution of a separate trial may determine the litigation is relevant.
•Separate trials of issues may be appropriate where it is likely to save expense and inconvenience.
•There is a focus in the Rules of the Supreme Court on the expedition of determination of matters before the Court and separate trials of issues may advance the expedition.
•A possibility that the determination of issues tried separately may lead to settlement should be taken into account even though the issues may not finally dispose of the action.
•In many cases the formulation of specific questions to be tried separately, from and in advance of other issues, will assist in the resolution of the matters in issue if the questions are capable of final answer in accordance with the judicial process.
•Separate trials are inappropriate where the result depends on complex issues of fact or when a preliminary question is one of mixed fact and law.
•The procedure should be confined generally to cases where facts are complicated and the legal issues short, otherwise it can be a treacherous shortcut.
•Separate trials may be productive of delay, extra expense and uncertainty of outcome, which they are intended to avoid. Saving some time is often illusory when the parties have the necessity of making full preparation and factual matters relevant to one issue are relevant to others which overlap.
•There is potential for further appeals.
The emphasis is on the possible saving of costs and the speedy resolution of matters. That is most likely to occur where the preliminary issue is relatively simple and is not enmeshed in factual controversy.[36] A key consideration is whether there is a clear line of demarcation between the issues.[37]
[36] Moore v Stockland South Beach Pty Ltd [32].
[37] Landsdale Pty Ltd v Moore [22].
But for a question of practical utility, which will need to be examined shortly, I consider that the construction question raised in CIV 2406 of 2015 and CIV 3118 of 2017 is particularly suited for trial separately from the issues in CIV 1812 of 2016 and the remaining issues in CIV 2406 of 2015.
The following eight factors support a separate trial of the construction question.
First, the proposed issue for determination is confined. There is a single substantive question; and it is one of contractual construction. Senior counsel for Multiplex confirmed that Multiplex's position was that its entitlement to have recourse to the security and retention bonds was dependent on cl 42.8(a) on its proper construction; and cl 42.8(a) alone was the relevant source of Multiplex's alleged entitlement.
From what I have said as to the issues in CIV 1812 of 2016, it will be apparent that this is not an issue that arises in that action. There are separate and distinct issues as between the construction question, on the one hand, and the broader building dispute, on the other.
Second, a separate trial of the construction question is likely to simply be a documentary trial. There is no suggestion that there will be any surrounding circumstances evidence; senior counsel for Multiplex said as much when I raised that question with him. While M+W has chosen to raise the issue by way of writ, the question is one that could have been brought by originating summons under O 58 r 10 of the Rules of the Supreme Court 1971 (WA). By contrast the numerous issues in CIV 1812 of 2016 are factually dense and legally complex. Discovery will be extensive and there will be considerable lay and expert evidence.
Third, no contested factual issue will arise on a separate trial of the construction question.
I note that Multiplex made a submission to the contrary. Multiplex submitted that, so far as Multiplex relied on cl 42.8(a), it would be necessary for the court to find that there was 'moneys due, or which may become due' for the purpose of cl 42.8.[38] That submission appears not to have had regard to M+W's concession that it accepts that the claims for payment made by Multiplex under the Payment Schedules constituted 'moneys due, or which may become due' for the purpose of cl 42.8.[39]
[38] Multiplex's Submissions dated 13 August 2018 par 41.
[39] M+W's Submissions dated 13 August 2018 par 4.
Senior counsel for M+W confirmed that this was the basis on which a separate trial of the construction question would proceed; it was accepted that there was money which may become due. It was only in CIV 1812 of 2016 - where the parties were seeking a final determination as to their respective monetary entitlements - that M+W would contend that there was no amount due.
In the circumstances there are no contested facts which will affect the proper construction of the contractual terms. The construction question is apt for determination on a statement of agreed facts. If an early trial is ordered preparation of a statement of agreed facts is one of the pre-trial steps the parties will be required to perform.
Fourth, the proposed separate trial will be at most two days, but really ought to be no more than a day. The issue is confined; the applicable principles as to contractual construction are well established. If argument proceeds on an agreed statement of facts, and an agreed documentary bundle, I am relatively confident that no more than one day will be required. By contrast the parties have estimated that a trial of all the issues in CIV 1812 of 2016 would be at least three weeks. That estimate appears realistic.

