Newman Rivergums Village Operations Pty Ltd (ACN 160 237 918) (Subject to a Deed of Company Arrangement) v BHP Iron Ore Pty Ltd - [2022] WASC 312

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   NEWMAN RIVERGUMS VILLAGE OPERATIONS PTY LTD (ACN 160 237 918) (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) -v- BHP IRON ORE PTY LTD [2022] WASC 312
CORAM:   MASTER SANDERSON
HEARD:   8 AUGUST 2022
DELIVERED          :   14 SEPTEMBER 2022
PUBLISHED           :   14 SEPTEMBER 2022
FILE NO/S:   CIV 1032 of 2021
BETWEEN:   NEWMAN RIVERGUMS VILLAGE OPERATIONS PTY LTD (ACN 160 237 918) (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
Plaintiff
AND
BHP IRON ORE PTY LTD
Defendant

Catchwords:

Practice & procedure - Application for extension of time to serve stale writ - Predatory behaviour on part of defendant - turn on own facts

Legislation:

Nil

Result:

Extension granted

Category: B

Representation:

Counsel:

Plaintiff	:	P Edgar
Defendant	:	J Taylor SC & P Mackenzie

Solicitors:

Plaintiff	:	Lavan
Defendant	:	King & Wood Mallesons

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

Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104
Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79
Chalmers & Partners v Kensit [2008] WASCA 122

MASTER SANDERSON:

On 20 January 2021 the plaintiff issued a writ against the defendant. The indorsement on the writ was in the following terms:
1Pursuant to a take and pay accommodation agreement dated 1 August 2013 between the plaintiff and Lendlease Infrastructure Services Pty Ltd (Lendlease) as varied by a variation agreement dated 1 April 2014 between the plaintiff and Lendlease (Accommodation Agreement), the plaintiff agreed to provide accommodation at Newman Rivergums Village, Great Northern Highway, Newman to persons nominated by Lendlease.
2At all material times, the defendant was aware of the Accommodation Agreement.
3In or around January or February 2015, through its employees or agents the defendant entered into discussions with Lendlease in relation to the Accommodation Agreement and provided inaccurate, misleading or deceptive correspondence to Lendlease (which correspondence was provided to the plaintiff) in such circumstances that the defendant’s conduct amounted to:
3.1 interference with the contractual relations between the plaintiff and Lendlease; and
3.2 misleading or deceptive conduct in breach of section 18 of the Australian Consumer Law, Schedule 2 of the Competition and Consumer Act 2010 (Cth) (ACL).
4 The plaintiff claims against the defendant:
4.1 damages for the tort of interference with contractual relations;
4.2 further or alternatively, damages pursuant to section 236 of the ACL;
4.3 such further or other order as this Honourable Court may consider just; and
4.4 interest on amounts awarded as damages, at such rates as this Court shall order pursuant to section 32 of the Supreme Court Act 1935 (WA).

