MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No 3)

[2021] NSWSC 1023

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

MP Water Pty Ltd v Veolia Water Australia Pty Ltd (No 3) [2021] NSWSC 1023

Hearing dates:

26, 27, 28 and 29 July 2021

Date of orders:

13 August 2021

Decision date:

13 August 2021

Jurisdiction:

Equity - Commercial List

Before:

Williams J

Decision:

See paragraph [391]

Catchwords:

CONTRACTS – construction of contracts for the design and construction of a water treatment facility and the provision of services in relation to that facility – alleged breaches of contracts – prevention principle – scope of assistance required to be provided by services provider to principal exercising step-in right following “Major Service Failure”

PRACTICE AND PROCEDURE – plaintiff purported to withdraw certain claims for relief after judgment reserved following four day hearing – defendant did not consent to withdrawal or discontinuance of those claims – leave required to discontinue claims – unfairness to defendant if claim discontinued

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), r 12.1

Cases Cited:

Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69

Cherry v Steele Park (2017) 96 NSWLR 548 Lawrence v Ciantar [2020] NSWCA 89

Lan v Kaymet Corporation Pty Ltd [2017] NSWCA 52

Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151

Re Mempoll Pty Ltd, Anankin Pty Ltd and Gold Kings Pty Ltd [2013] NSWSC 301

Category:

Principal judgment

Parties:

MP Water Pty Ltd (ACN 621 777 320) in its capacity as trustee of the MP Water Trust (ABN 86 561 380 647) (Plaintiff)
Veolia Water Australia Pty Ltd (Defendant

Representation:

Counsel:
Mr J Giles SC with Mr J Hutton and Mr W Marshall
Mr M Ashhurst SC with Ms J Wright and Mr F Anwar
Solicitors:
Gilbert + Tobin (Plaintiff)
Norton Rose Fulbright Australia (Defendant)

File Number(s):

2021/138389

Publication restriction:

N/A

Judgment

INTRODUCTION

1. The plaintiff (MP Water) seek orders requiring the defendant (Veolia) to comply with a Step-In Notice issued by MP Water on 13 May 2021 under clause 44 of a Services Provider Agreement dated 13 November 2017 between MP Water and Veolia (the SPA) pursuant to which MP Water engaged Veolia to provide specified services in relation to the treatment of water emanating from underground coal mines known as the Springvale Mine and the Angus Place Mine and the operation of a water treatment facility known as the Springvale Water Treatment Facility (the Facility). The water treated at the Facility is used in the cooling towers of the Mount Piper Power Station.

2. For a period of more than 48 hours commencing at about 7pm on 7 May 2021, the Facility failed to accept and process water emanating from the mines for processing and treatment. There is also a dispute about whether the failure of the Facility to accept and process water was a breach of the defendant’s obligations under the SPA. If so, the quantum of damages associated with a claim against the plaintiff by its customers who operate the coal mines and the power station is to be determined separately.

3. These proceedings involve disputes between MP Water and Veolia about whether that failure constituted a Services Provider Default and, if it did, whether that default was caused by MP Water’s own breaches of contract so that the prevention principle precluded MP Water from relying on the Services Provider Default. There are also disputes about whether MP Water was entitled to issue the Step-in Notice to Veolia on 13 May 2021 and whether clause 44 of the SPA entitles MP Water to require Veolia to perform the Services in accordance with MP Water’s directions.

RELEVANT CONTRACTUAL PROVISIONS

4. A suite of contracts for the design, construction, maintenance and operation of the Facility was entered into on 13 November 2017, comprising:

1. a Water Treatment Services Contract (WTSC) between MP Water (referred to as “Project Co”) and Springvale SK Kores Pty Ltd, Centennial Springvale Pty Ltd and EnergyAustralia NSW Pty Ltd (collectively, the Customer);

2. a Design and Construct Contract between MP Water (referred to as “the Principal”) and Veolia (referred as “the Contractor”) (D&C Contract); and

3. the SPA referred to above between MP Water (referred to as “Project Co”) and Veolia (referred as the “Services Provider”).

5. The Recitals to the WTSC recorded:

“1.   The Springvale Joint Venture has underground coal mining operations at Springvale and Angus Place, in the western coalfields of New South Wales (Springvale Mine and Angus Place Mine respectively).

2.   The Springvale Mine is the primary coal supply for the Mt Piper Power Station (MPPS). Coal at the Springvale Mine is extracted using the longwall mining method and requires Mine Water to be removed for safe operations and treated to comply with Laws.

3.   The MPPS is owned by Energy Australia. The MPPS requires, in addition to coal, Treated Water for its cooling circuits.

4.   The Customer wishes to engage Project Co to perform:

• the Works (including the design, engineering, procurement, supply, construction, testing and commissioning of the Facility); and

• the Services (including the operation and maintenance of the Facility, treatment of the Mine Water, treatment of Blowdown Brine and the supply of Treated Water from the Facility and the delivery of Water Product to the relevant Water Product Delivery Points),

in accordance with this Contract.

5.   Project Co has agreed to perform the Works and Services in accordance with this Contract.”

6. Mr Michael Clark, Executive General Manager, Strategy/Projects, at Centennial Coal gave evidence about the requirement for removal of water generated by the underground mining operations referred to in Recital 2 of the WTSC. Mr Clark deposed that, as part of normal underground mining operations at the Springvale Mine, approximately 25ML of water is generated each day. This occurs irrespective of the specific activities being conducted in the mine on any given day, and so the generation of water cannot be stopped or reduced. At the Angus Place Mine, approximately 7 to 8ML of water and up to a maximum 10ML of water is generated each day, even though coal mining is not currently taking place at that mine. The water generated in both the Springvale Mine and the Angus Place Mine needs to be removed to ensure that the strata are not saturated. Saturation of the strata risks compromising the effectiveness of the systems of bolts and mesh that are used to hold together the ribs and walls of the mines to ensure that the roof and walls do not fall in on tunnels in the underground mine. That is essential for the safe operation of the Springvale Mine. Although the Angus Place Mine is not currently being operated, the strata control are being maintained to facilitate potential recommencement of mining operations. ^[1]

   1. Mr Clark’s affidavit sworn on 20 May 2021, paragraphs 1-19.

7. Veolia was not a party to the WTSC. However, it is common ground between Veolia and MP Water in these proceedings that Veolia had knowledge of the terms of the WTSC at the time that MP Water and Veolia entered into the D&C Contract and the SPA.

8. Essentially, MP Water’s obligations to perform “the Works” under the WTSC were sub-contracted to Veolia under the D&C Contract and MP Water’s obligations to perform “the Services” under the WTSC were sub-contracted to Veolia under the SPA.

Relevant provisions of the WTSC

9. Subject to certain conditions precedent that are not presently relevant, clause 8.1 of the WTSC requires MP Water to “perform and complete the Works, including design, engineer, procure, supply, construct, test and commission the Facility, in accordance with … the Scope of Works and Services”. Clause 8.2 requires MP Water to “operate and maintain the Facility and perform and complete the Services in accordance with … the Scope of Works and Services”.

