Paulsens East Iron Ore Pty Ltd v Terra Mining Pty Ltd
[2025] WASC 221
•6 JUNE 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: PAULSENS EAST IRON ORE PTY LTD -v- TERRA MINING PTY LTD [2025] WASC 221
CORAM: HOWARD J
HEARD: 15 MAY 2025
DELIVERED : 15 MAY 2025
PUBLISHED : 6 JUNE 2025
FILE NO/S: COR 22 of 2025
BETWEEN: PAULSENS EAST IRON ORE PTY LTD
Plaintiff
AND
TERRA MINING PTY LTD
Defendant
Catchwords:
Corporations Law - Application to set aside statutory demand - Whether there is a genuine dispute - Finding that there is no genuine dispute - Application dismissed
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr K A Dundo |
| Defendant | : | Mr C S Gough |
Solicitors:
| Plaintiff | : | KD Legal (Perth) |
| Defendant | : | Alamo Legal |
Cases referred to in decision(s):
Arris Investments Pty Ltd v Fahd [2010] NSWSC 309
Black Box Control Pty Ltd v Terra Vision Pty Ltd [2016] WASCA 219
CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192
Energy Equity Corporation Ltd v Sinedie Pty Ltd [2001] WASCA 419
Wright v Lemon [2024] WASCA 19
HOWARD J:
(This judgment was delivered extemporaneously on 15 May 2025 and has been lightly edited from the transcript. The publication of these reasons was delayed by matters beyond the Court's control.)
On 22 January 2025, the defendant (Terra Mining) made a statutory demand on the plaintiff (Paulsens) in the sum of $6,889,712.14 (Statutory Demand).[1]
[1] The Statutory Demand is 'DS-2' at page 14 of the first Sun affidavit.
As will be seen, Terra Mining sought to amend the Statutory Demand in the hearing, under s 459H of the Corporations Act 2001 (Cth) (Act). I will return to that application below.
The description of the debt in the Statutory Demand was accompanied by an affidavit made by Barry Cook on 22 January 2025.[2] That supporting affidavit deposed to Mr Cook being the Chief Operating Officer of Terra Mining.
[2] Part of 'DS-2' at page 16 of the first Sun affidavit.
Annexure 1 to the Statutory Demand[3] referred to invoice 3082, dated 21 November 2024 (Invoice 3082). That invoice will be considered further below. It stated that the sum of $6,889,712.14 was outstanding.
[3] Part of 'DS-2' at page 17 of the first Sun affidavit.
That sum was said to be for costs pursuant to cl 10.2(e) of the Mining Services Contract which I will come to below.
Paulsens applies, pursuant to s 459G of the Act to set aside the Statutory Demand. I will return to the grounds on which it ultimately relies below.
Paulsens relies on affidavits of David Xiaoxuan Sun:
1.made and filed 11 February 2025 (first Sun affidavit);
2.made and filed 28 April 2025 (second Sun affidavit); and
3.made and filed 14 May 2025 (third Sun affidavit).
Terra Mining objected to the third Sun affidavit, and during the hearing I ruled it inadmissible. I did so for two reasons:
1.it was late and well outside of the programming orders made by Master Russell on 27 February 2025, as amended by Forrester J on 15th April 2025; and
2.more substantively, it deposed to the giving of a notice under cl 17.2 of the Mining Services Contract on 14 May 2025.
As I understand the authorities,[4] because the third Sun affidavit raised an event or a new ground which occurred outside of the statutory period of 21 days, it could not be taken into account.
[4] Principally Energy Equity Corporation Ltd v Sinedie Pty Ltd[2001] WASCA 419, particularly at [29].
Terra Mining relies on an affidavit of Barry Cook, made and filed 7 April 2025 (Cook affidavit).
Relevant factual background
I turn now to the factual background which, largely, was not in dispute.
Paulsens as principal and Terra Mining as contractor executed the Mining Services Contract on about 13 June 2024.[5]
[5] The Mining Services Contract is 'DS-4' at page [20] of the first Sun affidavit.
Terra Mining does not contest the terms of the Mining Services Contract.[6]
[6] Terra Mining's outline of submissions dated 8 May 2025 [6].
