Santos Ltd v Fluor Australia Pty Ltd - [2017] QSC 153

SUPREME COURT OF QUEENSLAND

CITATION:

Santos Ltd v Fluor Australia Pty Ltd [2017] QSC 153

PARTIES:

SANTOS LIMITED ABN 80 007 550 923

(plaintiff)

v
FLUOR AUSTRALIA PTY LTD ABN 28 004 511 942

(defendant)

FILE NO/S:

No 12939 of 2016

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

26 July 2017

DELIVERED AT:

Brisbane

HEARING DATE:

18 May 2017

JUDGE:

Flanagan J

ORDER:

1.    I adjourn Fluor’s application to strike out paragraphs 92, 93, 94, 106 (to the extent it incorporates 105(a) and 105(c)), 185, 186, 187, 190 and 191 of the statement of claim.

2.    The balance of Fluor’s application filed 6 April 2017 is dismissed.

3.   I will hear the parties as to costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OR DEFENCE – where the defendant applies to strike out paragraphs of the plaintiff’s claim – where the relevant parts of the statement of claim concern breaches of subcontracts the defendant entered into to carry out the work under the contract - whether paragraphs of the statement of claim fail to disclose a reasonable cause of action - whether the statement of claim identifies “global” or “total costs” claims – whether there is a “global” or “total costs claim” – whether a “global” or “total costs” claim is permissible in the circumstances – whether it is sufficient for a plaintiff to plead the material facts which are said to give rise to a causal connection

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – EMBARRASSING, TENDENCY TO CAUSE PREJUDICE, SCANDALOUS, UNNECESSARY ETC OR CAUSING DELAY IN PROCEEDINGS – where the defendant applies to strike out paragraphs of the plaintiff’s claim - whether paragraphs of the statement of claim do not sufficiently inform the defendant of the case to be met – whether the statement of claim would impose an unreasonable or unfair burden on the defendant that would prejudice, embarrass or delay a fair trial – whether the plaintiff sufficiently pleaded a causal connection - whether the plaintiff sufficiently pleads the causal connection between the breaches and amount claimed

Uniform Civil Procedure Rules 1999, r 171

Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215, cited
DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170, applied
John Doyle Constructions Ltd v Laing Management (Scotland) Ltd [2004] BLR 295, cited
John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd & Anor (1996) 8 VR 681, cited
Kousa International LLC v CPB Contractors Pty Ltd [2017] WASC 11, applied
LBS Holdings Pty Ltd v The Body Corporate for Condor Community Title Scheme 13200 & Ors [2004] QSC 229, cited
Mainteck Services Pty Ltd v Stein Heurtey SA & Anor [2014] NSWCA 184, cited
McGrath Corporation Pty Ltd v Global Construction Management (Qld) Pty Ltd [2011]…

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: [2017] QSC 153
Decision Date: 26 July 2017

CaseChat Overview and Summary

Santos Ltd has filed a claim against Fluor Australia Pty Ltd seeking the payment of approximately $1.4 billion as a debt due and owing under a written contract between the parties. The contract was entered into on 13 January 2011 and amended by deed on 26 August 2011. The claim relates to the engineering, procurement, and construction of certain facilities required by Santos for the GLNG Project, which involves the extraction of coal seam gas from the Fairview and Roma coal seam fields in Queensland. The statement of claim comprises six parts, with the strike-out application concerning Parts C and D. Part C deals with breaches of various subcontracts that Fluor entered into for the purposes of the work to be undertaken pursuant to the contract. Part C.1 alleges breaches of a subcontract between Fluor and Clough Seam Gas Pty Ltd and Downer EDI Engineering Power Pty Ltd, together trading as Clough Downer JV (the CDJV subcontract). Part C.2 concerns alleged breaches by Fluor of a subcontract entered into with McConnell Dowell Constructors (Aust) Pty Ltd (the McConnell Dowell subcontract). Part C.3 concerns a subcontract between Fluor and Tenix Australia Pty Ltd in which Tenix agreed to perform works comprising the design and construction of an overhead high voltage power distribution and sub-transmission network. Part C.4 concerns a subcontract between Fluor and Hitec Welding Pty Ltd entered into on 8 August 2012. Fluor does not press its strike-out application in relation to paragraphs 229 and 230 of the statement of claim, which concern the alleged breach by Fluor of the Hitec subcontract.

