NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd
[2020] WASCA 107
•7 JULY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: NRW CONTRACTING PTY LTD -v- CLIFFS ASIA PACIFIC IRON ORE PTY LTD [2020] WASCA 107
CORAM: MURPHY JA
BEECH JA
VAUGHAN JA
HEARD: 21 MAY 2020
DELIVERED : 7 JULY 2020
FILE NO/S: CACV 80 of 2019
BETWEEN: NRW CONTRACTING PTY LTD
Appellant
AND
CLIFFS ASIA PACIFIC IRON ORE PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: SMITH J
Citation: BGC CONTRACTING PTY LTD -v- CLIFFS ASIA PACIFIC IRON ORE PTY LTD [2019] WASC 248
File Number : CIV 2405 of 2018
Catchwords:
Practice and procedure - Application for summary judgment or strike out of counterclaim dismissed by judge - Appeal from interlocutory decision - Leave to appeal - Principles relevant to whether leave to appeal should be granted - Whether judge erred in failing to find that the counterclaim was untenable by reason of the type of loss claimed in the counterclaim - Whether judge erred in finding that the costs of the application be the respondent's in the cause of the counterclaim
Contract - Construction of indemnities and exclusion clause in lengthy mining contract - Complex questions of law - Whether judge made an error of law in finding that the proper construction of exclusion clause should be determined at trial
Legislation:
Rules of the Supreme Court 1971 (WA), O 1 r 4A and r 4B, O 14 r 1 and r 6, O 16 r 1, O 19 r 1, O 20 r 19
Supreme Court Act 1935 (WA), s 60(1)(b)
Result:
Leave to appeal refused
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | D Miller SC & D J Osborn |
| Respondent | : | M D Howard SC & E M Heenan |
Solicitors:
| Appellant | : | Quinn Emanuel Urquhart & Sullivan |
| Respondent | : | Norton Rose Fulbright Australia |
Case(s) referred to in decision(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140
AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Aquatec‑Maxcon Pty Ltd v Minson Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16
Astor Theatre WA Pty Ltd v Zimmerman Investments Pty Ltd [2014] WASC 329
Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256
BGC Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2019] WASC 248
Blenkinsop v Blenkinsop Nominees Pty Ltd [2015] WASC 254 (S)
Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
Carratti Holding Co Pty Ltd v Austpeak Australia Pty Ltd [2011] WASCA 34
Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1
Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693
Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397
Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544
Electricity General Corp v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26; (2008) 19 VR 358
European Bank Ltd v Evans [2010] HCA 6; (2010) 240 CLR 432
Forsayth NL v Northern Gold NL (Unreported, WASC Full Court, 20 January 1994)
Frigger v Kitay [No 12] [2016] WASC 241
General Steel Industries Inc v Commissioner for Railways (NSW) and Ors [1964] HCA 69; (1964) 112 CLR 125
Hadley v Baxendale (1854) 9 Ex 341
Hagipantelis v Legal Services Commissioner of New South Wales [2010] NSWCA 79; (2010) 78 NSWLR 82
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141
Helmers v Como [2014] WASC 394
House v The King [1936] HCA 40; (1936) 55 CLR 499
In re the Will of F B Gilbert (Dec) (1946) 46 SR (NSW) 318
Kelbush Pty Ltd v ANZ Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374
Knights Capital Group Ltd v Bajada and Associates Pty Ltd [2016] WASC 69
Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401
Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540
Love v Geelong Building Society (in liq) [1995] 2 VR 112
Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513
MacMahon Mining Services v Cobar Management [2014] NSWSC 502
Major v Woodside Energy Ltd [No 3] [2009] WASC 246
Monadelphous KT Pty Ltd v Transalta Energy (Australia) Pty Ltd [2017] WASCA 176
Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516
Regional Power Corporation v Pacific Hydro Group Two Pty Ltd [No 2] [2013] WASC 356; (2013) 46 WAR 281
Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeny [2011] WASC 167 (S)
Robinson v Harman (1848) 1 Ex 850
Rock Bottom Fashion Market Pty Ltd (in liq) v HR & CE Griffiths Pty Ltd [1998] QCA 033; (1998) Q ConvR 54‑505
Serventy Commonwealth Bank of Australia [No 2] [2016] WASCA 223
Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VR 342; (1976) 10 ALR 441
Shilkin v Taylor [2011] WASCA 255
Silbert v Steinberg [2010] WASCA 113
SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138
State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR 434
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117
The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40
Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603
WA Country Builders Pty Ltd v Premium Coastal Property Pty Ltd [2012] WASC 236
Waller v Waller [2009] WASCA 61
Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454
Westpac Banking Corporation v Anderson [2017] WASC 106
Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Unreported, WASC, Library No 92034, 19 June 1992)
Wilson v Metaxas [1989] WAR 285
MURPHY JA:
Introduction
This is an appeal against an interlocutory decision of Smith J in BGC Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd[2019] WASC 248(primary decision). In general terms, the primary proceedings concern claims by the appellant (BGC)[1] against the respondent (Cliffs) in respect of a mining services agreement executed on 28 March 2013 as varied, amended and restated (ultimately) on 11 September 2015 (the Contract). BGC's claims relate to breach of contract and misleading or deceptive conduct.[2]
[1] The appellant was formerly known as BGC Contracting Pty Ltd and is now known as NRW Contracting Pty Ltd.
[2] BB 27.
It was admitted in the pleadings that (1) Cliffs is engaged in the business of managing, exploring, mining and selling iron ore in Western Australia, (2) Cliffs owned the Koolyanobbing mine complex until August 2018, (3) BGC is engaged in the business of providing mining contract services in Western Australia, and (4) Cliffs, as principal, and BGC, as contractor, entered into the Contract for the provision of mining services in respect of the Koolyanobbing mine complex.
Cliffs filed a counterclaim alleging breaches of the Contract by BGC.[3] BGC applied for summary judgment on the counterclaim against Cliffs, alternatively for summary dismissal of the counterclaim on the basis that the counterclaim disclosed no reasonable cause of action, was frivolous and vexatious, or amounted to an abuse of process.[4] On 10 July 2019, the judge dismissed BGC's application for summary judgment and summary dismissal of the counterclaim. Her Honour also ordered that the costs of BGC's application be Cliffs' costs in the cause of the counterclaim, subject to a further order that BGC's costs incurred and thrown away by reason of Cliffs' amendment to the counterclaim be paid by Cliffs forthwith.
[3] BB 138 - 168.
[4] Primary decision [3], [40]; O 20 r 19(1)(a), (b) or (d) of the Rules of the Supreme Court of Western Australia 1971 (WA) (Rules).
BGC seeks leave to appeal against the orders dismissing the application for summary judgment/summary dismissal and the order that the costs of the application be Cliffs' costs in the cause of the counterclaim. For the reasons which follow, leave to appeal should be refused and the appeal should be dismissed.
The Contract
The Contract, in its original form,[5] is a substantial document of nearly 280 pages. In general terms, it includes provisions along the following lines.
[5] The parties did not contend that it was necessary, for present purposes, to canvass the particular amendments made in 2013 and 2015.
Recitals
1.The Contract includes recitals to the effect that:
(a)Cliffs owns the Site, which includes the Mines (including the Koolyanobbing minesite), the OHP (Ore Handling Plant),[6] and the Facilities (comprising the Village Facilities, the Minesite Facilities and the Utilities);[7] and
[6] 'OHP' was said in submissions to be an acronym for Ore Handling Plant: appeal ts 24; hearing 24/05/19, ts 11.
[7] Recital (A); GB 21.
(b)Cliffs wishes to engage BGC to provide the Mining Services.[8]
[8] Recital (D); GB 21.
Mining Services
2.BGC agrees to provide the Mining Services on the terms and conditions of the Contract, including the Principal's Mine Plan, the Production Schedule and the Operating Plan.[9]
[9] Clause 2.1, 3.1; GB 36 - 37.
3.The 'Principal's Mine Plan' means the mine plan prepared by Cliffs which describes the sequencing of mining ROM Ore from the Mine during the Term, and incorporates key parameters for mining, including mining sequence plans, landform designs, access and haulage roads, as amended by Cliffs in accordance with the Contract, the current version (at the time the Contract was entered into) of which is annexed as annexure B to the Contract.[10]
[10] Definition of 'Principal's Mine Plan' in cl 1.1; GB 31.
4.'Ore', for the purposes of the Contract, means Crushed Ore and ROM Ore. ROM Ore is the iron ore mined from the mine and delivered to the OHP. The OHP is the infrastructure for processing Ore, and includes the Ore pad and crushing systems.[11]
[11] Definitions of 'Ore', 'ROM Ore' and 'OHP' in cl 1.1; GB 30 - 31, 33.
5.The Mining Services are the mining and related services set out in sch 1, under which (amongst other things) BGC must, in accordance with the Principal's Mine Plan, (1) mine and extract ROM Ore in accordance with the Production Schedule and the Directions of Cliffs, (2) maintain and manage stockpiles, and (3) operate and manage the OHP as required to produce Crushed Ore in accordance with the Production Schedule and the Specifications.[12]
[12] Definition of 'Mining Services' in cl 1.1, sch 1 cl 1; GB 30, 104.
6.The Production Schedule means the volume of: (1) ROM Ore and Waste to be mined, hauled and delivered to the OHP or stockpiled on a daily basis in accordance with the 24‑hour haulage schedule provided by Cliffs, (2) ROM Ore to be mined and delivered to the OHP or stockpiled on a daily basis as set out in a crusher feed schedule provided by Cliffs every 24 hours, and (3) ROM Ore and Waste to be mined and delivered to the OHP and stockpiled on a weekly and monthly basis in accordance with schedules provided by Cliffs. In each case, the Production Schedule must be in accordance with the Principal's Mine Plan (as amended from time to time in accordance with the Contract).[13]
[13] Definition of 'Production Schedule' in cl 1.1; GB 32.
7.The Specifications are the specifications for Crushed Ore in sch 7. Crushed Ore in sch 7 is of two types, Lump and Fines, each of which has specifications for size and moisture content.
The Site
8.Cliffs must provide the Facilities (ie, the Village Facilities, Minesite Facilities, and Utilities[14]) for use by BGC free of charge for the performance of the Mining Services during the Term and for any period required for mobilisation.[15]
[14] Definition of 'Facilities' in cl 1.1; GB 25.
[15] Clause 9.3; GB 54.
9.If, as a result of any item of the Facilities not being fit for purpose, or being unlawful or unsafe, and BGC suffers any Loss (including a reduction in its Performance Fee) or is subject to a Claim - in each case other than to the extent that it results from BGC's own breach of obligations - Cliffs must pay BGC the amount of that Loss or Claim promptly upon request.[16]
[16] Clause 9.3(d); GB 54 - 55.
Plant and equipment
10.The term 'Plant and Equipment', for the purposes of the Contract, includes both the 'Principal's Plant and Equipment' and the 'Contractor's Plant and Equipment'.[17]
[17] Definition of 'Plant and Equipment' in cl 1.1; GB 31.
11.BGC must ensure that the Plant and Equipment (both the Contractor's Plant and Equipment and the Principal's Plant and Equipment) being used or maintained by BGC for the purposes of Mining Services is (1) fit for purpose, (2) complies with all applicable Laws including Health and Safety Laws, and (3) conforms with all applicable guidelines including Australian Standards.[18] BGC must also ensure that the Plant and Equipment is maintained in safe and working order in accordance with manufacturer's requirements, applicable Laws, the Safety Management Plan, and all relevant Work Procedures.[19]
[18] Clause 4.8(a); GB 43.
[19] Clause 4.8(b); GB 43.
12.If, as a result of the use of the Principal's Plant and Equipment, BGC suffers any Loss (including a reduction of its Performance Fee) or becomes the subject of any Claim - in each case other than to the extent that it results from BGC's own breach of obligations - Cliffs must pay the Loss or Claim promptly.[20]
[20] Clause 4.8(e); GB 43 - 44.
Standard
13.BGC must perform the Mining Services in a competent, prudent and commercial manner.[21]
[21] Clause 3.2(a); GB 37.
Health and safety obligations
14.BGC must ensure that the Mining Services are carried out in compliance with specified legislation, collectively defined as 'Health and Safety Laws'.[22]
[22] Clause 4.3(a); GB 40.
Environmental obligations
15.In providing the Mining Services, BGC must comply with specified legislation, collectively defined as 'Environmental Laws'.[23]
[23] Clause 5.1(a); GB 45.
Direct Costs
16.In performing the Mining Services, BGC may incur Direct Costs, providing that such costs are incurred in accordance with the Operating Plan and otherwise in accordance with the Contract or a Direction by Cliffs.[24]
[24] Clause 3.8; GB 39.
