P R A Electrical Pty Ltd v Perseverance Exploration Pty Ltd - [2006] VSC 432

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

BUILDING CASES LIST

No. 9700 of 2005

BETWEEN

P.R.A. ELECTRICAL PTY LTD (ACN 062 906 487)	Plaintiff
And
PERSEVERANCE EXPLORATION PTY LTD (ACN 010 604 878)	First Defendant
And
RICHARD MANLY	Second Defendant

---

JUDGE:	HABERSBERGER, J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 MARCH 2006
DATE OF JUDGMENT:	15 NOVEMBER 2006
CASE MAY BE CITED AS:	P.R.A. ELECTRICAL PTY LTD v PERSEVERANCE EXPLORATION PTY LTD
MEDIUM NEUTRAL CITATION:	[2006] VSC 432

---

Building Contract – Whether there was contract between the parties – Special condition that contract did not come into effect until formal instrument of agreement executed – Contract awarded to electrical contractor – No formal instrument of agreement executed – Contractor commenced work, provided security, made progress claims including for variations and submitted dispute to arbitration – Waiver – Proceeding stayed pursuant to Commercial Arbitration Act 1984, s.53.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr B. Jenner	Russell Kennedy
For the First Defendant	Mr G.J. Digby QC and Ms K. Stynes	Clayton Utz
For the Second Defendant No Appearance

HIS HONOUR:

The plaintiff, PRA Electrical Pty Ltd (“PRA”), is an electrical contractor. This litigation concerns disputes and differences which have arisen between it and the first defendant, Perseverance Exploration Pty Ltd (“Perseverance”), with respect to electrical work performed by PRA at the Fosterville Gold Mine near Bendigo. The worked ceased on or about 30 December 2004 when Perseverance gave notice to PRA that it, Perseverance, was taking the works out of the hands of PRA so that they might be completed by another electrical contractor. Perseverance also took possession of all materials and plant and equipment on the mining site. It is clear that, in so doing, Perseverance was purporting to invoke the power conferred upon the proprietor by cl. 39.4 of the General Conditions of Contract AS 4000-1997.

On 27 May 2005, PRA gave notice of dispute asserting that Perseverance was not entitled to act in this way and claiming damages estimated at $4,098,480, for breach by Perseverance of a contract entered into by PRA and Perseverance on 16 August 2004. Following some negotiations, the parties agreed on 15 August 2005 upon the appointment of the second defendant, Mr Richard Manly SC, to be arbitrator. The arbitration then moved forward in a fairly conventional way towards a preliminary conference which was appointed for 12 September 2005.

On 25 August 2005 the Superintendent, Cullen Mining Services Pty Ltd (“CMS”), issued a certificate of cost to complete which was expressed to be given pursuant to General Condition 39.6. Under this certificate, after giving PRA credit for work done, the amount payable by PRA to Perseverance was assessed to be $4,865,461.

PRA responded to the Superintendent’s certificate of cost to complete by giving a second notice of dispute dated 9 September 2005. In this notice it again challenged the validity of the acts of Perseverance in taking the work out of its hands, as…

Grounds of appeal

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

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

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

Consideration

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

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

Keep reading for free

Create a free CaseChat account to read P R A Electrical Pty Ltd v Perseverance Exploration Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2006] VSC 432
Decision Date: 15 November 2006

CaseChat Overview and Summary

The parties involved in this case were P R A Electrical Pty Ltd, an electrical contractor, and Perseverance Exploration Pty Ltd, a mining company. The dispute arose from a building contract, specifically whether there was a binding agreement between the parties. The matter was heard in the Supreme Court of Western Australia. The contractor claimed that there was a binding contract, whereas the mining company argued that no enforceable agreement existed because a formal instrument of agreement had not been executed.

The primary legal issue before the court was whether a binding contract existed between the parties despite the absence of a formal instrument of agreement. The court had to consider the special condition in the contract that stated it would not come into effect until a formal instrument was executed. Additionally, the court needed to determine whether the contractor's actions, including commencing work, providing security, and submitting a dispute to arbitration, could be construed as a waiver of the requirement for a formal instrument.

The court found that although the special condition stipulated that the contract would not take effect until a formal instrument was executed, the actions of both parties post-execution of the initial contract indicated an intention to be bound. The contractor's commencement of work, provision of security, and submission of progress claims, including for variations, demonstrated a clear intention to proceed under the terms of the contract. The court held that the mining company's acceptance of these actions constituted a waiver of the requirement for a formal instrument. Consequently, the court determined that a binding contract existed between the parties.

The court ordered that the proceeding be stayed pursuant to section 53 of the Commercial Arbitration Act 1984, pending the resolution of the arbitration dispute. This decision underscored the importance of the parties' conduct in determining the existence of a contract, even in the absence of a formal instrument. The court's ruling clarified that actions taken in reliance on the contract can be sufficient to establish its enforceability.

Orders