Allco Steel (Queensland) Pty Ltd v Torres Strait Gold Pty Ltd & Ors [1990] QSC 37

10 20 30 40 50 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE SENIOR MASTER HORTON Q.C. BRISBANE, _12 MARCH 1990 SC No. 2742 of 1989 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: ALLCO STEEL (QUE~NSLAND) PTY. LIMITED -and- Plaintiff TORRES STRAIT GOLD PTY. LTD. -and- POLBURY PTY. LTD. -and- AUGOLD N.L. -and- GIANT RESOURCES LIMITED JUDGMENT First Defendant Second Defendant Third Defendant Fourth Defendant SENIOR MASTER: I dismiss the summons for a stay. I publish my reasons. -Govt. Printer, Old. -1- 10 20 30 40 50 60 -- 1 of 9 -- IN THE SUPREME COURT OF QUEENSLAND No. 2742 of 1989 Before Master Horton Q.C. BETWEEN: AND: AND: AND: AND: ALLCO STEEL (QUEENSLAND) PTY LIMITED Plaintiff TORRES STRAIT GOLD PTY LTD First Defendant POLBURY PTY LTD Second Defendant AUGOLD N.L. Third Defendant GIANT RESOURCES LIMITED Fourth Defendant JUDGMENT REASONS: MASTER HORTON Q.C. This is an application brought by the First, Second, Third and Fourth defendants against the plaintiff in action 2742 of 1989 in which the applicant defendants seek an order that the action be stayed pursuant to the provision of Order 60 Rule 2 of the Rules of the Supreme Court. Before dealing with the respective merits of the application, I feel it is necessary to briefly outline the nature of the relief sought by the plaintiff in the subject writ. The endorsement on the writ is as follows: 1. Monies owing pursuant to contract. 2. Damages for breach of contract. 3. Damages for negligence. 4. Interest pursuant to the Common Law Practice Act of 1867 and 1981. -- 2 of 9 -- A statement of claim has been delivered on the 15th August, 1989 wherein it is alleged inter alia that by written contract made between the plaintiff and the first defendant on or about 2nd February, 1988, the plaintiff agreed to carry out detailed design, supply and erection of steel work and specified equipment for a crushing plant and C.I.L. floatation and grinding plant for a goldmine at Hall Island. It emerges from the material exhibited to the affidavit of Inoke that the first defendant was the operator of an unincorporated joint venture known as the Hall Island Joint Venture and the nominees of the two joint-venturers Augold N.L. and Polbury Pty. Ltd. a wholly owned subsidiary of Giant Resources Limited. Further, it is clear that pursuant to an agreement the first defendant was appointed to manage the joint venture and to act as the agent for a nominee of the joint- venturers to the purpose of the joint-venturers. The contract originally envisaged that the plaintiff would commence work on site in early January and completion under the contract would be achieved by 8th March, 1988. Initially, there was a fourteen week delay by the plaintiff in the completion of their portion of the work (as deposed to by the Solicitor for the defendants) and eventually matters proceeded to a stage where the first defendant formed a view that the plaintiff would be unable to meet its contractual obligations. The terms of the contract for the limited purposes of the application today are relatively brief. By paragraph 4.5.3 (i) the contract provided: "Torres Strait Gold reserves the right to inspect and to copy at any time any record in their original form held by the contractor in relating to the contract for auditing or for any other purpose." -- 3 of 9 -- l Further the contract provides under the heading "Disputes" by paragraph 4.5.6: "a. In any case, any dispute or difference shall arise between the Torres Strait Gold and the contractoreither during the progress of the work under thecontract or after determination, abandonment or breachof this contract as to the construction of the same or as to any matter or thing whatsoever arising thereunder or in connection therewith then the aggrieved party shall give to the other notice in writing setting out in full the detailed particulars of the dispute or difference. Upon receipt or issue of the notice, Torres Strait Gold shall give written notice to the contractor, appointing a date, time and venue for a conciliation meeting to be held to discussin detail the dispute or difference and may appoint such further time as may be necessary for the continuation thereof. The parties shall not be legally represented at said meeting but shall present, in their own manner, with the assistance of witnesses and documentary evidence, the details of their respective cases. b. If at the conclusion of the conciliation meeting the parties fail to resolve the dispute or differenceeither party may give to the other, within fourteen days a notice stating that at the expiration of thirty days it will proceed to have the dispute or differencereferred to a Court of competent jurisdiction in the province, state, or territory and country stated in the project data section 1 . 7 and at the expiration therefore may so proceed." Matters proceeded to litigation between the first defendant as plaintiff and the present plaintiff as defendant by Writ No. 3438 of 1988. An application was made to the Court and an order made by the Honourable Mr. Justice Ambrose on the 16th September, 1988 provided that the two abovenamed parties proceed to conciliation. A conciliation meeting was held on 27th September, 1988 attended by representatives of the present plaintiff and the present first defendant. It was then apparently adjourned. A further meeting was held on 9th February, 1989. Each was to no avail and following the second meeting, the plaintiff, by its servant Cahill wrote the letter of 16th February, 1989 to the first defendant, foreshadowing the commencement of litigation. -- 4 of 9 -- There then emerges a substantial body of factual dispute. What is clear is that certain documents were requested by the first defendant of the present plaintiff pursuant to clause 4.5.3 (i). A particularly unilluminating body of correspondence then ensued between the present first defendant and the plaintiff and if any spirit of conciliation and cooperation existed prior to this course of correspondence such spirit had certainly evaporated by its conclusion. By way of illustration, the letter of Allco signed by one Cahill, Finance and Commercial Manager to the first defendant reads: "In respect of your request for access to ourtimesheets, we reiterate that they are of limited assistance in developing a full picture of events and circumstances which form the basis of our claims. Factual analysis and further information which we are providing to you is derived from several sources, particularly our site staff ... In any event we confirm your verbal advice that any such issues relating to clause 4.5.3(i) of the contract are not relevant toeither the immediate progress