17.Direct Costs are the costs set out in sch 5 or any other costs approved by Cliffs.[25]
[25] Definition of 'Direct Costs' in cl 1.1; GB 24.
18.Neither party is to derive any 'profit or unreasonable advantage' from the recovery of Direct Costs.[26]
[26] Schedule 5 cl 1.1(a); GB 133.
19.A maximum of 100% of any bona fide Direct Costs reasonably incurred in the provision of the Mining Services will be recoverable by BGC, and Direct Costs must be able to be verified or substantiated by evidence reasonably acceptable to Cliffs.[27]
[27] Schedule 5 cl 1.1(c) and (d); GB 133.
Fees generally
20.Cliffs must pay BGC the Fees and BGC must accept the payment of the Fees, in accordance with the Contract as full payment for the provision of the Mining Services and the performance of its other obligations under the Contract.[28]
[28] Clause 20.1; GB 51.
21.The Fees payable to BGC comprise (1) the reimbursement of the Direct Costs, (2) the Management Fee and, (3) the Performance Fee.[29]
[29] Definition of 'Fees' in cl 1.1; GB 25.
Management Fee
22.The Management Fee is (subject to specified adjustments) the payment of (approximately) $1.4 million per month 'as consideration for indirect costs incurred by BGC in performing the Mining Services'.[30]
[30] Schedule 4 cl 2.1; GB 130.
Performance Fee
23.The Performance Fee has a number of components relating to health and safety (the Safety Fee), the Operating Plan (the Finance Fee), the Environment (the Environment Fee), the Principal's Mine Plan and Production Schedule (the Operations Fee), and costs reduction and operations achievement (the Operational Efficiency Fee).[31] The Contract contains extensive and detailed provisions concerning the calculation of the Performance Fee and its component parts.[32]
[31] Schedule 4 cl 3.1; sch 6; GB 131, 138 - 153.
[32] Schedule 6; GB 138 - 153.
Directions and Variations
24.The Contract distinguishes between Directions and Variations. A Direction is given under cl 3.4(a) and involves any direction or instruction given by (relevantly) Cliffs which is consistent with the Contract. By cl 3.4(a), BGC must (subject broadly to cases where BGC has given notice that the Direction is, or is believed to be, unlawful or unsafe) comply with a Direction unless it is a Variation, in which case cl 21 applies.
25.Clause 21, relating to Variations, provides, in general terms (amongst other things), that Cliffs may, at its sole discretion, by notice to BGC (Variation Notice), change the scope, timing or scheduling of the Mining Services, and change the Production Schedule and the Principal's Mine Plan. The Variation Notice must contain an adjustment to the Fees which Cliffs reasonably determines to be required as a result of the Variation. If BGC receives a Variation Notice, it must perform its obligations under the Variation Notice, save where it is of the reasonable opinion that the Variation is unlawful, unsafe, not technically feasible or requires an amendment to the Mining Services, the Production Schedule, the Principal's Mine Plan, the Operating Plan, the Environmental Operating Procedures and Forms, the Rail Pooling Schedule, the Management Plan or the calculation of any Component Fee Score. Clause 21 also provides, in effect, for the resolution of disputes in respect of Variation Notices.
Set off
26.Cliffs may set off or deduct from any amounts due to BGC under the Contract:
(i)Claims or Losses which Cliffs has paid or incurred and which BGC is liable to bear under specified provisions relating (generally speaking) to breaches of environmental laws and other laws, other than to the extent that the amount of those Claims or Losses are recoverable by BGC as Direct Costs;
(ii)any other amount finally determined to be due from BGC to Cliffs under the Contract, including any breach of Contract; and
(iii)any amount payable under the Contract which Cliffs may otherwise deduct or withhold at Law.[33]
[33] Clause 20.5(a); GB 73.
27.Similarly, BGC may set off or deduct from any amounts due to Cliffs under the Contract:
(i)Claims or Losses which BGC has paid or incurred and which Cliffs is liable to bear under certain specified provisions relating to compliance with Directions given by Cliffs and any Facilities not being fit for purpose;
(ii)any other amount finally determined to be due from Cliffs to BGC under the Contract; and
(iii)any amount payable under the Contract which BGC may otherwise deduct or withhold at Law.[34]
Claim and Loss
28.The words 'Claim' and 'Loss' are defined respectively as follows:
Claim means, in relation to a person, any claim, cause of action, proceeding, liability, suit or demand made against the person concerned, however it arises and whether it is present or future, fixed or unascertained, actual or contingent.
Loss includes any loss, damage, liability, compensation, fine, penalty, charge, payment, cost or expense, however it arises and whether it is present or future, fixed or unascertained, actual or contingent.
[34] Clause 20.5(b); GB 73.
Clause 24 is the principal clause in dispute and, insofar as it is relevant, is set out in full below.
Clause 24
Clause 24.1 provides, relevantly:
Subject to [BGC's] right to recover Direct Costs, [BGC] indemnifies [Cliffs] against, must hold [Cliffs] harmless from, and must pay to [Cliffs] on demand the amount of, any Loss or Claim paid, suffered or incurred by [Cliffs] to the extent it arises directly or indirectly out of any act or omission of [BGC] or [BGC's] Personnel in providing or failing to provide the Mining Services, including any Loss or Claim arising from:
(a)any breach by [BGC] or [BGC's] Personnel of [BGC's] obligations under this [Contract] save to the extent the breach is caused or contributed to by [Cliffs] or any breach of [Cliffs'] obligations under this [Contract];
(b)any breach of any applicable Law, save to the extent the breach is caused or contributed to by [Cliffs] or any breach of [Cliffs'] obligations under this [Contract];
(c)any Environmental Liability, save to the extent where the breach is caused or contributed to by [Cliffs] or any breach of [Cliffs'] obligations under this [Contract];
(d)any OHS Liability;
(e)any damage to any property owned by or under the control of [Cliffs];
(f)any loss, damage or destruction of any records, files and materials provided to [BGC] or [BGC's] Personnel;
(g)[BGC] or any of [BGC's] Personnel acting outside the scope of its authority under this [Contract];
(h)the provision of the Mining Services or any Intellectual Property owned or created by [BGC] infringing any Intellectual Property or other rights of any third party; or
(i)fraud, criminal conduct, breach of trust or fiduciary duty, bad faith, misrepresentation, negligence or wilful misconduct by [BGC] or any of [BGC's] Personnel. (emphasis added)
Clause 24.3 provides, relevantly:
[Cliffs] indemnifies [BGC] against, must hold [BGC] harmless from, and must pay to [BGC] on demand the amount of any Loss or Claim arising out of:
(a)injury to or death of any of [BGC's] Personnel engaged in performing the Mining Services at the Site, paid, suffered or incurred by [BGC] to the extent it arises directly or indirectly out of any wilful misconduct or negligent act or omission of [Cliffs], [Cliffs'] officers, employees, contractors (including Separate Contractors), agents and any other person authorised by [Cliffs] under this [Contract]; or
(b)any Intellectual Property owned or created by [Cliffs] infringing any Intellectual Property or other rights of any third party.
Clause 24.5 provides, relevantly:
(a)Each indemnity given in each of clause 24.1 and 24.3:
(i)is a continuing obligation of the indemnifying party, whether or not legal proceedings are instituted, and despite any settlement of account or the occurrence of any other thing, and survives the termination of this [Contract];
(ii)is an additional, separate and independent obligation of the indemnifying party and no one indemnity limits the generality of any other indemnity;
(iii)applies whether the Loss arises in connection with negligence, misrepresentation, or other cause; and
(iv)includes legal expenses on a full indemnity basis.
(b)[Cliffs] or, as the context requires, [BGC] may recover a payment under the indemnity given in clauses 24.1 and 24.3 respectively, before it makes the payment in respect of which the indemnity is given.
Clause 24.6 provides, relevantly:
Neither party will be liable to the other party in any circumstances for any indirect, special or consequential loss or damage, including loss of revenue, loss of production, loss of product, loss or deferment of opportunity, loss or deferment of contract, loss of profit (whether direct, indirect, anticipated or otherwise, but such loss of profit does not include the Performance Fee), loss or reduction of goodwill, damage to reputation, howsoever arising and whether in an action in contract, tort (including without limitation, negligence), in equity, product liability, under statute, or on any other basis. (emphasis added)
Clause 24.7 provides, relevantly:
Notwithstanding any other provision in this [Contract], [BGC's] maximum aggregate liability to [Cliffs] in respect of all Claims against [BGC] in connection with this [Contract] or the provision of the Mining Services is limited to $300 million, which sum is inclusive of any liability:
(a)to pay liquidated damages;
(b)to indemnify [Cliffs]; or
(c)to pay damages at law including pursuant to any statute or in equity,
provided that this clause does not exclude or limit [BGC's] liability with respect to:
(d)any Claim or Loss arising from:
(i)the wilful misconduct, Gross Negligence, fraud or criminal conduct of [BGC] or [BGC's] personnel;
(ii)the breach of third party Intellectual Property rights; or
(iii)the injury to or death of any person;
(e)the extent that a party receives (or ought to have received) proceeds from any insurance; and
(f)liability which cannot be contracted out of at Law.
The Counterclaim
By its Counterclaim, Cliffs alleges, in summary, that:
1.On 9 November 2016, and on 28 February 2017, 29 May 2017, 19 July 2017 and 24 October 2017, Cliffs notified BGC of Variations to the Principal's Mine Plan without any adjustment to the Fees. The changes provided for the amount of ROM Ore to be crushed, including the amount of Lump and Fines, and the minimum quantities of iron in the Lump and Fines in each of the months for the 2017 calendar year. (The alleged Variations dated 28 February 2017, 29 May 2017, 19 July 2017 and 24 October 2017 will be referred to herein as the '2017 Principal's Mine Plan Variations'.)
2.BGC breached the terms of the Contract requiring BGC to carry out the Mining Services (1) in accordance with the Principal's Mine Plan, (2) in accordance with the Production Schedule and the Operating Plan, and (3) in a commercial and reasonable manner.[35]
3.The breaches involved BGC (1) failing to crush a sufficient quantity of ROM Ore, and (2) failing to crush a sufficient quality of ROM Ore, in each case in compliance with the 2017 Principal's Mine Plan Variations.[36]
[35] Cliffs' amended counterclaim filed 17 May 2019, par 13; BB 151 - 156.
[36] Cliffs' amended counterclaim filed 17 May 2019, par 13; BB 151 - 156.
Paragraphs 14 and 15 of the Counterclaim are in the following terms:[37]
[37] Cliffs' amended counterclaim filed 17 May 2019, pars 14 - 15; BB 156.
14.By reason of the above breaches of the [Contract] by [BGC], Cliffs suffered loss and damage.
Particulars
Loss of profit
a)Cliffs lost the profit, or the opportunity to obtain a profit, from the sale of the additional quantity of Crushed Ore which it would have been able to sell but for the breaches of the [Contract] by [BGC];
b)Further particulars will be provided at trial
…
15.[BGC] is obliged to indemnify Cliffs against, hold Cliffs harmless from, and pay to Cliffs, the amount of the loss and damage pleaded in paragraph 14 above pursuant to [cl 24.1 of the Contract].
The 2017 Principal's Mine Plan Variations were also pleaded by Cliffs in par 46A of its amended defence (defence) to par 73A of BGC's second amended statement of claim (statement of claim). In par 46Al of its defence, Cliffs pleaded (amongst other things) (1) that it had set Target Scores based on the Principal's Mine Plan targets and the Operating Plan in force at the relevant time, (2) the Principal's Mine Plan had been varied in accordance with the 2017 Principal's Mine Plan Variations, and (3) that such variations had been discussed with representatives of BGC at meetings in February, May and July 2017.[38] In its Reply to Amended Defence, BGC pleaded, in response to par 46A(k) of Cliffs' defence, that Cliffs was obliged to consult with BGC in relation to the matters pleaded in pars 73A(a) ‑ 73A(l) of the statement of claim.[39]
[38] Cliffs' amended defence filed 3 May 2019, pars 46Al(A), 46Al(C)(5); BB 125 - 127.
[39] BGC's reply to amended defence filed 4 June 2019, par 9(c); BB 136.
In the original version of the counterclaim filed 1 March 2019, Cliffs also particularised its loss from the pleaded breaches as including 'liability to customers'. Cliffs, in that regard, alleged, in its particulars, that it had 'made payments totalling USD$8,908,723.76 to customers because some of the Crushed Ore that was shipped was not of the quality required by the Principal's Mine Plan as varied from time to time, as set out in the table attached hereto and marked "Table A - Payments to Customers"'. However, that particular was subsequently deleted. It did not form part of the particulars of loss in the Counterclaim before the primary judge on the summary judgment application.