The court was required to decide whether certain paragraphs of the statement of claim fail to disclose a reasonable cause of action or defence, whether the statement of claim identifies “global” or “total costs” claims, and whether it is permissible for a plaintiff to plead the material facts which are said to give rise to a causal connection. The court was also required to decide whether the statement of claim would impose an unreasonable or unfair burden on the defendant that would prejudice, embarrass, or delay a fair trial. The court found that the statement of claim sufficiently pleaded the material facts which are said to give rise to a causal connection. The court also found that the statement of claim did not identify a “global” or “total costs” claim. The court held that it is sufficient for a plaintiff to plead the material facts which are said to give rise to a causal connection. The court found that the statement of claim did not impose an unreasonable or unfair burden on the defendant that would prejudice, embarrass, or delay a fair trial.

The court adjourned Fluor’s application to strike out certain paragraphs of the statement of claim and dismissed the balance of Fluor’s application. The court will hear the parties as to costs.

Orders

Orders of the court

1. I adjourn Fluor’s application to strike out paragraphs 92, 93, 94, 106 (to the extent it incorporates 105(a) and 105(c)), 185, 186, 187, 190 and 191 of the statement of claim.

2. The balance of Fluor’s application filed 6 April 2017 is dismissed.

3. I will hear the parties as to costs.

Background

Background to the litigation

The application is brought pursuant to Rule 171 of the Uniform Civil Procedure Rules 1999. Fluor’s application does not identify which of the grounds set out in Rule 171 are relied on to strike out the specified paragraphs of the statement of claim. From the parties’ written submissions however, it may be accepted that Fluor’s strike out proceeds on the basis that the relevant paragraphs:(a) fail to disclose a reasonable cause of action; and(b)do not sufficiently inform Fluor of the case to be met, and would, if permitted to proceed to trial, impose an unreasonable and unfair burden on Fluor that would prejudice, embarrass or delay a fair trial.[1][1] Fluor’s Outline of Submissions, [39]; Santos’ Outline of Submissions, [1].Background Santos is a proponent of a project to extract coal seam gas from the Fairview and Roma coal seam fields in the Surat Basin in Queensland and to supply that gas for commercial sale and/or conversion to liquefied natural gas. The project is referred to as the GLNG Project. Santos is one of several participants in the GLNG Project. On 13 January 2011 Santos entered into a written contract with Fluor pursuant to which Fluor agreed to engineer, procure and construct certain facilities required by Santos for the GLNG Project (the Work). These facilities included three gas compression plant facilities (Hubs 2, 4 and 5), new wellpads in the fields surrounding the compressor stations and networks of gathering lines to connect each wellpad with a hub. The written contract was amended by deed dated 26 August 2011 (the Contract). By its claim filed 13 December 2016 Santos seeks the payment of an amount of approximately $1.4 billion as a debt due and owing under the Contract. The statement of claim comprises six parts. The strike out application concerns Parts C and D. Part C deals with breaches of various subcontracts that Fluor entered into for the purposes of the Work to be undertaken pursuant to the Contract. Part C.1 alleges breaches of a subcontract between Fluor and Clough Seam Gas Pty Ltd and Downer EDI Engineering Power Pty Ltd, together trading as Clough Downer JV (the CDJV subcontract). The CDJV subcontract was entered into on 17 February 2012. It was in relation to works comprising the construction of facilities and pipelines in the Fairview field. Part C.2 concerns alleged breaches by Fluor of a subcontract entered into on 28 July 2012 with McConnell Dowell Constructors (Aust) Pty Ltd (the McConnell Dowell subcontract). This subcontract concerned works comprising the construction of facilities and pipelines in the Roma field. Part C.3 of the statement of claim concerns a subcontract between Fluor and Tenix Australia Pty Ltd in which Tenix agreed to perform works comprising the design and construction of an overhead high voltage power distribution and sub-transmission network. Part C.4 concerns a subcontract between Fluor and Hitec Welding Pty Ltd entered into on 8 August 2012. Fluor does not press its strike out application in relation to paragraphs 229 and 230 of the statement of claim which concern the alleged breach by it of the Hitec subcontract.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

