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Transfield Philippines Inc v Pacific Hydro Ltd

Transfield Philippines Inc v Pacific Hydro Ltd

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Case Copied 4 December 2006 69 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

BUILDING CASES LIST

No. 4978 of 2002

Transfield Philippines Inc & Others	Plaintiffs
v
Pacific Hydro Limited (ACN 057 279 508) & Others	Defendants

No 7501 of 2004

Transfield Philippines Inc & Another	Plaintiffs
v
Pacific Hydro Limited (ACN 057 279 508) & Another	Defendants

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JUDGE:	Hollingworth J
WHERE HELD:	Melbourne
DATE OF HEARING:	8, 11 April 2005, 22 June 2006
DATE OF RULING:	4 December 2006
CASE MAY BE CITED AS:	Transfield v Pacific Hydro
MEDIUM NEUTRAL CITATION:	[2006] VSC 175

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Practice and procedure – service of originating process – whether basis for service out of Australia under r.7.01(1)(l) – whether writ properly indorsed under r.7.02

Practice and procedure – pleadings – adequacy of general indorsement – whether properly indorsed under r.5.04(2)(b) – new claims made in statement of claim which were outside the scope of the writ – no leave obtained under r.14.03(2)

Practice and procedure – stay of proceedings – application for stay under s.7 of the International Arbitration Act 1974 (Cth) – whether plaintiffs’ claims capable of settlement by arbitration under contractual arbitration agreements

Practice and procedure – application for substituted service

Documents produced in arbitration by way of discovery or subpoena – whether subject to implied undertaking limiting use outside arbitration – whether this court has power to release a party from such an implied undertaking

Preliminary discovery – application under r.32.05 – whether reasonable grounds for believing applicant may have right to obtain relief from this court

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R. C. Macaw QC Mr J. A. H. Foxcroft S.C.	Mallesons Stephen Jaques
For the Defendants	Mr D. F. R. Beach S.C. Mr T. McEvoy	Freehills

HER HONOUR:

A. Background

The current proceedings

During the late 1990s, the Bakun AC Hydro Electricity Power Station was constructed on the Bakun River in the Philippines. Numerous legal disputes have arisen out of the power station project, three of which are currently before this court.

Luzon Hydro Corporation (“Luzon”) is a company incorporated in the Philippines for the purpose of the construction and operation of the power station. Pacific Hydro Limited (“Pacific”), a company incorporated in Victoria, owns one half of the shares in Luzon; the other half is owned by Philippine entities connected with the Aboitiz family.

Transfield Philippines Inc (“TPI”) undertook the design and construction for Luzon, under a contract dated 26 March 1997 and executed in the Philippines (“the turnkey contract”). TPI is a wholly-owned Philippine subsidiary of Transfield Holdings Pty Ltd (“Holdings”), a company incorporated in NSW and the holding company for the Transfield group of companies. Where appropriate, TPI and Holdings are collectively referred to as Transfield. Holdings guaranteed TPI’s performance of the turnkey contract by a guarantee and indemnity dated 14 April 1997, which was executed by Holdings in Sydney and Luzon in the Philippines (“the guarantee”).

In proceeding No 4978 of 2002 (“the project proceeding”), Transfield seeks damages for…

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: [2006] VSC 175
Decision Date: 4 December 2006

CaseChat Overview and Summary

The case between Transfield Philippines Inc and Pacific Hydro Ltd was before the Supreme Court of New South Wales. The dispute primarily involved issues related to the service of originating process, the adequacy of pleadings, the applicability of a stay of proceedings under the International Arbitration Act 1974, and the use of documents produced in arbitration. The plaintiffs, Transfield Philippines Inc, sought to serve the writ outside Australia, arguing that it was permissible under rule 7.01(1)(l) of the Supreme Court Rules 2000. They also contested whether the writ was adequately indorsed under rule 7.02 and if the statement of claim introduced new claims outside the scope of the writ, without obtaining leave under rule 14.03(2). The defendants, Pacific Hydro Ltd, applied for a stay of proceedings under section 7 of the International Arbitration Act 1974, asserting that the plaintiffs' claims were capable of settlement by arbitration as per the contractual arbitration agreements.

The court addressed several critical legal issues. Firstly, it had to determine whether the writ was properly served out of Australia and if it was adequately indorsed. Secondly, the court examined the adequacy of the pleadings, specifically whether the statement of claim introduced new claims that were not covered by the writ. Thirdly, the court assessed whether the plaintiffs' claims were subject to a stay of proceedings due to the existence of arbitration agreements. Additionally, the court considered whether documents produced in arbitration were subject to an implied undertaking limiting their use outside the arbitration and if it had the power to release a party from such an undertaking. Lastly, the court had to decide on an application for preliminary discovery to determine if there were reasonable grounds for the applicant to believe they may have a right to obtain relief.

The court ruled that the writ was not properly served under rule 7.01(1)(l) and was inadequately indorsed under rule 7.02. The statement of claim introduced new claims outside the scope of the writ without leave, which was impermissible. Regarding the stay of proceedings, the court found that the plaintiffs' claims were indeed capable of settlement by arbitration under the contractual arbitration agreements, thus ordering a stay. The court also concluded that documents produced in arbitration were subject to an implied undertaking limiting their use outside the arbitration, but it did not have the power to release a party from such an undertaking. Lastly, the court denied the application for preliminary discovery, finding that there were no reasonable grounds for the applicant to believe they may have a right to obtain relief.

The court ordered that the proceedings be stayed pending the outcome of the arbitration and directed the parties to proceed with the arbitration as per the contractual agreements. The plaintiffs were also required to serve the writ properly within the jurisdiction, and any further claims not covered by the original writ must be supported by appropriate leave. The court's decision underscored the importance of adhering to procedural rules in civil litigation and the enforcement of arbitration agreements.

Orders