Primary decision
The parties' arguments
In general terms, the parties' arguments were as follows. BGC contended, in effect, that cl 24.6 of the Contract was a 'complete answer' to the whole of Cliffs' Counterclaim because it precluded any liability of BGC for the type of loss, ie, loss of profit or the lost opportunity to earn a profit, claimed by Cliffs in its Counterclaim.[40]
[40] Primary decision [39].
Cliffs said that BGC's construction ignored the effect of cl 24.1 or had the effect of overriding cl 24.1, and required the words 'indirect, special or consequential loss or damage' to be ignored or regarded as having no effect.[41] Cliffs said that if, as BGC contended, cl 24.6 qualified cl 24.1 and 24.3, that would denude cl 24.1(a) of any sphere of operation and fail 'to congruently construe' the Contract as a whole.[42] Cliffs submitted that the proper construction of cl 24.6, within the context of the Contract, having particular regard to cl 24.1 and 24.3, is that, to the extent that cl 24.6 excludes 'direct' loss of profit, that exclusion applies only to loss suffered by BGC.[43] Cliffs contended that this construction is consistent with the words in the parentheses in cl 24.6, referring to the exclusion of loss of the 'Performance Fee' from the type of loss of profit excluded.[44]
Findings relating to the proper construction of cl 24 of the Contract
[41] Primary decision [42].
[42] Primary decision [44].
[43] Primary decision [45].
[44] Primary decision [46].
The judge said that, in addition to the constructions advanced by the parties, a third possible construction of the clause emerged during the course of oral argument. Her Honour said that the words immediately following the words 'indirect, special or consequential loss or damage' in cl 24.6 might arguably be construed ejusdem generis; that is, the words that follow 'including' should be construed to define the class of loss and the damage that is indirect, special or consequential loss.[45]
[45] Primary decision [62].
The judge said that BGC's construction may require the word 'includes' to be read so as to signify that the following words are not categories of indirect, special or consequential loss or damage, but are rather categories of loss or damage in addition to any indirect, special or consequential loss. Her Honour said that whether it is open for the term 'includes' to operate in this manner to exclude the loss and damage pleaded by Cliffs may turn upon the proper characterisation of the nature of the loss of profit and loss of opportunity, and in particular, whether such losses and damage are to be characterised as indirect, special or consequential.[46]
[46] Primary decision [63].
Her Honour said that the meaning of the word 'including' depended upon the context in which it is used. The word 'including' in a definition can be interpreted to be inclusive but not exhaustive if it is intended to enlarge the ordinary meaning of a word or words.[47] Her Honour also noted that the word 'including' can, in some contexts, be interpreted to reduce the ambit of a defined term; that is, to limit a defined term.[48]
[47] Primary decision [64]; citing Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VR 342; (1976) 10 ALR 441, 353 (McInerney J); applied in Hagipantelis v Legal Services Commissioner of New South Wales [2010] NSWCA 79; (2010) 78 NSWLR 82 [20] (Spigelman CJ; Allsop P & Handley AJA agreeing).
[48] Primary decision [65].
The judge found that the word 'including' is used in cl 24.6 to both 'extend the meaning of the word defined beyond its ordinary meaning' and 'to specify as falling within the definition that which might otherwise have been in doubt'.[49]
[49] Primary decision [68].
The parties made submissions on the third possible construction of cl 24.6, however, the judge found that the proper constructional choice to be made remained unclear.[50]
[50] Primary decision [69] - [71].
Her Honour concluded:[51]
Importantly, despite the valiant submissions made by counsel for BGC, as senior counsel for Cliffs also points out none of the constructions considered in argument reconciles all of the operative words of cl 24.1 and cl 24.6.
The problem to be resolved in interpreting cl 24 is that because of the express inclusion of cl 24.1(a), both cl 24.1 and cl 24.6 appear to cover the same 'field' and are open to be each construed broadly. Clause 24.1 does not appear to be confined to Losses and Claims arising out of an action or claim made by a third party. The extent of the subject matter of cl 24.1(a) and cl 24.6 could be said to directly collide. Both prima facie appear to deal squarely with the same subject matter. On one reading of cl 24.1(a) BGC is required to indemnify Cliffs for all loss of profit, whether direct or indirect, arising out of a breach of the [Contract]. On the other hand, cl 24.6 prima facie excludes liability for such losses.
Such a constructional choice should only be resolved in a final hearing on the question.
The argument on this point is proceeded only on the basis of assertions made in the amended counterclaim. There are no facts before the court. The question of what is contemplated by the damage and loss indemnified in cl 24.1 and excluded in cl 24.6 necessarily requires consideration of the context and purpose of the whole of the [Contract] and the pleaded facts.
In the absence of consideration of these matters it is my view that this is not an appropriate case in which to consider, with any finality, the proper construction of cl 24 in a case for summary judgment. (original emphasis)
[51] Primary decision [73] - [77].
Grounds of appeal
Ground 1 alleges that the judge erred in law by failing to engage with and resolve on a summary dismissal basis the constructional question as to whether the loss of profit claim advanced in Cliffs' Counterclaim is barred by reason of cl 24.6 of the Contract. In particular, it is alleged that her Honour erred in her approach in that:
1.There was a failure by Cliffs to identify any contextual matters of fact that could bear upon the constructional question to be resolved.
2.In point of fact, there are no contextual matters of fact that could reasonably impact upon or inform the meaning of cl 24.1 and cl 24.6.
3.At [75] of the primary decision, the judge erred in finding that the question of construction, being the extent to which cl 24.1(a) was subject to or conditional by cl 24.6, could or should only be reserved to a final hearing.
Ground 2 alleges that the judge erred in law by failing to determine that Cliffs' Counterclaim, allegedly pursuant to cl 24.1(a), could not be maintained in light of cl 24.6, given that Cliffs conceded that the only loss it claimed was a loss of profit or anticipated profit.
Ground 3 alleges that the judge erred in law in finding that the costs of the application were Cliffs' in the cause of the Counterclaim. Ground 3 is dealt with separately in [96] ‑ [114] below.
Submissions on leave to appeal
BGC's submissions
BGC submitted that:
1.The primary decision is plainly wrong, or at the very least, attended with requisite doubt to weigh in favour of the court granting leave.[52]
2.It will suffer substantial injustice if leave to appeal is not given, as the judge's decision has serious cost consequences for BGC. In particular, BGC submitted that allowing Cliffs' Counterclaim to proceed would contribute to the interlocutory phases of litigation and would require responsive pleadings, extensive discovery and expert and lay evidence. BGC submitted that the issues raised in the Counterclaim are extensive and will add at least two weeks to the expected time of trial and significant cost.[53] BGC referred in particular to the scope of the pleas that BGC failed to crush a sufficient quantity and quality of ROM Ore for each month during the 2017 calendar year, and that the failures involved breaches of various terms of the Contract.
3.The issues in Cliffs' Counterclaim are quite separate, as a matter of factual substance, from the claims advanced by BGC in the main action such that disposal of the Counterclaim would result in 'real savings' in time and cost.[54]
4.Allowing a clearly contractually‑barred case to proceed would result in a waste of the court's resources and cost to the parties, contrary to the principles of case management in O 1 r 4A and 4B of the Rules.[55]
Cliffs' submissions
[52] Appellant's written submissions, par 16; WB 12.
[53] Appellant's written submissions, par 17(a); WB 12 - 13.
[54] Appellant's written submissions, par 17(b); WB 14.
[55] Appellant's written submissions, par 17(c); WB 14.
Cliffs submitted that the construction advanced by BGC is not plainly correct, and that no substantive injustice will result if an error was made in the primary decision and it is left uncorrected.[56]
[56] Respondent's written submissions, pars 1, 7; WB 29 - 30.
As to the latter matter, Cliffs contended that the judge's decision to leave the issue of the construction of cl 24 to trial will not significantly add to the cost or duration of the trial as there is a significant overlap between BGC's claim and Cliffs' Counterclaim. Cliffs submitted, in this regard, that (1) there will be a consideration of BGC's ability to perform the Mining Services to achieve the Target Scores set in September 2017 for the months of September, October, November and December 2017, and Cliffs' state of knowledge of that capability, and (2) this will include BGC's performance of the Mining Services in the period prior to the changes to the Target Scores, including in the period January 2017 to September 2017, and Cliffs' state of knowledge of that performance.[57]
[57] Respondent's written submissions, par 10; WB 30.
In particular in this context, Cliffs submitted that (1) BGC's claim will involve a consideration of the 2017 Principal's Mine Plan Variations pleaded in the Counterclaim, (2) allegations of fact in the Counterclaim about the quantities and qualities of ore actually crushed will be proved by documentary records, all of which must be discovered in the main proceedings, and (3) even allowing for evidence of the quantification of loss, it is not evident that the Counterclaim would add any significant number of days compared with the likely length of the trial of the main proceedings.[58]
[58] Respondent's written submissions, pars 11 - 13; WB 30 - 31.
Submissions on grounds 1 and 2
BGC's submissions
The structure of BGC's arguments in this appeal was as follows:
1.In relation to ground 1, the judge made an express error of law at [75] of the primary decision when her Honour found that there was no power on a summary judgment application, alternatively, any power was fettered or constrained, to determine in a final and dispositive manner the proper construction of cl 24.6 of the Contract in the face of competing arguments as to its proper construction. In that regard, BGC:[59]
(a)submitted, particularly in light of [17] of the primary decision, that when the judge said at [75] 'Such a constructional choice should only be resolved in a final hearing on the question', the word 'should' is to be understood in the sense of 'must';
(b)eschewed the proposition that on the proper construction of the primary decision, the judge found that Cliffs' arguments as to the merit of the Counterclaim, having regard to the proper construction of cl 24 as a whole, were not so plainly untenable as to warrant summary disposition; and
(c)submitted that whilst a judge need not in every case finally determine a point of construction raised in a summary judgment application, the judge at [75] of the primary decision erroneously 'shut down' the exercise of the power to enter summary judgment once the competing arguments had been identified.[60]
2.Having identified that error, this court should move to ground 2 and conclude that Cliffs' Counterclaim is so untenable that it cannot succeed if it went to trial.[61]
3.Alternatively, even if the judge made no error as alleged under ground 1, an appeal court may, having heard full argument, itself finally determine the proper construction of cl 24. In that regard, ground 2 was also relied on.[62]
[59] Appeal ts 3, 5 - 7, 15 - 18, 20 - 23.
[60] Appeal ts 17.
[61] Appeal ts 21.
[62] Appeal ts 8, 23 - 24.
In relation to ground 1, BGC referred in particular to the following matters:
1.Summary judgment is not confined to cases where the action is so hopeless as not to require argument.[63]
2.This case is distinct from others where the full litigation process is required to determine the complexities of provisions dealing with 'consequential loss' or any other such terms.[64] BGC submitted that the judge was in error at [35] of the primary decision to the extent that she found it necessary to construe the meaning of the term 'consequential loss' in order to resolve BGC's application. BGC submitted that cl 24.6 is clear in setting out the heads of loss which are carved out from the indemnity. The words in parentheses in cl 24.6 (ie, 'whether direct, indirect, anticipated or otherwise …'), coupled with Cliffs' 'concession' that its remaining head of claim in particular 14(a) was confined to loss of profit, rendered it unnecessary for the judge to have regard to considerations of what may or may not amount to consequential loss.[65]
3.Cliffs failed to identify any contextual matters of fact that could bear on the issue of construction of cl 24.6. Accordingly, there is an absence of contextual matters that could reasonably impact upon or inform the meaning of cl 24.1 and cl 24.6 of the Contract.[66]
4.Even if any extrinsic material were identified by Cliffs, the material could not be adduced to contradict the plain meaning of the instrument. BGC submitted that it is difficult to sensibly conceive how surrounding circumstances could assist the construction process in this instance as the intention of the parties is clear on the terms of cl 24 of the Contract. On this basis, BGC submitted that the judge's conclusion at [75] of the primary decision that the 'constructional choice' raised by Cliffs 'should only be resolved in a final hearing on the question' was in error.[67]
5.There is a very narrow factual compass involved in determining the question of construction in the matter which does not go further than the existence of cl 24.6, the terms of cl 24 generally and Cliffs' concession that it seeks to recover lost profits or anticipated profits.[68]
6.Case management considerations support the conclusion that the judge should have exercised her discretion to summarily dispose of Cliffs' counterclaim at the interlocutory stage. BGC submitted that allowing a 'clearly barred' case to proceed is contrary to case management principles because of the resultant waste of the court's resources and cost to the parties.[69]
[63] Appellant's written submissions, pars 21 - 22; WB 15; citing MacMahon Mining Services v Cobar Management [2014] NSWSC 502 [10], [12], [23], [30], [36] (McDougall J); Serventy Commonwealth Bank of Australia [No 2] [2016] WASCA 223 [62].