The writ was served on the defendant on 20 January 2022. That is not in dispute between the parties. When the writ was served on the defendant, the defendant entered a conditional appearance. The document lodged alerted the plaintiff to the objection the defendant took to jurisdiction by including the following:
The writ, dated 20 January 2021, was purportedly served on the defendant on 20 January 2022, and was therefore not valid, and is defective, liable to be struck out and ineffective for service according to the Rules of the Supreme Court 1971 (WA).
On 11 February 2022, the defendant issued a summons seeking orders that the writ be set aside. On 5 May 2022, the plaintiff issued a summons seeking to have the validity of the writ extended until 20 January 2022. It is open to doubt whether filing a conditional appearance in these circumstances was the proper course. That is a procedural matter which really has no impact on the point at issue between the parties. When the matter came on for hearing, the plaintiff moved on its chamber summons. Both parties accepted if the plaintiff did not obtain an order extending the validity of the writ, then service of the writ should be set aside. Whether that meant orders were made on the defendant's chamber summons really did not matter. The essential question was whether or not the validity of the writ should be extended.
It was also not in issue between the parties that power exists to extend the writ retrospectively. Both parties relied on the decisions in Brealey v Board of Management Royal Perth Hospital [1999] WASCA 158; (1999) 21 WAR 79 and Chalmers & Partners v Kensit [2008] WASCA 122 (Chalmers). To some extent, Chalmers has overtaken the decision in Brealey although the two can be read together harmoniously. Before dealing with the law in this matter I should say something in relation to the facts. Throughout the written and oral submissions, the plaintiff was referred to as 'NRVO' and the defendant was referred to as 'BHP'. I will use that description of the parties.
The plaintiff's application was supported by two affidavits of Dermott McVeigh both sworn 5 May 2022. One of the affidavits was opened the other was marked confidential. By the time this matter came on for hearing, both affidavits had been made available to the defendant. I will as and when necessary refer to the affidavits as 'open' or 'confidential'.
NRVO prior to falling into administration operated a business of providing accommodation in the Pilbara, specifically at Newman Rivergums Village in Newman, Western Australia. On 1 August 2013, it entered into an Accommodation Agreement with a company known as Lendlease Infrastructure Services Pty Ltd (Lendlease). That agreement was varied on 1 April 2014. A copy of the agreement and variation appears as attachment DJM22 to Mr McVeigh's confidential affidavit. This Accommodation Agreement was NRVO's only agreement for the provision of accommodation with Lendlease. It was a take or pay agreement. That is to say, Lendlease agreed to take a certain number of accommodation rooms at a specified rate for the duration of the agreement. It mattered not whether the units were occupied by Lendlease personnel or whether they remained vacant. The obligation was on Lendlease to pay to NRVO the amount specified for each room. The effect of the agreement then was to provide NRVO with a guaranteed income. Its profitability might fluctuate because some of the units might not have been occupied and therefore would not have required cleaning, reprovisioning and so on. But the income to NRVO was certain. As it turned out, most of the income NRVO received came from the Accommodation Agreement. For instance, in June 2014 Lendlease represented 93% of the NRVO occupancy. The contract was to run until 30 June 2016.
The Accommodation Agreement was to run back to back with an agreement between Lendlease and BHP pursuant to which Lendlease provided mechanical, electrical and scaffolding works which required workers who were accommodated at the NRVO's rooms.
The Accommodation Agreement contained a right to terminate. Relevantly, cl 8.1 reads as follows:
