Macquarie Generation v CNA Resources Ltd - [2001] NSWSC 1040

CITATION: Macquarie Generation v CNA Resources Ltd [2001] NSWSC 1040

CURRENT JURISDICTION: Equity Division
Commercial List

FILE NUMBER(S): SC 50057/01

HEARING DATE(S): 13 & 14 November, 2001

JUDGMENT DATE:
15 November 2001

PARTIES :

Macquarie Generation [Plaintiff]
CNA Resources Ltd (formerly Peabody Resources Ltd) [Defendant]

JUDGMENT OF: Palmer J

COUNSEL : B.W. Walker SC, I.M. Jackman, M. Leeming [Plaintiff]
N. Young QC, P.W. Collinson [Defendant]

SOLICITORS: Speed & Stracey [Plaintiff]
Allens Arthur Robinson [Defendant]

CATCHWORDS: CONTRACTS - OFFER AND ACCEPTANCE - CONDITIONAL OFFER - Whether an offer expressed to be subject to a condition can be accepted - whether a condition to an offer was "spent" by reason of subsequent events and the offer then became capable of immediate acceptance - INVITATION TO TENDER - CONTRACT - Whether submission of tender which did not comply with the requirements of the Invitation to Tender brought into existence a contract to conform to the tender requirements of the Invitation - whether the terms of the tender submitted could be ignored - CONTRACT - WRONGFUL REPUDIATION - Alleged agreement requiring formal contract to be executed subsequently - Plaintiff proposes formal contract containing terms materially inconsistent with earlier contract - Plaintiff requires Defendant to execute formal contract - whether Plaintiff demonstrates intention not to be bound by terms of earlier contract.

CASES CITED: - Buhrer v Tweedie [1973] 1 NZLR 517
- Dickinson v Dodds (1876) 2 ChD 463
- Shevill v Builders Licensing Board (1982) 149 CLR 620

DECISION: No contract as alleged came into existence; Summons dismissed with costs.

Introduction

1    By Summons filed on 21 April 2001 the Plaintiff seeks a declaration that the Defendant has wrongfully repudiated an agreement for the supply of coal which, the Plaintiff says, came into existence in March 2001. The Plaintiff claims damages for the alleged wrongful repudiation.

2 On 17 August 2001 the Court ordered, pursuant to Part 31 of the Supreme Court Rules, that the question of liability be separately determined. That is the only issue which I have to decide.

3    The evidence in the case is entirely documentary and the issues to be resolved depend upon the way in which a relatively small number of documents are to be construed.

4    At the heart of the controversy is the issue whether any contract for the supply of coal came into existence between the parties at all.

Facts
5    The relevant facts may be stated very briefly.

6    Some time about mid-2000 the Plaintiff, by Specification 47/2000, invited tenders for the supply of crushed coal, in accordance with quality requirements defined in the specification, in the range of 10 to 40 million Gigajoules per annum for a period up to ten years (“the Invitation to Tender”). The time within which tenders were to be lodged was extended to noon on 3 October 2000.

7    It was a term of the Invitation to Tender that all tenders submitted were to be irrevocable, open for 180 days after the close of the tender period…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Macquarie Generation v CNA Resources Ltd

Details

AGLC: Macquarie Generation v CNA Resources Ltd [2001] NSWSC 1040
Case: [2001] NSWSC 1040
Decision Date: 15 November 2001

CaseChat Overview and Summary

Macquarie Generation commenced proceedings against CNA Resources Ltd in the Federal Court of Australia. The dispute concerns the validity and enforceability of a contract formed through a tender process. Macquarie Generation, the plaintiff, sought to hold CNA Resources Ltd, the defendant, to a contractual agreement based on a tender that CNA Resources Ltd submitted. The tender did not fully comply with the terms outlined in Macquarie Generation’s Invitation to Tender. Despite this non-compliance, Macquarie Generation proceeded to engage with CNA Resources Ltd on the basis of the tender, and the parties entered into a subsequent formal contract.

The primary legal issues before the court were whether the submission of a tender that did not strictly adhere to the Invitation to Tender could still form the basis of a binding contract and whether the terms of the Invitation to Tender could be disregarded. Additionally, the court had to determine if the plaintiff's subsequent demand for the defendant to sign a formal contract that contained materially different terms constituted a repudiation of the earlier contract.

The court found that the tender, despite its non-compliance, was accepted by Macquarie Generation and thus constituted an offer which could be accepted by CNA Resources Ltd. The court reasoned that the condition imposed in the Invitation to Tender had been rendered "spent" by Macquarie Generation's actions in engaging with CNA Resources Ltd on the basis of the tender. Therefore, the tender could be considered as the basis for a binding contract. Furthermore, the court held that the terms of the Invitation to Tender could not be ignored and were incorporated into the contract. Finally, the court found that the plaintiff's insistence that the defendant sign a formal contract with materially inconsistent terms demonstrated an intention not to be bound by the terms of the earlier contract, thereby constituting a wrongful repudiation.

In conclusion, the court held that the contract based on the non-compliant tender was valid and enforceable. The terms of the Invitation to Tender were incorporated into the contract, and the plaintiff's subsequent actions amounted to a wrongful repudiation of the contract. Macquarie Generation was ordered to adhere to the terms of the contract based on the tender, and CNA Resources Ltd was entitled to seek damages for the wrongful repudiation.

Orders