Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214

Federal Court of Australia

Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214 File number: WAD 354 of 2018

Judgment of: MCKERRACHER J

Date of judgment: 8 October 2021

Catchwords: CONTRACTS – meaning of 'Insolvent' in commercial contract for the provision of mining services – where the contract prescribes a definition that includes various circumstances where a party will be considered 'Insolvent' – where one part of the definition refers to insolvency as defined by the Corporations Act 2001 (Cth) – where another part provides that a party will be 'Insolvent' if it is 'otherwise unable to pay its debts when they fall due' – whether the second part should be read down by reference to the first – whether the second part provides a similar yet independent limb of the definition separate to the insolvency regime in the Corporations Act – whether instead the second part is intended to enshrine the currently legislated definition of insolvency in the event that the Corporations Act is amended or repealed CONTRACTS – breach of contract – whether a party has committed an 'Insolvency Default Breach' by being unable to pay its debts when they fell due – where the relevant events occurred almost seven years ago – where the company continues to trade today and has never been subject to external administration – where the company was reliant on parent company support to pay its debts – whether the company had the necessary degree of assuredness that parent company support would be forthcoming to allow it to pay its debts when they fell due – consideration of whether a company had the 'ability' to pay its debts when they fell due, not whether it actually did so – consideration of the relevance of time periods before and after the date of termination for insolvency DAMAGES – quantum – where the contract provides an exhaustive and specific 'code' for the assessment of a party's entitlement upon termination for breach – whether a party's entitlement under the contractual code precludes the adjustment of that amount by general loss of bargain damages – reasoning in Basetec Services Pty Ltd v Leighton Contractors Pty Ltd (No 6) [2016] FCA 1354 applied – where damages are calculated solely by reference to the contractual code such that issues of causation and remoteness do not arise for consideration DAMAGES – quantum – whether Goods and Services Tax (GST) should be added to certain amounts payable to the successful party under the contractual code for the calculation of damages – where the amounts payable under the contractual code are directly referrable to amounts due for payment at the date of termination – whether amounts claimed constitute a 'taxable supply' – whether a sufficient nexus exists between the payment and consideration for a supply – consideration of tax ruling GSTR 2001/4 Goods and Services Tax: GST consequences of course orders and out-of-court settlements EVIDENCE – admissibility of business records to prove quantum of damages under s 69 of the Evidence Act 1995 (Cth) – whether the exception in s 69(3) of the Evidence Act applies –whether documents were prepared in contemplation of an Australian proceeding