10. The “Works” are defined in clause 1.1 as “all work which [MP Water] is or may be required to perform to comply with its obligations under this Contract, including the design, engineering, procurement, supply, construction, testing and commissioning of the Facility in accordance with this Contract” but excluding the “Services”.

11. The “Services” are defined as “the services in respect of the Facility to be provided by [MP Water] and includes all services described in the Scope of Works and Services…”.

12. The “Facility” is defined in clause 1.1 and the Glossary to the Scope of works and Services as:

“the whole of the facility to be designed, engineered, procured, supplied, constructed, tested, commissioned, operated, maintained and owned by Project Co on the Site in accordance with this Contract, and includes:

1   the Water Transfer System;

2   the Mine Water Buffer Pond;

3   the Water Treatment Facility;

4   the Mixed Brine Pond;

5   the OPUS Treatment Plant;

6   the Brine Cystalliser Plant;

7   the Brine Waste Ponds;

8   the Lime Salt Storage and Delivery System, and

9   the Mixed Salt Storage and Delivery System,

as further described in the Scope of Works and Services.”

13. The term “Mine Water Buffer Pond” is defined as:

“the existing Blowdown Pond B owned by Energy Australia at MPPS after it has been repurposed by Project Co to function as the Mine Water Buffer Pond and which will be part of the Facility, with all modifications and additions necessary to be compliant with Schedule 20 of this Contract; where

1    all modifications and additions are to be designed, engineered, procured, supplied, constructed, tested, and commissioned by Project Co, as further described in Attachment 1; and

2    which will be operated and maintained by Project Co in accordance with Schedule 20 of this Contract and the Mine Water Buffer Pond Operating Protocol.”

14. The term “Mine Water” is defined in clause 1.1 of the WTSC as water discharged from either the Springvale Mine or the Angus Place Mine (or both) and delivered to a “Mine Water Receipt Point”. There are three Mine Water Receipt Points that are identified in clause 6.2 of the Scope of Works and Services in Attachment 1 to the WTSC and in the Facility Diagram there referred to. Clause 6.2(a) of the Scope of Works and services provides that the Facility must accept Mine Water at the three Mine Water Receipt Points.

15. The Facility Diagram depicts the interaction between the multitude of components comprising the Facility, which are not limited to those listed in the definition of “Facility” above. Indeed, the definitions of many of those listed components themselves include many components. For example, the “Water Treatment Facility” is defined as “the water treatment plant and associated equipment to be utilised for treating Mine Water and producing Treated Water, Mine Water Brine and Residuals …”. The Facility Diagram shows the many different components of the Water Treatment Facility through which Mine Water passes after being accepted at one of the three Mine Water Receipt Points, including the “WTF Pretreatment”, “WTF Desalination” and “WTF Brine Treatment Plant”). The Facility Diagram also shows:

1. the “Mine Water Diversion” via which Mine Water may be diverted after passing the Mine Water Receipt Points to the Mine Water Buffer Pond; and

2. the “Mine Water Buffer Return” by which waters in the Mine Water Buffer Pond may be transferred back to the Water Treatment Facility.

16. Mr Benjamin Bowen, a chemical engineer who has acted as MP Water’s representative under the SPA from the outset, gave evidence describing the purpose of the Mine Water Buffer Pond as: ^[2]

“to provide additional buffering capacity to store Mine Water in the event of restricted flow to the Facility or where water from the Mine cannot be treated in the Facility immediately. Should such a disruptive event occur, the Buffer Pond will enable the Facility to continue to receive Mine water and, in effect, will store it until the disruptive event is remedied. Water stored in the Buffer Pond can then be sent back into the Facility for treatment.”

2. Mr Bowen’s affidavit sworn on 19 May 2021, paragraph 42.

17. Mr Bowen also gave evidence that: ^[3]

“As the Mine Water Buffer Pond is intended to provide additional buffering capacity to store Mine Water during plant outages or process upsets, to blend ‘out of envelope’ Mine Water and to receive and blend additional flows from the Mt Piper Power Station referred to as MPPS Mixed Waters and Blowdown Waters prior to treatment at the Facility, the Mine Water Buffer Pond is critical to the proper functioning of the Facility.”

3. Mr Bowen’s affidavit sworn on 16 July 2021, paragraph 7.

18. Veolia embraced these aspects of Mr Bowen’s evidence, which were consistent with evidence given by Ms Yvette Waterfall, Commercial Director of Veolia. ^[4]

    4. Ms Waterfall’s affidavit affirmed on 18 May 2021, paragraph 26.

19. Mr Bowen also gave evidence that the pond required to be repurposed as the Mine Water Buffer Pond has a capacity of 104ML. That evidence was not the subject of any challenge or dispute.

20. It is convenient to set out in full the definition of “Water Treatment Facility” referred to above:

“the water treatment plant and associated equipment to be utilised for treating Mine Water and producing Treated Water, Mine Water Brine and Residuals to be designed, engineered, procured, supplied, constructed, tested, commissioned and maintained and owned by Project Co on the Site in accordance with this Contract, as further described in the Scope of Works and Services and which forms part of (or, where the context requires, will form part of) the Facility”

21. The term “Treated Water” is defined as the treated water produced by the Water Treatment Facility, including treated water that is delivered to three specified delivery points referred to as TWDP1, TWDP2 and TWDP3.

22. The Scope of Works and Services is set out in Attachment 1 to the WTSC.

23. Clause 5.1 of the Scope of Works and Services provides that the Works include all work required to design, engineer, procure, supply, construct, test and commission the Facility, including each of the elements included in the definition set out at [12] above. Clause 5.1 also provides that the Services include all activities and services required to (inter alia) receive Mine Water at the three Mine Water Receipt Points, transfer Mine Water to the Water Treatment Facility, treat Mine Water at the Water Treatment Facility and transfer Treated Water to TWDP1, TWDP2 and TWDP3 in accordance with the WTSC.

24. Clause 5.3 of the Scope of Works and Services requires MP Water to design the Works so that the Facility is capable of achieving, and will be operated by MP Water to achieve, specified “Guaranteed Flow and Process Capacity”. I will refer to this as Guaranteed Capacity. Relevantly, the Guaranteed Capacity for the Water Treatment Facility is the capacity for continuous and uninterrupted acceptance of Mine Water at the rate of not less than 36ML per day (without using standby or backup equipment) and capacity for occasional acceptance of Mine Water at a rate of not less than 42ML per day for up to 60 days in respect of any one event (using standby or backup equipment).

25. Clause 5.5(g)(3) of the Scope of Works and Services permits MP Water to give the Customer a written request on 24 hours’ notice to stop or reduce the flow of Mine Water as soon as MP Water becomes aware of specified events, including “an actual or expected overflow of the Mine Water Buffer Pond”. The Customer must promptly comply with any such request. The request does not relieve MP Water of any obligation or liability under the WTSC.