and conciliation or the formulation of your foreshadowed cross-claim. In light of the above, we now suggest a suitable datefor the further meeting would be 1st December, 1988." Mr. Cahill continued in the same belligerent fashion by letter of 11th January, 1989 to the now Brisbane solicitors for the first defendant. The letter concludes: "Notwithstanding this position we do not wish to be unhelpful or to prejudice the conciliation meeting to be held on 9th February, 1989. Your client has been recently insisting that he requires access to ourlabour timesheets in order to sufficiently document his cross-claim to allow its proper consideration in the conciliation proceedings. If your client would specify, in clear terms, the relevance of the timesheets to either the liability or quantum of his cross-claim, we would give consideration to acceding to as much of your client's request as was reasonable." The same theme was repeated by the same author in the letter to Chambers, McNab of the 27th January, 1988 which concludes "III. Our offer in the last paragraph of our letter of 11th January, 1989 remains. If your client has any -- 5 of 9 -- genuine and relevant reasons timesheets to properly detail should state them." for access to his cross-claim, the you In other words, Mr. Cahill, in no doubt what he saw as a tactical manoeuvre sought to reserve to himself the right to decide when he would make proper discovery. He then sought to put himself in the position of both prospective litigant and prospective judge in determining the relevance of documents which were clearly relevant and discoverable in any process by which a party might seek to avoid litigation. This complete lack of conciliatory spirit also stands in particular contrast to what I regard are, upon a proper construction of clause 4.5.3 (i), the contractual obligations of the parties. It was faintly argued by Mr. Gore of Queen's Counsel who appeared for the plaintiff before me that the subject clause only creates a right during the life of the contract i.e. where the contract is proceeding normally along its path. He asserted that it had no application when a dispute is on foot and hence the first defendants could not insist upon any rights conferred by such clause save and except during the execution of the construction work provided for in the contract. This contention flies in the face of the clear meaning of the words themselves and in my view the contract provides a clear obligation on the present plaintiff to comply both during the course of construction and in the event of a dispute. I turn now to the argument of the applicant. Mr. Keane of Queen's Counsel argued that clause 4.5.6 is a valid "postponement of the right of access to the Court" and referred me to a long line of authorities collected by the learned authors Mustill and Void in the textbook "Commercial Arbitration" at page 111. He argued that the clause was a valid "postponement of the -- 6 of 9 -- Q right of access to the Court" and referred me to the authorities of Freshwater v. Western Australian Assurance Co. Limited [1933] 1 K.B. 515 at 523 Spurrier v. La Cloch [1902] A.C. 446 at 451 and Heyman v. Darwins Limited [1942] A.C. 356 at 377. Alternatively, he argued that the procedure required by clause 4.5.6 was a condition precedent to action and in as much that the claim presented by the statement of claim has not been the subject of submission bona fide to the conciliation process the plaintiff's claim a cause of action has not accrued. It is clear, however, that all of the authorities referred to by Mr. Keane are in fact, authorities relating to arbitration clauses or an obligation to arbitrate imposed pursuant to statute. His argument was that parallel considerations apply in the present circumstances and by the plaintiff's failure to give the first defendant access to its documents as was required by the clause 4.5.3 (i) of the contract the plaintiff has frustrated the mandatory processes of clause 4.5.6. As I have indicated earlier it is my view that certainly the plaintiff has made no bona fide attempt to conciliate in this case and any conciliation meeting that has been called and attended was one which did not comply with 4.5.6 of the contract the obligations imposed by 4.5.3 (i) of the contract having been breached by the plaintiff. However, that is not the end of the matter. Mr. Gore of Queen's Counsel submits that Clause 4.5.6 is not an agreement to arbitrate within the provision of s. 10 of the Arbitration Act 1973 and hence the cases which deal with Scott v. Avery clauses have no relevance in the present situation. In my view such a submission must succeed for in all cases -- 7 of 9 -- l involving arbitration the parties envisage a binding and final decision of a mutually agreed independent third party not merely the obligation to conciliate between themselves with the likelihood of no result. Here clause 4.5.6 merely provides an agreement to conciliate (as distinct from one to arbitrate) and as such is severable from the binding agreement in which it is located. See Anderson v. G.H. Mitchell & Sons Ltd. 65 C.L.R. 543. In other words, notwithstanding what I perceive to be a clear breach of the obligations to conciliate on the part of the plaintiff, the doctrine that the jurisdiction of the Court cannot be ousted dominates any other principle that would require the plaintiff to honour its contractual obligations that might arise under clause 4.5.6. In some ways, the situation is similar to the pre Arbitration Act instances dealt with by the High Court in Anderson's case at p. 448: "An agreement to refer disputes, whether existing or future, to arbitration could, apart from statute be enforced only by an action for damages against the party who refused to carry it out ... Apart from the statutory power of staying an action, the most express agreement to refer to arbitration and not to litigate could not prevent recourse to the Courts or exclude their jurisdiction, that is where the liabilities in question are absolute." An appeal was made to the inherent jurisdiction of the Court to grant a stay the condition precedent to the accruing of a cause of action not having been met, namely bona fide conciliation. In my view even if such relief was open this discretionary relief must be refused as it is abundantly clear that the parties have taken up positions which effectively rule out the possibility of compromise and conciliation, the plaintiff by its assertion that "discovery" does not lie -- 8 of 9 -- ~ pursuant to clause 4.5.3. and the defendants by their insistence of such process as a precondition of negotiations. Accordingly, therefore, I dismiss the summons for a stay with costs including reserved costs to be taxed. -- 9 of 9 --