Santos Limited v Fluor Australia Pty Ltd - [2016] QSC 129

SUPREME COURT OF QUEENSLAND

CITATION:

Santos Limited v Fluor Australia Pty Ltd [2016] QSC 129

PARTIES:

SANTOS LIMITED
ABN 80 007 550 923

(applicant)

v
FLUOR AUSTRALIA PTY LTD
ABN 28 004 511 942

(respondent)

FILE NO/S:

SC No 4848 of 2016

DIVISION:

Trial Division

PROCEEDINGS:

Originating application filed 13 May 2016 and application filed 30 May 2016

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

13 June 2016

DELIVERED AT:

Brisbane

HEARING DATE:

2 June 2016

JUDGE:

Douglas J

ORDERS:

1. Stay the principal proceedings filed 13 May 2016 pending the performance of the parties’ obligations pursuant to cl 60 of the contract between them.

2. Hear the parties further as to the form of the order and costs.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – SETTLEMENT OF DISPUTES – where Santos Limited (“Santos”) filed an application seeking an order that Fluor Australia Pty Ltd (“Fluor”) provide it with access to certain requested materials pursuant to a clause in the EPC contract between the parties – where Santos and Fluor are in a dispute about whether the requested materials must be provided pursuant to the EPC contract – where the parties have already exchanged detailed correspondence in relation to the issues in dispute – where Fluor is seeking a stay of Santos’s application pending the parties’ compliance with the dispute resolution process provided for in the EPC contract – where the parties used the contractual dispute resolution process in previous disputes and disagree about the utility of the process in the settlement of those disputes – where the parties have succeeded in compromising disputes under the EPC contract in the past – where Santos submits that the nature of the dispute makes it unlikely to be amenable to resolution by the dispute resolution process provided for in the EPC contract – whether the principal proceedings should be stayed pending the performance of the dispute resolution process provided for in the EPC contract

Admiral I Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105, distinguished

AMCI (IO) Pty Ltd v Aquila Steel Pty Ltd [2010] 2 Qd R 101; [2009] QSC 139, cited

Cable & Wireless plc v IBM UK Ltd [2002] EWHC 2059 (Comm); [2002] CLC QB 1319, applied

Dance With Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332, cited

Downer EDI Mining Pty Ltd v Wambo Coal Pty Ltd [2012] QSC 290, cited

United Group Rail Services Ltd v Rail Corporation NSW (2009) 74 NSWLR 618; [2009] NSWCA 177, applied

Welker & Ors v Rinehart & Anor (No 2) [2011] NSWSC 1238, cited

Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563; [2005] QSC 135, considered

COUNSEL:

D G Clothier QC, with C A Schneider for the applicant

G A Thompson QC, with D M Turner for the respondent

SOLICITORS:

Corrs Chambers Westgarth for the applicant

Jones Day…

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.

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Details

Case: [2016] QSC 129
Decision Date: 13 June 2016

CaseChat Overview and Summary

Santos Limited has filed an application seeking an order that Fluor Australia Pty Ltd provide it with access to certain requested materials. The parties are in dispute as to whether the requested materials must be provided pursuant to the Engineering, Procurement and Construction contract between the parties. Santos and Fluor have already exchanged detailed correspondence in relation to the issues in dispute, with Fluor now seeking a stay of Santos’s application pending the parties’ compliance with the dispute resolution process provided for in the EPC contract. The parties have used the contractual dispute resolution process in previous disputes and disagree about the utility of the process in the settlement of those disputes. Santos submits that the nature of the dispute makes it unlikely to be amenable to resolution by the dispute resolution process provided for in the EPC contract. The court was required to determine whether the principal proceedings should be stayed pending the performance of the dispute resolution process provided for in the EPC contract.

The court found that the enforceability of the dispute resolution procedure adopted by the parties in cl 60 was undoubted. The countervailing considerations urged to justify the grant of a stay were not sufficient, in the court’s view, to make the reference to those procedures “obviously futile” or “so slight as not to justify enforcing the agreement”. The parties have succeeded in compromising such disputes in the past. The enforcement of the obligation in cl 60 will not deprive Santos of the right to have its claim determined judicially and may advance the public interest in obliging the parties to adhere to their agreement. That public interest lies in avoiding the potentially unnecessary use of court time and reducing the costs of civil litigation to both the public and litigants.

The court concluded that there is nothing to suggest that Santos will be prejudiced by being obliged to comply with its agreement. The history of previous dealings between the parties does not satisfy the court that there is no point in enforcing this agreement as it does demonstrate compromise by both parties.

The court ordered that the principal proceedings filed 13 May 2016 be stayed pending the performance of the parties’ obligations pursuant to cl 60 of the contract. The court also directed the parties to further appear to address the form of the order and costs.

Orders

Orders of the court

1. Stay the principal proceedings filed 13 May 2016 pending the performance of the parties’ obligations pursuant to cl 60 of the contract between them.

