Macmahon Mining Services Pty Ltd v Micon Mining and Construction Products GmbH and Co Kg
[2020] WASC 411
•16 NOVEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: MACMAHON MINING SERVICES PTY LTD -v- MICON MINING AND CONSTRUCTION PRODUCTS GMBH & CO KG [2020] WASC 411
CORAM: MASTER SANDERSON
HEARD: 22 SEPTEMBER 2020
DELIVERED : 16 NOVEMBER 2020
PUBLISHED : 16 NOVEMBER 2020
FILE NO/S: CIV 1259 of 2019
BETWEEN: MACMAHON MINING SERVICES PTY LTD
Plaintiff
AND
MICON MINING AND CONSTRUCTION PRODUCTS GMBH & CO KG
Defendant
Catchwords:
Practice and procedure - Application to set aside order granting leave to serve out of jurisdiction - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | P Ward |
| Defendant | : | D J Pratt |
Solicitors:
| Plaintiff | : | Johnson Winter & Slattery - Perth |
| Defendant | : | Jackson McDonald |
Case(s) referred to in decision(s):
Bombardier Inc v Avwest Aircraft Pty Ltd [2020] WASCA 2
Crawley Investments Pty Ltd v Elman [2014] WASC 233
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162
MASTER SANDERSON:
By chamber summons filed 20 May 2020 the defendant seeks orders setting aside the service of the writ, the grant of leave to serve outside the jurisdiction and otherwise dismissing the proceedings. As is usual in these matters, leave was granted in separate proceedings: CIV 1205 of 2019. During the course of the hearing on this application affidavits which were relied upon by the plaintiff in the earlier proceeding were referred to. That course was quite proper. When referring to various affidavits I will indicate the proceeding in which they were filed.
There was no dispute between the parties as to the relevant background facts and the procedural history. By ex parte motion filed 5 February 2019, the plaintiff sought leave to issue a writ of summons against the defendant and serve the defendant in Germany. The application was supported by an affidavit of Sarah Louise Brinkmann affirmed 5 February 2019. Leave was sought pursuant to O 10 r 1(1)(e)(iii) of the Rules of the Supreme Court 1971 (WA) on the basis that an action was sought to be brought in respect of a contract that was by implication governed by the laws of Western Australia. On 12 February 2019 I granted leave to the plaintiff to file and serve its writ on the defendant in Germany. That same day the plaintiff filed a generally indorsed writ commencing this action. The writ was valid for 12 months. It was not served within that 12 month period.
On 24 December 2019 the plaintiff filed a statement of claim. On 11 February 2020 the plaintiff applied by ex parte motion to extend the validity of the writ. The application was supported by an affidavit of Minal Raichand Shah affirmed 11 February 2020. On that same day Acting Master Whitby made orders extending the validity of the writ until 12 May 2020.
On 28 February 2020 a copy of the writ was served on the defendant in Germany. The copy of the writ as served was stale and was not marked with an official stamp showing the period for which the validity of it had been extended in accordance with O 7 r 1(3).[1] On 30 March 2020 the defendant filed a conditional appearance. On 2 April 2020 the defendant was served with a copy of the writ of summons which had been stamped showing the period for which the validity of it had been extended. This copy complied with O 7 r 1(3).[2] On 15 April 2020 orders were made by consent deeming the defendant's conditional appearance to be an appearance to the renewed writ. The orders also extended the time for the defendant to bring any application pursuant to O 12 r 6(2) to set aside the service of the renewed writ to 20 May 2020.[3]
[1] Defendant's submission in support of application to set aside service of writ of summons filed 6 July 2020 [12].
[2] Defendant's submission in support of application to set aside service of writ of summons filed 6 July 2020 [14].
[3] Order Registrar Whitby dated 15 April 2020.
There was a significant measure of agreement between the plaintiff and the defendant as to the applicable legal principles. Both referred to the decision of the Court of Appeal in Bombardier Inc v Avwest Aircraft Pty Ltd [2020] WASCA 2. It was common ground between the parties that:
(a)to obtain leave to serve a writ on a party outside Australia under O 10 r 1(1) the following two requirements must be met:
(i)the case must fall within one of the categories or pigeon holes set out in O 10 r 1(1) of the Rules; and
(ii)the court must be persuaded to exercise its discretion in favour of the grant of leave; and
(b)to determine whether a case falls within one of the pigeon holes in O 10 r 1(1) the plaintiff must demonstrate that there is 'a good arguable case' that the matter falls within a pigeon hole.[4]
[4] Bombardier Inc v Avwest Aircraft Pty Ltd [14].