The parties agree that the Client may terminate this contract by notice in writing; such termination not to take effect less than three months after the date such notice is given to NRVO (the 'Notice Period'). The Client warrants that it shall not terminate this Agreement under the clause unless its BHP Contract (as identified in clause 1.2) is either terminated, or the work under the BHP Contract is reduced such that the Client cannot justify maintaining at least 30 workers in Newman for a continued period of at least six weeks. If either circumstance arises the Client must provide supporting evidence of the event relied on to NRVO's reasonable satisfaction at the time notice of termination is given. Should circumstances exist where the work under the BHP Contract is reduced to such an extent that the requirement for 50 Booked Rooms no longer exists, in lieu of termination of this Agreement, the parties will in good faith negotiate a commercially reasonable variation to the terms of this Agreement to enable a reduction in the number of Booked Rooms, together with a reasonable agreement on any required amendment to the Occupied Room Rate.
The management of NRVO did not know what the contractual arrangement was between Lendlease and BHP. All they knew as that so long as that contractual relationship continued, and it was to continue through until the end of 2018, Lendlease were obliged to honour the take or pay agreement.
In the course of his submissions, counsel for NRVO admitted that the position of the company pre‑termination of the accommodation agreement was precarious. By reference to various charts and other documents in the administrator's report to creditors, which is attachment DJM2 to Mr McVeigh's open affidavit, counsel submitted NRVO was just profitable with the accommodation agreement but without that agreement could not meet its debts as and when they fell due. That assessment of the position was not challenged by counsel for the defendant. I accept that to be the case.
Counsel for NRVO submitted that in 2014/2015 the iron ore industry was suffering a downturn. He accepted there was no direct evidence on that question but he did highlight a number of references in various documents which supported the submission. I accept that was the case. This was not the subject of challenge by counsel for the defendant. What flowed from the downturn is that the defendant was looking to reduce its cost base. In particular, it was looking to reduce the amount it paid Lendlease under their contract. The stumbling block was the take or pay agreement. Lendlease had certain fixed costs and the take or pay agreement with NRVO was one of those costs. It attempted to negotiate with NRVO to reduce the rate it paid under the Accommodation Agreement. But no agreement could be reached. That may have been because NRVO had no capacity to reduce the rate it was charging Lendlease. It was barely breaking even at the rates set in the accommodation agreement. To reduce the costs would have been suicidal. In any event, the reasons why agreement could not be reached are irrelevant. The fact is Lendlease, and through Lendlease, BHP, were aware there was no potential for a negotiated reduction in accommodation costs and consequent reduction in the amount Lendlease was charging BHP under their contract.
One way for Lendlease to reduce its costs was to terminate its contract with NRVO pursuant to cl 8.1 of the accommodation agreement. To do that it was necessary for BHP to terminate its contract with Lendlease. BHP did not want to terminate its contract with Lendlease. It was perfectly happy with the arrangement save with respect to costs. But what appears to have happened is that BHP and Lendlease agreed they would terminate the contract thus triggering the termination of the Accommodation Agreement solely for the purposes of allowing Lendlease to terminate the Accommodation Agreement. BHP and Lendlease would then re‑enter into essentially the same contract but the costs would be reduced because Lendlease would be in a position to negotiate lower accommodation charges. That appears to be what happened based upon correspondence passing between Lendlease and BHP and which came into the possession of the administrators' consequent upon a public examination. It is necessary to consider that correspondence in some detail.
The correspondence begins with an email from Brian Woods, an employee of BHP, to Scott Lester, also an employee of BHP. The email was sent on 19 January 2015 at 12.53 pm. The subject was said to be 'Lendlease Accommodation Rivergums Newman'. The email reads as follows:
Scott,
Currently Lendlease provide their own accommodation through Numans at Rivergums here in Newman at a rate pre‑determined some two years ago.
With the current rates being excessive and Numans unwilling to negotiate lower costs, Lendlease was looking to BHPIO for assistance to break their lease with them.