26. Clause 5.5(h) of the Scope of Works and Services requires the Mine Water Buffer Pond to have minimum reserve storage volume of 42ML provided as “Customer Freeboard”. Any temporary storage capacity set aside by MP Water to allow for scheduled maintenance or intermittent storage of fluids does not count towards the Customer Freeboard. Clause 5.6(a) provides that the Water Treatment Facility must be able to continuously accept Mine Water up to the Guaranteed Capacity whilst accommodating regular maintenance activities at the Water Treatment Facility, and requires MP Water to maintain not less than that 42ML capacity in the Mine Water Buffer Pond “for the sole purpose of receiving Mine Water inflow from the Customers on an unfettered basis”.

27. Clause 5.9(a) of the Scope of Works and Services provides:

“Project Co is wholly responsible for all Works necessary to repurpose the existing Blowdown Pond B as the Mine Water Buffer Pond, including isolation of the pond from Blowdown Pond A, and all diversion work required; except as otherwise provided in Schedule 20 of the Contract.”

28. Clauses 5.9(b)-(e) describe the other sources of water to be received by the Mine Water Buffer Pond in addition to Mine Water. Those other sources of water and the provisions of clauses 5.9(b)-(e) are not relevant to these proceedings.

29. Schedule 20 of the WTSC requires the Customer to obtain and provide to MP Water a report prepared by an experienced and competent contractor in relation to (relevantly) “the condition and integrity of the liner in each Pond” (the Pond Baseline Condition Report). The ponds in relation to which that report is required include “Blowdown Pond B which will become the Mine Water Buffer Pond”.

30. Clause 2(c) of Schedule 20 relevantly provides that, if the Pond Baseline Condition Report “identifies that … the integrity of the liner in any Pond will, or is reasonably expected to, materially adversely affect the performance of the Services” then the Customer must request MP Water to provide, and MP Water will provide, a quotation to (relevantly) “remediate or replace any relevant liner to the extent necessary to ensure the integrity of the liner will not materially adversely affect the performance of the Services”. I will refer to this as Liner Remediation Work.

31. Clauses 2(d) and (e) of Schedule 20 relevantly provide for the Customer to direct MP Water to undertake the quoted Liner Remediation Work (at the Customer’s cost) if the Customer and MP Water agree on the work required, the preferred manner in which to perform the work and the estimated cost of the work. In the absence of such agreement, the Customer must undertake or procure the Liner Remediation Work. Clause 6 of Schedule 20 requires the Customer to ensure that any Liner Remediation Work it undertakes or procures is performed in a sound and workmanlike manner, with due care and skill, using materials of merchantable quality that are fit for the intended purpose, to the standard expected of a competent contractor and in accordance with all applicable Laws.

32. Those provisions of clause 2 of Schedule 20 also apply to any work identified by the Pond Baseline Condition Report as necessary to ensure that the settled solids or chemistry of settled solids do not materially affect the operating volume of any Pond or the performance of the Services. Any such work, together with Liner Remediation Work, is defined as “Settled Solid and Liner Remediation”.

33. Thus, pursuant to clause 5.9(a) of the Scope of Works and Services, MP Water is “wholly responsible for all Works necessary to repurpose the existing Blowdown Pond B as the Mine Water Buffer Pond” except to the extent that the Customer undertakes or procures (relevantly) Settled Solid and Liner Remediation in accordance with Schedule 20. It is only Liner Remediation Work that is relevant to these proceedings.

34. It will be recalled that the Works to be carried out by MP Water under the WTSC include all work required to design, engineer, construct, test and commission the Facility, including the Mine Water Buffer Pond. Annexure 10 to the Scope of Works and Services requires MP Water to develop and implement a “Commissioning and Testing Plan” for the Works in consultation with the Customer. Clause 6 of Annexure 10 provides that successful commissioning requires MP Water to demonstrate that all systems comprising the Works comply with the requirements of the WTSC and the Commissioning and Testing Plan and evidence that process requirements for all process streams are operating and interfacing in a satisfactory manner. MP Water is required to provide a commissioning report to the Customer as soon as practicable after completion of commissioning. Clause 8 requires MP Water to undertake acceptance testing to demonstrate that Treated Water meets specified performance standards.

28. Clause 8.3 of the WTSC requires MP Water to commence performing the “Services” on the “Services Commencement Date” and to perform them “expeditiously and without delay”. The “Services Commencement Date” is defined, relevantly, as the day after the “Commercial Acceptance Date”, which is in turn defined as the date on which a “Commercial Acceptance Certificate” is issued by the Independent Completion Certifier under clause 17.11(a) or (b) certifying that “Commercial Acceptance” has been achieved.

29. The Independent Completion Certifier is appointed in accordance with a process set out in clause 17.14 of the WTSC. Mr Chris Morris of SMEC Australia Pty Ltd was appointed as the Independent Completion Certifier (the Certifier).

30. Clause 17.6 of the WTSC provides:

“Commercial Acceptance

The term ‘Commercial Acceptance’ means that stage in the execution of the Works when:

(a) those Works are complete in accordance with this Contract except for minor Defects:

(1) which do not prevent those works from being used for the Intended Purpose;

(2) which the Independent Completion Certifier determines, acting reasonably, Project Co has reasonable grounds for not promptly rectifying;

(3) the existence and making good of which will not inconvenience or adversely affect the Customer, having regard to the Intended Purpose; and

(4) which do not cause any legal impediment to the use or occupation of the Works;

(b) the Works have achieved Provisional Commercial Acceptance;

(c) Project Co has delivered to the Customer and the Independent Completion Certifier:

(1) all Key Documents and other information required by this Contract to have been delivered by Project Co to the Customer, prior to Commercial Acceptance, in a form approved by the Customer acting reasonably;

(2) certification from each of Project Co’s Design consultants who performed design work in respect of the Works (in the form set out in Schedule 19) that those Works have been executed, and those Works completed, in accordance with the design prepared by that design consultant;

(3) certification from each of Project Co’s design consultants and proof engineers (in the form set out in Schedule 19) stating the Key Documents submitted by Project Co to the Customer comply with the requirements of this Contract; and

(4) certification from a licenced surveyor (in the form set out in Schedule 19) to the effect that the Works are within the boundaries required by this Contract and that the structural elements of the Works are within the spatial tolerances specified in this Contract;

(d) the Commissioning and the Acceptance Testing and all other tests required to be performed by this Contract prior to or at Commercial Acceptance, have been carried out, have been passed and demonstrate that those Works are in a state that is capable of being operated in accordance with this Contract;

(e) the Works have achieved the Guaranteed Flow and Process Capacity and Water Product Performance Standards;

(f) all Approvals (other than the Customer Approvals) which are necessary for the use of the Works in accordance with the requirements of this Contract have been obtained and are in effect and copies of which have been provided to the Customer and Independent Completion Certifiers; and

(g) any other matters or conditions required by this Contract in order to achieve Commercial Acceptance have been satisfied (including those specified in Annexure 10).”

38. Clause 17.11 of the WTSC provides:

“Commercial Acceptance Certificate

(a)    The Independent Completion Certifier must issue a Commercial Acceptance Certificate where Project Co has submitted a Commercial Acceptance Claim and the Independent Completion Certifier is satisfied that Commercial Acceptance has been achieved.