Fifth, a separate trial of the construction question might be heard this year or, at worst, early in 2019. Based on the parties' submissions at the 10 July 2018 strategic conference I consider it unlikely that a trial of all the issues in CIV 1812 of 2016 would be heard until early to mid‑2020. Given that determination of the construction question would then be tied to the wider controversy, that might not see any curial determination until late 2020 at best or, more likely, early to mid-2021. In those circumstances I reject, as too optimistic, what was said at par 14(d) of Multiplex's position paper dated 25 October 2016.
Sixth, a separate trial of the construction question will finally determine CIV 3118 of 2017 and may, depending on its outcome, finally determine CIV 2406 of 2015.
Practical consequences may result from such a determination. Senior counsel for Multiplex accepted that, if the construction point was determined adversely to Multiplex, then - subject of course to any appeal and suspension order - Multiplex would have to immediately repay to M+W the money obtained by recourse to the security and retention bonds.
I accept that the proposed separate trial will not resolve the wider controversy. The points made by Multiplex at par 14(c), (g), (h) and (i) of its position paper of 25 October 2016 have validity and are matters that I take into account. But nevertheless, as is recorded in the position paper, the preliminary determination will achieve a resolution of an issue on which the parties are divided; it will determine which party should be 'in the money' pending the determination of the totality of the dispute.
Seventh, a separate trial of the construction question will not prolong the determination of the overall controversy between the parties. A trial of the construction question will not impact the parties in undertaking procedural steps to progress CIV 1812 of 2016 to entry for trial. Those steps can continue unimpeded by a separate trial of the construction question. A separate trial of the construction question will not impact on the timing of the substantive determination.
Orders have been made that contemplate that the parties are to prepare an agreed statement of issues and lay evidence. Expert evidence orders will follow conferral and production of an agreed expert evidence schedule. The timetable contemplates that such steps will be complete by 31 May 2019 by which time a trial of the construction question is likely to have been heard and determined.
Eighth, given the confined issue that would be tried in the proposed early trial in CIV 3118 of 2017 (and partial early trial in CIV 2406 of 2015) there ought to be no findings that would prejudice the fair trial of the issues in CIV 1812 of 2016. Nor ought there be any real possibility of inconsistent findings.
It will be noted that in recounting the factors that support a separate trial I have not taken into account any possibility that a separate trial of the construction question may lead to an overall settlement. I consider that possibility to be too remote to give it any weight. The amount of the security and the two retention bonds is dwarfed by the quantum of the claims in CIV 1812 of 2016. I consider that if M+W is put in the money, as concerns the security, in place of Multiplex, that change will have no impact on either M+W or Multiplex as concerns their attitude to an overall settlement. These are commercially sophisticated parties represented by highly experienced solicitors and senior counsel. M+W's and Multiplex's attitude to an overall settlement will be informed by evidence - in particular the expert evidence - in CIV 1812 of 2016 rather than the determination of the construction question.
Nevertheless, having regard to the various factors I have recounted, prima facie the construction question raised in CIV 2406 of 2015 and CIV 3118 of 2017 is suited for a separate trial to be conducted before the trial of the issues in CIV 1812 of 2016.
Against that, senior counsel for Multiplex raised a number of matters.
First, it was said that M+W had delayed in its application. I reject that submission. I accept that on its face the submission is open; CIV 2406 of 2015 was commenced in 2015 and Mr Wilenski's affidavit refers to consideration being given to a preliminary issue in late 2016. This application was not made until late July 2018. But the delay is explained by no steps being taken in the litigation during a mediation process. I am satisfied that there is no disentitling conduct on the part of M+W due to delay.
Second, it is said that the suggested early trial will not bring an end to the controversy between the parties. I accept that it will not resolve the whole of the controversy. But it will resolve the dispute as to whether Multiplex was entitled to have recourse to the security and the retention bonds (although, if M+W fails, an issue will remain in relation to CIV 2406 of 2015 as to the security and retention bond). At the very least action CIV 3118 of 2017 will be brought to a close.