2. Hear the parties further as to the form of the order and costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Here it is also significant that there is no explanation in the material for the delay between Fluor’s letter of 11 February 2016 making its position clear at that stage and the delay in the commencement of this proceeding until 13 May 2016. The cl 60 process could readily have been initiated and completed by the parties within that period. Santos’s failure to initiate the process then provides no good reason why it should now sidestep it with a view to having speedier access to the Court. Conclusion The enforceability of the dispute resolution procedure adopted by the parties in cl 60 is undoubted. Here the countervailing considerations urged to justify the grant of a stay are not sufficient, in my view, to make the reference to those procedures “obviously futile” or “so slight as not to justify enforcing the agreement”. The parties have succeeded in compromising such disputes in the past. The enforcement of the obligation in cl 60 will not deprive Santos of the right to have its claim determined judicially and may advance the public interest in obliging the parties to adhere to their agreement. That public interest lies in avoiding the potentially unnecessary use of court time and reducing the costs of civil litigation to both the public and litigants, as was submitted by Mr Thompson. That the dispute may be principally about a question of construction of the contract does not necessarily detract from the policy reasons for enforcing this type of dispute resolution clause for the reasons expressed by Colman J in Cable & Wireless plc v IBM UK Ltd. A fall-back position urged on behalf of Santos was that, because of the existing correspondence between the parties at the “Representative” level, I should stay only the operation of cll 60.2 to 60.4, leaving the procedure under cl 60.5 to go ahead with a “without prejudice” meeting of the more senior “Dispute Resolution Representatives”. I am disinclined to do even that. What the parties agreed to do was to have discussions. The exchange of correspondence, even of the nature of the correspondence in this case, is no necessary substitute for a meeting between senior officers of the company who can explore each other’s points of view face to face and in good faith with a view to reaching a commercial solution. That “formal process of negotiation” not uncommonly helps parties reach an agreed position.[16] [16] Downer EDI Mining Pty Ltd v Wambo Coal Pty Ltd [2012] QSC 290 at [29]. There is nothing to suggest that Santos will be prejudiced by being obliged to comply with its agreement. The history of previous dealings between the parties does not satisfy me that there is no point in enforcing this agreement as it does demonstrate compromise by both parties. Orders Accordingly I shall stay the principal proceedings filed 13 May 2016 pending the performance of the parties’ obligations pursuant to cl 60 of the contract. I shall hear the parties further as to the form of the order and costs.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Santos Limited v Fluor Australia Pty Ltd [2016] QSC 129
PARTIES:	SANTOS LIMITED ABN 80 007 550 923 (applicant) v FLUOR AUSTRALIA PTY LTD ABN 28 004 511 942 (respondent)
FILE NO/S:	SC No 4848 of 2016
DIVISION:	Trial Division
PROCEEDINGS:	Originating application filed 13 May 2016 and application filed 30 May 2016
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	13 June 2016
DELIVERED AT:	Brisbane
HEARING DATE:	2 June 2016
JUDGE:	Douglas J
ORDERS:	1. Stay the principal proceedings filed 13 May 2016 pending the performance of the parties’ obligations pursuant to cl 60 of the contract between them. 2. Hear the parties further as to the form of the order and costs.
CATCHWORDS:	CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS – SETTLEMENT OF DISPUTES – where Santos Limited (“Santos”) filed an application seeking an order that Fluor Australia Pty Ltd (“Fluor”) provide it with access to certain requested materials pursuant to a clause in the EPC contract between the parties – where Santos and Fluor are in a dispute about whether the requested materials must be provided pursuant to the EPC contract – where the parties have already exchanged detailed correspondence in relation to the issues in dispute – where Fluor is seeking a stay of Santos’s application pending the parties’ compliance with the dispute resolution process provided for in the EPC contract – where the parties used the contractual dispute resolution process in previous disputes and disagree about the utility of the process in the settlement of those disputes – where the parties have succeeded in compromising disputes under the EPC contract in the past – where Santos submits that the nature of the dispute makes it unlikely to be amenable to resolution by the dispute resolution process provided for in the EPC contract – whether the principal proceedings should be stayed pending the performance of the dispute resolution process provided for in the EPC contract Admiral I Pty Ltd v Leighton Contractors Pty Ltd [2005] NSWSC 1105, distinguished AMCI (IO) Pty Ltd v Aquila Steel Pty Ltd [2010] 2 Qd R 101; [2009] QSC 139, cited Cable & Wireless plc v IBM UK Ltd [2002] EWHC 2059 (Comm); [2002] CLC QB 1319, applied Dance With Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332, cited Downer EDI Mining Pty Ltd v Wambo Coal Pty Ltd [2012] QSC 290, cited United Group Rail Services Ltd v Rail Corporation NSW (2009) 74 NSWLR 618; [2009] NSWCA 177, applied Welker & Ors v Rinehart & Anor (No 2) [2011] NSWSC 1238, cited Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563; [2005] QSC 135, considered
COUNSEL:	D G Clothier QC, with C A Schneider for the applicant G A Thompson QC, with D M Turner for the respondent
SOLICITORS:	Corrs Chambers Westgarth for the applicant Jones Day…