(b)    Where no Commercial Acceptance Claim has been submitted, the Customer’s Representative may, in its sole and absolute discretion, request the Independent Completion Certifier issue a Commercial Acceptance Certificate, and the Independent Completion Certifier must issue a Commercial Acceptance Certificate if the Independent Completion Certifier is satisfied that Commercial Acceptance has been achieved.”

39. Clause 17.13 provides that the issue of a Commercial Acceptance Certificate does not relieve MP Water from any of its obligations under the WTSC or prejudice any claim by the Customer.

40. Clause 3 of Schedule 20 to the WTSC requires MP Water to:

1. immediately notify the Customer if MP Water identifies “any concern in relation to the structural integrity of a Pond, including in relation to the integrity of a liner in any Pond”; and

2. provide to the Customer a “Pond Infrastructure Report” on every second anniversary of the “Commencement Date”. The Pond Infrastructure Report must be “a detailed survey of the liners, walls, existing mechanical infrastructure and electrical infrastructure forming part of the Ponds (but excluding any infrastructure forming part of the Works) to document its condition” that documents issues, concerns, recommended investigations and provides an updated forecast asset replacement and refurbishment cost profile for the Ponds for the remainder of the term (which expires 15 years after the Services Commencement Date).

41. The Commencement Date is defined in clause 1.1 of the WTSC as the date on which the Customer issues a notice to MP Water to proceed under the WTSC after all conditions precedent have been satisfied or waived.

Relevant provisions of the D&C Contract

42. Clause 8.1 of the D&C Contract requires Veolia to “perform and complete the Works, including design, engineer, procure, supply, construct, test and commission the Facility, in accordance with … the Scope of Works”.

43. The “Works” are defined in clause 1.1 as “all work which [Veolia] is or may be required to perform to comply with its obligations under this Contract, including the design, engineering, procurement, supply, construction, testing and commissioning of the Facility in accordance with this Contract” and including “all work described in the Scope of Works”.

44. The “Scope of Works” is contained Attachment 1 to the D&C Contract.

45. The “Facility” as defined in clause 1.1 and in the Glossary to the Scope of Works has the same meaning as in the WTSC referred to at [12]-[21] above, with one exception. The reference to “this Contract” in the chapeau of the definition of “Facility” in the WTSC is replaced with a reference to “the Water Services Treatment Contract” in the chapeau of that definition in the D&C Contract.

46. The term “Mine Water Buffer Pond” is defined in clause 1.1 and in the Glossary to the Scope of Works in substantially the same terms as the definition in the WTSC set out at [13] above. The definition reads (emphasis added):

“the existing Blowdown Pond B owned by Energy Australia at MPPS after it has been repurposed by the Contractor to function as the Mine Water Buffer Pond and which will be part of the Facility, with all modifications and additions necessary to be compliant with Schedule 20 of this Contract; where:

1   all modifications and additions are to be designed, engineered, procured, supplied, constructed, tested, and commissioned by the Contractor, as further described in Attachment 1; and

2   which will be operated and maintained by the Services Provider in accordance with Schedule 20 of the Services Provider Agreement and the Mine Water Buffer Pond Operating Protocol.”

47. As I have already mentioned at [4] above, Veolia is both the “Contractor” referred to in item 1 of the definition and the “Services Provider” referred to in item 2.

48. The emphasised words in the definition above identify departures from the definition in the WTSC. As will become apparent, those departures reflect the fact that some of MP Water’s obligations under Schedule 20 of the WTSC are subcontracted to Veolia as Contractor under Schedule 20 of the D&C Contract (obligations relating to the Pond Baseline Condition Report and the Liner Remediation Work) and others are subcontracted to Veolia as Services Provider under Schedule 20 of the SPA (obligations relating to the Pond Infrastructure Report).

49. The term “Water Treatment Facility” is defined in clause 1.1 and in the Glossary to the Scope of Works in substantially the same terms as the definition in the WTSC set out at [20] above, with the only differences being those emphasised below:

“the water treatment plant and associated equipment to be utilised for treating Mine Water and producing Treated Water, Mine Water Brine and Residuals to be designed, engineered, procured, supplied, constructed, tested, commissioned and maintained and owned by the Principal on the Site in accordance with the Water Treatment Services Contract, as further described in the Scope of Works and Services and which forms part of (or, where the context requires, will form part of, the Facility”

50. As referred to at [4] above, MP Water is the “Principal” referred to in the D&C Contract.

51. The terms “Mine Water”, “Mine Water Receipt Point” and “Treated Water” have the same meanings in the D&C Contract as in the WTSC. The substance of those definition is set out at [14] and [21] above.

52. Clause 3 of the Scope of Works reflects the back-to-back nature of the D&C Contract and the SPA with the WTSC, and the interaction between the Works to be performed under the D&C Contract with the Services to be performed under the SPA. Clause 3 provides:

“Interaction with Scope of Services

The Contractor acknowledges and agrees that:

(a)   the Scope of Works and Services describes the Works and Services required to be performed under the Water Treatment Services Contract by the Principal, and that the obligations set out in the Scope of Works and Services are either obligations of the Contractor, of the Services Provider, or of both (as determined and/or allocated by this Scope of Works or the Scope of Services, or otherwise as determined by the dispute resolution process set out in clause 15 of the Interface Deed);

(b)    it has reviewed the Scope of Services and warrants that the performance of the Works by it in accordance with this Contract will permit and enable the Services Provider to perform its obligations in accordance with the Services Provider Agreement;

(c)    unless expressly made clear to the contrary in this Scope of Works. Sections of the Scope of Works and Services:

(1)    that relate to performance of the Works are obligations of the Contractor;

(2)    that require performance of obligations on or before the achievement of Commercial Acceptance are obligations of the Contractor;

(3)    that relate to performance of the Services are obligation of the Service Provider; and

(4)    that require performance of obligations after the achievement of Commercial Acceptance are obligations of the Services Provider; and

(d)    for the avoidance of doubt, it accepts by incorporation from the Scope Services into this Scope of Works, all standards, operating requirements and obligations relevant to its performance of the Minimum Services under section 7.1 of Annexure 10.”

53. The “Scope of Services” is defined as the Scope of Services under the SPA. The “Scope of Works and Services” is defined as the Scope of Works and Services under the WTSC.

54. Clause 5.1(a) of the Scope of Works provides that the Works include all work required to design, engineer, procure, supply, construct test and commission the Facility, defined as referred to at [12] and [45] above.

55. Clause 5.3 of the Scope of Works in the D&C Contract requires Veolia (as Contractor) to design the Works so that the Facility is capable of achieving, and will be operated by Veolia (as Services Provider) to achieve, the Guaranteed Capacity referred to at [24] above of continuous and uninterrupted acceptance of Mine Water at a rate of not less than 36ML per day (without using standby or backup equipment), with capacity for occasional acceptance of Mine Water at the rate of not less than 42ML per day for up to 60 days (with standby or backup equipment).