[64] Appellant's written submissions, par 23; WB 15, referencing as contrasting cases: Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26; (2008) 19 VR 358; SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138; Regional Power Corporation v Pacific Hydro Group Two Pty Ltd [No 2] [2013] WASC 356; (2013) 46 WAR 281.
[65] Appellant's written submissions, pars 23 - 26; WB 15 - 16.
[66] Appellant's written submissions, pars 27 - 28; WB 16 - 17.
[67] Appellant's written submissions, pars 30 - 32; WB 17 - 18.
[68] Appellant's written submissions, par 33; WB 18.
[69] Appellant's written submissions, par 36; WB 19.
In relation to ground 2 - on the question of the proper construction of cl 24.6 - BGC submitted, in effect, that:[70]
1.Clause 24 contains seven subclauses which give rise to an overall scheme.
2.Clause 24.1 and cl 24.2 deal with indemnities given by BGC in favour of Cliffs.
3.Within the scheme of cl 24, the role and operation of cl 24.6 is unambiguous. It operates as a 'bilateral carve‑out' and is placed amongst the clauses of limitation within cl 24. Its language is wide and should not be construed narrowly or artificially. The exclusion of liability in an exclusion clause may still apply even if the event excluded may defeat the main object of the Contract.[71] Clause 24.1 is, on the other hand, a broad, general indemnity which extends beyond both the parties to the Contract and its operation is objectively intended to be subject to the exclusionary operation of cl 24.6. On BGC's construction, cl 24.6 in particular and cl 24 more generally, are free to operate in the context of the parties' agreed risk allocation scheme. BGC's construction ensures the congruent operation of the various components as a whole. BGC contended that, by comparison, if Cliffs' interpretation of cl 24.6 were accepted, and cl 24.6 was qualified (and hence subsumed) by cl 24.1 rather than operating as an exclusion to it, cl 24.6 would cease to be mutual and would operate only for the benefit of Cliffs.
4.While each of the types of losses specified in cl 24.6 following the word 'including' would typically, in any event, be considered as 'indirect, special or consequential loss', in order to avoid any doubt, the parties have also specifically provided that the specified losses are excluded. Also, in respect of loss of profit, the parties took the extra step of expressly stating that loss of profit was excluded, 'whether direct, indirect, anticipated or otherwise', other than the BGC's Performance Fee.
5.The word 'including' in cl 24.6 supports its construction of cl 24. BGC referred to cl 1.2(b)(v) of the Contract which provides that, 'If an example is given of anything (including a right, obligation or concept), such as by saying it includes something else, the example does not limit the scope of that thing'. BGC also submitted that the word 'including' is used in cl 24.6 both to extend the meaning of 'indirect, special or consequential loss and damage' beyond its ordinary meaning, and 'to specify as falling within the definition that which might otherwise have been in doubt'.[72] BGC says that to construe the provision in this manner removes any 'tension' within cl 24. It also gives a meaning to both the listed defined losses (which would be redundant otherwise) and to the words in parenthesis 'whether direct, indirect, anticipated or otherwise' by which the parties were at pains to put it beyond doubt that the excluded 'loss of profit' extends to loss of profit of any kind other than BGC's Performance Fee.
6.Any failure by BGC to supply Crushed Ore in the quantities and with the quality specified under the Mining Plan may result in the diminution or non‑payment of the Performance Fee, but that was the only contractual consequence for BGC in light of the operation of cl 24.6.[73]
[70] Appellant's written submissions, pars 39 - 46; WB 20 - 22.
[71] Reference is made to AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140 [326] ‑ [327].
[72] Reference is made to primary decision [68].
[73] Appeal ts 33.
The implication of the last‑mentioned submission appeared to be that cl 24.6 could be interpreted in the manner advanced by BGC because the result would be that BGC would (only) be left with its entitlement to Direct Costs as part of a risk allocation scheme under the Contract.
Cliffs' submissions
Cliffs submitted that ground 1 is incorrectly premised on (1) BGC's construction of cl 24 being 'clearly correct' and (2) the proposition that the hearing of the Counterclaim would take additional weeks at trial.[74] Cliffs submitted that it is not enough for BGC to contend that it was open to the judge to grant summary judgment.[75] Cliffs submitted that each suggested construction of the Contract is contestable and thus, it was open to the judge to take the course of action that she did.[76]
[74] Respondent's written submissions, par 5; WB 29.
[75] Respondent's written submissions, par 14; WB 31.
[76] Respondent's written submissions, par 15; WB 31.
In relation to the proper construction of cl 24, Cliffs' submissions, broadly speaking, reflected the arguments advanced on its behalf before the primary judge. In particular, Cliffs submitted that:
1.It is central to BGC's proposed construction that cl 24.6 prevails over cl 24.1, however, that would essentially reduce the indemnity provided by BGC to Cliffs in cl 24.1 'to naught', and would 'denude cl 24.1(a) of any sphere of operation'. It would mean that BGC's promise to perform the Mining Services in accordance with the Principal's Mine Plan would be robbed of its essential contractual force, in that any non‑performance of the Mining Services in accordance with the Principal's Mine Plan would, presumably, always cause a loss of production, loss of revenue and loss of profit.[77]
[77] Respondent's written submissions, pars 21 - 23; WB 33.
2.BGC fails to explain why the specific express words of cl 24.1 should not be read over the more broad and general words in cl 24.6.[78]
[78] Respondent's written submissions, par 24; WB 33.
3.To the extent that cl 24.6 excludes 'direct' loss of profit, the exclusion effectively only applies to the loss suffered by BGC. That is because, under cl 24.1, BGC has expressly indemnified Cliffs against any or all loss arising either directly or indirectly from a breach by BGC in providing or failing to provide the Mining Services, yet, under cl 24.3, Cliffs has not given such an indemnity.[79] Cliffs submitted that while this construction would appear to give rise to a conflict with cl 24.6, this conflict may be resolved by reading cl 24.6 as a limit on a party's liability 'except as otherwise expressly provided for' in the Contract.[80] Cliffs submitted that such an interpretation is consistent with the context in which the Contract is to be performed - a matter on which evidence would be led at trial.[81]
[79] Respondent's written submissions, par 25; WB 33 - 34.
[80] Respondent's written submissions, par 27; WB 34.
[81] Respondent's written submissions, par 28; WB 34.
4.The illustrative list of 'indirect, special or consequential loss or damage' in cl 24.6 excludes BGC's Performance Fee. This shows that, despite the opening words of cl 24.6 ('Neither party will be liable'), there is an absence of mutuality in cl 24.6.[82]
5.The operative part of cl 24.6 is the phrase 'indirect, special or consequential loss or damage'. These words have no fixed legal meaning and must be construed in the particular context of the Contract, including the surrounding circumstances. In this case, the court will be required to characterise and construe that phrase.[83]
6.BGC's observations that the term 'including' may be used to extend the meaning of 'indirect, special or consequential loss and damage' or may be used to specify that each of the listed types of loss or damage fall within the definition of 'indirect, special or consequential loss and damage', do not resolve the constructional choice.[84]
7.There are 'constructional issues' within cl 24.6 which make it an inappropriate case for summary dismissal, in that:[85]
(a)the exclusion of 'direct' loss of profit in cl 24.6 must be reconciled with the absence of the adjective 'direct' before, for example, loss of revenue;
(b)the loss of revenue example is qualified only by the preceding words 'indirect, special or consequential';
(c)profit is revenue less expenses;
(d)the only way of reconciling the exclusion of 'direct' loss of profit with the non‑exclusion of 'direct' loss of revenue is to construe the exclusion of 'direct' loss of profit as applying only where the loss of profit is caused by an increase in expenses, rather than a (direct) loss of revenue; and
(e)Cliffs' loss and damage claimed in the Counterclaim is for a loss of profit caused by a direct loss of revenue (and a direct loss of production), not by an increase in expenses, and it is far from clear, in the context of cl 24.1, why such a claim would be excluded by cl 24.6.
[82] Respondent's written submissions, pars 29 - 31; WB 34.
[83] Respondent's written submissions, par 32; WB 34 - 35. Reference is made to Regional Power [88] ‑ [96]; SMEC [23].
[84] Respondent's written submissions, par 33; WB 35.
[85] Respondent's written submissions, pars 34 - 35; WB 35.
Summary judgment - rules and principles
The rules of court
Order 14 r 1 of the Rules of the Supreme Court 1971 (WA) (Rules) provides, in effect, for a plaintiff to seek summary judgment on the statement of claim against a defendant. Order 14 r 6 provides, in effect, that a defendant may seek summary judgment against a plaintiff on the defendant's counterclaim against the plaintiff. Order 14 r 6 is, in general terms, the counterpart to O 14 r 1 in a context where the defendant is effectively the plaintiff by counterclaim.
Order 16 r 1 of the Rules deals with an application for summary judgment by a defendant. It provides, relevantly:
1.Application by defendant for summary judgment
(1)Any defendant to an action may within 21 days after appearance or at any later time by leave of the Court, apply to the Court for summary judgment, and the Court, if satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily or without pleadings, may order -
(a)that judgment be entered for the defendant with or without costs; or
(b)that the plaintiff shall proceed to trial without pleadings,
or if all parties consent, may dispose of the action finally and without appeal in a summary manner. (emphasis added)
Order 16 does not have a provision expressly directed to the situation where a plaintiff in an action seeks summary judgment against a defendant on the defendant's counterclaim against the plaintiff. In WA Country Builders Pty Ltd v Premium Coastal Property Pty Ltd,[86] Master Sanderson referred to the provisions of O 14 and O 16, and considered that, although the Rules made no express provision for such an application, the court has the power in its inherent jurisdiction to grant summary judgment to a plaintiff on a defendant's counterclaim.[87] In Knights Capital Group Ltd v Bajada and Associates Pty Ltd,[88] Pritchard J said that it is 'open' to a plaintiff to apply for summary judgment on the defendant's counterclaim pursuant to O 16 r 1.
[86] WA Country Builders Pty Ltd v Premium Coastal Property Pty Ltd [2012] WASC 236 [1] ‑ [10].
[87] WA Country Builders [1] ‑ [10]; Helmers v Como [2014] WASC 394 [43].
[88] Knights Capital Group Ltd v Bajada and Associates Pty Ltd [2016] WASC 69 [39]; see also Westpac Banking Corporation v Anderson [2017] WASC 106 [50] (Pritchard J); compare Frigger v Kitay [No 12] [2016] WASC 241 [13].
In this appeal, the judge in the primary decision, in effect, approached the matter on the basis (without dispute by the parties in this appeal) that the power to grant summary judgment was to be exercised in the manner provided for under O 16.[89] That approach was correct, whether it is grounded on the proper construction of O 16 (as Pritchard J apparently concluded in Knights Capital) or in the court's inherent jurisdiction (as Master Sanderson concluded in WA Country Builders). In other words, the power to grant summary judgment on BGC's application for summary judgment required the court to be 'satisfied' that Cliffs' Counterclaim was 'frivolous or vexatious', that Cliffs had 'a good defence on the merits' or that the Counterclaim 'should be disposed of summarily'.
[89] Primary decision [14].
Order 20 r 19(1) of the Rules provides:
19.Striking out pleadings etc.
(1)The Court may at any stage of the proceedings, subject to subrule (3), order to be struck out or amended any pleading, or the indorsement of any writ in the action, or anything in any pleading or in the indorsement on the ground that -
(a)it discloses no reasonable cause of action or defence, as the case may be; or
(b)it is scandalous, frivolous or vexatious; or
(c)it may prejudice, embarrass or delay the fair trial of the action; or
(d)it is otherwise an abuse of the process of the Court,
and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.
Insofar as BGC relied on O 19 r 1(a), (b) and (d), those provisions added nothing of substance to the summary judgment application.[90]
The principles to be applied
[90] Compare Forsayth NL v Northern Gold NL (Unreported, WASC Full Court, 20 January 1994) (Franklyn J, Wallwork J agreeing).