Lendlease have asked if they could obtain a letter from BPHIO outlining that the current Mechanical, Electrical and Scaffolding Services will be drawing to a close /contract conclusion or termination in March/April 2015 due to a new request for tender being called with a view to receiving lower overall cost or something outlining the above.
The only other alternative would be to provide a letter outlining that BHPIO has changed it's Shutdown cycle and these are now extended to 12/14 weeks cycle times.
Could you advise if this would be possible so that Lendlease can review accommodation costs as part of their submission.
It seems Mr Lester agreed with the request and wrote to one of the other employees of BPH, Mr Wes Sutherland, on 20 January 2015. That email reads as follows:
Brian
As discussed, I don't have an issue with this if we draft a letter that says something along the lines of:
·We currently have a contract with Lendlease for [insert scope of works].
·The contract is set to expire [applicable date].
·We are currently retendering the scope and are not yet in a place to know the outcome.
Wes, are you able to draft this letter for Brian?
Scott
Later that same day, Mr Lester sent an email to both Mr Sutherland and Mr Woods saying:
Perfect Wes. I'm happy for it to go out under your signature.
On 21 January 2015, Mr Woods sent an email to one Chris Bell, who counsel suggested (and it was not denied), was the superior of Mr Woods at BHP. That email read as follows:
Chris
Just to keep you in the loop Lendlease have tried re negotiations with their accommodation provider to no avail, however they did ask BHPBIO for assistance to enable them to break their lease at the Rivergums site. Scott Lester agreed that to get lower accommodation costs as part of the transformation Tender he had Wes issue a letter for Lendlease to be able to have discussions with 'Numans' the owners of the Rivergums accommodation around either lower costs or break the lease Basically to get lower costs they need to be able to break their lease and re negotiate with others in Newman.
Regards
Brian
On 20 January 2015, a letter was drafted which was intended to cover the purported termination of the agreement between BHP and Lendlease. That letter read as follows:
Re: BHP Biliton Iron Ore Pty Ltd (BHPBIO) and Lendlease Infrastructure Services Pty Ltd (Lendlease) Supply Contract
A contractual arrantement between BHPBIO and Lendlease currently exists for the supply of mechanical, electrical and scaffold services to BHPBIO's Mount Whaleback, Eastern ridge and Jimblebar mine sites located in Western Australia's Pilbara region. This contract was awarded to BHPBIO to Lendlease on the 1^st of August 2013 and is due to expire on the 30^th of June of 2018.
BHPBIO, at its discretion, has recently commenced proceedings to re‑tender its requirements for mechanical, electrical and scaffold services for all company sites located in Western Australia's Pilbara region. The anticipated tender completion date for this requirement is March of 2015. The resultant contracts arising from the tender will replace the existing contracts for these service requirements. As this tender has recently been released to the marketplace BHPBIO is not in a position to advise regarding the potential outcome of the tender.
In the event you have any queries in relation to this matter please feel free to contact the undersigned.
Yours faithfully
Wes Sutherland
A copy of that letter was supplied to a Ms Jess Grigson of Lendlease. On 28 January 2015, Ms Grigson sent the following email:
Hi Brian, Wes,
Our legal team has asked if we can have
'As a result of the retender process the current contract between BHPBIO and Lendlease will come to an end'
Would that be possible? And also if you could please sign it Wes.
Thanks.
Regards
Jess Grigson
In line with Ms Grigson's suggestion, the BHP letter was redrafted but it still had the date of 20 January 2015. Armed with this letter, Lendlease then wrote to NRVO in the following terms:
Dear Mr Stowe
Newman Rivergums Village Accommodation Agreement
I refer to your letter of 28 November 2014, and also recent discussions regarding the Take and Pay Accommodation Agreement between Newman Rivergums Village Operations Pty Ltd (NRVO) and Lendlease Services Pty Limited (Lendlease) (the Accommodation Agreement).