On about 13 June 2024, Paulsens and Terra Mining entered into a Security of Payment Contract.[7] Terra Mining does not dispute the terms of that contract.[8]
[7] 'DS-15' at page 120 of the first Sun affidavit.
[8] Terra Mining's outline of submissions dated 8 May 2025 [8].
Ultimately, as the argument developed in the hearing, I do not need to consider the Security of Payment Contract further.
Relevantly, Terra Mining submitted Monthly Claims as follows:
1.in respect of August 2024, by an email dated 13 September 2024;[9]
2.in respect of September 2024, by an email dated 7 October 2024;[10] and
3.in respect of October 2024, by an email dated 7 November 2024.[11]
[9] 'DS-6' at page 103 of the first Sun affidavit. The email was in the annexure, but not the progress claim itself.
[10] 'DS-7' at page 105 of the first Sun affidavit. The email was in the annexure, but not the progress claim itself.
[11] 'DS-8' at page 107 of the first Sun affidavit. The email was in the annexure, but not the progress claim itself.
I note that the 7 November 2024 email stated that the Monthly Claims for August and September 2024 had not been paid and were well overdue.
The Monthly Claims themselves were not in evidence.
As I understood the plaintiff's position put in the hearing, it was accepted by it that:
1.Monthly Claims were submitted for August, September and October 2024; and
2.it was not relying on non-compliance with the three-day period referred to in the chapeau of cl 10.2(a) of the Mining Services Contract to dispute the Statutory Demand.
Rather, Paulsens contended that the Monthly Claims did not comply with cll 10.2(a)(i) to (iv) of the Mining Services Contract. However, as said, the Monthly Claims were not in evidence and, where Paulsens bore the onus in this application, I consider that I cannot and should not accept that contention without evidence.
In any event, as I understand it, Paulsens' ultimate position as put in the hearing was that Terra Mining's compliance or otherwise with cll 10.2(a)(i) to (iv) is not important to its asserted dispute.
Further, on 13 September 2024, by email, Terra Mining submitted variation claims in respect of the Mining Services Contract for works it said were carried out in August 2024.[12]
[12] 'DS-9' at page 108 of the first Sun affidavit.
Paulsens made a payment of $600,000 to Terra Mining between 15 and 17 November to assist Terra Mining with payment of monies owed to its creditors.[13]
[13] First Sun affidavit [24].
As will be seen, by Invoice 3082 Terra Mining credited that $600,000 to Paulsens' benefit.[14]
[14] That invoice is contained within 'DS-2' at page 18 of the first Sun affidavit.
On 22 November 2024, Terra Mining issued Invoice 3082 in the amount of $6,978,683.35.[15] This is the invoice which is referred to in Annexure 1 of the Statutory Demand.
[15] 'DS-2' at page 18 of the first Sun affidavit.
Paulsens, in the hearing, made much of the fact that Invoice 3082, under the heading of 'Reference' towards the top of the page, stated 'Progress Claim #4-Oct24'. There was a similar description provided in about the middle of the page, where it stated 'Work performed and claimed under progress claim 4 - October 2024'.
While that may be accepted, it is to be noted that in the description the following also appears:
Calculations and all supporting documents for claimed amounts have been previously provided.
Contractor notes that Principal has not paid any contract costs for months of Aug - Oct 2024 other than as set out below
VAR 002, 003, 004 have all been approved and dayworks sheets signed.[16]
[16] 'DS-2' at page 18 of the first Sun affidavit.
The above quotes, in my view, also provide context, in that it seems to me plain that it was not solely in relation to work done in October 2024 that Invoice 3082 was issued.
On 8 January 2025, Paulsens, via Sean Freeman, sent an email to Terra Mining.[17] This email stated:
Please find below some additional information and requests for action to work through the final claims up to end of November
If I could request a focus on the manhours [sic] for the technical teams we should be able to close out this aspect quickly, and then we would propose generation of more frequent, smaller invoices rather than larger monthly ones
[17] 'DS-10' at page 110 of the first Sun affidavit.
Before turning to the table (under the heading of 'Terra Mining Invoice Review') that immediately follows the above, I note that, at least from Mr Freeman's point of view, Paulsens was hoping for invoices to be rendered not on a monthly basis, but on a more frequent, smaller basis.