Really the crux of the plaintiff's argument in this matter is summarised in par 6 of counsel's written submissions:
As to the second requirement, it should be noted that the requirement is that it must be established that there is a 'good arguable case' that the matter falls within a pigeonhole, not a good arguable case as to the merits of the case. Further, this does not require the court to determine that the matter does fall within a pigeonhole, only that there is a good arguable case that it does; the ultimate determination of issues such as where a contract was made, or what is the governing law of the contract, are matters to be determined in the substantive action, not on an application for leave to serve outside of Australia or on an application to set aside service. As noted below, a fundamental problem with Micon's Application is that it seeks such a final determination.
With respect, the authorities support counsel's submission. Apart from the Bombardier decision, counsel also relied upon Crawley Investments Pty Ltd v Elman [2014] WASC 233. In that decision at [45] Edelman J provides a summary of the applicable principles when determining whether the issue of the writ and its service should be set aside. I would adopt, without repeating, what his Honour has to say. In all respects, par 6 of the plaintiff's submissions quoted above is consistent with his Honour's reasoning.
The plaintiff accepted that when an application such as this is made, it bares the onus of showing the case was a proper one for service outside the jurisdiction, because there is a good arguable case that it falls within one of the 'pigeon holes'. The onus is borne by the applicant (defendant) in relation to the second limb where the applicant seeks an exercise of the court's discretion to set aside the writ and service. In this latter case the test to be applied is the same as that for summary judgment. Edelman J deals with this point in the Crawley Investments decision. His Honour adopts the statement of principle he set out in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [44].
It is convenient at this point to set out the indorsement of claim. It reads as follows:
The plaintiff's claims:
1.Pursuant to a contract for the supply of raise drilling rods by the defendant to the plaintiff made on or about 19 January 2012 (Contract), damages for the defendant's breach of that contract.
2. Alternatively to 1, damages for the defendant's breach of its duty of care in relation to its performance of the Contract.
3. Alternatively to 1, damages for the defendant's breach of the condition implied in the Contract by section 14 of the Sale of Goods Act 1895 (WA).
4. Interest at the rate of 6% per annum pursuant to section 32 of the Supreme Court Act 1935 (WA), as amended.
5. Costs.
6. Further or other relief
The essentials of the defendant's submission are set out in par 5 of counsel's written submissions. That paragraph reads as follows:
In particular, Micon Mining contends that:
(a) as to Macmahon’s claim in negligence:
(i) Macmahon must establish that each of its causes of action is a proper one under RSC O.10 r1(1)(a) for service outside the jurisdiction. See paragraph 26.
(ii) Macmahon did not on the application for leave to serve outside the jurisdiction seek leave in relation to its claim in negligence and it cannot now justify the grant of leave on a ground not relied upon when the original leave was granted. See paragraphs 25 and 32-33.
(iii) In any event:
(A) there was no tort committed within the jurisdiction. See paragraphs 34 to 41; and
(B) Macmahon contracted with Micon Drilling and not Micon Mining and has therefore sued the wrong defendant. See paragraphs 49 to 71.
(b) As to Macmahon’s claim in contract:
(i) Even accepting Macmahon’s arguments that it contracted with Micon Mining and as to the documents that comprise the contract, the contract is not one which is by implication governed by the law of Western Australia. See paragraphs 43 to 48.
(ii) In any event, the better view is that:
(A)Macmahon contracted with Micon Drilling and not Micon Mining. Consequently, Macmahon has sued the wrong defendant and it cannot establish a good arguable case against Micon Mining in respect of any of its claims. See paragraphs 49 to 71;
(B) The contract was subject Micon Drilling’s General Terms and Conditions of Business, which make the contract subject to German substantive law. Consequently, the case is not one falling within RSC O.10 r1(e)(iii) since the contract is not by its terms or implication governed by the law of Western Australia. See paragraph 69(b).
(iii) if discretionary factors are relevant and the contract is subject to Micon Drilling’s General Terms and Conditions of Business, then:
(A)the applicable limitation period pursuant to the Micon Drilling General Terms and Conditions of Business within which the plaintiff may bring claims in contract was 1 year from transfer of risk (Art 14(7)) and expired prior to the issue of the writ of summons;
and
(B) the exclusive place of jurisdiction for bringing claims against Micon Drilling is Germany: Art 1(4). See paragraph 69(c).
As I understand par 5(a) above, the defendant is approaching this matter on the basis the plaintiff is making a claim in tort. In his written submissions, counsel for the plaintiff maintained that was not the case. He pointed out that the contract between the plaintiff and the defendant was for engineering, manufacture and supply of a bespoke product. As such the contract was of a type involving the supply of professional services which incorporate, as a matter of law, an implied obligation to exercise reasonable care in the performance of the contractual obligation. Accordingly, the claim is contractual. That would seem to be borne out by the statement of claim. Paragraph 17, which appears under the heading 'Negligence' refers only to the contract and does not seem to in tort. Accordingly, that aspect of the defendant's argument fails.