BHP Billiton Iron Ore Pty Ltd (BHPBIO) recently released a tender for all mechanical, electrical and scaffold services at all BHPBIO sites in the Pilbara region. As a result of this tender process, the Mechanical Electrical and Scaffolding Services Contract between BHPBIO and Lendlease will come to an end. With the conclusion of this contract, Lend Lease's accommodation requirements remain uncertain, such the Lendlease cannot commit to any ongoing accommodation requirements.
For the reasons outlined above, Lendlease now gives notice to terminate the Accommodation Agreement between NRVO and Lendlease. In accordance with clause 8.1 of the Accommodation Agreement (Termination by Client), Lendlease gives notice to terminate on the grounds that the Mechanical Electrical and Scaffolding Services Contract between BHPBIO and Lendlease is to be terminated.
As required by clause 8.1, written confirmation from BHPBIO of the termination of the Mechanical Electrical and Scaffolding Services Contract is attached.
The date of the termination will be three months from the date of this letter, or such other date as agreed between NRVO and Lendlease.
We appreciate NRVO's attempt to offer a revised proposal, but unfortunately Lendlease is unable to commit to any alternative at the present time.
Yours sincerely
John Valuri
Not surprisingly, this letter provoked a response from NRVO. The letter was addressed to Mr John Valuri, the general manager of Lendlease. It is dated 3 February 2015. It reads as follows:
Re Take and Pay Accomodation Agreement – Newman Rivergums Village Operations Pty Ltd (NRVO) and Lendlease Services Limited (Lendlease) (Agreement)
Dear John,
We refer to your letter dated 29 January 2015 purporting to terminate the Agreement (Your Letter) under clause 8.1 of the Agreement (Notice of Termination) which encloses a letter dated 20 January 2015 from BHP Billiton Iron Ore Pty Ltd (BHP) to BPH (BHP Letter). The Notice of Termination provides that termination will take effect in 3 months' time (29 April 2015) in accordance with the notice requirement in clause 8.1 of the Agreement.
NRVO considers that the Notice of Termination does not comply with clause 8.1 of the Agreement and is invalid for the following reasons:
1.You're Letter and the BHP Letter does not evidence that the BHP Contract has been terminated as at 20 January 2015 or 29 January 2015, both letters are stating in effect that the BHP Contract may at some time in the future be terminated. We do not accept the BHP letter as sufficient evidence to warrant terminating the contract. Evidence on the ground clearly indicates that the contract is still in existence; Lendlease personnel are in the accommodation village and working under the contract.
2.For NRVO to be satisfied that the BHP Contract has been terminated, it is reasonable for NRVO to receive a copy of a notice of termination from BHP to Lendlease terminating the BHP Contract identifying the relevant contract and the clause of the contract or other right upon which BHP terminates the BHP Contract. Lendlease has not provided such evidence to NRVO.
Therefore, the Agreement is not terminated in remains on foot and in effect.
Our letter of 28 October 2014 was an invitation to negotiate in good faith a fair and reasonable outcome for both Lendlease and NRVO. There has been no meaningful communication from Lendlease since this letter to indicate Lendlease has been prepared to have any in good faith negotiations. Clause 8.1 requires the parties to negotiate in good faith for a commercially reasonable variation to the terms of the Agreement. NRVO considers that Lendlease has not complied with this clause of the Agreement and NRVO reserves all of its rights in this regard. Careful notes have been recorded of all the discussions which took place at recent meetings.
Whilst we are not privy to the contract between Lendlease and BHP, we find it difficult to accept there is no means within that contract for negotiations to take place in search of an outcome to match the commercial situation both parties are in. We have appreciated the relationship which has been developed between Lendlease and NRVO and would also welcome the opportunity to assist you in any discussions with BHP if this was appropriate.
A recent phone call to your Douglas Moss in Sydney by our chairman, Ray Purdy, attempting to set up a meeting when next he was in Perth has to date been ignored.
We believe such a meeting is essential and look forward to hearing from you at your earliest convenience.
NRVO reserves all its rights in relation to the Agreement.
King regards
Geoff Stowe