The above-mentioned table has four columns with rows for the months of June to November 2024. The only ones which are material for this decision are rows 3, 4, and 5 being for August, September and October 2024.[18]
[18] The table is part of 'DS-10' at page 110 of the first Sun affidavit.
As I understand it, and as it emerged in the hearing, the fourth column, the furthest to the right-hand side, is headed 'Outstanding' and the natural reading of the email is to the effect that the sums set out were outstanding, in the sense of owing or at least not disputed by Paulsens.
In each of the rows for August, September and October 2024, there was in the third column a request, in effect, for Terra Mining to provide 'man hours supporting data for environmental and geology roles'. There was no dollar sum recorded in the fourth column under 'Outstanding', but rather for that line item there was written 'Amount TBD', which I have inferred as 'to be determined'.
But, in any event, it is plain that there was not an acceptance at that point by Paulsens of what had been claimed by Terra Mining for environmental and geology roles, which explains the absence of a dollar figure in the furthest column and the inclusion of 'Amount TBD'. Further, in the first and second paragraphs there is a request for additional information, and a request that there be a focus on man hours for the technical teams.
On 13 January 2025, Paulsens sent an email to Terra Mining.[19]
[19] 'DS-11' to the first Sun affidavit.
As noted, the Statutory Demand was made on 22 January 2025.
In response to the Statutory Demand, Paulsens sent an email on 24 January 2025 to Terra Mining which stated, relevantly:
2.We note significant inaccuracies and false statements in the affidavit submitted by Mr Barry Cook of Terra Mining, specifically
a.That all of the amounts listed in point 1 of the affidavit totalling $6,889,712.14 are considered under the terms and conditions of the Mining Services Contract, and we note that these amounts have been and remain in dispute with Terra Mining,
b.The statement included in point 5 that Mr Cook believes there is no genuine dispute about the existence or amounts of any of the debts is not only in conflict with point 3 of his statement but is also demonstrably false and misleading.
We again reiterate out [sic] statement that Terra have failed to act in good faith to negotiate and resolve disputes, noting the following recent timelines for your records.
·7th January Meeting between Terra Mining and Miracle Iron to review outstanding claims
·8th January Miracle Iron submit email summary of claim review and request for further particulars
·13th January Mr David Sun submits follow up email for request for further particulars
·20th January Mr Sean Freeman submits follow up email for request for further particulars
·21st January Mr Barry Cook provides initial response to request for information
·22nd January Terra Mining file Statutory Demand for Payment of Debt
Terra Mining's lack of engagement through this dispute resolution process and varying from our agreed intent of good faith negotiations is disappointing, and we hope Terra can re-engage in a positive way to move this project to a safe and amicable solution for all parties.[20]
[20] 'DS-3' at page 19 of the first Sun affidavit.
Paulsens also sent emails to Terra Mining on:
1.20 January 2025;[21]
2.31 January 2025;[22] and
3.4 February 2025.[23]
[21] 'DS-12' at page 112 of the first Sun affidavit.
[22] 'DS-13' at page 115 of the first Sun affidavit.
[23] 'DS-14' at page 116 of the first Sun affidavit.
Paulsens' contentions
Paulsens' contentions before the hearing appear in the first Sun affidavit, where he deposes (and in some cases submits) to the following:
15.The debt claimed in the Statutory Demand is comprised of the Defendant's August 2024 to October 2024 monthly claims and the Variation Claims.
16.The Plaintiff disputes each monthly claim noting that the claims are still under review by the Plaintiff as each claim is subject to requests for further information to be provided by the Defendant. I note that the timing of the lodgement of the monthly claims is not in accordance with the Mining Services Contract.
17.The Plaintiff has requested further information form [sic] the Defendant by:
(a)email dated 8 January 2025, annexed hereto and marked "DS-10" is a copy of the email dated 8 January 2025 from Sean Freeman to Barry Cook;
(b)email dated 13 January 2025, annexed hereto and marked "DS-11" is a copy of the email I sent to Barry Cook dated 13 January 2025;
(c)email dated 20 January 2025, annexed hereto and marked "DS-12" is a copy of the email dated 20 January 2025 from Sean Freeman to Barry Cook; and
(d)email dated 31 January 2025, annexed hereto and marked "DS-13" is a copy of the email dated 31 January 2025 from Sean Freeman to Barry Cook, Tomothy [sic] Moore and Ree Dai of the Defendant; and
(e)email dated 4 February 2025, annexed hereto and marked "DS-14" is a copy of the email dated 4 February 2025 from Sean Freeman to Timothy Moore.
