Santos v Fluor
[2025] QSC 184
•8 August 2025
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SUPREME COURT OF QUEENSLAND
CITATION: Santos v Fluor [2025] QSC 184 PARTIES:
SANTOS LIMITED ABN 80 007 550923 (plaintiff)
v
FLUOR AUSTRALIA PTY LTD
ABN 28 004 511 942
(first defendant)
AND
FLUOR CORPORATION
(second defendant)FILE NO/S: BS 12939/16 DIVISION: Trial Division PROCEEDING: Applications ORIGINATING Supreme Court of Queensland COURT: DELIVERED ON: 8 August 2025 DELIVERED AT: Brisbane HEARING Directions hearing: 18 and 23 May 2023 DATES: Hearing (2023): 17-21 and 24-28 July 2023
Directions hearing: 30 August 2023
Directions hearing: 7 February 2024
Hearing (2024): 12-16, 19-23, 26-29 February 2024, 1, 4-8,
11-15, 18-22 and 25-27 March 2024JUDGE: Freeburn J ORDER: The orders are as follows:
(a)
the application filed by the defendants on 4 April 2023 is dismissed;
(b)
pursuant to rule 505D of the Uniform Civil Procedure Rules 1999, the application filed on 21 August 2023 is allowed in that the court accepts the opinions and findings of the report of the referees to the court dated 14 July 2023;
(c)
that acceptance of the report of the referees is subject to the qualifications and variations stated in these reasons;
(d)
judgment will be given for the plaintiff for a sum, including interest, to be determined in accordance with these reasons;
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(e)
the court will hear the parties on the appropriate orders and directions and on the calculation of interest, and on costs.
CATCHWORDS:
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – TRIAL – MODE OF TRIAL – ASSESSOR, SPECIAL REFEREE ETC – where the plaintiff, Santos, and the defendant, Fluor entered into a contract for the large scale construction of a coal-seam gas project – where the project was over time and over budget – where Santos commenced proceedings for alleged overpayments totalling over $1.4 billion, approximately $140 million for an alleged contravention of Australian Consumer Law, and liquidated damages of $15 million for an alleged failure of Fluor to reach Mechanical Completion by the contractual dates – where all questions arising on the pleadings were referred to three referees for determination – where after 62 sitting days, the referees made a report – where Fluor challenged the findings, and made an application for the court to set aside the orders pursuant to r 502 of the Uniform Civil Procedure Rules 1999 (Qld) – where Santos made a cross application for the court to adopt the report pursuant to r 505D of the Uniform Civil Procedure Rules 1999 (Qld) – whether the court should set aside the orders – whether the court should adopt the report
ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – JURISDICTIONAL MATTERS – where the Court has referred questions arising on pleadings to three referees – where the defendants contend that that the referees failed to comply with the Referral Order – where the defendants argue the referees have not determined the issues on the pleadings – where the defendants contend the referees focussed on the essential arguments of each party on the real issues in dispute as they appeared from the submissions – where the referees’ final report states it does not deal with every variation of every argument put by one party or the other – where the defendants contend for example the referees’ found in favour of the plaintiff’s ‘error in audit’ case on a basis which was not open to them on the pleadings and which had been expressly disavowed by the plaintiff– whether the referees failed to comply with the referral order
ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – BIAS – APPREHENSION OF BIAS – where the Court has referred questions arising on pleadings to three referees – where the defendants contend that that the referees failed to comply with the Referral Order – where the parties agree the parties agreed that the only relevant category is disqualification by conduct – where the defendants submit the referees were affected by apprehended bias – where the
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defendants submit one strong indicator of apparent bias is that the referees afford the parties differential treatment in relation to the parties’ respective expert witnesses – where the defendants submits, for example, that the referees might have had a preconception about the defendants’ responsibility and liability for the project overrun time and costs which exceeded the budget - where the defendants submits, for example, that the referees might have held the view that the defence of the proceedings was improper as constituting an attempt to avoid a liability must necessarily exist - whether the lay minded observer would have a reasonable apprehension of bias based on the referee’s conduct
ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – HEARING – NATURE OF HEARING – where the Court has referred questions arising on pleadings to three referees – where the defendants contend that that the referees denied them procedural fairness – where the defendants argue the reasons in the draft report are inadequate – where the plaintiff submits that the defendants had an opportunity to make further submissions – whether the defendants were denied procedural fairness
ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – GENERALLY – where the Court has referred questions arising on pleadings to three referees – where the defendants contend that that the referees denied them procedural fairness – where the defendants argue the reasons in the draft report are inadequate – where the plaintiff submits that the defendants had an opportunity to make further submissions – whether the defendants were denied procedural fairness
ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – GENERALLY – where the Court has referred questions arising on pleadings to three referees – where the defendants allege that the draft report results in a miscarriage of justice justifying the court setting aside the referral order– where the defendants argue the reasons in the draft report are inadequate – where the defendants submit the referees’ conduct in making of inconsistent findings based on incompatible reasoning regarding matters of importance results in miscarriage of justice – where the defendants submit the manner in which the referees have continued to conduct the reference in regard to dealing with the question of overlap, the issuing of Procedural Order 11 and its consequences result in miscarriage of justice – whether there was a miscarriage of justice
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – TRIAL – MODE OF TRIAL –
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ASSESSOR, SPECIAL REFEREE ETC – where the Court has referred questions arising on pleadings to three referees – where were three referees – where the three referees consisted of two retired judges and a senior counsel specialising in building and construction law – where the plaintiff seeks an order pursuant to r 505D of the Uniform Civil Procedure Rules 1999 (Qld) to adopt the report – where the relevant principles are stated in Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd – where parties contest the application of principles 5,6,7, 8 and 10 of Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd – whether the principles in Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd can be applied in full
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where a clause of the contract between the parties required the plaintiff to issue payment certificates to the defendant upon receipt of a payment claim made by the defendant – where the plaintiff sought recovery of purported overpayments to the defendant through the issuance of negative payment certificates under the clause – where the referees construed the clause such that it permitted the plaintiff to issue negative payment certificates to recover purported overpayments from the defendant – whether the referees erred in their construction of this clause
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where the plaintiff sought to recover certain payments made to the defendant because the materials provided for those payments failed to comply with requirements under the contract – where the referees permitted the plaintiff to recover such costs from the defendant for that reason – where the defendant submitted that, by the purported application of a clause in the contract which permitted the recovery of defective work undertaken by subcontractors in certain circumstances, the costs of those claims could not be recovered by the plaintiff – where the purported application of that clause was not completely pleaded in the defendant’s defence – where the referees did not have regard to that clause in determining whether the plaintiff could recover certain payments from the defendant – whether the referees erred by failing to have regard to the application of that clause
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – where a clause in