It follows that paragraph 173 of the statement of claim should not be struck out.Category 4: CDJV acceleration claim Fluor seeks to strike out paragraphs 31, 37, 102 and 106 of the statement of claim. Paragraphs 31 and 37 fall under the heading “Breaches of the CDJV Subcontract” and the subheading “Delays to initial baseline schedule between September 2011 and March 2012”. Paragraphs 31 and 37 need to be understood in the context of their surrounding paragraphs. Paragraph 29 pleads that on 10 November 2011 CDJV submitted to Fluor its initial baseline schedule. This is referred to in the pleading as the November 2011 Baseline Schedule. This schedule included dates by which Fluor was to provide CDJV with certain AFC Drawings and access to parts of the site on which the CDJV Work was to be constructed, as well as the dates by which certain aspects of the CDJV Work were to be commenced and completed. Paragraph 30 pleads that between 14 September 2011 and 1 March 2012 Fluor failed in a number of respects. These include a failure to provide CDJV with AFC Drawings in a manner sufficient to enable CDJV to undertake the relevant Work without delay and, further or alternatively, complete the CDJV Work by the CDJV Milestone Dates. Paragraph 30 makes similar allegations in relation to Free Issue Materials and access. Particulars of these failures are identified in Schedule 5 and in particular 5.1, 5.2 and 5.3. By reference to Schedule 5 Fluor asserts that in respect of the alleged breaches in paragraph 30 Santos purports to provide particulars of 66 individual alleged failures.[58][58] Fluor’s Outline of Submissions in Reply, [58]. Paragraph 31 pleads that as a result of the matters pleaded in paragraph 30:(a) the progress of the CDJV Work was delayed; and(b)further or alternatively, CDJV could not complete the CDJV Work by the CDJV Milestone Dates; and(c) accordingly, Fluor breached certain pleaded terms of the CDJV Subcontract. Paragraph 32 pleads that on 6 February 2012 Fluor requested that CDJV accelerate the activities comprised in the CDJV Work to overcome the effect of the delay in the execution of the CDJV Work described in paragraph 31(a) and to enable CDJV to complete the CDJV Work by the CDJV Milestone Dates. Paragraph 33 pleads that CDJV provided Fluor with its proposal for the acceleration of the activities comprised in the CDJV Work. Paragraph 35 pleads that Fluor approved a document titled “Revision 10E”. It is in this context that paragraph 37 pleads that but for the occurrence of the events that are pleaded in paragraph 30, it would not have been necessary for the activities comprised in the CDJV Work to be accelerated and performed in the matter set out in Schedule 10E. Paragraph 38 pleads that on 5 November 2012 CDJV notified Fluor that CDJV was entitled to be compensated for the extra costs that it had incurred or would incur as a result of the acceleration of activities comprised in the CDJV Work that was required pursuant to Schedule 10E. CDJV’s estimate of the total amount of compensation that it was entitled to claim as a result of this acceleration was $101,250,000.

CITATION:	Santos Ltd v Fluor Australia Pty Ltd [2017] QSC 153
PARTIES:	SANTOS LIMITED ABN 80 007 550 923 (plaintiff) v FLUOR AUSTRALIA PTY LTD ABN 28 004 511 942 (defendant)
FILE NO/S:	No 12939 of 2016
DIVISION:	Trial
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	26 July 2017
DELIVERED AT:	Brisbane
HEARING DATE:	18 May 2017
JUDGE:	Flanagan J
ORDER:	1. I adjourn Fluor’s application to strike out paragraphs 92, 93, 94, 106 (to the extent it incorporates 105(a) and 105(c)), 185, 186, 187, 190 and 191 of the statement of claim. 2. The balance of Fluor’s application filed 6 April 2017 is dismissed. 3. I will hear the parties as to costs.
CATCHWORDS:	PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OR DEFENCE – where the defendant applies to strike out paragraphs of the plaintiff’s claim – where the relevant parts of the statement of claim concern breaches of subcontracts the defendant entered into to carry out the work under the contract - whether paragraphs of the statement of claim fail to disclose a reasonable cause of action - whether the statement of claim identifies “global” or “total costs” claims – whether there is a “global” or “total costs claim” – whether a “global” or “total costs” claim is permissible in the circumstances – whether it is sufficient for a plaintiff to plead the material facts which are said to give rise to a causal connection PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – EMBARRASSING, TENDENCY TO CAUSE PREJUDICE, SCANDALOUS, UNNECESSARY ETC OR CAUSING DELAY IN PROCEEDINGS – where the defendant applies to strike out paragraphs of the plaintiff’s claim - whether paragraphs of the statement of claim do not sufficiently inform the defendant of the case to be met – whether the statement of claim would impose an unreasonable or unfair burden on the defendant that would prejudice, embarrass or delay a fair trial – whether the plaintiff sufficiently pleaded a causal connection - whether the plaintiff sufficiently pleads the causal connection between the breaches and amount claimed Uniform Civil Procedure Rules 1999, r 171 Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215, cited DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170, applied John Doyle Constructions Ltd v Laing Management (Scotland) Ltd [2004] BLR 295, cited John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd & Anor (1996) 8 VR 681, cited Kousa International LLC v CPB Contractors Pty Ltd [2017] WASC 11, applied LBS Holdings Pty Ltd v The Body Corporate for Condor Community Title Scheme 13200 & Ors [2004] QSC 229, cited Mainteck Services Pty Ltd v Stein Heurtey SA & Anor [2014] NSWCA 184, cited McGrath Corporation Pty Ltd v Global Construction Management (Qld) Pty Ltd [2011]…