18.As at the date of affirming this affidavit, I confirm that the Plaintiff has not received from the Defendant any response to the requests for further information referred to in paragraph 17 above.
19.The Plaintiff disputes the Variation Claims noting that the Defendant did not give to the Plaintiff any written notice of the proposed variations and submitted the Variations claims by email dated 1 October 2024 after the alleged variation works had been completed. A copy of the email dated 1 October 2024 is contained at DS-9.
20.The Defendant has not complied with clause 17.1 of the Mining Services Contract, which requires the parties to comply fully with the dispute resolution process set out in the Mining Services Contract prior to the commencement of any litigation proceedings.[24] (emphasis in the original)
[24] First Sun affidavit [15] - [20].
As I understood the hearing today, [16] of the first Sun affidavit, particularly the last sentence of it, is not pressed by Paulsens.
In relation to [17] and [18] of the first Sun affidavit, the evidence, as I understand it, bears out the requests for further information, but as seen from attachment 'DS-10', only in relation to the 'Amount TBD' line items.
In relation to [19] of the first Sun affidavit, as I understand it, the variations which are being referred to are now not pressed by Terra Mining, and that has led to the application, in effect, to amend the statutory amount pursuant to s 459H of the Act.
As to [20] of the first Sun affidavit, I will return to the dispute resolution process under the Mining Services Contract.
So, as I understand Paulsens' contentions at the hearing, they are, in essence, two-fold:
1.Invoice 3082 was not submitted in accordance with cl 10.2(e) of the Mining Services Contract; and
2.cl 17 of the Mining Services Contract has the effect of causing there to be, here, a genuine dispute.
Relevant provisions of the Mining Services Contract
The following are the principal provisions relevant to the current application:
1.1Definitions
In this agreement unless the context otherwise requires:
…
Dispute is any dispute or difference arising under or in connection with this agreement or in providing the Mining Services on which the parties have failed to agree and which a party wishes to raise as an issue for the purposes of the Dispute Resolution Process.
Dispute Resolution Process is the process for resolving Disputes prescribed by this agreement.
…
...
1.2Interpretation
In this agreement (unless the context otherwise requires):
…
(d)the singular includes the plural and vice-versa;
…
…
10.2Payment
(a)The Contractor must submit to the Principal's Representative within 3 days after the end of each month a Monthly Claim for the previous month including:
(i)the amount of Ore and Waste mined, hauled and dumped for the month (if applicable), for which there is a specific rate in the Schedule of Rates, calculated in accordance with the method of measurement set out in Schedule 11;
(ii)the price for any changes to the scope of the Mining Services approved by the Principal's Representative in writing;
(iii)all evidence reasonably acceptable to, or requested by, the Principal's Representative verifying or substantiating amounts used for the purpose of calculating the Monthly Claim; and
(iv)details of the Contractor's calculations of the Monthly Claim.
(b)Following receipt of a Monthly Claim, the Principal's Representative must, within 5 days, determine the amount payable in respect of the Monthly Claim and issue a Payment Certificate to the Principal and the Contractor setting out that determination showing:
(i)the final survey quantities and processed tonnes forming the basis for the monthly claim; and
(ii)the total of any moneys which are due or which may become due from the Contractor to the Principal (Payment Certificate).
The Payment Certificate must include or enclose details of the Principal's Representative's calculations of the stated amounts and, if the Principal's Representative does not accept the Contractor's calculations, a statement of reasons for the differences in calculation.[25]
[25] 'DS-4' at page 42 of the first Sun affidavit.
(c)The Contractor must give the Principal a Valid Tax Invoice in respect of the items and amount shown in the Payment Certificate within 2 business days of receipt of that certificate.
(d)If requested by the Principal' s Representative, the Contractor must give the Principal a statutory declaration in the form set out in Schedule 5 before it receives a payment under a Payment Certificate.
(e)If the Principal's Representative failed to issue the Contractor with the Payment Certificate within 5 days of the Contractor's claim, the Contractor shall invoice the Principal the amount stated on the Contractor's Monthly Claim.