Third, reference was made to the potential for such a matter to take on a life of its own. I accept that possibility. Entitlement to the security is, however, a separate and distinct dispute from the wider controversy as to the parties' respective monetary entitlements and obligations under the subcontract. The possibility that there might be an appeal from a determination as to the construction question is of lesser concern in those circumstances. Such an appeal will not, in my view, fragment the proper disposition of CIV 1812 of 2016 or prolong the time for determination of CIV 1812 of 2016.
Fourth, it was said that there would be some inevitable duplication of costs. There was little evidence on this; but as a matter of logic that must be so. However, given that the trial is likely to be short, the amount of duplication is likely to be relatively modest. The risk of duplication does not weigh heavily in the balancing exercise.
Fifth, the question arose in circumstances where M+W had previously agreed to orders that the three actions be heard and tried together; and, at least in CIV 2406 of 2015 and CIV 1812 of 2016, consent orders to that effect had been made. This too must be taken into account. But, for the reasons I have given in assessing the interests of justice as to vacating para 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016, I consider it to be a factor of lesser weight. The overriding question is what best achieves the objects in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA).
I did, however, harbour serious reservations as to the practical utility in ordering an early trial in CIV 3118 of 2017 and a partial early trial in CIV 2406 of 2015 to determine the construction question. That was particularly so in circumstances where it would remain necessary to try the substantive issues in CIV 1812 of 2016 and the proposed separate trial of the construction question would not save any costs or reduce any inconvenience to the parties. In terms of utility the only clear benefit was the early determination of which party should be in the money pending determination of the substantive dispute.
That issue of practical utility was manifest in a number of ways. For example, with the benefit of hindsight, what would be the benefit of M+W's proposal for an early trial of the construction question were M+W to win that issue, but following determination of CIV 1812 of 2016 it was found that M+W was liable to pay Multiplex an amount considerably greater than that as represented by the retention bonds? Could there then be said to be any injustice in M+W not having been permitted to pursue the construction question at an early trial?
Similarly, the question might be posed as to what injustice M+W suffered, practically speaking, if it could be compensated in interest if it were found that Multiplex had wrongfully converted the security and the retention bond.
Senior counsel for M+W accepted that M+W might be compensated in interest. But, according to counsel, that was not really to the point. Proper regard was to be had to the nature and purpose of a security arrangement such as had been entered into between M+W and Multiplex. It was said that the inherent character of contractual terms that govern access to securities of this nature - being 'cash like'[40] instruments such as bank guarantees and bonds - is to determine which party remains 'in the money' in the particular circumstances pending resolution of a substantive dispute.
[40] CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [No 2] [2017] WASCA 123 [84].
By reference to cases in the building and construction context in which interlocutory injunctions had been sought to restrain a principal calling on a contractor's bank guarantee senior counsel submitted that the courts have traditionally been concerned to preserve the integrity of such security arrangements.
In such cases the courts have distinguished between arrangements where the underlying purpose is one of 'security' and arrangements where the underlying purpose is one of security and 'risk allocation'.[41] In determining that a bank guarantee is provided by way of a 'risk allocation device' the court identifies an intention that the parties have allocated the risk between them as to who is to be out of pocket pending the resolution of a substantive dispute between them. In those circumstances, where an injunction is sought to restrain a party from calling on the guarantee, the court will generally not imply a negative stipulation prohibiting the holder of the guarantee from calling on it.[42]
[41] Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812, 821, 826 - 827; Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2008] FCAFC 136; (2008) 249 ALR 458 [79]; CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [No 2] [86].
[42] See eg Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd (826 - 827); Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [82]; Dedert Corporation v United Dalby Bio-Refinery Pty Ltd [2017] VSCA 368 [104].
Senior counsel for M+W did not invite me to look to the terms of the subcontract to identify whether the security provisions of the subcontract evinced an underlying purpose of security or security and risk allocation. That may be a matter for the eventual determination of the construction question. Senior counsel's contention was based instead on the approach the courts have taken when such applications for an interlocutory injunction are being litigated.
Usually an applicant for an interlocutory injunction need only show a prima facie case. However, the authorities suggest that ordinarily a court should determine the construction of the contract if determination of that issue is a necessary step to a conclusion as to whether an applicant is entitled to an injunction to restrain recourse to a security provided under a building contract.[43] The matter is determined by reaching a concluded view as to the meaning and effect of the relevant terms of the contract; the contract is construed on a final basis rather than a prima facie basis.