A decision by a judge managing a case to the effect that summary judgment should be refused and the parties proceed to trial is an interlocutory order of a procedural character.[91] A tight rein must be kept on interference with interlocutory orders of practice and procedure made by judges at first instance.[92] That is particularly so in cases where the order involves a matter of practice and procedure in a judge's CMC list.[93]
[91] Silbert v Steinberg [2010] WASCA 113 [2], [5].
[92] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 and In re the Will of F B Gilbert (Dec) (1946) 46 SR (NSW) 318, 323.
[93] Silbert [5].
In seeking leave, ordinarily the appellant must show that the original decision was wrong, or at least attended by sufficient doubt to justify the grant of leave, and that substantial injustice would be done if the decision was not reversed. Ultimately, however, leave may be granted whenever the interests of justice require it.[94]
[94] SMEC [13].
As this court has previously observed,[95] it is something of an anomaly that in a case such as the present an avenue of appeal lies at all. Where an application for summary judgment by a plaintiff under O 14 of the Rules is refused, and the defendant is given unconditional leave to defend, no avenue of appeal is available to the plaintiff: s 60(1)(b) of the Supreme Court Act 1935 (WA). In such a case, the rights of the parties are left to be determined at trial. It is not obvious why a different approach is taken in respect of an application for summary judgment by a defendant under O 16. In any event, the fact that an appeal concerns the refusal of an application for summary judgment informs the approach taken by the court to the grant of leave.
[95] SMEC [14].
In Dey v Victorian Railways Commissioners,[96] Dixon J said that '[a] case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury'. In General Steel Industries Inc v Commissioner for Railways (NSW) and Ors,[97] Barwick CJ stated that the jurisdiction to terminate an action '… is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion' (emphasis added).
[96] Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91.
[97] General Steel Industries Inc v Commissioner for Railways (NSW) and Ors [1964] HCA 69; (1964) 112 CLR 125, 129.
Both of those authorities dealt with the exercise of a power of summary dismissal of a plaintiff's claim. Nevertheless, in Theseus Exploration NL v Foyster,[98] which concerned an application for summary judgment, Barwick CJ said:[99]
Perhaps the summary intervention to prevent the continuance of a plaintiff’s action ought to be much rarer than the giving of summary judgment but there is sufficient correspondence in the two situations to make apposite to this case much of what I said in General Steel Industries v Commissioner for Railways (NSW)[.]
[98] Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507.
[99] Theseus (514).
Theseus was a case in which the plaintiff company sued on a contract under which the defendant agreed to apply for 20 cent shares in the company on the basis that 5 cents would be payable on application and 15 cents would be payable on the company's listing. The company was listed and the plaintiff sued for the 15 cents tranche of the consideration. The defendant alleged that the claim was prevented by s 320 of the Companies Act 1961 ‑ 1964 (Qld). The plaintiff brought a summary judgment application. There was no issue of fact to be tried. The application was dismissed by the primary judge without reasons, although Barwick CJ considered it 'evident that the judge was satisfied that there was a question in dispute with respect to the [plaintiff's] claim which ought to be tried'.[100] The High Court found, in effect, that the defendant's defence had no validity.
[100] Theseus (513).
Barwick CJ said:[101]
Although I have reached a clear conclusion as to the lack of validity in the [defendant's] submission that the [plaintiff] was unable to recover the amount claimed, I would not be prepared to hold that the judge erred in the course he took. Equally, however, I would not have thought him in error if he had granted the [plaintiff's] application for summary judgment. The case was one which, in my opinion, could have been disposed of upon legal argument upon the application. But it was for the judge to be satisfied that there was a matter to be tried. Whilst there were no facts to be decided, it was open to the judge, in my opinion, to take the view that the extent and complexity of the matters of law and of argument thereon warranted a hearing.
However, we have now heard a full argument on the substance of the matter from both [plaintiff] and [defendant]. I am convinced that the suggested defence fails and that the [plaintiff] is entitled to judgment in the action. Thus, although I would not hold the dismissal of the summons for summary judgment to be erroneous, I would allow the appeal and now grant that application.
[101] Theseus (514).
Gibbs J said:[102]
No doubt the remarks in [earlier] cases were not intended to preclude the exercise of some discretion by a judge to whom application for summary judgment is made in deciding whether the question of law raised is so difficult that it ought not to be decided summarily, and no doubt also sometimes some explanation or reference to authorities will be necessary to enable a judge to decide whether a question is really unarguable. However, in the present case the questions were serious and disputable and, assuming that the learned primary judge had a discretion, it was entirely proper for him to decline to dispose of them in chambers.
Logically it should follow that the appeal should be dismissed. However, we have heard full argument on the questions upon which the fate of the action depends and have reached the conclusion that the defence raised by the [defendant] must fail. No fact is in dispute. It has not been suggested that there is any other matter on which argument could usefully be advanced. If the action is sent to trial the court will be bound to apply our statement of the law and the [plaintiff] must succeed. In these circumstances it would be absurd to give the [defendant] leave to defend the action. Justice therefore requires us to take the anomalous course of allowing an appeal from a judgment which was correct; but in the circumstances it would not in my opinion be right to allow the [plaintiff] the costs of the appeal.
[102] Theseus (515).
The general principles in relation to the grant of summary judgment were recently stated by this court in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd:[103]
Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46]; Spencer v The Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 [24], [53] - [55].
[103] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24]; see also Monadelphous KT Pty Ltd v Transalta Energy (Australia) Pty Ltd [2017] WASCA 176 [116].
In the present context (see [40] above), BGC was required to show at first instance that by virtue of cl 24.6 of the Contract (1) BGC had a good defence on the merits, (2) the Counterclaim was frivolous or vexatious, or (3) the Counterclaim should be disposed of summarily. In substance, each of those three characterisations amounts (in this context) to the same thing - that the Counterclaim is so clearly untenable that it could not possibly succeed at a trial in the ordinary way.[104]
[104] Shilkin v Taylor [2011] WASCA 255 [29].
The determination of a summary judgment application at first instance ultimately involves an assessment by the judge of the claim's prospects of success if it went to a trial in the ordinary way.[105] The assessment no doubt has an evaluative character to it, but it is doubtful that it can be strictly described as a discretionary decision.[106]
[105] Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401 [40]; see also Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 [46].
[106] Compare Astor Theatre WA Pty Ltd v Zimmerman Investments Pty Ltd [2014] WASC 329 [26].
The question of whether a claim is so untenable that it cannot possibly succeed may require extensive argument. Summary judgment is not confined to cases where it is 'so to speak apparent at a glance' that the claim is untenable.[107]
[107] General Steel (129).
Where a judge dealing with a summary judgment application at first instance concludes that it cannot be said that the claim is so clearly untenable that it could not possibly succeed if it went to trial, having regard to the complex or serious points of law involved, there is (ordinarily at least) no error in dismissing the application for summary judgment on that account.[108]
[108] Theseus (514 - 515); SMEC [20]; Monadelphous [116]; Aquatec‑Maxcon Pty Ltd v Minson Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16 [59]; Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1 [36].
An appellant alleging error in that context must show that the primary judge erred by demonstrating that, on the materials and arguments presented to the primary judge, the result is so clear that there remains no real question to be tried.[109]
[109] Theseus (514); Love v Geelong Building Society (in liq) [1995] 2 VR 112, 114.
However, even if error in that regard is not demonstrated, a court hearing the appeal may, upon hearing 'full' argument,[110] 'go beyond'[111] identifying a serious issue for trial and conclude the point of law in dispute and allow the appeal. In that event, the court acts upon the basis that 'justice requires [the court] to take the anomalous course of allowing an appeal from a judgment which was correct'.[112] In other words, the identification and recognition of a serious or complex legal issue does not deprive the appellate court of the power to determine finally the issue and grant summary judgment.[113]
[110] In the sense of a detailed, comprehensive and complete argument by which the parties have provided the necessary assistance to enable the court to reach a definite and certain conclusion: General Steel (129).
[111] Love (114).
[112] Theseus (515); Casella [36].
[113] Rock Bottom Fashion Market Pty Ltd (in liq) v HR & CE Griffiths Pty Ltd [1998] QCA 033; (1998) Q ConvR 54‑505, at 60,064.
Disposition - grounds 1 and 2
BGC's construction of [75] of the primary decision is incorrect. The judge recognised, correctly, that there was a decision for her to make - whether it was appropriate to determine the question of law involved in finally determining the proper construction of cl 24.6.[114] When the primary decision is read as a whole,[115] the judge was saying that there were a number of constructional choices which were fairly available as to the proper construction of cl 24.6 and that accordingly, she was not satisfied that Cliffs' suggested construction was so clearly untenable that it could not possibly succeed at trial.
[114] Primary decision [17], [73], [77].
[115] Including primary decision [17], the heading to [27] of the primary decision and [42], [62], [73], [77].
Accordingly, ground 1 has no merit and, having regard to the structure of BGC's argument referred to in [31] above, it is on that account unnecessary to move to ground 2.
Further, leave to appeal should be refused, having regard to two considerations.
First, as just explained, ground 1 fails, with the consequence that ground 2 is not reached. Thus, the primary decision is not attended with sufficient doubt to sustain the grant of leave.
Secondly, it is evident that there is at least a not insignificant degree of overlap between the matters pleaded in the Counterclaim and BGC's statement of claim (see [14] above). Essentially for the reasons advanced by Cliffs referred to at [30] above, I am not persuaded that substantial injustice would be done if the decision of the primary judge were left unreversed. It would appear that BGC's contention in this appeal that if the Counterclaim were allowed to proceed, a further two weeks would be added to the trial, was not a submission put to the primary judge (who may have been in a better position than this court to evaluate its correctness having regard to her case management role) and its basis was not adequately explained by BGC in this appeal. It was open to BGC to apply for an order that there be a preliminary issue. No reason was advanced for not taking that course. Moreover, the conclusion that leave should be refused is reinforced when regard is had to the anomalous nature of the appeal from the refusal of a summary judgment sought by a defendant - see [45] above.
The conclusion that leave to appeal should be refused is confirmed by, but not dependent upon, the following further considerations in [64] ‑ [65] below.
In response to questions from the Bench, senior counsel for BGC contended that the words 'loss of profits' and/or 'loss of revenue' in cl 24.6 would also comprehend a claim by Cliffs for the difference between (1) the market value of Crushed Ore in the quantities and with the qualities required under the Mining Plan, and (2) the market value of the Crushed Ore actually produced.[116] However, it is not clear, at least without the benefit of further argument, that a claim of this kind would be comprehended specifically by the terms 'loss of profit' or 'loss of revenue' in cl 24.6 or, more generally, by the phrase 'indirect, special or consequential loss or damage' in cl 24.6.[117]
[116] Appeal ts 33 - 34, 37 - 38.
[117] See the discussion in H McGregor, McGregor on Damages (17th ed) [1‑035] - [1-036].
At this stage in the litigation, the material facts pleaded by Cliffs' Counterclaim are (1) by reason of the alleged breaches in the Counterclaim 'Cliffs suffered loss and damage' (par 14), and (2) Cliffs is entitled to an indemnity in respect of such loss and damage pursuant to cl 24.1 of the Contract (par 15). Even if the claim for lost profits under particular (a) of par 14 were untenable, it does not follow that the Counterclaim itself pleads an untenable cause of action.[118]
[118] Cliffs' 'concession' on which BGC has relied (see [32.2] above) was merely to the effect that particular (a) to par 14 could be characterised as a 'loss of profit' or loss of 'anticipated profit' as a head of damage.
Consequently, subject to BGC's invitation to this court to determine the construction of cl 24.6 notwithstanding the absence of error by the primary judge, grounds 1 and 2 do not sustain the grant of leave to appeal.
In my opinion, in circumstances where the judge managing the case in the CMC list has found, without error, that summary judgment is not appropriate, and where the appellant has failed to demonstrate substantial injustice in leaving the primary decision unreversed, this court should be cautious before taking up such an invitation. In such circumstances, bearing in mind the anomalous nature of the approach identified in Theseus and the anomalous nature of the availability of a defendant's right to appeal against the refusal of a summary judgment application, this court would rarely do so.
In any event, for the reasons explained below, on the arguments presented in the appeal, it is not appropriate for this court to finally determine the proper construction of cl 24.
In order to explain that conclusion, it is necessary to outline some preliminary observations on the operation of cl 24. The observations are preliminary in the sense that they outline, in a provisional and tentative way, matters arguably arising from the express terms and potentially relevant to the ultimate construction of cl 24, and do not in any way reflect concluded views on the meaning, scope and operation of cl 24.
Before turning to the provisions of cl 24, it is convenient to recall some of the underlying contractual principles in the context of which the Contract was arguably drawn and form part of the background against which it was arguably intended to operate.