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the contract between the plaintiff and defendant provided that the aggregate liability of the defendant to the plaintiff arising out of the contract was limited to a certain amount – where the defendant submitted that that clause limited the defendant’s liability to repay the plaintiff for certain amounts payable through the plaintiff issuing negative payment certificates under the contract – whether the referees erred in their conclusion that the clause limiting liability did not apply to sums payable by the defendant for the issuance of negative payment certificates by the plaintiff
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS -where the applicant submitted that the referees erroneously interpreted a clause in the contract between the parties – where that clause had been interpreted in previous litigation between the parties by the Queensland Court of Appeal – where the referees concluded that the Court of Appeal’s interpretation of the clause was correct – whether the referees properly construed the clause in the contract
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS - Where the plaintiff submits Fluor had breached its subcontract with CDJV and McConnell Dowell – where the plaintiff sought to establish fluor’s breach of the respective subcontracts was a result of the defendants’ failure or delay in providing AFC drawings– where the plaintiff sought to establish Fluor’s breach of the subcontracts was a result of the provision of defective Free Issue Material in the first instance - where the plaintiff sought to establish Fluor’s breach of the respective subcontracts by their delay in providing non-defective and compliant Free Issue Material - where the plaintiff sought to establish Fluor’s breach of the respective subcontracts were a result of fluor’s delay in providing authorisations required for subcontractors to access certain areas of land to construct gathering lines – whether the referees correctly interpret the subcontracts
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – DISCHARGE, BREACH AND DEFENDES TO ACTION FOR BREACH - Where the plaintiff submits that the defendants’ breach of a subcontract resulted in performance of the works under the subcontract to be delayed – where the defendants incurred Time-related indirect costs both charged by the subcontractors, as well as their own – where the plaintiff submits those costs where excluded costs under the contract – where the plaintiff submits the defendants claimed those costs and the plaintiffs paid them – where the plaintiff contends it was entitled to issue a negative payment certificate under the contract to have those costs repaid – where
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the defendants contend that there is a significant causation issue in relation to all of the plaintiff’s delay claims – whether plaintiff failed to prove causation at the reference
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PRODECURAL ASPECTS OF EVIDENCE – EXPERT REPORTS AND EXPERT EVIDENVE – OTHER MATTERS Where the plaintiff and the defendants relied on the expert evidence of their respective programming experts – were wrong to accept the plaintiff’s expert’s findings regarding the critical path – where the plaintiff submits the referees failed engage with its submissions regarding why the plaintiff’s expert’s opinion was preferred to the defendants’ expert opinion regarding the connections design – where the defendants submit the referees’ criticism of their programming expert’s reference to CDJV’s manpower was erroneous – where the defendants allege the plaintiff’s programming expert uses unverified date – where the defendants submit their programming expert’s opinion on concrete foundations being concurrently critical on Hub 4 between 7 September 2012 and 14 December 2012 should have been accepted by the experts – where the defendants submit that it made additional criticisms of the plaintiff’s programming expert’s conclusions as to the delay claims that were not addressed by the referees – where the defendants submit the referees erred in accepting the plaintiff’s programming experts opinion on mitigation analysis – where the defendants submit the referees erred in accepting the plaintiff’s programming experts over their expert’s opinion as to the delay to progress due to unavailability of steel – where the defendants submit that, contrary to the referees’ view, the plaintiff’s expert’s evidence as to the fabrication being delayed by increase in tonnage was undermined by the defendants’ expert – where the defendants submit the referees erred in accepting the plaintiff’s expert’s evidence as to a range of issues in relation the allegation that the defendant’s delayed and/or non-compliant provision of certain carbon steel fittings caused critical delays – where the defendants contend that the referees erred in accepting the plaintiff’s expert’s opinion that the critical path moved to spool fabrication immediately upon the issuing of the stop work order – where the defendants contend that the referees erred in accepting that the database used for assessing the progress of aboveground piping by the plaintiff’s programming expert was better than the defendant’s programming expert – where the defendants contend that the plaintiff’s programming expert erred in her analysis of the NEWS data and that the referees erroneously accepted that – where the defendants contend that the referees do not adequately address their submissions – where the defends submit that the referees prejudged a variety of issues which the programming experts provided their evidence on – whether the
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referees erred in accepting aspects of the plaintiff’s
programming expertCONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF THE WORK – TIME – where the referees’ report concluded that the applicant’s breach of contract caused two periods of critical delay on a portion of the contract described as Hub 2 – where the applicant submitted that the referees insufficiently considered their evidence and submissions in reaching this conclusion – whether the referees erred in reaching their conclusion that the applicant’s breach of contract caused two periods of delay on Hub 2
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF THE WORK – TIME – where the referees’ report concluded that the applicant’s breach of contract caused critical delay under the contract – where the applicant challenged the finding that the applicant’s breach caused the critical delay – whether the referees erred in their conclusion that the applicant’s breach of contract caused critical delay
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF THE WORK – TIME – where, pursuant to the contract between the parties, the defendant agreed to engineer, procure and construct a network of various gas and water pipelines – where the plaintiff made four claims of costs which were excluded from payment to the defendant by reason of alleged breaches of the defendant’s subcontract which caused delay – where the referees upheld the delays claims sought by the plaintiff – where the defendant submitted, for a number of reasons, that the referees erred in upholding the delay claims – where the defendant further submitted that certain findings by the referees were manifestly unreasonable – where the defendant further submitted that evidence given by an expert witness should not have been accepted – whether the referees erred in upholding the four claims of costs by the plaintiff.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF THE WORK – TIME – where the plaintiff alleged that the defendant caused delay in the construction of gas and water pipelines by the defendant at Roma Field – where the plaintiff brought four delay claims against the defendant – where the referees accepted all four of the plaintiff’s claims – where the defendant challenged the referees’ finding that the defendant’s breach caused the delay claimed by the four claims – whether the referees erred in their conclusion that the defendant’s breach caused the four delay claims alleged by the plaintiff
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DAMAGES – ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT – VALUATION, COMPUTATION ETC – Where the plaintiff brought claims alleging that Excluded Costs had been paid to Fluor arising from the rectification of defects in certain Free Issue Material – where the defendants allege that the referees failed to address Fluor’s defence – where the defendants allege the referees erred by misconstruing the obligations imposed upon Fluor by the McConnell Dowell subcontract in relation to the Free Issue Material - where the referees found against Fluor’s submission that, in each case, Santos had approved the costs as Actual Costs – whether the referees’ decision to allow this claim is manifestly unreasonable, perverse or otherwise incorrect