56. I have referred at [25] above to MP Water’s right under clause 5.5(g)(3) of the Scope of Works and Services in the WTSC to request the Customer to cease the flow of Mine Water in the event of “an actual or expected overflow of the Mine Water Buffer Pond”.

57. Clause 5.5(g)(3) of the Scope of Work in the D&C Contract provides:

“(g)   Water management

…

(3)   The Contractor [Veolia] acknowledges that if the Services Provider [Veolia] requires the Principal [MP Water] to stop or reduce the flow of Mine Water due to one or more of the following events (each a ‘Facility Outage’):

…

(B)   an actual or expected overflow of the Mine Water Buffer Pond;

…

the Services Provider must provide a written request to the Principal to direct the Customer to stop or reduce the flow of Mine Water as soon as the Services Provider becomes aware of the relevant event or circumstances as set out above, but in any event no later than 20 hours prior to when the Services Provider requires the Principal to take such action.”

58. Clause 5.5(h) of the Scope of Work records that MP Water requires that the Mine Water Buffer Pond capacity include a minimum 42ML reserve storage capacity as “Customer Freeboard” (in addition to any temporary storage capacity designed to allow for scheduled maintenance outages or intermittent fluids storage).

59. Clause 5.6(a) of the Scope of Works to the D&C Contract provides that the Water Treatment Facility must be able to continuously accept Mine Water up to the Guaranteed Capacity whilst accommodating regular maintenance activities. Clause 5.6(a) also contains an acknowledge by Veolia (as Contractor) that Veolia (as Services Provider) must maintain not less than the 42 ML Customer Freeboard “for the sole purpose of receiving Mine Water inflow from the Customers on an unfettered basis.”

60. Clause 5.9(a) of the Scope of Works to the D&C Contract provides:

“The Contractor is wholly responsible for all Works necessary to repurpose the existing Blowdown Pond B as the Mine Water Buffer Pond, including isolation of the pond from Blowdown Pond A, and all diversion work required; except as otherwise provided in Schedule 20 of the Contract.”

61. Clauses 5.9(b)-(e) describe the other sources of water to be received by the Mine Water Buffer Pond in addition to the Mine Water. As I have already mentioned, those other sources of water and the provisions of clauses 5.9(b)-(e) are not relevant to these proceedings.

62. Under Schedule 20 to the D&C Contract, MP Water owes the same obligation to Veolia to procure the Pond Baseline Condition Report as the Customer owes to MP Water under Schedule 20 to the WTSC. Schedule 20 to the D&C Contract imposes the same obligations on MP Water and Veolia as Schedule 20 to the WTSC imposes on the Customer and MP Water (respectively) in relation to Settled Solid and Liner Remediation, including Liner Remediation Work: see [29]-[32] above.

63. Clause 2(b) of Schedule 20 to the D&C Contract provides that the Pond Baseline Condition Report is deemed to be “Relied Upon Information”. Pursuant to clause 10.4 of the D&C Contract, the Veolia is therefore entitled to claim an adjustment to the Contract Sum under the D&C Contract or other compensation in the event that the Pond Baseline Condition Report contains information that is incorrect. The WTSC contains provisions to the same effect for the benefit of MP Water as against the Customer.

64. Thus, the effect of clause 5.9(a) of the Scope of Works and Schedule 20 to the D&C Contract is that Veolia is “wholly responsible for all Works necessary to repurpose the existing Blowdown Pond B as the Mine Water Buffer Pond” except to the extent that MP Water undertakes or procures Settled Solid and Liner Remediation in accordance with Schedule 20 to the D&C Contract. As I have already mentioned, it is only Liner Remediation Work that is relevant to these proceedings.

65. Pursuant to Annexure 10 to the Scope of Works to the D&C Contract, Veolia owes to MP Water the same obligations in relation to commissioning and acceptance testing of the Works that MP Water owes to the Customer under Annexure 10 to the Scope of Works and Services to the WTSC: see [34] above.

66. Clause 17.6 of the D&C Contract provides for “Commercial Acceptance” in terms that operate back-to-back with the provisions clause 17.6 of the WTSC set out at [37] above. Clause 17.6 of the D&C Contract provides:

“Commercial Acceptance

The term “Commercial Acceptance” means that stage in the execution of the Works when:

(a)    those Works are complete in accordance with this Contract except for minor Defects:

(1)    which do not prevent those Works from being used for the Intended Purpose;

(2)    which the Independent Completion Certifier determines under clause 17.6(a)(2) of the Water Treatment Services Contract that the Principal has reasonable grounds for not promptly rectifying;

(3)    the existence and making good of which will not inconvenience or adversely affect the Principal or the Customer, having regard to the Intended Purpose; and

(4)    which do not cause any legal impediment to use or occupation of the Works;

(b)    the Works have achieved Provisional Commercial Acceptance;

(c)    the Contractor has delivered to the Principal:

(1)    all Key Documents and other information required to be delivered by the Principal to the Customer under clause 17.6(c) of the Water Treatment Service Contract prior to Commercial Acceptance, in a form approved by the Principal acting reasonably;

(2)    certification from the Contractor (in the form set out in Schedule 19) that the works have been executed, and the Works completed, in accordance with the design prepared by the Contractor;

(3)    certification from the Contractor (in the form set out in Schedule 19) stating that the Key Documents submitted by the Principal to the Customer under the Water Treatment Services Contract comply with the requirements of the Water Treatment Services Contract; and

(4)    certification from the Contractor (in the form set out in Schedule 19) to the effect that the Works are within the boundaries required by the Water Treatment Services Contract and that the structural elements of the Works are within the spatial tolerances specified in the Water Treatment Services Contract;

(d)    the Commissioning and the Acceptance Testing and all other tests required to be performed by this Contract prior to at Commercial Acceptance, have been carried out, have been passed and demonstrate that those Works are in a state that is capable of being operated in accordance with this Contract;

(e)    the Works have achieved the Guaranteed Flow and Process Capacity and Water Product Performance Standards;

(f)    for Approvals (other than the Principal Approvals) which are necessary for the use of the Works in accordance with the requirements of this Contract have been obtained and are in effect and copies of which have been provided to the Principal; and

(g)    any other matters or conditions required by this Contract in order to achieve Commercial Acceptance have been satisfied (including those specified in Annexure 10).”

67. Clause 17.11 of the D&C Contract provides:

“Commercial Acceptance Certificate

(a)    The parties acknowledge that the Independent Completion Certifier must issue a Commercial Acceptance Certificate under the Water Treatment Services Contract, where the Principal has submitted a Commercial Acceptance Claim and the Independent Completion Certifier is satisfied that Commercial Acceptance has been achieved under the Water Treatment Services Contract.

(b)    The parties acknowledge that where no Commercial Acceptance Claim has been submitted under the Water Treatment Services Contract, the Customer’s Representative may, in its sole and absolute discretion request the Independent Completion Certifier issue a Commercial Acceptance Certificate, and the Independent Completion Certifier must issue a Commercial Acceptance Certificate if the Independent Completion Certifier is satisfied that Commercial Acceptance has been achieved under the Water Treatment Services Contract.