Principles
The general rule at common law is that where a plaintiff sustains a loss by reason of a breach of contract, a plaintiff is entitled to be placed in the same situation with respect to damages, so far as money can do it, as if the contract had been performed.[119]
[119] Robinson v Harman (1848) 1 Ex 850, 855; European Bank Ltd v Evans [2010] HCA 6; (2010) 240 CLR 432 [11]; Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 80.
The award of damages for breach of contract protects a plaintiff's expectation of receiving a defendant's performance. The onus of proving damages sustained lies on a plaintiff, and the amount of damages awarded will be commensurate with a plaintiff's expectation, objectively determined, rather than subjectively ascertained.[120]
[120] Amann (80).
Beyond nominal damages for breach of contract, this generally involves two steps: first, proof that the loss suffered results from, or is caused by, the breach and secondly, that the loss is not too remote.[121]
[121] Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd [1968] HCA 64; (1968) 120 CLR 516, 523; Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 [22].
The common law rule as to remoteness of damage does not detract from the general principle that a plaintiff is entitled to be placed in the same position with respect to damages, as far as money can do it, as if the contract had been performed. Rather, the rule of remoteness, traditionally expressed in the Exchequer decision of Hadley v Baxendale,[122] is 'a limit on, rather than a ground of, liability'.[123] The common law rule of remoteness is an exclusionary rule which marks out the boundary of the liability for loss or damage caused by breach of contract.[124]
[122] Hadley v Baxendale (1854) 9 Ex 341; Wenham v Ella [1972] HCA 43; (1972) 127 CLR 454, 471.
[123] Evans [12].
[124] Evans [12].
The operation of the common law rules of causation and remoteness otherwise applicable to claims for breach of contract may be altered by express agreement between the parties in their contract.[125] In construction contracts, indemnities may also be used to confer advantages with respect to limitation periods - eg, by postponing the date of accrual of the cause of action from the date of breach to the date of the occurrence of the damage, claim, loss or expense.[126]
Clause 24.1
[125] See, eg, State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR 434, 454 ‑ 456, 462; N Dennys & R Clay, Hudson's Building and Engineering Contracts (13th ed, 2015) [10-022].
[126] Hudson's Building and Engineering Contracts [10‑022].
Clause 24.1 is expressly subject to BGC's right to recover Direct Costs. It contains no other express qualification. The express reservation with respect to Direct Costs may arguably have a bearing upon BGC's submission referred to in [33.6] ‑ [34] above.
By cl 24.1, BGC agrees to (1) indemnify Cliffs against, (2) hold Cliffs harmless from, and (3) pay Cliffs on demand 'any Loss … to the extent that [the Loss] arises directly or indirectly out of any act or omission of [BGC] including any Loss … arising from' the matters enumerated in subclauses (a) ‑ (i) of cl 24.1. These three elements are arguably substantially the same and overlapping - an 'indemnity', at least in its widest sense, includes a contract obliging one person to make good the loss suffered by another.[127]
[127] Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269 [7].
The word 'Loss' is defined to include 'any loss, damage, liability, compensation, fine, penalty, charge, payment, cost or expense' (1) 'however it arises', and (2) 'whether it is present or future, fixed or unascertained, actual or contingent'. In the second of those aspects, the definition of 'Loss' refers to the conventional ways in which losses may be characterised by the law - (1) present or future, (2) fixed or ascertained, and (3) actual or contingent.
The enumerated matters to which the indemnity in cl 24.1 applies are, at least in general terms, 'any Loss' to the extent that it arises directly or indirectly from any act or omission by BGC in providing or failing to provide the Mining Services arising from (1) any breach of Contract by BGC (cl 24.1(a)), and (2) the specified matters in cl 24.1(b) ‑ (i). The words 'any Loss' in this context are arguably (as BGC appeared to accept) wide enough to include the loss or damage to which cl 24.6 refers, relevantly, to 'loss of profit'.
The specified matters in cl 24.1(b) ‑ (i) to which the cl 24.1 indemnity applies are, in general terms:
1.Any breach of an applicable Law (save to the extent that the breach is caused or contributed to by a breach of the Contract by Cliffs).[128]
2.Any 'Environmental Liability' (save to the extent that the breach is caused or contributed to by a breach of the Contract by Cliffs).[129] This includes any breach by BGC of cl 5 of the Contract, and any loss incurred by Cliffs in relation to non‑compliance with Environmental Laws, including in relation to investigation and remedial work, claims by a third party in tort, and compensation, fines and penalties.[130]
3.Any OHS Liability.[131] This includes any breach by BGC of cl 4 of the Contract and any loss incurred by Cliffs in relation to non‑compliance with Health and Safety Laws, including any claim in tort by a third party in respect of such non‑compliance, any requirement to pay compensation, any fine or penalty imposed in relation to such non‑compliance, and any accident, death, disease or injury arising as a result of any non‑compliance.[132]
4.Any damage to property owned by or under the control of Cliffs.[133]
5.Any loss, damage or destruction of any files or records provided to BGC.[134]
6.BGC or its personnel acting outside the scope of their authority under the Contract[135] - in relation to which, presumably, Cliffs might otherwise be liable to third parties under the doctrine of ostensible authority.
7.BGC's infringement, in the provision of the Mining Services, of any intellectual property rights of any third party.[136]
8.Fraud, criminal conduct, breach of trust or fiduciary duty, bad faith, misrepresentation, negligence or wilful misconduct by BGC.[137]
[128] Clause 24.1(b); GB 80.
[129] Clause 24.1(c); GB 80.
[130] Definition of 'Environmental Liability' in cl 1.1 and cl 5.1(a); GB 25, 45.
[131] Clause 24.1(d); GB 80.
[132] Definition of 'OHS Liability' in cl 1.1 and cl 4; GB 10, 39 - 44.
[133] Clause 24.1(e); GB 80.
[134] Clause 24.1(f); GB 80.
[135] Clause 24.1(g); GB 80.
[136] Clause 24.1(h); GB 80.
[137] Clause 24.1(i); GB 80.
It appears that the matters enumerated in subclauses (a) ‑ (i) of cl 24.1 are, at least in some cases and to some extent, overlapping. For example, the definition of 'OHS Liability' includes a breach of cl 4 of the Contract and, accordingly, the indemnity in respect of that matter in cl 24.1(d) would also arguably be caught by the indemnity for breach of the Contract under cl 24.1(a). Nevertheless, insofar as the matters in cl 24.1(b) ‑ (i) are not otherwise the subject of express contractual obligations by BGC to which cl 24.1(a) applies, the indemnity in cl 24.1 appears to provide Cliffs with rights not otherwise provided for under the Contract. Neither party sought to explain whether the heads of damage falling within the indemnities in cl 24.1(b) ‑ (i) might arguably include 'any indirect, special or consequential loss or damage … including loss of profit' within the meaning of cl 24.6 and, if so, the consequences of that for the proper construction of cl 24.1 and cl 24.6.
Insofar as the indemnity in cl 24.1 applies to breaches of the Contract by BGC via cl 24.1(a), its purpose might arguably be to provide Cliffs with express contractual rights intended to augment, but not derogate from,[138] Cliffs' common law rights for breach of contract.[139] Again, neither party sought to explain the effect of cl 24.1(a) on Cliffs' common law rights and, in that context, the proper construction of cl 24.1 read with cl 24.6.
Clause 24.3
[138] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693 [23]; Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117, 135.
[139] Clause 34.6(c) provides (amongst other things) that the exercise of any right does not prevent the exercise of any other right, and cl 34.7(c) provides for severance of any provision which is unenforceable.
Clause 24.3 deals with Cliffs' agreement to indemnify BGC. It relates, relevantly, to 'any Loss', ie, any 'loss, damage, liability, compensation, fine, penalty, charge, payment, cost or expense however it arises … ' in respect of two specified matters. The two matters appear to some extent to be equivalent to the last two matters in the list in cl 24.1, ie, the matters in cl 24.1(h) and (i), although the counterpart of cl 24.1(i) is significantly narrower in scope. The two matters are:
1.Injury or death to BGC's personnel engaged in performing Mining Services at the Site, to the extent that the injury or death arises directly or indirectly out of any wilful misconduct or negligence by Cliffs.
2.Cliffs' infringement of third parties' intellectual property rights.
Clause 24.3 appears to have no counterpart to cl 24.1(a) in relation to an indemnity for breaches of the Contract. Accordingly, arguably recovery by BGC for any breach of the Contract by Cliffs would be subject to the limitations derived from the common law rules including causation and remoteness of damage.
There was no explanation by the parties in their submissions as to whether the loss recoverable under the indemnities in cl 24.3 might include heads of damage within the scope of the wording of cl 24.6 and, if so, the consequences of that for the proper construction of cl 24.6 and cl 24 read as a whole.
Clause 24.5
Clause 24.5(a) is arguably a provision interpretive of the scope and operation of cl 24.1 and cl 24.3. It provides that each of the enumerated indemnities under cl 24.1 and cl 24.3 is a continuing obligation, that no one enumerated indemnity limits the generality of any other, that each enumerated indemnity applies whether the Loss arises in connection with negligence, misrepresentation or other cause, and the indemnity includes legal expenses. Clause 24.5(b) provides that a party may recover payment under the indemnity given in cl 24.1 and cl 24.3 before it makes the payment in respect of which the indemnity is given. Clause 24.5, in each of its parts, is consistent with cl 24.6 dealing comprehensively with the subject matter to which it refers.
Clause 24.6
Clause 24.6 appears to be intended to have mutual operative effect insofar as it applies to both parties ('Neither party …'). Also, it deals with the liability of one party to the other 'in any circumstances'. The intended scope of that expression was an issue in this appeal.[140]
[140] Appeal ts 45.
The subject matter of cl 24.6 is 'any indirect, special or consequential loss or damage including … [the specified matters]'. Whether and to what extent the italicised words control or influence the construction of the words following the word 'including' was also an issue in the appeal.[141]
[141] Appellant's written submissions, pars 45 - 46; WB 21 - 22; appeal ts 27 - 28.
The exclusion of the loss with which cl 24.6 deals applies 'howsoever arising', including 'in an action in contract'.
Further, the parties arguably treated the general exclusion in cl 24.6 as potentially applying to BGC's entitlement to earn the Performance Fee (which arguably might include 'profit' in its ordinary meaning[142]), unless that matter were expressly exempted from the operation of cl 24.6.
Clause 24.7
[142] Amann (81). Before the primary judge, BGC submitted, in effect, that the Performance Fee incorporated its profit: hearing 24/05/19, ts 12; on appeal BGC submitted that BGC does not 'get profit' under the Contract: appeal ts 25.
Clause 24.7 is the final subclause in cl 24. It starts with the words 'Notwithstanding any other provision'. It puts a cap on BGC's maximum aggregate of liability in specified circumstances, including arguably with respect to the liability under cl 24.1(a).[143]
Issues arguably relevant to construction
[143] See cl 24.7(b); GB 81.
The following related questions (at least) arguably arise for consideration on the question of the proper construction of cl 24:
1.The general question of which is the leading provision and which is the subordinate provision as between cl 24.1 and cl 24.6, ie, whether cl 24.6 should be read as commencing with the words 'Notwithstanding any other provision' (as cl 24.7 does) or the words 'Subject to the foregoing'.[144]
2.Whether cl 24.6, insofar as it applies to 'an action in contract', is intended to apply only to claims for damages for breach of the Contract by either party under the common law or whether it also applies to claims enforceable under the contractual indemnities in cl 24.1 and cl 24.3.
3.Whether the liabilities for which the parties are directly liable under the contractual indemnities in cl 24.1 and cl 24.3 respectively are properly characterised for the purposes of cl 24.6 as liabilities for 'indirect, special or consequential loss or damage …' and, if not, the purpose (objectively ascertained) of treating lost profits as irrecoverable under cl 24.6 despite the liability not being (on the present assumption) of the character of a liability for 'indirect, special or consequential loss or damage'.
[144] Compare, in a statutory context, Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, 382.
The answers to these questions would require not just a consideration of the terms of cl 24, but a consideration of cl 24 in the context of the operation of the Contract as a whole. In this appeal, neither parties' written submissions made any direct reference to the broader contractual context. In oral submissions, BGC made only relatively fleeting reference to the other terms of the Contract in which cl 24 is set.[145] Also, subject to one exception, the parties made no attempt, or at least no real attempt, to construe the Contract with a view to demonstrating the commercial objects sought to be achieved by cl 24 within the context of the Contract as a whole, or to demonstrate which construction produced the most 'businesslike' interpretation.[146] The one exception was BGC's submission referred to in [33.6] and [34] above. However, the submission was not elaborated upon, and it was not clear how the submission accommodated the express reservation in cl 24.1 concerning Direct Costs (see [76] above).
