Thiess Contractors Pty Ltd v Murchison Zinc Co Pty Ltd
[2000] WASC 71
•20 MARCH 2000
THIESS CONTRACTORS PTY LTD -v- MURCHISON ZINC CO PTY LTD [2000] WASC 71
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 71 | |
| 20/03/2000 | |||
| Case No: | CIV:2137/1996 | 2 MARCH 2000 | |
| Coram: | TEMPLEMAN J | 9/03/00 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | THIESS CONTRACTORS PTY LTD (ACN 010 221 486) MURCHISON ZINC CO PTY LTD (ACN 008 950 178) |
Catchwords: | Civil procedure Western Australia Rules of the Supreme Court, O 20 r 19 Application to strike out statement of claim Dispute arising from a mining project's excavation and construciton contract Application made on the basis that the plaintiff's is a global claim and that it was not pleaded with sufficient particularity |
Legislation: | Rules of the Supreme Court, O 20 r 19 |
Case References: | John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1997) 13 BCL 262 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MURCHISON ZINC CO PTY LTD (ACN 008 950 178)
Defendant
Catchwords:
Civil procedure Western Australia - Rules of the Supreme Court, O 20 r 19 - Application to strike out statement of claim - Dispute arising from a mining project's excavation and construction contract - Application made on the basis that the plaintiff's is a global claim and that it was not pleaded with sufficient particularity
Legislation:
Rules of the Supreme Court, O 20 r 19
(Page 2)
Result:
Application dismissed
Representation:
Counsel:
Plaintiff : Mr P G Clifford
Defendant : Mr D J Martino
Solicitors:
Plaintiff : Fiocco Hopkins Nash
Defendant : Pullinger Stewart
Case(s) referred to in judgment(s):
John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1997) 13 BCL 262
Case(s) also cited:
Nil
(Page 3)
1 TEMPLEMAN J: This is an application to strike out substantial portions of the plaintiff's statement of claim in an action which was commenced in 1996.
2 The plaintiff is a mining company which, at the material time, was acting as agent for a group of joint venturers. The plaintiff carries on business as an underground and civil works contractor.
3 The action arises out of a contract made between the parties in September 1994 which was incorporated in a written document executed in November 1995.
4 The contract was for the excavation and construction of a decline. It was a schedule of rates contract comprising a number of documents including special and general conditions, drawings and specifications and the schedule of rates.
5 In its statement of claim, the plaintiff contends that on about 3 and 4 December 1994, the Superintendent, acting on behalf of the defendant, directed the plaintiff to depart from the original design in a way which resulted in the decline being excavated at a level some 12 metres higher and 2.21 metres to the right of the location shown in the original drawings.
6 The plaintiff then alleges that on 7 January 1995, in the early stages of construction of the decline, a portion between chainages 23 and 28 collapsed. The plaintiff alleges that as a result of the change in the location of the decline and the subsequent collapse, it was necessary to employ a work method which differed significantly from that envisaged for the implementation of the original design.
7 The plaintiff contends that the different work method was required because the ground conditions which it encountered were different from those contemplated by the scope of the original works. The plaintiff contends that the work which it carried out in consequence of the ground actually encountered, entitled it to a variation to the contract and therefore, to greater remuneration.
8 The plaintiff contends also that its rate of advance in the construction of the decline was affected by substantial inflows of water which were encountered at chainage 650 and which thereafter required a different excavation cycle to be employed. This, it is said, also entitled the plaintiff to a variation of the contract.
(Page 4)
9 It is then said that between about 3 and 31 July 1996, the main ventilation fan, which the defendant was obliged to provide pursuant to the contract, was removed by the defendant for unscheduled maintenance. The plaintiff alleges that it was unable to procure a ventilation fan of equivalent performance with the result that inadequate ventilation was provided through the decline. This is described in the pleading as a ventilation failure.
10 The plaintiff contends that as a result of the ventilation failure, it was required to modify its performance of the works in all areas in which exhaust emitting equipment was used. This, it is said, also entitled the plaintiff to a variation of the contract.
11 The plaintiff pleads that the ground encountered, the water encountered and the ventilation failure, each entitled the plaintiff to the same variation.
12 The plaintiff's complaint is that the defendant paid for the works as if they had been performed under the original contract. The plaintiff therefore claims the difference between its actual costs and the amount which it has been paid by the defendant. This amounts to $3,566,632 from chainages 0 to 650 and $3,734,195 from chainages 650 to 1814. Particulars of those costs are set out in consolidated schedules 8 and 9 to the statement of claim.