(c)    In the absence of manifest error, an issue of Commercial Acceptance Certification under the Water Treatments Services Contract is deemed to be an issue of a Commercial Acceptance Certificate under this Contract and the Principal’s Representative will issue a Commercial Acceptance Certificate. For the avoidance of doubt, Commercial Acceptance under this Contract will not occur until Commercial Acceptance has been achieved under the Water Treatment Services Contract and the Principal’s Representative must not issue a Commercial Acceptance Certificate until the Independent Completion Certifier has issued a Commercial Acceptance Certificate under the Water Treatment Services Contract.”

68. Clause 17.13 of the D&C Contract relevantly provides that the issue of a Commercial Acceptance Certificate does not relieve Veolia from any of its obligations or prejudice any claim by MP Water under the D&C Contract.

69. Clause 17.14A of the D&C Contract, contains an acknowledgement by MP Water and Veolia that the “Independent Completion Certifier” is appointed by the Customer and MP Water in accordance with the WTSC (the Certifier), that the Certifier will perform the functions set out in the WTSC and an Independent Completion Certifier Deed of Appointment provided for the WTSC, and that the Certifier is obliged to act independently of MP Water and Veolia.

Relevant provisions of the SPA

70. Clause 8.2 of the SPA requires Veolia to “operate and maintain the Facility and perform and complete the Services, in accordance with … the Scope of Services”. Similarly, clause 19.1 of the SPA requires Veolia to provide “the Services … in the manner and to the standard described in the Scope of Services” during the “Operations Phase” and to “comply with all of its obligations, requirements and responsibilities as set out in the Scope of Services”. The “Operations Phase” is defined in clause 1.1 of the SPA as “the period commencing on the Services Commencement Date and expiring on the Expiry Date or earlier termination of this Contract”. The “Expiry Date” is the date that is 15 years after the “Services Commencement Date”. The “Services Commencement Date” has the same meaning as in the WTSC, where it is relevantly defined as the day after the “Commercial Acceptance Date”. As referred to at [35] above, the “Commercial Acceptance Date” under the WTSC is the date on which the Certifier issues a “Commercial Acceptance Certificate” under the WTSC.

71. Clause 19.2 of the SPA contains a warranty and undertaking by Veolia that “at all relevant times it has or will have available to it the resources, expertise and experience necessary to provide the Services in accordance with this Contract”.

72. The Services are relevantly defined in clause 1.1 as “the services in respect of the Facility to be provided by the Services Provider”, including “all services described in the Scope of Services”.

73. The Scope of Services is set out in Attachment 1 to the SPA.

74. The term “Facility” is defined in clause 1.1 of the SPA and in the Glossary to the Scope of Services in the same terms as in the D&C Contract: see [12] and [45] above.

75. The term “Mine Water Buffer Pond” is defined in the same terms as in the D&C Contract, save for some changes in terminology that achieve the same effect as the D&C Contract definition. It is nevertheless convenient to set out in full the definition of “Mine Water Buffer Pond” in the SPA:

“the existing Blowdown Pond B owned by Energy Australia at MPPS after it has been repurposed by the Construction Contractor to function as the Mine Water Buffer Pond and which will be part of the Facility, with all modifications and additions necessary to be compliant with Schedule 20 of the Construction Contract; where:

1   all modifications and additions are to be designed, engineered, procured, supplied, constructed, tested, and commissioned by the Construction Contractor, as further described in Attachment 1; and

2   which will be operated and maintained by the Services Provider in accordance with Schedule 20 of this Contract and the Mine Water Buffer Pond Operating Protocol.”

76. References to “Construction Contract” in the WTSC and the SPA are references to the D&C Contract. The SPA defines “Construction Contractor” as meaning Veolia in its capacity as contractor under the D&C Contract.

77. The term “Water Treatment Facility” in the SPA has the same meaning as in the D&C Contract, save that MP Water is referred to in the SPA definition as “Project Co” rather than as “the Principal”. As referred to at [49] above, the D&C Contract definition is the same in substance as the WTSC definition. The definitions of “Mine Water”, “Treated Water” and “Mine Water Receipt Points” in the SPA are the same as in the D&C Contract and the WTSC: see [12]-[21] and [45]-[51] above.

78. The Services are described in clause 5.1 in the Scope of Services in the same terms as clause 5.1 of the Scope of Works and Services to the WTSC, namely as including all activities and services required to (inter alia) receive Mine Water at the three Mine Water Receipt Points, transfer Mine Water to the Water Treatment Facility, treat Mine Water at the Water Treatment Facility and transfer Treated Water to TWDP1, TWDP2 and TWDP3 in accordance with the SPA.

79. Clause 5.3 of Scope of Services in the SPA contains an acknowledgment by Veolia (as service provider under the SPA) that Veolia (as construction contractor under the D&C Contract) must design the Works so that the Facility is capable of achieving, and will be operated by Veolia (as service provider) to achieve the Guaranteed Capacity referred to at [24] and [55] above. In relation to the Water Treatment Facility, the Guaranteed Capacity is continuous and uninterrupted acceptance of Mine Water at a rate of not less than 36ML per day (without using standby or backup equipment), with capacity for occasional acceptance of Mine Water at the rate of not less than 42ML per day for up to 60 days (with standby or backup equipment). Acceptance occurs at the Mine Water Receipt Points, as explained at [14]-[15] above.

80. Clause 20.1(a) of the SPA provides:

“Mine Water is deemed to have been delivered to the Services Provider in accordance with this Contract when the Mine Water passes or enters into a Mine Water Receipt Point.”

81. Clause 20.2(a) of the SPA relevantly provides that Veolia “must accept and process all … Mine Water made available at the Mine Water Receipt Points subject to the Guaranteed Flow and Process Capacity” unless “expressly provided otherwise” by another provision of the SPA.

82. Clause 20.2(b) of the SPA and clause 1.1(a) of Annexure 3 to the Scope of Services provide that neither the Customer nor MP Water gives any warranty as to the quality of the Mine Water. However, clause 20.3 of the SPA makes provision for circumstances in which the quality of Mine Water delivered is outside or materially outside the range for specified parameters set out in clause 1.1 of Annexure 3 to the Scope of Services – referred to as “Out-of-Envelope Mine Water” and “Materially Out-of-Envelope Mine Water”.

83. Clause 20.3(a) of the SPA requires Veolia to notify the Customer and MP Water as soon as Veolia becomes aware that Out-of-Envelope Mine Water has been delivered. Clauses 20.3(b) and (c) provide that Mine Water is deemed to comply with the quality parameters if Veolia fails to give that notice within specified timeframes. If Materially Out-of-Envelope Mine Water is delivered, clause 20.3(d) permits Veolia to direct MP Water to issue a direction to the Customer under the WTSC to reduce the quantity of Mine Water. Clause 20.3(e) provides that, “[e]xcept as provided for in clause 20.3(d)”, Veolia “must receive and process all Mine Water at the Facility and deliver the Services in accordance with this Contract”. Clauses 1.1(b) to (d) of Annexure 3 of the Scope of Services are to similar effect.