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS - Where the plaintiff alleges the defendants breached the contract by producing AFC designs later an agreed schedule – where the plaintiff alleges the late production of design caused critical path delay – where the referees accepted the plaintiff’s submission that on the proper construction of the contract in this respect – where the defendants submit the referees erred in their interpretation Fluor was obliged to produce AFC design in strict accordance with the dates in the EPC Schedule where defendants allege the referees incorrectly construed the contract – whether the referees erred in their interpretation of the contract
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS - Where the plaintiff alleges that the defendants breached the Contract Personally not providing certain structural steel connection design by the time agreed - where the defendants submit it had subcontracted the work of the connections design – where the referees found that the defendants did not subcontract the connections design to CDJV or McConnell Dowell – where the defendants submit that the referees erred in their conclusion that Fluor had not subcontracted the work of preparing the connections design – whether the court should make orders rejecting Part 17 of the referees’ final report, dismissing the delay claims pleaded in this respect or direct that the delay claims in this respect to be the subject of a further hearing
DAMAGES – ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT – VALUATION, COMPUTATION ETC – where a plaintiff cannot obtain a substantial award of damages unless he or she proves both the fact and amount of damage – where a mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best as it can – where the amount of damage must be proved with as much certainty as
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is reasonable in the circumstances – where when the court is assessing damages due allowance can be made for the fact that the calculation of damages may be necessarily based on information that was primarily within the knowledge of the opposite party – where if evidence called by the plaintiff fails to provide any rational foundation for a proper estimate of damages the court should simply decline to make one – where the defendant sought to argue by analogy to global claims, where the causal connection between the matters complained of and their consequences, whether in terms of time or money, are not fully spelt out – whether the claims made by the plaintiff are such that they can be characterised as global claims
PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – where orders were made that referred all the questions arising on the pleadings to three referees – where the defendant argues that the plaintiff’s expert’s report was unreliable – where the defendant argues that the referees’ conclusions on the evidence of the experts before them was wrong – where the referees had the advantage of observing the evidence of the witnesses and their cross-examination – where the referees had an advantage that must be respected by the court – whether the referees’ conclusions should be rejected on the basis of natural justice and burden of proof – whether the referees adjudicated the matter on the basis of notions that were beyond pleadings and were in excess of their jurisdiction – whether the referees’ conclusion is perverse and manifestly unreasonable – whether the referees’ reversed the onus of proof and as such their conclusions should be rejected – whether the referees perversely concluded that the defendant ought to have called evidence to rebut the possibility of acceleration, and in so doing also erred in law – whether the referees perversely concluded that “acceleration” is an alternative to time-shifting without referring to or addressing the defendant’s submissions to the contrary or providing any reasons for their implicit conclusion (or assumption) – whether the referees misapprehended the evidence given by the expert in cross- examination – whether the reference ought to be set aside
PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – where orders were made that referred all the questions arising on the pleadings to three referees – where the defendant submitted to the referees that the plaintiff’s expert’s opinions rested upon assumptions which were unproved and likely to be wrong – where the basis rule provides that an expert opinion is not admissible unless evidence has been, or will be, admitted, which is capable of supporting findings of primary fact which
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are sufficiently like the factual assumptions on which the opinion is based to render the opinion of value – where the referees made a factual determination – where the court should not interfere with that factual determination – whether the defendant’s criticisms were pursuant to the “basis rule” or an attack on the plaintiff’s expert’s reasoning process.
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES OF BREACH OF CONTRACT – DAMAGES – where the subcontract between the defendant and a third party is dated 8 August 2012 – where the subcontract provided for the fabrication and assembly of piping skids and offskid pipework by the third party for use in the constructions of wellpads – where a third party used CS Fittings to assemble the equipment piping skids and offskid pipework – where the defendant supplied the defendant the CS Fittings as Free Issue Material under the subcontract – where the plaintiff claims from the defendant the sum of $14,085,177 as alleged Excluded Costs or non-Actual Costs paid by the plaintiff by reason of alleged breaches by the defendant of its subcontract with a third party – whether the defendant supplied defective CS Fittings to the third party and this constituted a breach of the subcontract – whether the third party incurred additional costs that arose out of the defendant’s breach of the subcontract
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – PERFORMANCE OF WORK – REMEDIES FOR BREACH OF CONTRACT – where the defendant was engaged to design, procure and construct 166 wellpads – where meeting the gas production deadline depended on the completion of the wellpads work – where Fluor estimated the cost of constructing and upgrading the 166 wellpads to be AUS104 million – where the total cost charged to Santos was more than AUD254 million – where Santos claims that Fluor performed the wellpads work inefficiently – where such inefficiencies were said to have increased the cost of that work – where Santos seeks to recover those costs as Excluded Costs – where Santos alleges that the increased costs were occasioned by Fluor’s breaches of the Contract and/or of two subcontracts – where, in Part 20 of their final report, the referees upheld most of Santos’ claim, except in relation to the contention that a breach of the Hitec subcontract caused a loss of productivity in August and September 2012 – where Fluor contends that the findings within Part 20 of the referees’ final report ought be rejected – where Fluor submits, among other things, that the referees failed to consider some of its submissions and that they were denied procedural fairness – whether the referees’ erred in their conclusions in Part 20 of the referees’ final report
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PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS - Where the defendants invite the court to reject part 18 of the referees’ report or make related orders - Where the plaintiff claimed that the defendants wrongly charged the plaintiff for the work of alleged ‘Subcontractors’ as ‘Contractor’s Personnel’ - where plaintiff submitted personnel of TRS and of the labour hire companies were not “Contractor’s Personnel” – where the plaintiff submitted alternatively, if personnel of TRS and of the labour hire companies were “Contractor’s Personnel” then the hourly rates that the defendants charged for work performed by its employees had been impermissibly calculated to include allowances on account of profit – where the defendants submit the referees erred in their interpretation of this aspect of the contract – where the defendants submit the referees misstatement of Fluor’s submissions in material respects is indicative of apprehended bias and entailed a failure to afford procedural fairness to Fluor – whether court should make orders rejecting Part 18 of the referees’ final report, dismissing the claims pleaded in this respect or direct the delay to be the subject of a further hearing
CONTRACTS – MISLEADING AND DECEPTIVE
CONDUCT – BREACH OF WARRANTY – DEICISION BY REFEREES where pursuant to clauses 5.1.2, 5.1.3 and Table 5.2 of schedule 3.1, the defendant was entitled to be paid by the plaintiff remuneration at hourly rates for
personnel of different designations in accordance with a number of classifications under the contract – where the hourly rates for personnel were established by Table 5.2 –where the plaintiff claimed the rates had been calculated to does not dispute the findings of the referees – where the defendant contends, with one exception, that Part 19 of the referees’ report should be rejected on various alternative bases– whether the rates stipulated in the Table had been calculated to include an element of profit – whether Part 19 of the referees’ final report should be rejected – whether the plaintiff’s claim should be dismissed.