(f)The Principal must pay the amount in the Invoice to the Contractor no later than 21 calendar days from the last date of the serviced month (previous month i.e. payment for works done in June must be paid before 21st July).
…
17Dispute resolution
17.1Limitation on proceedings
The parties agree that it is a condition precedent to the commencement of any litigation proceedings by a party in respect of a Dispute under this agreement that the party has complied fully with the Dispute Resolution Process (regardless of the level or levels on which the Dispute has previously been considered) except where:
(a)the party seeks urgent interlocutory, injunctive or declaratory relief; or
(b)the other party has failed to observe the requirements of this clause and the party seeks to enforce compliance with the Dispute Resolution Process,
in respect of the Dispute.
…
17.2Dispute Resolution Process
(a)Where a Dispute arises between the parties, either party may give a Dispute Notice to the other party to initiate the formal Dispute Resolution Process.
(b)(Form of Notice) The notice of a Dispute (Dispute Notice) must:
(i)state that the notice is given under this sub-clause;
(ii)describe the nature of the Dispute; and
(iii)nominate a representative of the party who is authorised to negotiate and settle the Dispute on the party's behalf.
(c)(Representative of Other Party) The other party must within 7 days after receipt of a Dispute Notice nominate in writing to the other party a representative authorised to negotiate and settle the Dispute on its behalf.
(d)(Negotiation by Representatives) The parties' representatives must negotiate in good faith with a view to resolving the Dispute within 21 days after the receipt of the Dispute Notice, (or such longer period as those representatives agree), failing which the Dispute must be immediately referred to the chief executive officers of the parties.
(e)(Chief Executive Officers) The chief executive officers must negotiate in good faith with a view to resolving the Dispute within 14 days of the Dispute being referred to them (or such longer period as the chief executive officers agree) failing which, the Dispute must be immediately referred to mediation.
(f)(Mediation) Mediation of the Dispute must:
(i)be conducted by the person or body agreed to by the parties or, failing agreement within 35 days after receipt of the Dispute notice, as nominated by the President for the time being of the Law Society of the Nominated State on request by either party;
(ii)be conducted in accordance with such rules as may be agreed to by the parties or, failing agreement within 35 days after receipt of the Dispute Notice, in accordance with the rules nominated by the person or body agreed or nominated to conduct the mediation;
(iii)be at the cost and expense of the parties equally (except that each party must pay its own advisers, consultants and legal fees and expenses) unless the parties otherwise agree; and
(iv)if not earlier resolved, be continued for a period expiring on the date being 14 days after the nomination of the mediator (or such other period as the parties may agree) after which either party may at any time after that date seek expert determination under this agreement or commence litigation proceedings in respect of the Dispute.[26]
[26] 'DS-4' at page 52 of the first Sun affidavit.
Applicable principles
The applicable principles are well established, and I have taken the following from the Court of Appeal decision in CA & Associates Pty Ltd v Fini Group Pty Ltd.[27] At [35] Buss P and Vaughan JA set out the following principles:
1.The court's function is to determine whether there is a genuine dispute; the court is not expected to undertake an extended inquiry or attempt to weigh the merits of the dispute. It is not part of the court's function to resolve the dispute.
2.It suffices if there is a "plausible contention" requiring "further investigation" - something that may be equated to the criterion of whether there is a "serious question to be tried".
3.However, the applicant must establish that: (a) the dispute is bona fide and truly exists in fact; and (b) the grounds alleging the existence of the dispute are real and not spurious, hypothetical, illusory or misconceived.[28] (footnotes omitted)
[27] CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31.
[28] C&A Associates Pty Ltd v Fini Group Pty Ltd [35].
Buss P and Vaughan JA then cited with approval the following statement from Barrett J (as he then was) in Drillsearch Energy Ltd v Carling Capital Partners:[29]
A dispute as to the existence of a debt that is the product of a dispute about construction is not removed from s 459H(1)(a) just because the issue in contention is one of construction. While it has been said that 'a short point of law or the construction of documents or agreed facts' may, unlike a disputed question of fact, be determined upon a s 459G application, it does not follow that the court is compelled to make such a determination. In the case of a legal argument, determination might be appropriate if it were, in the words of McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd, a 'patently feeble legal argument'.[30] (footnotes omitted)
[29] Drillsearch Energy Ltd v Carling Capital Partners Pty Ltd [2009] NSWSC 1192.