[43] Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98 [53], [111]; Dedert Corporation v United Dalby Bio-Refinery Pty Ltd [99]. That was the approach taken in CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd [2017] WASC 112 [62] - [66].
In part this view is taken as the decision to grant or refuse the interlocutory injunction may in a practical sense determine the substance of the matter in issue. Also, as was explained by Kaye JA in Dedert Corporation v United Dalby Bio-Refinery Pty Ltd:
The determination of the application for an interlocutory injunction on behalf of the applicant would potentially be dispositive of at least part of the subject matter of the proceeding. If the interlocutory injunction were granted, it would be determinative of the extent of the security afforded by the guarantee, and the question as to which party should be out of pocket pending resolution of any dispute under the contract. On the other hand, if, as occurred in this case, the application for interlocutory injunction were refused on the basis of the undertaking proffered by the respondent, such a resolution would extend the duration of the security provided by the guarantee until after the determination of the substantive dispute between the parties under the contract. It would also affect, at least in part, the allocation of the risk of which party should be out of pocket pending determination of that dispute.[44] (emphasis added)
[44] Dedert Corporation v United Dalby Bio-Refinery Pty Ltd [100]. However, Whelan JA (dissenting) had a different view as to the detriment caused by a 'temporal extension' of the obligation to provide security (albeit expressed in the context of balance of convenience analysis): at [15].
In those circumstances it is appropriate, on such an application to restrain the holder from calling on the bank guarantee, to determine the proper construction of the security arrangements under the building contract on a final basis when it is practicable to do so.
The observations of Kaye JA are apt, and ought to be applied by analogy, to the question currently before me.
To leave the construction question to await determination with the substantive building and construction dispute in CIV 1812 of 2016 would be to render largely futile or pointless the court's determination as to Multiplex's entitlement to have recourse to the security and the retention bonds.
The court's determination on the construction question will be of little practical moment as between the parties if it is found that Multiplex's actions were authorised under the subcontract. Multiplex, having exercised what it says was its entitlement to do so, is in the money and will stay in the money. But let it be assumed (only for the sake of considering whether it is in the interests of justice that the construction question be adjudicated before the substantive dispute) that on a proper construction of the subcontract the true position is that contended for by M+W: Multiplex had no entitlement to resort to the security and the retention bonds. However, by standing over the construction question to be determined with the substantive dispute Multiplex will remain in the money and the parties' agreement as to the provision of security and allocation of risk will have been ineffective in practical terms.
It is no answer to this analysis to say that it is dependent on an assumption that M+W is correct in its contention that Multiplex wrongfully converted the security and retention bonds. That assumption must be employed to expose where the interests of justice lie. At present all that is known is that there is an unresolved dispute as to the parties' respective entitlements. Each party's position is arguable. Indeed, given Master Sanderson's dismissal of the summary judgment application in CIV 3118 of 2017, I must proceed on the basis that Multiplex's construction is arguable. But so too, in my view, is that of M+W. A conclusion as to which party is correct, and who should be in the money, cannot be reached without a final judicial determination following trial.
Returning to the posited second scenario, by its actions, although not entitled to do so, Multiplex will remain in the money pending the finalisation of the substantive dispute. Multiplex will have unilaterally extended the duration of the security until the determination of the substantive dispute; it will have altered the allocation of risk as to which party should be out of pocket pending determination of the substantive dispute.
Viewed in this way, an early determination of the construction question is, in my opinion, consistent with the interests of justice.
Ordinarily, if it is practicable to do so, it will be in the interests of justice that there be an early judicial determination where a contractual construction question arises as to whether the holder of a bank guarantee was entitled to have recourse to it under the terms of the relevant security arrangements. By 'early determination' I mean a determination before the substantive dispute. Otherwise a holder, through self-help, may be able to alter the security and risk allocation arrangements as struck by the parties. It is only by prompt curial determination that the parties are necessarily kept to their bargain.
Parties are expected to observe their contractual bargains. So too the court should respect and give effect to contractual arrangements freely entered into by commercial parties. Where the parties' bargain is sensitive to, and informed by, questions of risk allocation pending determination of a substantive dispute, the court best respects and gives effect to the contractual arrangements by making an early judicial determination where practicable.