84. Clause 20.3(f) of the SPA requires MP Water to pay Veolia a “Mine Water Quality Out-of-Envelope Services Volumetric Charge” for processing Out-of-Envelope Mine Water in respect of which Veolia has given the notice required by clause 20.3(a).

85. Clause 21.1(a) of the SPA requires Veolia to process the Mine Water at the Facility and to deliver the resulting Treated Water to specified delivery points. Clause 21.1(b) requires Veolia to ensure that the Treated Water meets specified standards. Clause 21.2 requires Veolia to make all Treated Water available for delivery to the Customer at the “MPPS Treated Water Delivery Point”, but also contains an acknowledgment by Veolia that the Customer may take as much Treated Water as is available in its sole and absolute discretion and is not obliged to take any Treated Water at that delivery point. Clause 21.5 provides:

“No Relief

Other than as expressly stated in this Contract, the quality or volume of Mine Water delivered by the Customer to a Mine Water Receipt Point will not relieve the Services Provider from or alter its liabilities or obligations under this Contract (including the Services Provider’s obligation under clauses 21.1(a) and 21.2).”

86. Clause 28(a) of the SPA relevantly provides:

“Without limiting any other obligation of the Services Provider (including the Services Provider’s obligations under clause 19) or any rights or remedies of Project Co, during the Operations Phase, the Services Provider must (at its own cost and expense and other than as expressly stated in this Contract):

(1)   subject to clauses 35 and 35A, keep the Facility operating at all times;

…”

87. Clause 35 of the SPA makes provision for “Force Majeure Events”.

88. Clause 35A provides for suspension of Veolia’s obligations under the SPA during the Operations Phase if it is prevented from performing any part of the Services or otherwise meeting its obligations by reason of an “Abatement Relief Events”, provided that Veolia complies with the notice and other requirements of clause 35A.2. Clause 1.1 of the SPA contains a very wide definition of “Abatement Relief Event”, including an act or omission of the Customer or MP Water (other than a proper exercise by the Customer or MP Water of certain contractual rights).

89. Clause 28.2 of the SPA requires Veolia to notify MP Water if it has been, or is likely to be, prevented from performing its obligations under clause 28.

90. I have referred at [25] and [56]-[57] above to the provisions of clause 5.3(g)(3) of the Scope of Works and Services in the WTSC and clause 5.5(g)(3) of the Scope of Works in the D&C Contract. Clause 5.5(g)(3) to the Scope of Services in the SPA relevantly provides:

“If the Services Provider requires Project Co to stop or reduce the flow of Mine Water due to one or more of the following events (each a ‘Facility Outage’):

…

(B)   an actual or expected overflow of the Mine Water Buffer Pond;

…

the Services Provider must provide a written request to Project Co to direct the Customer to stop or reduce the flow of Mine Water as soon as the Services Provider becomes aware of the relevant event or circumstance set out above, but in any event no later than 20 hours prior to when the Services Provider requires Project Co to take such action. Project Co must procure that the Customer promptly complies with any such request, having regard to the 20-hour notice requirement. Other than as expressly stated in this Contract, and subject to section 1.1(c) of Annexure 3, a request from the Services Provider pursuant to this section 5.5(g)(3) or otherwise to the Customer or Project Co to stop, reduce or divert the flow of Mine Water in response to any request by the Services Provider pursuant to this section 5.5(g)(3) of otherwise will not relieve the Services Provider of any obligation or liability under this Contract…”

91. Clause 5.5(g)(6) of the Scope of Services in the SPA provides:

“The Blowdown Ponds are not configured or engineered for physical access, such as excavator access, for the purpose of desludging any accumulated solids. The Services Provider must ensure that its process, any repurposing and any ongoing operation of the ponds provides for this condition.”

92. Clauses 5.5(h) and 5.6(a) of the Scope of Services in the SPA contain provisions in relation to Customer Freeboard in substantially the same terms as those clauses in the Scope of Works attached to the D&C Contract: see [59] above.

93. Clause 5.9(a) of the Scope of Services contains an acknowledgment by Veolia (as services provider) that:

“… the existing Blowdown Pond B will be repurposed by the Construction Contractor as the Mine Water Buffer Pond, including isolation of the pond from Blowdown Pond A, and all diversion work required.”

94. Clauses 5.9(b)-(e) describe the other sources of water to be received by the Mine Water Buffer Pond in addition to the Mine Water. As I have already mentioned, those other sources of water and the provisions of clauses 5.9(b)-(e) are not relevant to these proceedings.

95. Schedule 20 to the SPA contains provisions that operate back to back with the provisions of Schedule 20 of the WTSC referred to at [40]-[41] above. Veolia is required to notify MP Water of any concern in relation to the structural integrity of a pond (including the integrity of a liner). Veolia is required to provide the Pond Infrastructure Report to MP Water on every second anniversary of the “Commencement Date”. The “Commencement Date” in Schedule 20 of the SPA has the same meaning as in the WTSC, as referred to at [41] above. I note that this pre-dates the “Services Commencement Date” referred to below.

96. If a notification or Pond Infrastructure Report under those provisions of Schedule 20 results in capital work being undertaken to a pond, that work is an Abatement Relief Event and the provisions of clause 35A of the SPA apply.

97. Clause 8.3(a) of the SPA also requires Veolia to commence the “Pre-Operations Services” on the Commencement Date. Clause 18A describes a wide range of matters included in the “Pre-Operations Services”, including the preparation of an “Operations Mobilisation Plan”, reviewing the design and construction of the Facility, monitoring whether Veolia has performed the relevant commissioning tests under the D&C Contract, undertaking all things necessary to prepare to operate the Facility and cooperating with MP Water and with Veolia (as contractor under the D&C Contract) to “receive handover of the Facility at the Services Commencement Date and in accordance with this Contract”.

98. Pursuant to clause 8.3(a) of the SPA, Veolia is obliged to commence providing all other Services (that is, other than the Pre-Operations Services described in clause 18A)) on the “Services Commencement Date”. Clause 1.1 of the SPA provides that “Services Commencement Date” has the same meaning as in the WTSC, namely the later of the day after the “Commercial Acceptance Date” and 1 May 2019. This, in turn, picks up the definitions of “Commercial Acceptance Date” and “Commercial Acceptance” in the WTSC and the provisions in the WTSC concerning the issue of a “Commercial Acceptance Certificate” referred to at [35]-[38] above. Clause 8.3(b) of the SPA requires Veolia to perform the Services “expeditiously and without delay”.

99. Annexure 11 to the Scope of Services in the SPA requires Veolia to ensure that the Facility satisfies minimum residual service life requirements when delivered up to MP Water at end of the term of the SPA. Liners in lagoons are required to have a minimum residual service life of 5 years.