Turning then to the contract itself, a good part of the defendant's submissions are taken up with an argument the plaintiff contracted not with the defendant but with a related company, Micon Drilling GnbH. In response the plaintiff says this application is not the occasion to determine finally the party with whom the plaintiff contracted. That must await trial. It was the plaintiff's submission it was reasonably arguable the contracting party was the defendant.
In par 11 of his written submissions, counsel for the plaintiff examines in some detail the evidence in relation to the proper contracting party. That paragraph reads as follows:
The evidence on this point is as follows:
a. The dealings that led to the contract relevantly began on or about 8 September 2010, when Russell Wood of Macmahon emailed Kai Schwarzburg of Micon seeking pricing for supply of drill rods and setting out performance specifications for the purposes of engineering of the rod diameter and thread design. In that regard, it is important to note that right from the outset the contract was for custom engineered and manufactured drill rods, not ‘off-the-shelf’ items.
b. Kai Schwarzburg was, at all relevant times, an officer of, and holder of a power of attorney for, the named defendant Micon. He was listed as the point of contact for the named defendant Micon on its website at
c. As at 2012, there was no apparent mention of the company Micon Drilling GmbH as a supplier of products or services on the website Rather, the only company names on the website at that time were Micon (i.e. the presently named defendant, Micon Mining and Construction Products GmbH & Co. KG), Eastman Whipstock GmbH and 'Micon GmbH & Co. KG' (which can reasonably be assumed to be a contraction of Micon Mining and Construction Products GmbH & Co. KG, given that the evidence indicates that no separate company of that name exists).
d. On the defendant’s own evidence in support of the Application, the named defendant Micon is the company in the Micon group that specialises in production of drilling and raise bore equipment. This is confirmed by the extracts from the website from 2012, in which the named defendant Micon describes itself as having 'experience in … manufacturing and developing drilling equipment of more than 50 years' (emphasis added), and by Micon’s then-publicly available document setting out its offerings in the field of raise bore equipment. (Not that it is directly relevant to what happened in 2012, but even in the current versions of the website, the named defendant Micon is said to specialise in 'the production of drilling and raise bore equipment', whilst Micon Drilling GmbH represents that it 'offers a comprehensive range of high‑quality directional drilling equipment. In addition to MWD systems and drilling motors, self-steering tools such as the RVDS, TruTrak, VertiTrak and 3D-Trak (RSS) are available' and that it specialises in 'sales and rental of drilling equipment'. That is, the clear representation is that the named defendant Micon is the company in the group responsible for custom engineering and manufacture of drilling and raise bore equipment.)
e. It should also be noted that the named defendant has described itself at all material times as having originated in Christensen Mining Europe. There is no evidence of Micon Drilling GmbH having a direct connection to Christensen Mining. This is relevant when considering the significance of the Christensen Mining trademark on documents subsequently produced by Mr Schwarzburg, indicating that those documents were equally consistent with having been delivered on behalf of the named defendant Micon, rather than on behalf of Micon Drilling GmbH as the defendant contends.
f. Technical discussions and designs for engineering and manufacture of the drill rods continued from September 2010 to 7 December 2011. It is clear from those exchanges that the technical engineering specifications and performance of the drill rods were critical factors in ensuring that the rods when supplied were fit for purpose. It is also clear that that engineering work was being done by the named defendant Micon, not Micon Drilling GmbH.
g. Although formal quotations for supply of the drilling rods were delivered from time to time by Mr Schwarzburg on letterhead naming Micon Drilling GmbH, three matters must be noted as to those quotation documents:
i. first, each of those documents also carried the logo of Christensen Mining, which was represented by the named defendant Micon to be its predecessor;
ii. secondly, the terms of payment that were proposed in those quotations are materially different to those subsequently agreed in the contract; and
iii. thirdly, the last formal quotation was dated 26 April 2011 and was valid only to 31 May 2011, and had thus expired almost 8 months before the contract came into existence. Those quotations are ultimately irrelevant to, and inadmissible for the purpose of, construing the contract that ultimately came into existence.