13 The consolidated schedule 8 and 9 is a substantial document. It is divided into four sections. Section A contains a cost and revenue summary. It shows the site costs incurred by the plaintiff between various chainages and the revenue which it derived from progress payments for each of those sections. Schedule A also contains a breakdown of costs into labour, plant, materials and indirect costs, these being the on-site overheads. The breakdown is given for each of the chainage sections referred to in the cost and revenue summary.
14 Section B of the consolidated schedule contains an analysis of the various site costs and the costs codes by which they are identified in the plaintiff's ledger. There is then a breakdown of each of the costs relating to the respective codes.
15 Section B also contains a series of computer spreadsheets which analyse the site costs on a weekly basis for each of the chainage sections identified in the cost and revenue summary which forms section A.
(Page 5)
16 Section C is not relevant. It contains an analysis of the anticipated costs of the project derived from the schedule of rates.
17 Section D of the consolidated schedule contains the plaintiff's valuation of the variation which it claims. These are derived from the site costs, the off-site overheads and profit, according to what is said to be the relevant contractual formulae.
18 The consolidated schedule 8 and 9 therefore contains a full analysis and breakdown of all the items of cost which comprise the plaintiff's claim.
19 The plaintiff also claims an extension of time due to the ground encountered, the water encountered and the ventilation failure, all of which, it is said, resulted in the completion of the works being delayed by 53 days. The extension claimed in the body of the pleading and in the prayer for relief is 154 days. However, particulars of the extension sought are contained in schedule 10 in which the claim is confined to direct critical path delays amounting to 53 days. Counsel for the plaintiff accepts that this is the relevant period.
20 Schedule 10 contains a number of spreadsheets from which it is possible to identify the mining activity carried on by the plaintiff in each 12 hour shift throughout the construction of the decline.
21 The defendant's application to strike out the statement of claim is expressed to have been made pursuant to O 20 r 19 of the Rules of the Supreme Court. As counsel for the plaintiff pointed out, the application does not set out, as it should have done, which of the four grounds referred to in O 20 r 19(1) is relied on. However, it is plain from the application that the gravamen of the defendant's complaint is that no adequate particulars have been provided for the loss and damage alleged in specified paragraphs of the statement of claim. In substance, the complaint is that inadequate particulars have been provided in consolidated schedule 8 and 9 and schedule 10.
22 One of the complaints made in the course of the defendant's submissions, was that the statement of claim contained, in various crucial places, the assertion that further particulars would be provided. Those words were deleted after counsel for the plaintiff conceded, in effect, that they had remained in the pleading as a result of inadvertence, after the current particulars had been prepared.
(Page 6)
23 Counsel for the defendant commenced his submissions by taking a preliminary point arising from the decision of Byrne J in John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1997) 13 BCL 262. That case was concerned with a claim brought by a contractor against a specialist sub-contractor for alleged breaches of the relevant contract. The claim was a global claim: that is, as Byrne J put it:
"The claimant does not seek to attribute any specific loss to a specific breach of contract, but is content to allege a composite loss as a result of all of the breaches alleged, or presumably, as a result of such breaches as are ultimately proved. Such a claim has been held to be permissible in the case where it is impracticable to disentangle that part of the loss which is attributable to each head of claim, and this situation has not been brought about by a delay or other conduct of the claimant."
24 Byrne J went on to say that the logic of such a claim was:
"(a) the contractor might reasonably have expected to perform the work for a particular sum, usually the contract price;
(b) the proprietor committed breaches of contract;
(c) the actual reasonable costs of the work was a sum greater than the expected cost.
The logical consequence implicit in this is that the proprietor's breaches caused that extra cost or costs overrun. This implication is valid only so long as, and to the extent that, the three propositions are proved and a further unstated one is accepted: the proprietor's breaches represent the only causally significant factor responsible for the difference between the expected cost and the actual cost."
25 Counsel for the defendant, submits that two crucial elements are missing from the plaintiff's claim as pleaded. The first is element (a) set out above: that the contractor might reasonably have expected to perform the work for a particular sum, usually the contract price.
26 In my view, however, that is not an element of the present claim. The plaintiff does not suggest that it should have performed the work for a particular sum, but that it has been obliged to incur additional costs. The plaintiff contends that it was entitled to a variation: and that it has not been paid as it should have been.
(Page 7)
27 The defendant then contends that there is no allegation in the statement of claim that "the proprietor's breaches represent the only causally significant factor responsible for the difference between the expected cost and the actual cost".
28 Against that, counsel for the plaintiff contends that this element is inappropriate because the plaintiff's claim is not based on breaches of contract but a contractual entitlement.