The real position as between BHP and Lendlease is evidenced by an email which is in the following terms:
From: Joshua Saunders
Sent: Tuesday, 24 February 2015 11.58AM
To: Andrew Van Mierlo; John Valuri
Subject FW: Urgent: BHP Super Tender
Andrew and John
Can you please summarise a response to this? Ie assuming I understand it correctly:
-The proposal is to cancel the existing METAS and replace it with this new contract, on the METAS terms. BHPBIO (Wes Sutherland) yesterday confirmed with me that they would be looking to a Variation of the METAS contract – by varying scope, pricing and term (so that the 5+5 yr term re-starts upon the date of the variation Agreement). The key reason is that this enables BHPBIO to progress this internally much easier than it would be.
-Scope is broader, and in particular includes more work at Port Hedland
John can you explain this?
-Margins are a bit tighter – and reflect the downturn in the iron ore industry. Other players are being excluded completely, and this is a competitive advantage for us, as we remain mobilised in the Pilbara.
John can you explain this? In the CLR we had a margin of Sell Price at 8% - weren't we around this mark under METAS? I don't believe I received the final pricings/top sheet that was sent around for Final Commitment Review.
-Overall the revenue and gross profit will be higher, but margin percentage will be lower.
John can you explain this (presume gross profit $ are potentially higher? Depends on how many Contractors BHPBIO end up going with. Yesterday Wes told me 6 out of 52 are shortlisted to this stage. I'm not sure how many they're getting down to? Margin % is slightly lower than METAS?
-We are endeavouring to cut costs by making other savings eg. on staff accommodation.
John?
-Etc.
Otherwise just respond to Allan's queries below. Send back to me, and I will tidy it up and send it on. If we can get a response in, our 4.45 discussion should go smoothly.
Thanks
Josh
Some three days after this email was written, Lendlease again wrote to NRVO finally terminating the accommodation agreement. That letter reads as follows:
Dear Mr Stowe
Newman Rivergums Village Accommodation Agreement
I refer to recent correspondence regarding the Take and Pay Accommodation Agreement between Newman Rivergums Village Operations Pty Ltd (NRVO) and Lendlease Services Pty Limited (Lendlease) (the Accommodation Agreement).
BHPBIO has now provided Lendlease with further notice of termination of the Mechanical Electrical and Scaffolding Services Contact, confirming the contract end date of 13 March 2015.
Further to our previous termination notice, provided in accordance with clause 8.1 of the Accommodation Agreement (Termination by Client), Lendlease attaches the further correspondence from BHPBIO which confirms the contract end date.
In accordance with the Accommodation Agreement, the effective date of termination of the Accommodation Agreement will be three months from the date of our initial termination notice, being 20 April 2015.
Yours sincerely
John Valuri
Before dealing further with the evidence and how that is relevant to this application I should make two points. First, it is not my role in this application to make any findings of fact. Counsel for NRVO outlined his version of the facts because he said the strength of NRVO's case was one factor in determining whether or not an extension of time ought be granted. BHP took a different view. They maintained that while it may be relevant to say NRVO had an arguable case, that really was the end of the matter. The merits or otherwise of the case were of no moment. Perhaps for that reason, BHP put on no evidence challenging the version of facts given by NRVO, nor were any submissions made to the effect the circumstances were not as alleged by NRVO. No doubt, if the matter gets to trial, BHP will provide their version of the facts which might well be different to NRVO's version of the facts and might, in the end, carry the day. But it is relevant to note that despite having the opportunity to do so and despite being clear as to the way in which NRVO structured their case, BHP did not challenge NRVO's version of the facts.
It is appropriate here to deal briefly with the law. The principles were not in dispute between the parties. They can best be summarised by reference to the Court of Appeal decision in Chalmers. The facts in that case were relatively straightforward. A writ was issued by the respondent. The indorsement on which read in part:
1.damages for equitable relief arising out of negligence, breach of statutory duty, breach of contract, breach of fiduciary duty and breach of duty of trust and confidence.[1]
[1] Chalmers & Partners v Kensit [2008] WASCA 122 p 5.
The Court of Appeal found this indorsement was clearly defective. The writ was served one day out of time. The solicitor concerned assumed the writ could be served up to and on the anniversary of the date it was issued. In fact a writ must be served the day prior to the anniversary on which it was issued. So in Chalmers, as here, the writ was served a day late. At first instance I granted the extension of time. The Court of Appeal reversed that decision. Buss JA (as his honour then was) dealt with the matter in this way:
32.The factors which are in favour of an extension of the validity of the writ are these:
(a) The statutory limitation period applicable to one or, perhaps, more of the alleged causes of action which the respondents wish to litigate against the appellants may have expired as at the date when the writ became stale.
(b) By the letter dated 17 April 2003, the appellants were given some particulars of the respondents' claim.
(c) The purported service of the writ was effected only one day after it became stale.
(d) The respondents applied promptly for an extension of the validity of the writ.
33.The factors which are against an extension of the validity of the writ are as follows:
(a) No statutory limitation period applies to the alleged causes of action for breach of fiduciary duty or breach of duty of trust and confidence, and equity would not apply a limitation period by analogy in respect of those alleged causes of action.