h. The negotiations culminated in Macmahon issuing a letter of intent dated 16 January 2012. The following matters should be noted as to that letter:
i. it is addressed to the named defendant Micon;
ii. it references supply in accordance with specifications developed 'over the last few months' (i.e. not more than 8 months previously when the last formal quotation and conditions of contract were issued by Mr Schwarzburg) – in context this is clearly a reference to the most recent technical specifications contained in and annexed to the email from Corinna Bossin dated 25 November 2011, which expressly states they come from the named defendant Micon;
iii. it thanks the named defendant Micon 'for your efforts in developing a heat treatment process that will provide a superior product for the raise drill rods …', being precisely the type of engineering work that the named defendant Micon specialises in, as opposed to the equipment sale and rental business of Micon Drilling GmbH;
iv. it indicates an intention on the part of Macmahon to be bound in contract on acceptance of the letter of intent by use of the words, 'please proceed on the basis of this letter to procure the required material'; and
v. it contained all of the essential terms necessary to constitute a contract, albeit one that the parties intended would be supplemented by a formal Macmahon order which was to be emailed 'within the next 10 days'. It was thus capable immediately on acceptance of giving rise to a binding contract of the kind described by the High Court in the first category in Masters v Cameron (1954) 91 CLR 353 at 360.
i. Mr Schwarzburg responded just over one hour after receiving the letter of intent, accepting it as, 'your order', and advising, 'This is enough for us to proceed at this stage.' This was in the context of Mr Schwarzberg’s email approximately 4 hours earlier, on a Saturday, chasing the order because, 'The steel producer is pushing me because they hold their raw material prices only valid until today …'. Clearly, by accepting the order as the basis for proceeding to confirm a materials supply order from the steel producer, Mr Schwarzberg was also intending that Macmahon should immediately be bound. There was no quibble by Mr Schwarzberg that the wrong Micon entity had been named in the order.
j. The 'official Macmahon order' referred to in the letter of intent was subsequently emailed to Mr Schwarzburg on 24 January 2012. Although the form of the purchase order says that the rods have been 'ordered from' Micon Drilling GmbH, it also says that the order was 'CONFIRMATION ONLY', and that it was issued '… in accordance with the attached specification and terms', and the attached terms are in the form of a letter to the named defendant Micon in materially the same terms as the letter of intent.
k. Although Micon now relies, in support of its Application, on the purported 'order acknowledgement' and its attached general terms of business, as emailed from Ms Bossin of Micon to Macmahon on Friday 27 January 2012 (10 days after the contract was formed), that document is of no legal effect. It should also be noted that those terms are materially different from the general terms that were annexed to the earlier quotations from Micon Drilling GmbH. There is no evidence that Macmahon had ever been provided with the terms now propounded by Micon before the order was placed and the contract concluded.
(In the submissions counsel has cross‑referenced aspects of the evidence to particular affidavits. I am satisfied the summary provided by counsel accords with the evidence. On that basis I have omitted the particular affidavit references).
It is appropriate to emphasise at this point I am not making any determination one way or the other whether the present defendant is the proper contracting party. But it is clear from the above the point is arguable. That is sufficient. Furthermore, it is clear summary judgment could not be entered in the defendant's favour on the basis the contract incorporates the Micon Drilling GmbH general terms and conditions of business. That is simply not a conclusion I could reach on the evidence as it stands.
Further, it is arguable the contract was formed in Western Australia. Under West Australian law determining where an agreement was made requires consideration of where the final act completing the formation of the contract occurred. As a general rule, a binding contract is formed when acceptance of an offer is communicated to the offeror. Accordingly, a contract is made at the place where the communication of acceptance is received. As is evident from the time zone notations on Mr Schwarzbur's email acceptance which record the time zone as '+0800' the plaintiff received that communication of acceptance at its head office in Western Australia. It is then arguable the contract was formed in Western Australia.
Finally, it is arguable the proper law of contract is the law of Western Australia. The proper law of the contract is the system of law by reference to which the contract was made or with which it has its closest and most real connection. It is arguable that is Western Australia. The contract was arguably formed in Western Australia. It is in English and is in a form that is consistent with the common law of Western Australia. The contract does not contain many of the types of provisions which might be found in a German contract. The plaintiff is domiciled in Western Australia. The subject matter of the contract was engineering, manufacture and supply of drilling rods for use in Australia.
Against that is the fact that the currency was in Euros. Further, the price is said to be 'Xworks' which may mean delivery was accepted by the plaintiff in Germany. On this issue, the plaintiff argues the drill rods were uniquely engineered for the plaintiff's requirements in Australia and were required to be delivered and packaged in containers suitable for international shipping. Just what the expression 'Xworks' means in that context may well be the subject of dispute.
While accepting there are arguments both ways on this issue, I am satisfied that for present purposes the plaintiff's position is arguable. It is certainly not a case where the defendant could obtain summary judgment under O 16 of the Rules of the Supreme Court. That is determinative of the present application.
The defendant's application will be dismissed. In his written submissions, counsel for the plaintiff submitted the costs of the application ought be paid by the defendant, such costs to be assessed with limits removed. Within seven days of the publication of these orders the defendant should make any submissions in relation to the costs order proposed by the plaintiff.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TM
Associate to Master Sanderson16 NOVEMBER 2020
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