FEDERAL COURT OF AUSTRALIA

Eden Construction Pty Ltd v State of New South Wales [2006] FCA 476

EDEN CONSTRUCTION PTY LTD v STATE OF NEW SOUTH WALES

NSD 833 OF 2004

GRAHAM J

26 APRIL 2006

SYDNEY

THE COURT ORDERS THAT:

1.         The solicitors for the parties further consult with my Associate with a view to identifying all relevant pleadings, affidavits and other documents on the Court file referable to the proposed separate questions, on or before Tuesday 9 May 2006.

2.         The parties bring in draft short minutes of order defining the proposed separate questions under Order 29 Rule 2 of the Rules as required by Conti J on 19 July 2004, no later than Tuesday 9 May 2006. Such draft short minutes of order should be submitted to my Associate for my approval.

3.         Leave be granted to the Applicant to file and serve Further Amended Points of Claim in accordance with the draft ‘Amended Points of Claim dated 17 December 2005’, but omitting paragraphs 44(b) to 44(d) inclusive, such leave permitting the reformatting of the amendments to produce clearer identification of paragraph numbers and the distinction between pleaded material and particulars. Such Further Amended Points of Claim to be filed and served on or before Monday 1 May 2006.

4.         The Respondent file and serve any Defence to the Further Amended Points of Claim, on or before Tuesday 16 May 2006.

5.         The Applicant’s Notice of Motion filed 13 April 2006 be dismissed.

6.         The Applicant pay the Respondent’s costs of the motion. Such costs may be taxed and shall be payable forthwith.

7.         Leave be granted to the Applicant to file and serve any Notice of Motion seeking further amendment to the Further Amended Points of Claim, no later than Tuesday 16 May 2006. Such motion to be made returnable for a date to be nominated by my Associate and to be supported by an affidavit identifying the facts and matters upon which the Applicant relies to support the inference of any implied terms said to form part of the settlement agreement in relation to the Nora Head Contract between ‘Eden Constructions’ and the Respondent, any alleged breach thereof and causal connection with the failure of the Applicant to secure a contract in respect of the Moruya Heads project, and identifying those parts of the evidence already filed on the separate questions which are said to establish those facts and matters.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The current proceedings have a protracted history. My understanding is that they were commenced in the Supreme Court of New South Wales, in the Building and Construction List, by Summons filed 30 June 2003.

2                     The current pleadings consist of a Further Amended Summons filed 9 December 2003 in the Supreme Court of New South Wales, to which there is a Defence filed 24 August 2004.

3                     The matter was cross-vested into this Court by the Supreme Court of New South Wales on 7 May 2004. Until late 2005, the matter was listed in Conti J’s docket. In very broad-brush terms, the Applicant, as a civil engineering contractor, complains that it missed out on some 16 government contracts because it had been, if I can use a very broad expression, ‘blacklisted’ as a result of its participation in earlier contracts in which it had been the contracting party.

4                     With a view to avoiding an extraordinarily protracted hearing, the parties proposed that, in accordance with Order 29 Rule 2 of the Federal Court Rules (‘the Rules’), separate questions be defined, limited to liability, which it was anticipated would allow a final resolution of the whole of the proceedings.

5                     The Applicant has indicated that in broad terms, the most that it could hope to achieve by way of an award of damages would end up being something like $750,000. The Respondent has indicated that it considers its maximum exposure to be something in the order of $150,000, were it to lose on the issue of liability. The suggestion is that if the Respondent succeeds on the question of liability on the hearing of a separate question, then it is unlikely that liability will have to be further addressed. If the Respondent loses on the question of liability on a particular separate question, it is unlikely that liability would have to be further addressed; the only question then being one of quantum plus the possible issue of causation in relation to some of the other projects.

6                     It would appear that the Applicant was awarded a contract on 28 January 1998 in respect of a Kremur Street Pumping Station, in Albury (‘the Kremur Street contract’). That contract was performed, as I understand it, in 1998 and it is alleged that adverse comment in respect of the Applicant's suitability for such work flowed from its performance of that contract, the relevant adverse comments having been made from on or about 11 August 1998 to 15 August 2000.

7                     The Applicant submits that because of matters associated with the Kremur Street contract, it missed out on becoming a subcontractor in respect of a Moruya Heads Sewerage Scheme Design and Construction of Collection and Transportation Contract (‘the Moruya Heads contract’) awarded to Allied Construction.

8                     On 24 June 2004, the matter was before Conti J, who heard argument on whether there should be separate questions ordered referable to the Applicant's participation in the Kremur Street contract, and whether what followed resulted in it missing out on participation in a subcontract in relation to the Moruya Heads contract.

9                     My understanding is that on 19 July 2004, Conti J agreed that it was appropriate for the matter to be dealt with as proposed, with separate questions dealing with the issue of liability confined to a consideration of the Kremur Street contract and the non-participation of the Applicant in the Moruya Heads contract. My understanding is that his Honour directed the parties to bring in short minutes of order in accordance with Order 29 Rule 2 of the Rules, conformably with his reasons for Judgment (see [2004] FCA 941).

10                  Counsel for the parties are unable to direct my attention to any formal orders having been made as yet for the definition of the separate questions.

11                  On the assumption that the separate questions have been defined, Points of Claim and Points of Defence have been filed. The current state of the pleadings referable to the separate questions is that on 4 July 2005 Amended Points of Claim were filed by the Applicant. As yet, the Respondent has not filed a Defence to those Amended Points of Claim, it being indicated by counsel for the Respondent that the matter proceeded to mediation, which was unsuccessful, thereby causing the parties to put to one side the question of filing a Defence to the Amended Points of Claim.