include allowances on account of profit – where the plaintiff
pursued that claim on three alternative bases – where the
referees upheld the plaintiff’s first and third alternative but
dismissed the second in Part 19 of the their final report –
where the referees further determined the plaintiff had not
established any entitlement to receive any amount in relation
to the hourly rates charged for the defendant’s personnel that
worked outside of Australia, the US, the UK, the
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PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – REFERENCE AND REMOVAL OF PROCEEDINGS AND APPEAL AND REVIEW WITHIN COURT – where the defendant raised defences alleging estoppel, misleading and deceptive conduct, unconscionable conduct, waiver and election against the plaintiff’s claims before the referees – where the referees did not accept the defendant’s defences – where the defendant submitted that the referees determined certain defences against the defendant without addressing, or without adequately addressing, the evidence – where the referees upheld a defence of misleading and deceptive conduct and estoppel in dismissing one of the plaintiff’s claims – where the defendant submitted that, based on the referees’ reasons leading to that conclusion, that those defences were also applicable to other claims brought by the plaintiff – whether the referees erred in their conclusion that the defendant had not established certain defences
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM – where the referees upheld two aspects of the defendant’s counterclaim – where the defendant submitted that it should have judgment in those two aspects of the counterclaim – where the plaintiff succeeded on other claims brought against the defendant – whether the defendant should have judgment for the two aspects of its counterclaim which were successful – whether the aspects of the defendant’s counterclaim which were successful should be set off by claims in which the plaintiff was successful
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JUDGMENTS AND ORDERS – GENERALLY – FORM OF JUSGMENT OR ORDER – where the plaintiff has issued a corrective payment certificate – were the referees found the defendants are liable to reimburse the plaintiff for a portion of the Corrective Payment Certificate – where the defendants submit the corrective payment certificate was invalid – where the – where Fluor submits the referees failed to consider its opening submissions on the point – where the court has power to open and up and revise the Corrective Payment Certificate – where the Court has power to give effect to the parties underlying rights – where interest should be awarded – whether the court should adopt the referees’ finding on quantum and interest
Civil Liability Act 2003 (Qld), s 22(1)
Evidence Act 1995 (NSW), s 79
Competition and Consumer Act 2010 (Cth) sch 2
Uniform Civil Procedure Rules 1999 (Qld) r 502, r 503, r
505C, r 505D
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AAPT Ltd v Cable & Wireless Optus Ltd (1999) 32 ACSR 63;
[1999] NSWSC 509, considered
Abigroup Contractors Pty Ltd v Sydney Catchment Authority
(No 3) (2006) 67 NSWLR 341; [2006] NSWCA 282,
considered
AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd (2010) 15
BPR 28; [2010] NSWSC 985, cited
AK v Western Australia (2008) 232 CLR 438; [2008] HCA 8,
cited
Allianz Australia Insurance v Mashaghati [2018] 1 Qd R
429; [2017] QCA 127, applied
Amaca Pty Ltd v Ellis (2010) 240 CLR 111; [2010] HCA 5,
cited
Ascon Contracting Ltd v Alfred McAlpine Construction Isle
of Man Ltd (1999) 66 Con LR 119; [1999] All ER (D) 1147,
cited
Australian Broadcasting Commission v Australasian
Performing Right Association Ltd (1973) 129 CLR 99; [1973]
HCA 36, cited
Australian Securities and Investments Commission v Westpac
Banking Corp (No 2) (2018) 357 ALR 240; [2018] FCA 751,
considered
AWG Group Ltd v Morrison [2006] All ER (D) 139 (Jan);
[2006] EWCA Civ 6, applied
Beveridge v Dontan Pty Ltd (1991) 23 NSWLR 13, cited
BHP Petroleum (Australia) Pty Ltd v Sagasco South East Inc
[2001] WASCA 159, cited
Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969,
considered
Brown v King [2023] NSWCA 36, cited
Browne v Dunn (1893) 6 R 67 (HL), applied
Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) [2022]
VSC 13, considered
Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55, cited
Chloride Batteries Australia Ltd v Glendale Chemical
Products Pty Ltd (1988) 17 NSWLR 60, cited
Chocolate Factory Apartments Pty Ltd v Westpoint Finance
Pty Ltd [2005] NSWSC 784, applied
City Inn (Jersey) Ltd v Ten Trinity Square Limited [2008]
EWCA Civ 156, cited
CNY17 v Minister for Immigration and Border Protection
[2019] 268 CLR 76; [2019] HCA 50, cited
Coghlan v Pyoanee Pty Ltd [2003] 2 Qd R 636; [2003] QCA
146, considered
Commonwealth Bank of Australia v Barker (2014) 253 CLR
169; [2014] HCA 32, cited
CS Energy Limited v GPS Power Pty Limited [2021] QCA
194, cited
Currie v Dempsey (1967) 69 SR (NSW) 116; [1967] 2
NSWR 532, applied
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011]
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HCA 21, cited
DL v The Queen (2018) 266 CLR 1; [2018] HCA 26,
explained
Dockside Holdings Pty Ltd v Rakio Pty Ltd (2001) 79 SASR
374; [2001] SASC 78, cited
Esso Australia Resources Pty Ltd v Southern Pacific
Petroleum NL [2005] VSCA 228, cited
FBM Corporation Pty Ltd v Redsilk Enterprises Pty Ltd
[2013] WASC 398, cited
Fitzgerald v Penn (1954) 91 CLR 268; [1954] HCA 74, cited
GEC Marconi Systems Pty Ltd v BHP Information
Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50, cited
Gindy v Capital Lawyers Pty Ltd [2022] ACTCA 66, cited
Gramotnev v Queensland University of Technology [2015]
QCA 127 , cited
H Lundbeck A/S v Sandoz Pty Ltd (2022) 276 CLR 170;
[2022] HCA 4, cited
Haddow v Simala [2010] QSC 245, considered
Halford v Price (1960) 105 CLR 23; [1960] HCA 38, cited
Harris v Morabito Holdings [2018] NSWSC 912, cited
HDI Global Specialty SE v Wonkana No 3 Pty Ltd (2020) 104
NSWLR 634; [2020] NSWCA 296, cited
Heavy Plant Leasing Pty Ltd (In Liq) v McConnell Dowell
Constructors (Aust) Pty Ltd (No 2) (2022) 163 ACSR 562;
[2022] NSWSC 1775, cited
Hume Steel Ltd v Attorney-General (Vic) (1927) 39 CLR 455;
[1927] HCA 24, cited
Ironbridge Holdings Pty Ltd v O'Grady [2020] VSC 344,
considered
Irving v Pfingst [2021] QCA 280, considered
JLW (Vic) Pty Ltd v Tsiloglou [1994] 1 VR 237; [1994]
VicRp 16, cited
Kane Constructions Pty Ltd v Sopov (2006) 22 BCL 92;
[2005] VSC 237, cited
Karry Trading Co Pty Ltd v Asoke Colloboration Ltd [2025]