[145] Appeal ts 24 - 26.
[146] Electricity General Corp v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 [17].
This is not a case where it could be said that the court has had the benefit of 'full argument' sufficient to resolve the point of construction in BGC's favour, and for this court to be satisfied that it is appropriate to finally determine the proper construction of s 24.
The result is that in relation to grounds 1 and 2, BGC has not demonstrated that the judge's decision was wrong or attended by sufficient doubt to justify the grant of leave. Leave to appeal should accordingly be refused in relation to grounds 1 and 2.
Ground 3 - costs of BGC's application
It remains necessary to deal with ground 3, concerning costs.
The parties' proposed costs orders before Smith J
At a hearing on 10 July 2019, the parties were heard on the issue of costs of BGC's application. The parties each supplied a minute of proposed orders.
BGC sought orders that:[147]
1.[BGC's] application for summary dismissal or strike out of the Counterclaim dated 25 March 2019 (the Application) be dismissed.
2.Subject to order 3 below, the costs of the Application be in the cause of the Counterclaim.
3.[BGC's] costs incurred and thrown away by reason of [Cliffs'] amendment of its Counterclaim made on 17 May 2019 be paid by [Cliffs] forthwith, to be taxed if not agreed.
[147] Appellant's minute of proposed orders dated 10 July 2019.
Cliffs sought orders that:[148]
1.[BGC's] application for summary dismissal or strike out of the counterclaim dated 25 March 2019 be dismissed.
2.The costs of the application dated 25 March 2019 be payable by [BGC] to [Cliffs] in the cause, in any event, to be taxed if not agreed.
[148] Respondent's minute of proposed orders dated 10 July 2019.
The effect of the orders sought by Cliffs was that costs of the application would be payable by BGC to Cliffs if Cliffs was successful in the Counterclaim. However, if Cliffs was not successful in its Counterclaim, there would effectively be no order as to costs in respect of the application for summary dismissal of the Counterclaim. In support of this, Cliffs relied on the decision of Kenneth Martin J in Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeny.[149]
[149] Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeny [2011] WASC 167 (S); hearing 10/07/19, ts 59; GB 3.
BGC contended that order 2 of its proposed minute of orders represented the 'orthodox position' in a summary judgment application that costs be in the cause. BGC submitted that there was nothing to suggest that the case fell into the 'exceptional' category that would warrant the making of unorthodox costs orders against it.[150] In particular BGC said its application had merit in that it had the potential to bring the action to an end. Further, the late amendment by Cliffs to its Counterclaim illustrated that BGC's application was a 'necessary step in the process'.[151] BGC distinguished the judgment of Kenneth Martin J in Ridgepoint on the basis that it was dealing with costs of a summary judgment application in fundamentally different factual circumstances.[152]
[150] Hearing 10/07/19, ts 61; GB 5.
[151] Hearing 10/07/19, ts 62; GB 6.
[152] Hearing 10/07/19, ts 62 - 63; GB 6 - 7.
Smith J said:[153]
[I]t's my view that the statement that Justice Kenneth Martin had to say in the decision of Ridgepoint … in particular [in relation to] the decision in Whitehall Holdings Proprietary Limited v Custom Credit Corporation Limited the Full Court, 19 June 1992 - now following an even older English case of Harry Smith Car Sales Proprietary Limited v Claycong Vegetables Supply Company Proprietary Limited, that in circumstances for failed summary judgment applications brought by plaintiffs that costs are normally ordered to be costs in the cause …
… [T]hat rule … should be revisited in light of the intensification of case management practices now utilised by the courts in Western Australia under, in particular Order 1, Rule 4A and Rule 4B [of the Rules].
As his Honour [Kenneth Martin J] said:
'Where interlocutory disputation in the CMC list is to be strongly discouraged unless it's absolutely necessary.'
In my judgment, in particular, paragraph 74 [of the primary decision]… identified that … the central issue in this matter is that clause 24.1(a) and clause 24.6 of the [Contract] appear to cover the same field and open to be - each to be construed broadly, and both prima facie appeal to - appear to - deal squarely with the same subject matter. And on one reading of clause 24.1(a) BGC is required to indemnify Cliffs for all loss of profit, whether direct or indirect, arising out of a breach of the [Contract].
And on the other hand, clause 24.6 prima facie excludes liability for such losses. And in the face of such broad powers, then it's my view that such a constructional choice should only be resolved in a final hearing on the question. So it's my view that this application is of the kind that the usual rule that costs are normally ordered to be costs in the cause should be departed from. So accordingly, I intend to make an order in the form sought by [Cliffs'] in paragraph 2 of [Cliffs'] minute of proposed order. (emphasis added)
Smith J's costs orders
[153] Hearing 10/07/19, ts 64 - 65; GB 8 - 9.
Smith J ordered, by orders 2 and 3 of her Honour's orders of 10 July 2019:
2.Subject to Order 3, the costs of the application dated 25 March 2019 shall be [Cliffs'] costs in the cause of the counterclaim, to be taxed if not agreed.
3.[BGC's] costs incurred and thrown away by reason of [Cliffs'] amendment of its counterclaim made on 17 May 2019 be paid by [Cliffs] forthwith, to be taxed if not agreed.
Ground 3
BGC's submissions
As noted earlier, by ground 3, BGC alleged that the judge erred in law in finding that the costs of the application were Cliffs' in the cause of the Counterclaim.[154]
[154] Appellant's written submissions, par 49; WB 23.
BGC submitted that the order that the costs of the application be Cliffs' in the cause of the Counterclaim departed from the orthodox order to award costs in the cause generally.[155]
[155] Appellant's written submissions, par 49; WB 23; citing Civil Procedure Western Australia [14.8.1] and Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Unreported, WASC, Library No 92034, 19 June 1992), 2 ‑ 4 (Ipp J, Pidgeon & Owen JJ agreeing); Blenkinsop v Blenkinsop Nominees PtyLtd [2015] WASC 254 (S) (Allanson J) [3], [16].
BGC submitted that the judge's reliance on Ridgepoint was misplaced because the plaintiff's action in that case was a professional negligence claim which would rarely be suitable for summary determination. BGC submitted that, in contrast to Ridgepoint, its interlocutory application was a necessary step in the proceeding.[156] In support of this point, BGC said that Cliffs' amended counterclaim 'abandoned half of its counterclaim'. BGC submitted that in this case, there was no reasonable basis for the judge to conclude that there should be a departure from the orthodox order.[157]
[156] Appellant's written submissions, pars 49 - 52; WB 23 - 24.
[157] Appellant's written submissions, par 53; WB 24.
In oral submissions, senior counsel for BGC expressed the alleged error by the judge in the following terms:[158]
Her Honour elevated the case management consideration of the court seeking to discourage interlocutory disputation that sits within the CMC List as effectively driving the outcome that, where a party for a summary judgment application is unsuccessful, there ought to be - a defendant seeks a summary judgment, there ought to be a costs order that, effectively, penalises that party even if ultimately they are successful in the final hearing.
Cliffs' submissions
[158] Appeal ts 36 - 37.
Cliffs relied on the presumption in favour of the correctness of a discretionary decision on costs unless an appellate court is satisfied that it is clearly wrong. Cliffs submitted that BGC's submissions identify no relevant error in the judge's decision on costs.[159]
[159] Respondent's written submissions, pars 38 - 39; WB 36.
Cliffs submitted that there is no basis for BGC's contention that its interlocutory application was a necessary step in the proceeding. Cliffs also contended that it did not abandon half of its Counterclaim, but rather deleted one half of its head of damage from its particulars of loss and damage arising from the alleged breaches of the Contract. Cliffs submitted (1) that there was no proper basis for seeking to link that amendment with the dismissal of BGC's application, and (2) that, in any event, the judge separately dealt with the costs thrown away by reason of amendment. Therefore, Cliffs contended that BGC's submissions relating to the application being a 'necessary step' in the proceedings are irrelevant to ground 3.[160]
Disposition - ground 3
[160] Respondent's written submissions, par 40; WB 36.
In order to succeed on ground 3, BGC must establish an error in accordance with the principles in House v The King.[161] Moreover, an interlocutory decision on costs is archetypically a procedural order over which an appellate court should keep a tight rein in interfering (see [43] above).
[161] House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 ‑ 505.
The error alleged by BGC was, in effect, the judge's 'elevation' of case management considerations in the exercise of her Honour's discretion. Presumably (although BGC's submissions were not clear on this point), the error alleged is an alleged error in principle on the basis that her Honour gave so much weight to case management considerations that, in substance, she failed to exercise the discretion actually entrusted to her.[162]
[162] Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513, 519; Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79 [36].
While the judge unnecessarily appears to have expressed the view in passing that the usual rule endorsed by the Full Court in relation to failed summary judgment applications[163] should be 'revisited', it appears that her Honour did not decide the question of costs on that basis. Rather, it appears that her Honour concluded that, in the particular circumstances of this case, on the arguments presented to her Honour, a reasonable party in BGC's position ought to have known that it had no reasonable prospects of success in obtaining summary judgment. Where the application for summary judgment has that character, and particularly bearing in mind case management principles, it may not be just for the applicant, even if successful at trial, to have the costs of the failed interlocutory application. Ridgepoint, to which her Honour referred, is, and should be understood as, an illustration of the application of that kind of reasoning, albeit in that case the applicant's absence of reasonable prospects related to the factual context in which the claim was brought.[164]
[163] Whitehall (2 - 4); see also Major v Woodside Energy Ltd [No 3] [2009] WASC 246 [16]; Blenkinsopp (S) [3].
[164] Ridgepoint especially at [10] - [11].
There is no error in that approach in principle, and no error as alleged by BGC has been established. There is no basis for this court to doubt the correctness of the ordinary rule referred to in Whitehall and the cases which have followed it, but it cannot be hardened into a fixed and inviolable rule that costs are always in the cause in this context.
Accordingly, BGC has not established that the judge's decision on costs is wrong or attended with sufficient doubt to justify the grant of leave to appeal in respect of ground 3.
Conclusion
Leave to appeal should be refused and the appeal should be dismissed.
BEECH & VAUGHAN JJA:
The background to this appeal from the refusal of a defendant's summary judgment application is set out in Murphy JA's reasons. Like his Honour, we would refuse leave to appeal. Our reasons are as follows.
Principles
The procedural anomaly[165] that allows an appeal against refusal of a defendant's summary judgment application is subject to this court granting leave to appeal.[166] Where leave to appeal is necessary, leave may be granted whenever the interests of justice require it.[167] The principles on which this court considers whether to grant leave to appeal are well-established:
[165] Silbert v Steinberg [2010] WASCA 113 [8]; Carratti Holding Co Pty Ltd v Austpeak Australia Pty Ltd [2011] WASCA 34 [28]; SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 [14].
[166] Supreme Court Act 1935 (WA) s 60(1)(f). See also Silbert v Steinberg [2].
[167] The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40, 56 - 57.
1.The requirement for leave is no mere technicality or procedural nicety; it serves an important function in the administration of justice by discouraging unnecessary interlocutory appeals.[168]
[168] Krishell Pty Ltd v Nilant [2006] WASCA 223; (2006) 32 WAR 540 [30]; Waller v Waller [2009] WASCA 61 [9].
2.Appellate courts exercise particular caution (sometime referred to a 'special restraint')[169] in reviewing interlocutory decisions on matters of practice and procedure.[170]
3.There is a particular need to refrain from interfering with interlocutory procedural decisions made by judges managing cases in the Commercial and Managed Cases List.[171]
4.Ordinarily, while not being rigid or exhaustive criteria,[172] the considerations to be taken into account by this court upon an exercise of the discretion to grant or refuse leave to appeal are:[173]
(a)first, whether the decision was wrong or, at the least, attended with sufficient doubt to warrant its being reconsidered; and
(b)second, whether substantial injustice would result if the decision is left unreversed, supposing the decision to be wrong. However, the requirement to show substantial injustice is no more than a guideline for the exercise of what is a broad discretion.
The two considerations bear on each other. The degree of doubt that is sufficient in one case may be different from that required in another. It will be affected by the extent of the risk of substantial injustice if leave were refused, supposing the decision to be wrong.
5.The requirement of 'substantial injustice' is not satisfied by interference with procedural rights or procedural disadvantage; it looks to whether substantive rights are adversely affected.[174]
6.Where substantive rights are not effectively determined, an appellate court should be reluctant to interfere.[175]
[169] Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2019] WASCA 141 [49].