It is accepted that bank guarantee security arrangements between principal and contractor (and likewise contractor and sub-contractor) in a building and construction context may be informed by considerations of allocation of risk - parties may contract so that one party is put 'in the money' pending the determination of the substantive dispute. Commercial parties attribute importance to the continuation of security, the allocation of risk and whether one party is to be put in the money pending determination of a substantive dispute. Accordingly, the court should, in my opinion, respect and give effect to the bargain struck by such commercial parties in a manner that best adheres to the commercial considerations that underpinned the bargain.
An unnecessary delay in the judicial determination of whether the holder of a bank guarantee was entitled to resort to the security may result in the parties' bargain being denuded of its proper meaning and effect. All the more so if the court simply stands over that question to be determined with the substantive dispute - an approach which, in the circumstances before me, would see considerable delay.
If courts were to defer such a construction question so that it was determined with the substantive dispute as a matter of course, commercial parties asked to proffer bank guarantees may become concerned that there is an unacceptable risk that, notwithstanding the commercial bargain as struck, the terms may be practically unenforceable. There may at least be a perception among commercial parties that the terms will not be enforced in a way that respects and gives effect to contractual arrangements as to the continuation of security and the allocation of risk. The utility of bank guarantees may be impaired as contractors and sub-contractors may become unwilling to proffer them. That risk is ameliorated by the court finally determining the parties' respective entitlements at an early trial where practicable.
Accordingly, I accept that there is real practical utility in the early determination of the construction question in CIV 3118 of 2017 and CIV 2406 of 2015.
Given the nature and purpose of a security arrangement such as that entered into between M+W and Multiplex, there is a real risk of injustice in simply standing over the question of whether Multiplex was entitled to have recourse to the security and the retention bonds to be heard together with the substantive dispute. That is all the more so when a decision following a trial of the substantive dispute will be many years in the future. The court should respect and give effect to the contractual arrangements entered into by the parties, thereby better preserving the integrity of the security arrangements.
A separate trial of the construction question can be conducted efficiently and economically, segregated from the merits of the wider building and construction dispute between the parties in CIV 1812 of 2016. Such a trial of the construction question will be short and could be held in the immediate future - certainly well before a trial of the whole controversy in CIV 1812 of 2016. That trial will quell a significant disputed issue between the parties, namely, whether Multiplex was entitled to have recourse to, and may retain, some $3.94 million pending determination of the substantive dispute. Given the nature and purpose of the type of security arrangement entered into between Multiplex and M+W, it is appropriate that the court facilitate the early determination of that dispute where it is practicable to do so.

In the particular circumstances of this case, and taking into account the various matters I have referred to, I consider it is in the interests of justice that there be an early trial in CIV 3118 of 2017. Put alternatively, I am satisfied that it is just and convenient that that there be a separate trial of the construction question.
It follows that I would vacate par 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016 in order to facilitate making orders that the construction issue in CIV 2406 of 2015 be tried with CIV 3118 of 2017. I consider the more convenient way to achieve the latter object is to provide for an early trial of the matters raised by the relevant paragraphs of the statement of claim in CIV 2406 of 2015 as provided for in par 2(b) of M+W's application.

Conclusion and orders

Subject to hearing from counsel as to the precise terms, I propose to order that:
(1)Par 1 of the orders made 28 September 2016 in CIV 2406 of 2015 and CIV 1812 of 2016 is vacated.
(2)There will be an early trial (separate from a trial of the issues in CIV 1812 of 2016) in respect of:
(a)the entirety of the matters in CIV 3118 of 2017; and
(b)the matters raised in pars 1, 2, 3, 4(a), 4(b), 4(c), 4(f), 4(g), 4(h), 4(i), 4(j), 5, 7, 8, 9, 13 and 14 of the statement of claim dated 22 March 2016 in CIV 2406 of 2015,
the two actions to be tried and heard together with evidence in one to be evidence in the other.
I will hear from counsel as to costs. I also invite the parties to confer as to the necessary pre-trial orders for the early trial as to the construction question.

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 VAUGHAN
21 AUGUST 2018