(b) Neither the indorsement of claim (which is plainly defective), nor the affidavit material filed by the respondents, enables this court to assess reliably whether the statutory limitation period which is applicable to the alleged causes of action for negligence, breach of statutory duty and breach of contract had expired as at the date on which the writ became stale. A minute of amended or substituted indorsement of claim was not produced to the learned master or this court. The respondents are therefore responsible for the uncertainty which attends this important issue.
(c) The respondents, in deciding not to serve the writ until the last moment, chose to live by technicalities, and therefore must be taken to have accepted the risk of dying by them if they failed to observe the time limits imposed by O 7 r 1(2).
(d) The respondents, having decided not to serve the writ until the last moment for the purpose of enabling them to investigate whether they had reasonable causes of action against the appellants, did not make productive use of the 12 month period for that purpose. Rather, as the learned master found, the respondents' solicitor 'took little or no steps in the 12 months after the issue of the writ to advance the [respondents'] claim' [10].
(e) As the learned master concluded, there was no satisfactory explanation for the respondents' delay in serving the writ. Mr Lindsay's apparent belief that 26 May 2006 (and not 25 May 2006) was the last day on which the writ was valid may be an explanation but it is not, in the circumstances, satisfactory.
(f) Any prejudice suffered by the respondents if the validity of the writ were not to be extended would be self‑inflicted.
(g) Although the appellants are able to point only to general, as distinct from particular, prejudice, this may well be attributable, in part, to the respondents' failure properly to draw their claim. The letter dated 17 April 2003 provides some particulars in relation to the respondents' alleged cause of action against the first appellant in negligence, but it does not mention the second appellant. Nor does it mention any claim for breach of statutory duty, breach of contract, breach of fiduciary duty or breach of duty of trust and confidence against the first appellant.
34 After assessing the factors which are in favour of an extension of the validity of the writ and those factors which are against the extension, I have concluded that the respondents' application should be dismissed. The factors militating against an extension decisively outweigh the factors militating in favour of it. The interests of justice, including the 'balance of hardship' between the parties, do not require the exercise of the court's remedial discretion. The respondents cannot reasonably complain of any unfairness resulting from the refusal of an extension.
In its written submissions, BHP gave seven reasons why they said the validity of the writ should not be extended. In summary, these reasons were:
(a)NRVO has provided no satisfactory explanation of why it chose to wait until the last moment to seek to serve the Writ and its corresponding failure to serve the Writ within the requisite 12‑month period;
(b)NRVO has seemingly taken no steps to investigate or advance its claim in the 12 months since the writ was filed;
(c)it would be inconsistent with the policy of O 7 r 1 to permit NRVO's application to succeed;
(d)BHP suffers prejudice if the validity of the writ is extended as the limitation period underling the claims has expired;
(e)BHP suffers prejudice in defending the claim some seven years after the alleged events occurred in the first half of 2015;
(f)there is no apparent prejudice to NRVO beyond a bold assertion that it has a claim for an unquantified amount which it has already pursued and settled against the primary wrongdoer; and
(g)NRVO in deciding not to serve the writ until the last moment is the author of its own misfortune and has chosen to live and die by technicalities.
It is worth examining each of the points made by BHP in detail. To explain the delay in serving of the writ, NRVO relied on an affidavit of Tegan Healey sworn 5 May 2022. Ms Healey says that on 19 January 2022, she was instructed to write to BHP's solicitors regarding service of the writ. A copy of that letter appears as attachment JGA-6 to an affidavit of Joseph Abberton sworn 20 May 2020. Relevantly, part of that letter reads as follows:
1.As you are aware, our client filed a writ of summons in the Supreme Court of Western Australia on 20 January 2021, with your client named as the defendant. To date, that writ has not been served on your client. Accordingly, the period of time for which the writ remains valid will lapse tomorrow, 20 January 2022.
In the body of that letter there is reference to a copy of the writ being attached to the letter. In fact no such copy was attached. This was an oversight. But even had it been attached, it is open to doubt whether simply sending the letter to BHP's solicitors would have been sufficient service. In any event, the point is moot. The writ was not attached. But it is apparent from the letter Ms Healey was mistaken. She thought she had until 20 January 2022 to serve the writ. That was not the case at all. As occurred in Chalmers, an error on the part of a solicitor resulted in service that was out of time by one day.
In his affidavit, Mr Abberton, who is a partner of the firm representing NRVO, sets out the circumstances which led to the service of the stale writ. I need not detail what occurred. It is clear there was a breakdown in the systems within his firm. During the course of his submissions, counsel for NRVO frankly admitted a mistake had been made. There is really nothing more to be said.
It is not entirely clear what steps were taken to further investigate the claim between the date of the issue of the writ and its service. At pars 40 to 43 of his confidential affidavit, Mr McVeigh gives some detail of the work done in relation to the claim. But it does not appear anything was done between the issue of the writ and its service. That may be because there was nothing further to do. By the time the writ was issued, NRVO was in possession of all the evidence it needed to formulate and advance its claim.