[30] C&A Associates Pty Ltd v Fini Group Pty Ltd [37].
Buss P and Vaughan JA further said:
38.Cases in which the court will determine a disputed question of contractual construction on an application to set aside a statutory demand will be the exception rather than the norm. Two things are established by the authorities. First, in dealing with an application to set aside a statutory demand the court is not compelled to determine questions of construction of instruments. Second, such proceedings are not ordinarily the occasion for the court to construe a contract, especially where there are competing views about its meaning. The corporations list ought not to be used as a convenient means of determining a dispute about whether a putative debt is due and payable, even if the only disputed issue is one of contractual construction.
39.Where the question of contractual construction has any element of rational controversy the court should exercise restraint.
40.Competing but plausible submissions on a question of contractual construction should lead to a finding that there is a dispute on the question and therefore a dispute as to the existence of the debt the subject of the statutory demand. Consistent with the existing authorities - excluding as a "genuine dispute" only that grounded on feeble legal argument or which is spurious, illusory or misconceived - there is a genuine dispute where a question of contractual construction is subject to rational argument.[31] (footnotes omitted)
[31] C&A Associates Pty Ltd v Fini Group Pty Ltd [38] - [40].
Further, Mitchell JA stated:
90.In my view, the threshold to be met by an applicant seeking to establish the existence of a genuine dispute under s 459H is lower than that facing a defendant opposing a plaintiff's summary judgment application. The question on a summary judgment application is whether there is such a high degree of certainty about the ultimate outcome of the action if it went to trial that summary judgment ought properly be granted. If so, it will be in the interests of justice to resolve the controversy by entering judgment at an early stage of the proceedings. In a summary judgment application, the court resolves the dispute by entering judgment where the court is able to make a certain and concluded determination that the plaintiff would succeed. Even a strong claim may be genuinely disputed, and the proper course for a claimant in those circumstances is to commence proceedings and seek summary judgment.
91.On the other hand, the question in the current context is whether the existence of the dispute provides a reason, other than insolvency, as to why the demanded amount has not been paid. The question for the court considering an application to set aside a statutory demand is whether the corporation's basis for disputing the debt is so lacking in merit as to indicate that the professed dispute is not genuine, so that it is not a reason for non-payment of the debt.[32] (footnote omitted)
[32] C&A Associates Pty Ltd v Fini Group Pty Ltd [90] - [91].
That the court should exercise restraint in considering questions of construction reflects that this is not even a preliminary judgment as to the merits of any disputed contractual interpretation.
It was common ground between the parties, and correctly so, that Paulsens had the onus to establish that there was a genuine dispute.
Terra Mining's application to amend the Statutory Demand
Turning then to the application to amend the Statutory Demand, which was put, as I understand it, under section 459H of the Act by Terra Mining.
Terra Mining accepts that there is a genuine dispute as to the sum of $303,062.70 in the Statutory Demand which, as I understand it, is effectively the line items from attachment 'DS-10' to the first Sun affidavit which were annotated as 'Amount TBD'.
The application to amend is not opposed.
I would give leave, effectively, to Terra Mining to amend the Statutory Demand to the sum of $6,675,620.65.
That will be reflected in the orders made under s 459H(4) of the Act below.
Consideration of Paulsens' contentions
I now turn to a consideration of Paulsens' contentions.
The first contention as it developed in the hearing, was to the effect that Invoice 3082 did not comply with cl 10.2(e) because it was a composite invoice for August, September, October 2024 and what was contractually required was a separate invoice for each month.
That is, the sum, per se, was not in dispute, which is consistent with what I apprehend to be the natural reading of attachment 'DS-10' to the first Sun affidavit, as discussed above.
I have borne in mind the principles outlined above to the effect that the Court should exercise restraint on disputed questions of construction and the reasons for the exercise of such restraint.
However, simply, I do not accept that the construction put by Paulsens of cl 10.2(e) as it applies to Invoice 3082, is arguable such that it leads to a finding of a genuine dispute.
The invoice is to contain the amount which has been stated on the Monthly Claim. Clause 10.2(e), and the issuing of an invoice by the contractor, comes after a process outlined in cll 10.2(a) - (d).