[170] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177.
[171] Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [49].
[172] The State of Western Australia v Bond Corporation Holdings Ltd (57).
[173] Wilson v Metaxas [1989] WAR 285, 294 (as explained in The State of Western Australia v Bond Corporation Holdings Ltd (54 - 57)). See also Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397, 398 - 399.
[174] Waller v Waller [2009] WASCA 61 [9] - [10]; Kelbush Pty Ltd v ANZ Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374 [81].
[175] In re the Will of F B Gilbert (Dec) (1946) 46 SR (NSW) 318, 323.
These considerations provide general guidance only. Thus, while the question of leave is normally considered within the rubric of these organising principles, there will be cases raising special considerations. The touchstone remains the interests of justice. The nature and risk of the injustice said to result from the order appealed from will generally be a material consideration. There is a far greater risk of injustice where an interlocutory decision determines a substantive right. In such a case leave will be granted more readily. By contrast, as is mentioned in the authorities establishing the principles set out at [117] above, a 'tight rein' must be kept on appeals involving interlocutory decisions on matters of practice and procedure.
Special considerations arise in the present case. A decision refusing a defendant summary judgment, and requiring that the parties proceed to trial, has a procedural character.[176] The goal and objects enshrined in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) are applicable and inform assessment of the application for leave to appeal.[177] So too the assessment is informed by the nature of the procedural anomaly that permits the disappointed applicant to seek leave to appeal.[178] When summary dismissal is refused the defendant will nevertheless be afforded a full opportunity to establish his or her substantive rights at trial in the usual way. There may, exceptionally, be cases where manifest error in refusing a defendant's summary judgment application and the interests of justice in all the circumstances of the case will justify a grant of leave to appeal. But in many cases the delay and costs in such an interlocutory appeal will be incompatible with achievement of the goal and objects that underpin the exercise of the processes of the court.
[176] Silbert v Steinberg [5].
[177] Silbert v Steinberg [5].
[178] Silbert v Steinberg [8]; Carratti Holding Co Pty Ltd v Austpeak Australia Pty Ltd [28]; SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [14].
It is also as well for applicants for leave to appeal in these circumstances to pay proper regard to what was said by this court in Silbert v Steinberg:
It is pertinent to emphasise that the availability of an avenue of appeal from interlocutory decisions, subject to the grant of leave, should not be seen as providing an unrestricted opportunity for the lengthy reventilation of arguments which failed at first instance. The determination of whether the decision from which leave to appeal is sought was wrong, or attended with sufficient doubt to justify the grant of leave to appeal should not ordinarily require or involve argument of the complexity and duration of the argument presented at first instance. Ordinarily, the court determining whether or not to grant leave to appeal will take a broad approach to that question, informed by the various principles [which apply to such an application for leave to appeal] ...[179]
[179] Silbert v Steinberg [7]. See also Carratti Holding Co Pty Ltd v Austpeak Australia Pty Ltd [27].
As is more than evident from the comprehensive reasons of Murphy JA, in presenting its application for leave to appeal the appellant paid no more than lip service to these principles. The constructional argument relied on before the primary judge was reagitated in full before this court. Moreover, no doubt conscious of the difficulty in establishing that the interests of justice required a grant of leave to appeal, as a work around the appellant invited this court to adopt the approach in Theseus Exploration NL v Foyster[180] and finally determine the constructional dispute as to the proper construction of cl 24 of the Contract even if there was no error on the part of the primary judge.
[180] Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507, 514, 515.
Summary
We would not grant leave to appeal against the dismissal of the appellant's summary judgment application. Essentially this is for two reasons. First, we are not satisfied that substantial injustice will result if the decision remains unreversed and the appellant is left to seek to establish its preferred construction of cl 24.6 of the Contract at trial. Second, we are not satisfied that the primary judge's decision is wrong or attended with sufficient doubt to justify the grant of leave.
Moreover, considering the interests of justice as a whole, we take into account the circumstances that: (1) the dismissal was an interlocutory decision of a procedural character by a CMC List judge; (2) on a fair reading of her reasons the primary judge considered the available constructional choices and the arguments for and against the possible constructions before concluding - as was well open to her Honour - that it was not appropriate to finally determine the question of law on which the summary dismissal application turned; (3) the decision did not adversely affect any putative substantive right on the part of the appellant; (4) insofar as the rules of the court provide an alternate procedural mechanism, by application for a trial of preliminary issues, that would overcome the alleged substantial injustice contended for, we are not satisfied that the grant of leave to appeal is consistent with the goal and objects in O 1 r 4A and r 4B.
No substantial injustice
The appellant contended that it would suffer substantial injustice as dealing with the respondent's counterclaim at trial would have 'serious temporal and costs consequences'.[181] By temporal consequences the suggestion was that dealing with the counterclaim would cause delay in the pre-trial phase of the litigation - it would take longer to bring the action as a whole to trial. The adverse costs consequences were the additional costs in dealing with the counterclaim as a whole. The implicit suggestion was that, although unquantified, the additional costs would be substantial. The appellant asserted that the counterclaim would 'add at least two weeks … to the expected trial time'.[182]
[181] Appellant's submissions par 17(a) WAB 12.
[182] Appellant's submissions par 17(a) WAB 13.
In the circumstances of this case both matters lacked substance. There was no basis to believe that the respondent would be unable to meet the appellant's costs if the appellant was ultimately successful on the counterclaim. As to delay, the extent of the claimed delay was unclear. Nor was there any suggestion that delay in the time to trial would cause the appellant any specific prejudice. To the extent that there is a delay in the adjudication of the appellant's claim the appellant makes a claim for pre-judgment interest at commercial rates compounded quarterly.[183] We acknowledge the strain that arises for any litigant - even a corporation such as the appellant - by reason of ongoing litigation.[184] There is both a diversion of resources and uncertainty associated with the outstanding claim. But there was nothing in the materials before the court to suggest that this is a factor bearing particular weight in the present case, in circumstances where the litigation will, in any event, continue as to the appellant's original claim.
[183] Appellant's second amended statement of claim dated 29 March 2019 par G BAB 99.
[184] AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [100] - [101].
Moreover, there was no finding of the primary judge, and no evidence before this court, to sustain the factual assertion that the counterclaim would prolong a trial of the action by at least two weeks and delay the time to commencement of trial. A submission in those terms was not put to the primary judge. The most that was said to her Honour was that there would be a 'considerable' saving of trial time.[185]
[185] ts 27.
In any event, at all times it has been open to the appellant to seek a trial of preliminary issue for final determination of the constructional question. In seeking orders to resolve the counterclaim in this manner it would be necessary for the appellant to adduce evidence to support its contention that the early and separate determination of its defence based on cl 24.6 of the Contract would have the claimed case flow management benefits. Accordingly, unlike the present situation, the court would be in a position to make an informed decision as to whether in fact case flow management benefits would accrue by immediate determination of the constructional question raised by the appellant's defence to the counterclaim.
Thus, there is a readily available procedural mechanism to overcome the matters that are relied on by the appellant as constituting substantial injustice (assuming that those matters are made out). In all the circumstances this neutralises the alleged substantial injustice that is suggested to arise should the dismissal of the summary judgment application remain unreversed.
The merits of the appeal
As to the merits of any appeal, Murphy JA has explained that ground 2 is predicated on the acceptance of ground 1. Senior counsel for the appellant accepted as much at the appeal hearing.[186] Ground 1 depended on whether, at [75] of the primary decision, the primary judge was in error in concluding that the constructional choices presented by cl 24 'should only be resolved in a final hearing'.[187] The appellant argued that in so stating the primary judge was setting out a general proposition of law rather than a conclusion as to what was appropriate in the circumstances of the present case[188] - thereby 'walking away' from a confined constructional argument within the four corners of the Contract[189] and not engaging with the evaluative decision as to whether it was appropriate to resolve the construction question finally in the context of the summary judgment application.[190]
[186] Appeal ts 7 - 8, 21.
[187] See Appeal ts 20 - 21.
[188] Appeal ts 3 - 7, 14 - 18, 20 - 21.
[189] Appeal ts 4.
[190] Appeal ts 17.
The appellant's contention misconstrues the primary judge's reasoning process. Reading the primary decision fairly and as a whole:
1.In considering the applicable legal framework, the primary judge observed, correctly, that the court may determine a difficult question of law on a summary dismissal application[191] (it being well understood that the proper construction of a contractual term is a question of law). Consistent with the primary judge's observation in this respect, it is the case, generally speaking, that an application for summary judgment is not the occasion to dispose of difficult or substantial questions of law which cannot be determined without full argument.[192]
2.The primary judge identified the relevant contractual provisions.[193]
3.The primary judge considered the competing constructions[194] - among other things asking herself whether there were 'contestable constructions of cl 24.6'[195] - and identified that there were constructional choices.[196] The appellant did not contend that there was error in this respect. Senior counsel for the appellant submitted to this court that there is a 'difficult but nonetheless confined constructional argument'.[197]
4.Where the proper construction of cl 24 was a matter of some complexity,[198] and the question was being considered in an evidential vacuum without consideration of the context and purpose of the Contract as a whole,[199] the primary judge concluded that the case before her did not present as an appropriate case to finally determine the proper construction of the clause by means of a summary determination.[200]
5.The primary judge summarised her conclusion at [75] of the principal decision so far as her Honour stated that the constructional choice should only be resolved at a final hearing.
[191] Primary decision [17].
[192] Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1 [36], [92].
[193] Primary decision [19] - [26].
[194] Primary decision [27] - [73].
[195] See the heading above Primary decision [27].
[196] Primary decision [73] - [75].
[197] Appeal ts 4. See also Appeal ts 16.
[198] That complexity appears from her Honour's consideration of the competing constructions (Primary decision [27] - [73]) and is confirmed by senior counsel for the appellant's characterisation of the question as being one involving a 'difficult' constructional argument (Appeal ts 4).
[199] Primary decision [76].
[200] Primary decision [77].
We do not accept that, at [75] of the principal decision, the primary judge concluded erroneously that as a matter of law the constructional choice presented for determination must only be determined at a final hearing.[201] That is incompatible with her Honour's earlier recitation of the applicable authorities and the express recognition that a question arose for her decision as to whether the extent and complexity of the question of law embodied in the proper construction of cl 24 was such that it ought not to be decided summarily.[202] The primary judge was instead stating, by way of conclusion, why in the exercise of her discretion the circumstances were inapt for determination on a summary dismissal basis. The conclusion as so stated was consistent with the well-known principles applicable to summary judgment - rehearsed by her Honour in any event[203] - that summary judgment is reserved for the clearest of cases where there is a high degree of certainty about the ultimate outcome of the claim were it allowed to proceed to trial. The view that this was not such a case, and the constructional question should be determined at trial as it was serious and contestable, was well open to her Honour given the conclusions that had been reached. It involved no error of principle.
[201] Compare Appeal ts 3 - 4, 7.
[202] As to which see Theseus Exploration NL v Foyster (514), (515).
[203] Primary decision [14].
Ground 1 thus fails. It follows, given that ground 2 was premised on ground 1 being upheld, that it is unnecessary to consider ground 2. Moreover, in terms of leave to appeal, it cannot be concluded that the decision was wrong or attended with sufficient doubt to justify leave to appeal.
Why the appellant's fallback position should not be accepted
In terms of the appellant's fallback position, we accept that, exceptionally, this court might consider it appropriate to adopt the approach in Theseus Exploration NL v Foyster and - having heard full argument - determine a question of law even though there was no relevant error on the part of the primary judge.[204] To do so is, as Gibbs J described it, an 'anomalous course'.[205] It is not necessary to consider the circumstances in which the anomalous course permitted by Theseus Exploration NL v Foyster might appropriately be applied to the procedural anomaly which permits an appeal against refusal of a defendant's summary dismissal application. It suffices to say that to do so will be rare and that it should not be allowed to become a means to blithely side-step the statutory requirement that there be leave to appeal.
[204] Casella v Hewitt [36].
[205] Theseus Exploration NL v Foyster (515).
We would decline the invitation to adopt the anomalous course permitted by Theseus Exploration NL v Foyster in the circumstances of this case: it would allow the appellant to circumvent the statutory requirement of leave to appeal in circumstances where the application for leave was without prima facie merit. In any event, for the reasons given by Murphy JA, we are not satisfied that there has been full argument, so, for that reason too, we would not take up the appellant's invitation.
Ground 3
Leave to appeal against the primary judge's costs order should be refused for the reasons given by Murphy JA.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DM
Associate to the Honourable Justice Murphy7 JULY 2020
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