100. Clause 1.1 of the SPA, defines a “Major Service Failure” as:

“the occurrence of one or more of the following:

1   the Services Provider fails to submit a report to Project Co outlining risk mitigation measures in accordance with (including within the timeframe set out in) section 2.3(b) of Schedule 12 or does not carry out the proposed risk mitigation measures set out in that report within the timeframes set out in that report …;

2   the Service Provider accumulates an aggregate of 200 Service Failure Points or more within a period of 16 consecutive Operating Months or less; or

3   the Facility fails or ceases to be able to accept Mine Water at a capacity which is at least the Guaranteed Flow and Process Capacity for a continuous period of 48 hours (unless otherwise agreed in writing by Project Co).”

101. As referred to at [24], [55] and [79] above, the Guaranteed Capacity for the Water Treatment Facility is continuous and uninterrupted acceptance of Mine Water at a rate of not less than 36ML per day (without using standby or backup equipment of the Facility), with capacity for occasional acceptance of Mine Water at the rate of not less than 42ML per day for up to 60 days (with standby or backup equipment).

102. Clause 1.1 of the SPA specifies 14 matters that constitute a “Services Provider Default”. One of those matters is: “where … a Major Service Failure occurs”.

103. Clause 42.2 of the SPA relevantly provides:

“Services Provider Default

(a)    If the Services Provider commits a Services Provider Default, Project Co may give the Services Provider a written notice requiring the Services Provider to remedy the Services Provider Default (Services Provider Default Notice).

(b)    A Services Provider Default Notice must:

(1)    state that it is a Services Provider Default Notice;

(2)    specify the alleged Services Provider Default; and

(3)    if the Services Provider Default is:

(A)    capable of being remedied, specify a time and date by which the Services Provider must remedy the Services Provider Default, which must allow for a reasonable period of time to remedy the Services Provider Default in the circumstances; or

(B)    not capable of being remedied, specify the requirements of Project Co which the Services Provider must comply with in order to overcome the effects of the Services Provider Default and a time and date by which the Services Provider must comply with those requirements, which must allow for a reasonable period of time to overcome the effects of the Service Provider Default in the circumstances.

(Applicable Cure Period).

(ba)   Not used.

(c)    Upon receipt of a Services Provider Default Notice, the Services Provider must remedy the Services Provider Default or comply with the requirements of Project Co to overcome the effects of the Services Provider Default by the time prescribed by, and otherwise in accordance with the Services Provider Default Notice.

(d)   Not used.

(e)   If the Services Provider reasonably determines that it requires an extension to an Applicable Cure Period it may, no later than the expiration of the Applicable Cure Period) submit in writing to Project Co:

(1)   evidence that the Services Provider has diligently pursued and is continuing to diligently pursue a remedy, or overcome the effects of the Services Provider Default Notice; and

(2)   the period of time proposed by the Services Provider to be the extended Applicable Cure Period for the applicable Services Provider Default Notice.

(f)   Project Co will not unreasonably refuse to grant an extension of the Applicable Cure Period for the applicable Services Provider Default Notices if the Services Provider strictly complies with the requirements of clause 42.2(e).”

104. The WTSC contains provisions that essentially operate back-to-back with the default provisions of the SPA referred to above. The WTSC defines “Major Service Failure” in the same terms as the definition in the SPA referred to at [100]-[101] above, save that the failures in items 1 and 2 of that definition refer to failures by “Project Co” (that is, MP Water) rather than by the Services Provider. The WTSC specifies 16 matters that constitute a “Project Co Default”. One of those matters is: “where … a Major Service Failure occurs”. Clause 42.2 of the WTSC permits the Customer is issue a “Project Co Default Notice” if MP Water commits a “Project Co Default”. The requirements for a “Project Co Default Notice” and the rights and obligations of the Customer and MP Water in relation to such a notice under clause 42.2 of the WTSC are the same in all relevant respects as clause 42.2 of the SPA, mutatis mutandis.

Issue 5: Orders now sought by MP Water

383. For all of the reasons explained under Issue 4 above, MP Water is not entitled to the relief in prayers 11 and 12 of the Summons, as amended as set out at [217] above.

Issue 6: Whether Veolia breached its obligations under the SPA

384. For the reasons explained under Issue 2 above, MP Water had complied with its Settled Solids and Liner Remediation obligations under Schedule 20 of the D&C Contract by the time of the Certifier’s letter dated 26 October 2020. The Mine Water Buffer Pond was available to Veolia for commissioning and testing in accordance with the D&C Contract from that time.

385. Veolia’s submissions attributed the May Major Services Failure to what Veolia characterised as its inability to commission and test the Mine Water Buffer Pond. For all of the reasons explained under Issues 2 and 3 above, from early November 2020, Veolia was able to undertake that commissioning and testing. Its failure to do so caused the May Major Services Failure. As it was not submitted that Veolia was relieved from its Guaranteed Capacity obligations under clause 20.2(a) of the SPA by reason of clause 20.3(d) or clause 35A of the SPA, the May Major Services Failure involved a breach by Veolia of its obligation to perform the Services in accordance with the SPA for the reasons explained under Issue 1 above. ^[71]

     71. See, in particular, [237]-[243] above.

386. For the reasons explained under Issue 3 above, Veolia failed to diligently pursue and comply with the 11 May SPA Default Notice.

387. MP Water did not address any submissions to the contention that Veolia had failed to comply with the 11 May SPA Direction. That contention is therefore taken to have been abandoned.

388. The terms of the 13 May Step-in Notice are set out at [207] above. The terms of the Notice itself do not make it clear MP Water intended only to direct Veolia to take the steps set out in (a) and (b) of the Notice (as opposed to MP Water itself taking those steps). However, it is plain from MP Water’s submissions that it intended the Notice to convey only that it would be issuing directions to Veolia. That is in fact all that MP Water purported to do in giving effect to the Notice. For the reasons explained under Issue 4 above, Veolia did not breach the SPA by failing to comply with those directions in the period between 13 May 2021 and 20 May 2021 when the interim orders were made. There is no allegation that Veolia failed to comply with those interim orders, which must now be discharged in light of my conclusions in relation to Issues 4 and 5 above.

389. As referred to at [215] above, quantum issues as between MP Water and Veolia associated with a claim by the Customer against MP Water have been ordered to be determined separately from the matters that are the subject of these reasons.

390. Whilst MP Water has failed in its claim for the relief set out at [217] above, it has succeeded on other issues that may ultimately affect the outcome of those quantum issues. Determination of the costs of the proceedings to date should therefore await the outcome of the determination of those quantum issues.

CONCLUSION AND ORDERS

391. For all of the reasons above, I make the following orders:

1. Order 5 made on 20 May 2021 is discharged with immediate effect.

2. Prayers 11 and 12 of the Summons, as amended during the hearing on 29 July 2021, are dismissed.

3. List the matter for directions in the Commercial List on 20 August 2021 for directions as to the future conduct of the proceedings in relation to the quantum issue the subject of order 1 made on 11 June 2021 and any claim for compensation by the defendant under the plaintiff’s undertaking as to damages given on 20 May 2021.

4. Costs reserved.

**********

Endnotes

Amendments

13 August 2021 - Amended formatting of coversheet

16 August 2021 - Error at 383

Decision last updated: 16 August 2021