SADC 63, cited
Kilpatrick Green Pty Ltd v Leading Synthetics Pty Ltd [2016]
VSC 630, cited
Laurelmont Pty Ltd v Stockdale & Leggo (Qld) Pty Ltd
[2001] QCA 212, cited
Lewis v Australian Capital Territory (2020) 271 CLR 192;
[2020] HCA 26, cited
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506;
[1991] HCA 12, cited
Maynard v Dabinett [1999] NSWCA 295, cited
McAlpine Humberoak Ltd v McDermott International Inc (No
1) (1992) 58 BLR 1, cited
McGowan v Commissioner of Stamp Duties [2002] 2 Qd R
499; [2001] QCA 236 , cited
Mikeon Projects Pty Ltd v Staffseal Pty Limited [2022]
NSWSC 170, quoted
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Minister for Immigration and Multicultural Affairs v Jia
(2001) 205 CLR 507; [2001] HCA 17, cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd
(2015) 256 CLR 104; [2015] HCA 37, quoted
Nicholls v Stamer [1980] VR 479; [1980] VicRp 46, quoted
Nobarani v Mariconte (2018) 265 CLR 236; [2018] HCA 36,
Considered
Oakey Coal Action Alliance Inc v New Acland Coal [2019] 2
QR 271; [2019] QCA 184, cited
Origin Energy LPG Ltd v BestCare Foods Ltd [2013]
NSWCA 90, cited
QYFM v Minister for Immigration, Citizenship, Migrant
Services and Multicultural Affairs (2023) 279 CLR 148;
[2023] HCA 15, cited
Realestate.com.au Pty Ltd v Hardingham (2022) 277 CLR
115; [2022] HCA 39, cited
Russell v The Trustees of the Roman Catholic Church
Archdiocese of Sydney (2007) 69 NSWLR 198; [2007]
NSWSC 104, considered
Santos Limited v Fluor Australia Pty Ltd (No 4) [2021] QSC
296, related
Santos Limited v Fluor Australia Pty Ltd [2021] QCA 204,
applied
Santos Limited v Fluor Australia Pty Ltd [2023] QSC 77,
related
Santos Ltd v Fluor Australia Ltd (No 4) [2021] QSC 296,
related
SCAA v Minister for Immigration & Multicultural &
Indigenous Affairs [2002] FCA 668, cited
SCAA v Minister for Immigration & Multicultural &
Secured Income Real Estate (Australia) Ltd v St Martins
Investments Pty Ltd (1979) 144 CLR 596; [1979] HCA 51,
cited
Swain v Waverley Municipal Council (2005) 220 CLR 517;
[2005] HCA 4, considered
Tapp v Australian Bushmen’s Campdraft & Rodeo
Association Limited (2022) 273 CLR 454; [2022] HCA 11,
cited
Telecomputing PCS Pty Ltd v Bridge Wholesale Acceptance
Corporation (Aust) Ltd (1991) 24 NSWLR 513, quoted
Thiess Watkins White Construction Ltd v Commonwealth of
Australia (1998) 14 BCL 61, cited
V601 Developments Pty Ltd v Probuild Constructions (Aust)
Pty Lt, [2021] VSC 849, considered
Vines v Djordjevitch (1955) 91 CLR 512; [1955] HCA 19,
cited
Wallaby Grip Limited v QBE Insurance (Australia) Limited
(2010) 240 CLR 444; [2010] HCA 9, cited
Wardley Australia Ltd v Western Australia (1992) 175 CLR
514; [1992] HCA 55, cited
Webb v The Queen (1994) 181 CLR 41; [1994] HCA 30,
xvi
cited
Wellington v Huaxin Energy [2020] QCA 114, cited
Westpoint Management Ltd v Chocolate Factory Apartments
Ltd [2007] NSWCA 253, cited
Westpoint Management Ltd v Chocolate Factory Apartments
Ltd [2007] NSWCA 253, cited
Whisprun Pty Ltd v Dixon (2003) 234 CLR 492; [2003] HCA
48, cited
White Constructions (NT) Pty Ltd v Commonwealth ofAustralia (1991) 7 BCL 193, considered
COUNSEL: P O’Shea KC with J Rowland KC, D Piggott KC, A Stumer
KC, C Schneider, J Mitchenson and J Menzies for the
plaintiff
S Couper KC with D O’Sullivan KC, J O’Regan, J Baartz, D
Turner, S Eggins, E Robinson, A McKinnon and T Pagliano
for the defendantsSOLICITORS: Corrs Chambers Westgarth for the plaintiff
Jones Day for the defendants
xvii
TABLE OF CONTENTS
PART 1: INTRODUCTION (and an Executive Summary) ...........................................1
PART 2: BACKGROUND ................................................................................................9
PART 3: RELEVANT PRINCIPLES ............................................................................13
PART 4: FAILURE TO COMPLY WITH THE REFERRAL ORDER ....................35
PART 5: APPARENT BIAS ............................................................................................98
PART 6: DENIAL OF PROCEDURAL FAIRNESS ..................................................146
PART 7: MISCARRIAGE OF JUSTICE .....................................................................154
PART 8: INTERPRETATION OF CLAUSE 29.4 ......................................................187
PART 9: INTERPRETATION OF CLAUSE 37.9 ......................................................211
PART 10: INTERPRETATION OF CLAUSE 54.2 ....................................................220
PART 11: MECHANICAL COMPLETION DELAY CLAIM (Liability Issues) ...230
PART 12: DELAY CLAIMS C1 AND C2 ...................................................................235
PART 13: MCCONNELL DOWELL HUB 2 DELAY CLAIMS ..............................434
PART 14: ONGOING DELAYS (HUBS) ....................................................................470
PART 15: FAIRVIEW GATHERING LINES DELAY CLAIMS .............................474
PART 16: ROMA GATHERING LINES DELAY CLAIMS ....................................517
PART 17: DEFECTIVE FIM (FREE ISSUE MATERIALS) .....................................543
PART 18: DELAY CLAIMS IN PART D.1 OF 15ASOC – BREACH OF THE
CONTRACT– SPECIFIC LEGAL ISSUES ................................................548
PART 19: MECHANICAL COMPLETION DELAY CLAIM AND CRITICAL
PATH DELAY CLAIMS – QUANTUM ISSUES .......................................559
PART 20: HITEC CLAIM ............................................................................................637
PART 21: WELLPADS CLAIM ...................................................................................654
PART 22: SUBCONTRACTORS AS CONTRACTORS PERSONNEL .................733
PART 23: PROFIT IN RATES ......................................................................................755
xviii
PART 24: THE ‘CONDUCT DEFENCES’ AND OTHER MATTERS ....................791
PART 25: FLUOR’S COUNTERCLAIM & DISMISSAL OF CDJV CONVERSION
CLAIM .............................................................................................................822
PART 26: THE APPROPRIATE RELIEF ...................................................................823
PART 1: INTRODUCTION (and an Executive Summary)
Executive Summary
This proceeding concerns claims by the plaintiff, Santos Limited as principal (Santos) against the first defendant, Fluor Australia Pty Ltd as contractor, and against Fluor Corporation as guarantor (together, Fluor).[1] This court referred all of the issues arising from the pleadings to a panel of three referees.
[1] For convenience, when referring to the first defendant/contractor, I will use the expression ‘Fluor’.