29 This, I think, is the crucial point. I accept the submission of counsel for the plaintiff that this is not a global claim. It is not a claim for damages to which a number of causes have contributed. It is a claim based on a contractor's entitlement to a variation of the contract: an entitlement which is said to arise from different contractual provisions. But it is the same variation: namely, the changed work method.
30 As I have noted, the defendant's attack on the statement of claim is based on a lack of particularity. However, I think the plaintiff has set out the basis for its claim with sufficient clarity in consolidated schedules 8 and 9, and schedule 10. I do not think the defendant will now have any great difficulty in checking the plaintiff's figures. That is the kind of exercise which I should have expected the defendant to undertake in response to progress claims. And it is an exercise which, now that the information has been laid out and explained by counsel, should present no undue burden for persons with a suitable qualification. I emphasise "undue". Clearly, a claim approaching $7 million is bound to impose a burden on the defendant.
31 But given the degree of co-operation which I expect from the parties and their experts, it should be possible for them to reach a considerable measure of agreement about the actual costs. If either party acts unreasonably in that exercise, its conduct will attract appropriate costs orders.
32 Counsel for the defendant submits that the plaintiff's particulars do not advance the case beyond the position it had reached in June 1999 when I ruled that the particulars which had then been filed were inadequate.
33 In written submissions which were then made on behalf of the defendant, it was said that the original schedule 8:
"…should be replaced with a schedule that separately identifies, in respect of each item of extra work performed or materials
(Page 8)
- supplied, the amount claimed as the cost of that item, and the basis for the contention that that cost represents the reasonable cost of that item."
- At the time, I observed in the course of argument (Ts 125) that "broadly speaking, what is sought … is reasonable. It is a question of the amount of detail that is given".
34 The present particulars, do I think, provide sufficient detail. As I have said, the analysis contained in consolidated schedule 8 and 9 makes it possible to see what work was performed and materials supplied, and the amounts claimed in respect of those items. It is extra cost, in the sense that it represents costs which the defendant has refused to pay.
35 Counsel for the defendant referred to a request for further and better particulars of the statement of claim in which the plaintiff was asked to identify extra costs claimed in respect of various elements making up the total claim, and the facts and matters relied on in support of the various allegations that the costs were reasonable.
36 In its answer, the plaintiff stated that full particulars of the extra costs would be set out in revised schedules 8 and 9. This has been done.
37 The plaintiff objected to answering the request directed to reasonableness on the basis that it had not pleaded that the costs were reasonable. The plaintiff said:
"The extra costs claimed are costs incurred by the plaintiff as an experienced underground contractor. It is for the defendant to allege and prove that the extra costs claimed by the plaintiff were unreasonable."
38 This, I think, is an exercise in semantics. It is, of course, fundamental to the plaintiff's claim that costs are reasonable. Why else is it asserted that the costs are incurred by an experienced underground contractor?
39 I understand that the reasonableness of the plaintiff's conduct in incurring the additional costs will be in issue. It is for the plaintiff to prove that it did act reasonably. But if it adduces evidence that, as an experienced contractor, it took steps which were dictated by the circumstances, the evidentiary burden will shift to the defendant.
(Page 9)
40 For practical purposes, the issue will be resolved by a consideration of the evidence relating to the work actually carried out and expert opinion as to the appropriateness of that work.
41 I assume that the progress of the work and the method of working is well documented on both sides. I should therefore expect a considerable measure of agreement as to those matters. As to appropriateness, I should expect (and shall in due course direct) experts to confer with a view to identifying areas of agreement and disagreement.
42 Counsel for the defendant was also critical of the statement of claim because of a non-compliance with O 20 r 8. It is there provided that:
"Every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim … and the statement must be as brief as the nature of the case admits."
43 There is much force in this criticism. The statement of claim is complex and somewhat tortuous. On an earlier interlocutory application, when the plaintiff sought leave to amend its statement of claim, I expressed the view that the failure to comply with O 20 r 8 would make it likely that the application would be refused. I gave counsel for the plaintiff the opportunity, which he accepted, of filing a substituted statement of claim.
In my view, the result was no marked improvement. However, it is to be noted that the present application to strike out the statement of claim is not based on a failure to comply with O 20 r 8.
44 In any event, it is not my intention to have this case tried on the pleadings. I shall, in due course, direct the parties to confer with a view to identifying a list of issues which require to be adjudicated. Although the issues will, of course, be based on the pleadings, it should be possible to formulate them in a clear and concise manner. As I have said, I expect that once the experts have conferred, the issues will be narrowed very considerably.
45 For all these reasons, I consider that I should now permit the statement of claim to go forward and direct the defendant to file its defence. The application should therefore be dismissed.
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