It is BHP's position that the time limit in relation to this claim has expired. Senior Counsel for BHP, in her submissions, was very clear on this point. While this application is not the occasion to determine that issue, it is very difficult to see how the position could be otherwise. Counsel for NRVO did not concede the point but he did say that it was arguable. This is one of those cases where, I think, it is possible to say in all probability the time limit has expired. That factor cuts both ways. On the one hand, if time is not extended, NRVO will be met with a limitation defence if it issues fresh proceedings. On the other hand, if time for service of the writ is extended, BHP is denied the limitation defence it would otherwise have been able to run.
There is no doubt BHP will suffer prejudice if the writ is extended. The prejudice is what is sometimes referred to as general prejudice which arises in any case where there is delay. BHP was not able to point to any particular prejudice such as a witness having died or documents being destroyed. Nonetheless, there is no doubt that with the passage of time the task of defending a claim becomes more difficult.
Finally, it is the fact that NRVO left it until the last minute to serve this writ. As was made plain in Chalmers, any prejudice suffered by NRVO is of its own making and the damage is self‑inflicted.
Against that, NRVO says there are a number of factors which favour the extension. Of the four factors mentioned by Buss JA in Chalmers, all are present in this case – the limitation period may have expired; BHP was given particulars of NRVO's claim; the purported service of the writ was affected only one day after it became stale; and NRVO applied promptly for an extension of time. Consistent with Chalmers, all of those factors must weigh in the balance and favour the grant of an extension of time.
There are two other factors which NRVO says favour the grant of the extension. The first might be terms the impecuniosity of NRVO. In his affidavit, Mr Abberton says NRVO reached a settlement with Lendlease in relation to its claims on or about 30 June 2020. The proceeds of this settlement were not sufficient to discharge the secured lenders and NRVO was left without funds to pursue its claim. That is offered as an explanation as to why the writ was not served and the action was not pursued. BHP says a failure to secure litigation funding cannot be used as an excuse for not serving the writ. Further, as no litigation funding has yet been obtained, there would be no utility in granting the extension because there is nothing to suggest the claim could be pursued. In fact, BHP says this is a factor which weighs against the extension being granted.
The New South Wales Court of Appeal considered the relevance of a litigation funder (or lack of litigation funder) to the question of an extension of a writ in Arthur Andersen Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104. Ipp JA (with whom Tobias and McColl JJA agreed had this to say:
[82] In my view it would be inappropriate to allow an extension of time for the service of a writ or statement of claim where a significant cause of the delay has been the willingness of the plaintiff to do nothing about service while awaiting a decision from a litigation funder as to whether or not to provide the necessary funds. Were that to be regarded as a good reason to extend time, the Court would be allowing plaintiffs to arrogate to non-parties the right to decide the period by which the time for service of a writ should be extended. That would be fundamentally in conflict with the Court’s duty to exercise, alone, the discretion conferred upon it.
It is clear then based upon this decision, lack of a litigating funder is not a factor which can advance the plaintiff's case.
In the Arthur Andersen decision (supra) Ipp JA discussed the nature of the discretion which is to be exercised in a case his Honour said:
[28] The rule requires the exercise of a judicial discretion, not fettered by inflexible prescriptions: Bray CJ in Victa Limited v Johnson (1975) 10 SASR 496 at 503, approved by Stephen J, sitting alone, in Van Leer Australia Pty Limited v Palace Shipping KK [1991] HCA 11; (1991) 180 CLR 337 at 343 - 344, and Mason J, sitting alone, in Foxe v Brown (1984) HCA 69; (1984) 59 ALJR 186 at [189]. But this does not mean that the discretion is at large. The discretion is to be exercised in the context of and by reference to the statute by which it is conferred (and any other statute that is relevant to the legislative context) and in accordance with principles developed by judicial decisions.
The second factor NRVO points to is the merits of their claim. They really put the position this way. BHP and Lendlease conspired to create an artificial circumstance which allowed Lendlease to terminate the accommodation agreement. That led directly to NRVO falling into administration. Now BHP wants to rely upon a technicality to walk away from their corporate responsibility. NRVO submitted it was not in the interests of justice to allow that to occur.
In the end, all of the cases emphasise that matters must be weighed in the balance and a compromise reached as to the competing interests. On that basis, it seems to me relevant that this cause of action has arisen in the way it has. To now suggest that because BHP was served one day late it would be unjust to extend time when the facts presently but not necessarily ultimately uncontested suggest predatory behaviour which was directly responsible for the financial collapse of NRVO does not seem to me to be fair and reasonable.
Weighing all matters in the balance, I am satisfied the extension ought be granted. The nature and strength of the plaintiff's claim tips the balance. It takes this case out of the Chalmers case and that I have determined is decisive.
On publication of these reasons the parties ought agree a minute and if agreement cannot be reached, competing minutes should be provided. In my view, costs should follow the event and be paid by BHP. If the parties cannot agree as to costs then short submissions should be filed within seven days of the publication of these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AH
Associate to Master Sanderson
14 SEPTEMBER 2022