12                  On 14 December 2005, the matter came before me for directions for the first time, and I made a number of directions with a view to bringing the matter to a hearing on the separate questions on 1 August 2006. The first and second directions which I made were as follows:

‘(1) The solicitors for the parties to consult with my Associate with a view to identifying all relevant pleadings and affidavits and other documents on the court file referable to the separate questions on or before Friday 27 January 2006.

(2) A copy of the court order defining the separate questions to be included in a Judge's bundle of pleadings and affidavits.’

13                  I am informed that the solicitors for the parties consulted with my Associate as required by the first direction, but alas, the benefit of that consultation has been lost as a result of the change in the holder of the office of Associate.

14                  As to the second direction, there is a problem in that as yet, there would appear not to have been a formal order made defining the separate questions, and that needs to be attended to. Obviously, it will then be possible to comply with direction number 2 in due course.

15                  On about 17 December 2005, the Applicant proposed a series of further amendments to the Amended Points of Claim filed 4 July 2005. A document entitled ‘Amended Points of Claim Dated 17 December 2005’ was produced and submitted to the Respondent. I will not refer in detail to the several amendments that have been proposed beyond recording that the Respondent consents to all amendments save for those proposing the introduction of new paragraphs 44(a) and 44(e) in the Points of Claim. That consent was notified to the Applicant by letter dated 28 March 2006. The Applicant, being dissatisfied with the extent of the Respondent's agreement, filed a Motion on 13 April 2006 seeking an order granting leave to the Applicant to rely upon the whole of the document entitled ‘Amended Points of Claim Dated 17 December 2005’.

16                  In the circumstances, the real issue for consideration is whether or not the amendments proposed in paragraphs 44(a) to 44(e) should be allowed. I should add that this morning, the Respondent informed the Applicant that it had no objection to the inclusion in the pleading of paragraphs 44(a) and 44(e), thus confining the dispute to paragraphs 44(b) to 44(d), inclusive. As to paragraphs 44(a) and 44(e), they recite background facts but do not themselves give rise to any independent cause of action.

17                  Paragraphs 44(b) to 44(d) are proposed for inclusion in a section of a very lengthy part of the pleading entitled ‘The 7 January 1994 Settlment (sic) Agreement’. The paragraphs provide as follows:

‘44(b).On or about 14 March 1994, the policy division of the Defendant recommended that the Plaintiff be given works up to the value of $700,000.

44(c) On or about May 1994, Mr Barry of the Defendant disagreed with the recommendation in the preceding paragraph and proposed a limit of $250,000 which was adopted by the Defendant.

44(d) Further or alternatively, in breach of the settlement agreement, on or about 4 May 1994 the Defendant added the Plaintiff to its review list until such time as it had met its obligations under the settlement agreement, being payment of $50,000 to the Defendant.’

18                  The settlement agreement referred to is one apparently made on 7 January 1994 between a company referred to in the written contract as ‘Eden Constructions’ and the ‘PWD’, which it is conceded is a reference to the Public Works Department of the Respondent. As to ‘Eden Constructions’, I am informed that it is a different company from the Applicant, but that the Respondent does not dispute the entitlement of the Applicant to rely upon it as if ‘Eden Constructions’ was a reference to the Applicant.

19                  The settlement agreement related to a dispute between ‘Eden Constructions’ and the Public Works Department concerning a ‘Nora Head Contract’. Plainly there were claims and counter-claims, and they were resolved upon ‘Eden Constructions’ agreeing to pay to the Public Works Department an amount of $50,000 on or before 31 August 1995.

20                  Clause 4 of the settlement agreement provided:

‘4. Subject to normal prudential requirements by the PWD, the PWD will permit Eden to tender to the PWD, and permit Eden to do work for the PWD, provided always all other normal Dept. requirements are satisfied.’

21                  Counsel for the Applicant has indicated that the Applicant desires to have paragraphs 44(b) to 44(d) added to the Points of Claim with a view to propounding certain implied terms said to flow from the settlement agreement and breaches thereof on the part of the Respondent, which it is contended resulted in the Applicant missing out on work under a subcontract with Allied Construction in relation to the Moruya Heads project.

22                  The paragraphs in question plainly do not allow such a case to be advanced. On their own, paragraphs 44(b) and 44(c) lead nowhere. Paragraph 44(d) clearly propounds a breach of the settlement agreement, but a breach which was, in effect, operative for only a short period of time, namely until the Applicant or, more accurately, ‘Eden Constructions’, met its obligations under the settlement agreement in respect of the payment of $50,000.

23                  The Applicant propounds that that amount of money was paid on 17 May 1994, which would suggest that the Applicant's case was confined to the Applicant being on the Respondent's ‘review list’ for a period of 13 days back in 1994, which could hardly be germane to the failure of the Applicant to secure subcontract work in respect of the Moruya Heads Contract some five years later.

24                  The Applicant has, quite rightly, conceded that it does not have an entitlement to have paragraphs 44(b) to 44(d) incorporated in the pleading in the terms currently proposed. The Applicant has indicated a desire to further consider its pleading and to consider reformulating the implied terms upon which it would wish to rely and allegations of breaches thereof and consequential matters.

25                  Notwithstanding the recent concessions by the Respondent in respect of paragraphs 44(a) and 44(e), I consider that the Applicant has failed completely in its present motion. The motion should, in my opinion, be dismissed with costs, and, given the history of the matter and the nature of the proposed amendments, which are unsustainable, it ought to be open to the Respondent to have those costs taxed and paid forthwith.

Associate:

Dated: 2 May 2006