There are two applications before the court. One is an application by Fluor to set aside the reference which was ultimately heard by the referees over 62 sitting days up to August 2022.[2] In March 2023, the referees provided a draft report to the parties. A month later Fluor brought the first application, an application to set aside the reference (the SA application). The SA application was made on the basis that the reference process was affected by apparent bias, a failure to comply with the referral order, an excess of jurisdiction, a lack of procedural fairness, and because the reference process had become a miscarriage of justice.
[2] There were two further sitting days in April and July 2023.
In July 2023 the court commenced hearing the SA application. It was allocated 10 sitting days from 17 July 2023. In the meantime, on the eve of the hearing of that application, the referees converted their draft report into a final report. That led to Santos bringing the second application, a cross-application (the 505 application), for the court to adopt the referees’ report pursuant to rule 505D of the Uniform Civil Procedure Rules 1999.
Both applications were ultimately heard over a total of 43 sitting days in July 2023 and then in February and March 2024. No evidence was heard during the course of the hearing of the two applications, but the parties referred to and relied on the written and oral evidence and submissions received by the referees during their 62 sitting days.
The SA Application
First, the referees’ draft report referred to and relied on both the pleadings and the very extensive written and oral submissions of the parties. The referees addressed the essential arguments of each party on the real issues in dispute as they appeared from the submissions. It was reasonable for them to do so.
Second, the referees decided the issues in accordance with the pleadings. The examples submitted by Fluor do not demonstrate that the referees strayed beyond the pleadings and thereby failed to comply with the referral order or exceeded their jurisdiction.
Third, apprehended bias will arise where a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial mind to the decision. Such an observer would not conclude apprehended bias here because no issue was taken as to the referees conduct of the reference. The criticisms made by the referees of Fluor, and Fluor’s case and its witnesses were the end-product of their decision-making process and would not have caused the fair-minded lay observer to think that the referees had prejudged the case, or that the referees had brought minds that were other than impartial to the decision-making process.
Fourth, there is no evidence or basis for saying that the referees failed to consider Fluor’s submissions. The referees were not obliged to address, in their reasons, every single argument put by the parties. What was necessary was a basic explanation of the fundamental reasons which led the referees to their conclusions. The referees’ reasons satisfied that requirement.
Fifth, contrary to Fluor’s submissions, there is no separate common law remedy that enables the court to set aside a referral order on the basis of a miscarriage of justice. Instead, the court possesses a broad discretion under rule 502 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) to set aside or vary a referral order or to accept, vary or reject all or part of the referees’ report under rule 505D. Those discretions are, of course, required to be exercised bearing in mind the interests of justice. In any event, the interests of justice are part and parcel of both applications.
Consequently, the SA application will be dismissed.
The 505 (Cross) Application – Legal Issues
The 505 application required the court to exercise the discretion to accept, vary or reject all or part of the referees’ report by applying the principles in Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd.[3] That required the discretion to be exercised in this way:
[3] [2005] NSWSC 784.
(a) the court should re-consider and determine legal issues afresh; but (b) the court should refrain from reconsidering disputed questions of fact unless the referee’s report reveals some error of principle, an absence or excess of jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact-finding.
Thus, the court should not interfere where there was factual material sufficient to entitle the referees to reach the conclusions they did.
The cross-application for the court to adopt the report will be allowed, with some modifications that are identified in these reasons.
There were four significant legal issues, all involving the interpretation of the contract between the parties. The first of those legal issues was whether the Fluor was correct that clause 29.4(b) had the effect that:
(a) Santos was not entitled to issue a ‘negative’ payment certificate requiring Fluor to make a payment in the absence of proof of an error by Santos; and (b) Santos was precluded from issuing such a certificate if it made the payment voluntarily or made the payment with knowledge that the payment was not payable under the contract.
The referees found against Fluor on the first of those arguments and in favour of Fluor on the second of those arguments. However, the referees found as a fact that Santos did not actually know that it was paying amounts part of which were Excluded Costs under the contract, though it became suspicious over time that it was being overcharged.
In my view, the referees’ interpretation of clause 29.4 of the contract was correct as to the first argument but incorrect as to the second. The words of clause 29.4, and the context, do not make Santos’ knowledge in making the payments relevant at all.
Second, Fluor relied upon clause 37.9 of the contract as an answer to five of Santos’ claims that it paid Excluded Costs because Fluor had supplied Free Issue Materials that did not comply with the specifications for those items. Fluor argued that the referees did not address Fluor’s argument that clause 37.9 operated to deem, as Actual Costs, the costs claimed by reason of the supply of defective materials. Fluor is correct that the referees did not substantively deal with this legal issue. However, the issue was not adequately pleaded or proved by Fluor. And, even if it had been adequately pleaded and proved, on the proper interpretation of clause 37.9, the defence did not properly extend to the costs of consequent delay and/or disruption.
Third, Fluor raised a limitation of liability provision in the clause 54.2 of the contract as a defence. In my view the referees were correct to adopt a narrow interpretation of clause 54.2. That clause does not limit the alleged liability of Fluor to repay what was said to be Excluded Costs. In short, the limitation did not comprehend the price paid or to be paid under the contract.
Fourth, Santos sought to recover from Fluor its Mechanical Completion Delay claim. That was a claim to recover from Fluor sums paid for time related indirect costs paid in the period between the date for Mechanical Completion and the date when Mechanical Completion was achieved. In the absence of a delay notice, those costs were, in effect, barred by clause 23 of the contract. The referees found that the claims were valid and followed the Court of Appeal’s 2021 decision in Santos Limited v Fluor Australia Pty Ltd.[4] This court is bound to follow that decision.
[4] [2021] QCA 204.
The 505 (Cross) Application – Factual Issues
The referees rejected Santos’ largest claim, the CDJV Conversion claim. However, a number of other claims made by Santos succeeded and the referees’ recommended declarations to the effect that Santos was entitled to claim those amounts back from Fluor. Parts 12 to 23 of these reasons involve a consideration of a large number of submissions made by Fluor as to why the referees were wrong to find in favour of Santos.
Some of those issues involve arguments about the pleadings, and about legal issues and the application of legal principle, and about the factual findings made by the referees. It is impractical to try to summarise those issues here.
However, it is clear that the referees have grappled with and decided the real issues. The referees’ report does not reveal any error of principle, or an absence or excess of jurisdiction, or a patent misapprehension of the evidence, or perversity or manifest unreasonableness in fact finding.
To use the words of the authorities,[5] having closely scrutinised the referee’s report, the court is left with a comfortable feeling of satisfaction that the factual issues have been properly explored and considered by the referees and the court declines to interfere in the various findings made.
[5] See Part 3.
The Result
The referees’ report should be adopted by the court, with any necessary modifications in light of these reasons. There are three variations or qualifications to the referees’ report that need to be resolved.
The referees concluded that the clause 29.4 payment certificate on which Santos relied was ineffective because it claimed substantially more than the amount that was properly due. I do not agree. In my view judgment should be entered, with (simple) interest, but subject to the three variations/qualifications.