Via that process information has been supplied by a Monthly Claim or multiple Monthly Claims under cl 10.2(a).
There has then been an opportunity for the principal to accept, amend, or reject via a payment certificate under cl 10.2(b).
If the principal has availed itself of the process of issuing a payment certificate which, as said above, could accept, amend or reject the Monthly Claim, that would lead, under cl 10.2(c) and (d), to an invoice being able to be issued by the contractor for the amount of the payment certificate.
Clause 10.2(e) operates if the principal has not availed itself of the payment certificate process and leads to the contractor being able to invoice the principal amount stated on the Monthly Claim.
I accept that the language of cl 10.2(e) includes 'shall', but the construction that I have just advanced allows for the fact that it could not be sensibly contended that if the contractor did not issue an invoice under cl 10.2(e) that it had breached the Mining Services Contract. But that is, really, to one side.
I am to adopt the stance of a sensible or reasonable business person - and in doing so, I have in mind the principles from the Court of Appeal decisions Wright v Lemon,[33] and Black Box Control Pty Ltd v Terra Vision Pty Ltd[34] to the effect that the proper construction of a commercial contract is to be determined objectively, by reference to what a reasonable business person would have understood the terms to mean.
[33] Wright v Lemon [2024] WASCA 19.
[34] Black Box Control Pty Ltd v Terra Vision Pty Ltd [2016] WASCA 219.
Doing so, I do not understand any commercial rationale, and certainly none was advanced at the hearing, which supports Paulsens' construction that a single invoice was required to be issued under cl 10.2(e) for each particular Monthly Claim.
Further, such a construction is not, in my view, supported by the interpretation provisions of the Mining Services Contract, particularly cl 1.2(d).
It seems to me that a sensible commercial construction would not require a single invoice for each particular Monthly Claim, and it seems to me that there is absolutely no violence done to the regime set out in cl 10.2, by 'allowing' the composite invoice, which is Invoice 3082.
The above analysis of cl 10.2(e) has proceeded on the basis that Paulsens is arguably correct that any non-compliance of that clause would lead to a genuine dispute.
I have not had to decide whether that contention is arguably correct because I have found, if it was, it was unarguably complied with.
If I am wrong about that, I would have found that the mere fact of non‑compliance with cl 10.2(e) here, by Terra Mining, would not lead to the conclusion that there was a genuine dispute.
Factually, it seems to me, that arises from 'DS-10', and the fact that there were only the nominated line items annotated with 'Amount TBD'.
Turning, then, to a consideration of cl 17.
Paulsens accepted in the hearing, with respect, correctly, that Terra Mining could, under the Mining Services Agreement, issue the Statutory Demand.
That is, it was accepted that there was no prohibition in the Mining Services Contract, in cl 17 or otherwise, which prevented Terra Mining from issuing the Statutory Demand.
Clause 17.1, if it worked against any party in the application, would seem to work against Paulsens. However, it was not put by Terra Mining against Paulsens in this application.
As I understand the authorities which were captured or collected by Palmer J (as he then was) in Arris Investments Pty Ltd v Fahd,[35] particularly at [15] - [20]:
1.a dispute clause, or an arbitration or mediation clause, does not, of itself, lead to a statutory demand being set aside;
2.if there is a dispute found as to the claim in the statutory demand, then that, in effect of itself, should lead to the statutory demand being set aside, in any event; and
3.that there is such a clause may be a weighty factor in a consideration of whether there is some other reason why the statutory demand should be set aside under s 459J(1)(b).
[35] Arris Investments Pty Ltd v Fahd [2010] NSWSC 309.
Here, whether there is a dispute comes back to, effectively, the sole contention put by Paulsens about cl 10.2(e), which I have already considered.
Clause 17 here, in my view, adds nothing to that, and I have already decided for the reasons given that cl 10.2(e), as it is said to apply to Invoice 3082, does not give rise to a genuine dispute.
Orders
1.The application be dismissed.
2.Pursuant to s 459H(4) of the Act:
(a)the statutory demand be varied to the sum of $6,675,620.65; and
(b)it is declared that the Statutory Demand had effect as so varied from when it was served on the plaintiff.
3.The plaintiff pay the defendant's costs of the application to be taxed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IF
Associate to the Hon Justice Howard
6 JUNE 2025
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