City West Water v Simon Engineering [2005] VSC 248

What the court decided

In a related proceeding his Honour granted unopposed leave, nunc pro tunc, to begin and proceed with the main proceeding [1]. The first defendant was in voluntary administration and the other defendants were its administrators [3]. The plaintiff pleaded that by an agreement made on or about 23 June 2003 the first defendant agreed to design, construct and commission an upgrade to the plaintiff's Altona Treatment Plant [4]. It also pleaded that on 18 February 2005 the first defendant suspended the works and abandoned the project [5]. A default notice had allegedly not been remedied, so that clause 41.3(g) entitled the plaintiff to do anything reasonably considered necessary to rectify the defaults [5]. The upgrade was pleaded to be only 85 per cent complete and had not been commissioned [6]. The writ claimed final delivery of the items in Schedule A, and the summons sought interlocutory delivery of the items in Schedule B [7].

The plaintiff's witness deposed that failure to complete any requirement would cause the whole project to fail, in that new EPA requirements would not be achieved by 14 October 2005, which his Honour thought defence counsel correctly called an overstatement [14].

His Honour said that issuing an interlocutory mandatory injunction is "a high standard to achieve", referring to the review of the authorities by Warren J in Elan Trading Corporation Pty Ltd v Clarence Street Freeholds Pty Ltd [9]. No injunction will be granted lightly, and "mandatory ones especially so" [9].

The defendants' deponent said that the documents were valuable intellectual property and that disclosure while retention moneys and claims remained unpaid would cause the documents to lose all their value [10]. His Honour accepted that an order once made could not be undone, and that it would dispose of the main proceeding as to the Schedule B documents [10]. He did not share the defendants' view that time was not critical, but did not regard their withholding of the documents, as their strength in relation to moneys outstanding, as a cynical or wrongful approach [15]. Whether those moneys were owing was not for him to determine [18].

The contract's definition of Facility Information comprehended the Schedule B documents [20]. Senior counsel for the plaintiff submitted that clause 41.3(g), or at least an implied term, gave a right to the information [21]. His Honour agreed with him that the date of 14 October 2005 ought be met rather than postponed [21]. The alleged repudiation concerned non-payment of a first invoice with an erroneous GST amount, the corrected invoice having been paid [19]. The plaintiff submitted that this could never realistically be said to constitute repudiation, and that in any event the accrued rights principle aided it [21]. His Honour agreed that, on its face, damages were not an adequate remedy for the plaintiff [22]. He also agreed that any error in ordering delivery could be remedied by damages, and the usual undertaking was proffered [23].

The defendants argued that the plaintiff had repudiated the contract and that the first defendant had lawfully terminated, relying partly on Progressive Mailing House v Tabali [24]. Their senior counsel accepted that the period in that case was much lengthier than the brief period relied on here [24].

Looking at the matter "not finally of course", his Honour held that the plaintiff's submissions were correct and that the purported repudiation was not efficacious [25]. He held that the requirements of the situation justified ordering the Schedule B documents and that time ought not be let run [25]. He granted the order sought and reserved the costs of the proceeding [26], [27]. In the exchange after the reasons, counsel formally proffered the undertaking and his Honour ordered the documents to be provided by 4 pm on Wednesday 29 June [27].

Why it matters

The decision shows that a principal whose contractor has allegedly abandoned the works may obtain interlocutory delivery of design and facility documents under a clause in this form, even where the contractor withholds them while payments are in dispute. The result rested on the clause's wording, an allegedly unremedied default notice and a preliminary view that the purported repudiation failed, as well as on regulatory deadlines and the inadequacy of damages. It is a brief ruling on an expressly non-final view, ordering only the short list, so it illustrates the high standard for mandatory relief being met rather than finally deciding the parties' rights [7], [9], [25].

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.