Background
Applegarth J described the parties in this proceeding as being engaged in litigation on a monumental scale arising from the construction of the upstream component of a major coal-seam gas project between 2011 and 2014.[6]
[6] This was the description given to the dispute by Applegarth J in April 2023 in Santos Limited v Fluor Australia Pty Ltd [2023] QSC 77 at [1].
The Gladstone Liquified Natural Gas Project (the GLNG Project) is a coal seam gas to liquified natural gas project in central and southern Queensland. The GLNG Project involves the extraction of coal seam gas in fields in central southern Queensland, including at Fairview and Roma, and, after initial processing, the transportation of that gas by a long-distance gas pipeline to Curtis Island at Gladstone. There the gas is liquified into liquified natural gas and loaded onto ships.
The proponents of the GLNG Project were a joint venture of Santos (30 per cent), Petronas (27.5 per cent), Total (27.5 per cent) and Kogas (15 per cent). The components of the GLNG Project at and near the fields are referred to as being “upstream”. The gas transmission pipeline and the facilities on Curtis Island are referred to as being “downstream”. The GLNG Project required:
(a) the development of many hundreds of wells at the upstream fields; (b) the development of upstream surface facilities, including: (i) wellpads;
(ii) gas and water gathering networks;
(iii) nodal and hub compressor stations;
(iv) water treatment facilities;
(v) at Roma, underground gas storage and associated injection and withdrawal facilities;
(c)
construction of the downstream gas transmission pipeline to transport gas to Curtis Island;
(d)
construction of the downstream liquified natural gas plant at Curtis Island together with associated infrastructure such as port facilities.
This proceeding relates to an upstream component of the overall GLNG Project. That component is referred to as the project.
The parties entered into a contract in about 13 January 2011. That contract was subsequently amended on or about 19 August 2011.[7] By the contract, as amended, Fluor agreed to engineer, procure and construct the following facilities:
[7] The amended contract altered the method for payment of Fluor. The method of payment is discussed later.
(a) three gas compression plant facilities (each a Hub) and associated utilities and infrastructure, at the following three locations in the Fairview and Roma Fields: (i) north-east of Injune (Hub 5);
(ii) east of Injune (Hub 4); and
(iii) east north-east of Roma (Hub 2);
(b) modifications to pre-existing gas compression facilities; (c) wellpads at various locations throughout the Fairview and Roma Fields, and associated infrastructure and facilities, including water and gas flow lines to transport CSG and associated water from the wellpads to the Hubs; and (d) roads, construction lay-down areas, high voltage transmissions lines from the Hubs to the wellpads and other facilities.[8] [8] The summary of the Project in these paragraphs is taken from Fluor’s SA submissions at [31]-[37]. The description is not in dispute.
Santos’ claims against Fluor can be categorised into these three categories:
(a)
an entitlement to recover alleged overpayments of the contract price totalling over $1.4 billion (the overpayment claims);
(b)
damages in the amount of approximately $140 million, for breach of a collateral contract or for misleading or deceptive conduct in contravention of the Australian Consumer Law, on the basis that the labour rates charged by the first defendant on the project allegedly impermissibly included an allowance for profit (the profit- in-rates claims);
(c)
liquidated damages of $15 million, for the alleged failure of the first defendant to achieve “Mechanical Completion” of certain “Parts” of the works by the contractually required dates (the liquidated damages claim).[9]
[9] Fluor summarised the claims in Fluor’s SA submissions at [82].
The Reference
On 15 February 2021, and subsequently, Bradley J made orders that referred all questions arising on the pleadings to three referees.[10] Those referees were the Hon. Robert McDougall KC, the Hon. Richard Chesterman KC and Mr Michael Rudge SC. Hearings were held before the referees for a total of 62 sitting days between November 2021 and August 2022.[11] There were two further sitting days before the referees in April and July 2023.
[10] The referral was pursuant to Uniform Civil Procedure Rules 1999, r 501.
[11] This summary of the proceedings before the referees is deliberately brief. Fluor have summarised the proceedings from the time of the referees’ appointment at Fluor’s SA submissions, [56]-[74].
It is fair to say that the referees were disgruntled about the volume of the evidence put before them. Their final report explains that there were some 171 lay witness statements, 76 expert reports, eight joint expert reports, 6,115 pages of oral evidence and many, many thousands of documentary exhibits – not all of them short.
The referees were also displeased with the volume of submissions. As they explained in the final report, “the parties inflicted prodigious quantities of submissions on us”. Fluor itself provided to the referees over 4,600 pages of written opening, closing and reply submissions, and more than two days of oral closing submissions.[12] Santos’ submissions were similar in scale. Santos estimates that the referees were given nearly 10,000 pages of submissions by the parties.[13]
[12] Santos’ SA submissions at [15].
[13] Santos’ SA submissions at [60].
As will be seen, the fact that the parties, to use the language of the referees, inflicted voluminous pleadings, evidence and submissions on the referees had consequences in the way they approached their task.
On 7 March 2023 the referees provided a draft report to the parties.
Fluor was unhappy with the draft report and so, by an application filed on 4 April 2023, Fluor sought the following orders:
(a) the referral order of Bradley J made on 15 February 2021 be set aside;[14] (b) the various orders for the conduct of the reference also be set aside;[15] (c)
directions be made for the hearing of an application by Fluor for summary judgment in respect of some of the issues[16] and for directions in relation to the disposition of the balance of the issues;
(d)
alternatively, directions as to the determination of preliminary issues and directions as to the disposition of the balance of the issues.
[14] UCPR r 502 permits a court to set aside or vary a referral order made under UCPR r 501. The test, of course, is whether it is in the interests of justice to do so.
[15] The amended application lists orders made on 15 February 2021, 24 February 2021, 27 May 2021, 19 October 2021 and 2 November 2021.
[16] The application describes these as clauses 29.4 and 41.2 issues (as defined in [4] of the application) and the claims made by the Plaintiff in the following paragraphs of the Fifteenth Amended Statement of Claim: [246]-[289.1] (the profit in rates claim).
In broad terms, Fluor sought those orders because it contends that: the reference process is affected by apparent bias; the referees have failed to comply with the referral order and have acted outside their jurisdiction; the reference process is affected by a lack of procedural fairness; and the reference process has become a miscarriage of justice. Fluor’s application was set down for a hearing and was heard over 10 days commencing on 17 July 2023. No decision was made on that application, because, with the agreement of the parties, it was necessary for the court to also consider a cross-application by Santos (discussed below).
In the meantime, the referees converted their draft report to a final report which was delivered to the parties on 14 July 2023 – on the eve of the hearing of Fluor’s application. Fluor’s application was heard over ten sitting days from 17 July 2023.
Santos was content with the both the draft and final referees’ report. And so, Santos made a cross-application that the final referees’ report should be accepted by the court pursuant to r 505D of the UCPR. That cross-application was heard over a further 33 sitting days from 12 February 2024.
There are many issues that overlap. For example, some of the facts that Fluor relies on as evidence of apprehended bias are also relied on as a reason why the court should not accept the referees’ report.
For convenience, I will refer to Fluor’s application as the SA application,[17] and Santos’ cross-application as the 505 application or the 505 cross-application.[18] Similar abbreviations will apply to the parties’ submissions.
[17] The parties often referred to Fluor’s application as the Set Aside Application. I have simply abbreviated.
[18] The parties often referred to the cross-application as the 505D Application or the Adoption Application. Again, I have abbreviated.
[46] Santos’ supplementary submissions at [5].
[47] The expression ‘that obstacle’ no doubt refers to the prior discussion on the inconsistency with the
written terms which concludes (at paragraph 180): “It is scarcely credible that parties in the positions
of Fluor and Santos – a global Tier 1 contractor and an energy giant respectively - each possessed of
vast commercial experience and having access to the best legal advice, would negotiate a contract in
the terms and detail that they did, whilst knowing that each intended (and knew that the other
intended), that essential terms of the contract would operate other than as they were written.”[48] See the referees’ final report Part 21 at [165] – [169].
[49] Santos’ supplementary submissions at [9].
[50] Business Risk Management Framework documents.
[51] Santos’ supplementary submissions at [13].
[52] Fluor’s supplementary submissions at [20].
[53] (2018) 266 CLR 1 at 12, 13 [33] quoting from AK v Western Australia (2008) 232 CLR 438 at 468
[85].
[54] Fluor’s supplementary submissions at [20].
[55] Fluor’s SA submissions (Part 7) at [535].
[56] Fluor’s 505 submissions at [3407] quoting the referees’ final report Part 10 at [65].
[57] Referees’ final report Part 21.1 at [80].
[58] Referees’ final report Part 21.1 at [79].
[59] Referees’ final report Part 21.1 at [73].
[60] As is the case elsewhere, Fluor uses the expressions ‘fail to consider’ and ‘fail to address’
interchangeably. Here, the likelihood is that Fluor’s complaint is that the referees failed to address in
the sense of refer to the evidence. That seems clear from paragraph [3416(a)] of Fluor’s 505
submissions.
[61] Fluor’s 505 submissions at [3458].
[62] Santos’ 505 reply submissions at [1884].
[63] Santos’ 505 reply submissions at [1887] – [1890].
[1] Fluor’s 505 submissions at [3462], [3463].
[2] Santos’ 505 reply submissions at [3288].
[3] Fluor’s 505 submissions at [3465]. See the referees’ final report at Part 14.
[1] Santos’ 505 submissions at [76].
[2] Santos’ 505 submissions at [77].
[3] Santos’ 505 submissions at [78].
[4] Here I am referring only to the Australian dollar amounts. The other amounts in the other currencies are
all significantly less, but by different proportions.
[5] My reasons for saying that are explained below.
[6] See Part 3.
[7] [1999] AC 266.
[8] Referees’ final report, Part 24, at [13].
[9] Referees’ final report, Part 24, at [13].
[10] [1984] QB 644.
[11] Referees’ final report, Part 24, at [14].
[12] Referees’ final report, Part 24, at [17].
[13] [2022] QCA 266 at [114].
[14] Referees’ final report, Part 24, at [18] – [22].
[15] Regular payment certificates are given in response to payment claims pursuant to clause 29.4(a).
[16] Workman, Clark & Co Ltd v Lloyd BrazileÑo [1908] 1 KB 968; Grahame Allen Earthmoving Pty Ltd v Woodwark Bay Development Corporation Limited [1989] QSC 260.
[17] If the payment certificate were issued pursuant to legislation the question is whether the certificate
qualifies as a certificate under the Act.
[18] Keating on Construction Contracts, 11th ed, at [5-019]; Rupert Morgan Building Services Ltd v Jervis [2004] 1 WLR 1867.
[19] Section 78(5) of the Building Industry Fairness (Security of Payment) Act 2017.
[20] See, for example, Blue Chip Pty Ltd v Concrete Constructions Group Pty Ltd (1996) 13 BCL 31.
[21] See, for example, Main Roads Constructions Pty Ltd v Samary Enterprises Pty Ltd [2005] VSC 388.
[22] Beaufort Developments (NI) v Gilbert-Ash Ltd [1999] 1 AC 266 at 276.
[23] Keating (supra) at [5-042].
[24] Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1999] 1 AC 266 at 275-276.
[25] Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1999] 1 AC 266 at 276.
[26] Fluor’s 505 submissions at [3492]. (This aspect is addressed in Part 14.3 of Fluor’s 505 submissions.
But, for convenience I have addressed it here.)
[27] See Fluor’s 505 rejoinder submissions at [1434].
[28] See Fluor’s 505 rejoinder submissions at [1435].
[29] See the discussion of the ad hoc payment certificates in Part 8.
[30] Fluor’s 505 submissions at [3489(a)].
[31] Fluor’s 505 submissions at [3487].
[32] Fluor’s opening submissions, Part 7 at [6.253] - [6.284].
[33] Santos’ 505 reply submissions at [3295].
[34] This is Fluor’s summary in its 505 submissions at [3493]. The quote is from Santos’ 505 submissions at
[119].
[35] See Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1999] 1 AC 266 at 286.
[36] Fluor’s 505 submissions at [3495], [3496].
[37] Santos’ 505 reply submissions at [3312] – [3314].
[38] LIBOR stands for London Interbank Offered Rate.
[39] Santos’ 505 submissions at [181].
[40] Fluor’s 505 submissions at [3507].
[41] See, for example, Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 followed in Candoora No.
19 Pty Ltd v Freixenet Australasia Pty Ltd & Anor (No 2) [2008] VSC 478 at [14]. The limitation that
the prescribed contractual machinery is not an essential and indispensable part of the contractual
bargain is satisfied here because the relevant provision in a construction contract.[42] These cases always depend on the particular contract. However, the case also involved a construction
contract and the same expression - “calculated daily”.
[43] See the discussion of Haddow v Simala below.
[44] [2025] SADC 63.
[45] See also Hutchinson v AD Securities America LLC [2021] NSWSC 1573.
[46] [2020] VSC 344.
[47] [2013] WASC 398 (a statutory demand).
[48] Taxation Administration Act 1953 (C’th) s 8AAC.
[49] [2010] QSC 245 at [6].
[50] [2003] 2 Qd R 636 at [20].
[51] The Laws of Australia, Thomson Reuters Westlaw, [25.4.500].
[52] The referees overruled Fluor’s objections to the process.
[53] Referees’ final report Part 23 at [53].
[54] Referees’ final report Part 23 at [53].
[55] Referees’ final report Part 23 at [54].
[56] Referees’ final report Part 23 at [56].
[57] Referees’ final report Part 23 at [57].
[58] This is a step that may not be necessary if, for example, the claim is merely an alternative.
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