Supreme Court New South Wales Medium Neutral Citation: Acciona Industrial Australia Pty Ltd v Kwinana WTE Project Co Pty Ltd [2021] NSWSC 1527 Hearing dates: 23 November 2021 Decision date: 23 November 2021 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Proceedings stayed pending observance of dispute resolution procedures in contract; proceedings transferred to Supreme Court of Western Australia Catchwords: CIVIL PROCEDURE – stay of proceedings – whether proceedings should be stayed pending observance of dispute resolution procedures in contract CIVIL PROCEDURE – cross-vesting – transfer to other Supreme Court – relevant factors – transferred to Supreme Court of Western Australia Legislation Cited: Civil Procedure Act 2005 (NSW) Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) Cases Cited: Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 Cable & Wireless plc v IBM United Kingdom Ltd [2002] EWHC 2059 (Comm); [2002] C.L.C 1319 Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 Huddart Parker Ltd v Ship Mill Hill (1950) 81 CLR 502; [1950] HCA 43 Joshan v Pizza Pan Group Pty Ltd [2021] NSWCA 219 Santos Ltd v Fluor Australia Pty Ltd [2016] QSC 129 Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135 Category: Procedural rulings Parties: Acciona Industrial Australia Pty Ltd (First Plaintiff/Respondent) Acciona Construction Australia Pty Ltd (Second Plaintiff/Respondent) John Beever (Aust.) Pty Ltd (Third Plaintiff/Respondent) Kwinana WTE Project Co Pty Ltd (First Defendant/Applicant) BTA Institutional Services Australia Ltd (Second Defendant/Respondent) Representation: Counsel: L Shipway (Plaintiffs/Respondents) T Breakspear SC with T J Boyle (First Defendant/Applicant) Solicitors: Corrs Chambers Westgarth (Plaintiffs/Respondents) King & Wood Mallesons (First Defendant/Applicant) MinterEllison (Second Defendant/Respondent) File Number(s): 2021/307737 EX TEMPORE Judgment (REVISED) 1. The plaintiffs (together, "Acciona") and the defendant ("Kwinana") are parties to a contract dated 16 October 2018 to engineer, procure and construct a "waste to energy facility" in Kwinana in Western Australia. The parties referred to the contract as the "EPC Contract". 2. Kwinana is the owner of the project and Acciona is the contractor. 3. It is a large project. It is worth hundreds of millions of dollars. It is far from complete. 4. Many disputes have arisen under the contract, particularly as to whether a Force Majeure Event (as defined in the contract) has occurred. In that regard, the factual issues which have arisen between the parties are primarily, if not solely, concerned with matters arising out of the COVID-19 pandemic. 5. The EPC Contract is lengthy and complex. It contains detailed provisions as to what is a Force Majeure Event, when a Force Majeure Event is an event of default and as to Acciona's entitlements to terminate the contract in that event. Related provisions concern Extensions of Time and a provision concerning Change of Law, which concepts are also relevant to questions of default and the parties' entitlement to terminate the agreement. There is much interaction in the contract between those three concepts. 6. Numerous disputes have arisen between the parties about those matters, which are summarised in the submissions of Mr Breakspear SC and Mr Boyle for Kwinana as follows: 1. Acciona has made eight claims based on the Change of Law provision in the contract, all of which are disputed by Kwinana; 2. Acciona has made 19 claims for Extensions of Time, all of which have been rejected by the Independent Certifier under the contract; and 3. Acciona has made 58 claims of Force Majeure Events and identifies further such claims in its List Statement in these proceedings. 1. There has been a four-day mediation of all disputes under the EPC Contract before the Honourable Wayne Martin AC QC in late August and early September this year. That mediation is ongoing but the disputes between the parties are not resolved. 2. Acciona and Kwinana are also parties to a Consent Deed. The second defendant, BTA Institutional Services Australia Ltd, referred to by the parties as the "Security Trustee", is also a party to the Consent Deed. The Security Trustee, in effect, represents the interests of a consortium of lenders to the project and under the Consent Deed has the right to intervene in various ways if an event of default is alleged to have occurred under the EPC Contract. The Consent Deed also provides certain constraints on, relevantly, Acciona's ability to act on an alleged event of default. 3. On 1 October 2021, Acciona sent the Security Trustee a letter in which it set out its contentions concerning Kwinana's defaults under the EPC Contract. The evident object of that letter was to enable the Security Trustee to consider whether to exercise its rights under the Consent Deed to intervene. 4. Kwinana replied to the Security Trustee by letter dated 12 October 2021. In that letter Kwinana denied there was any default and expressed reasons for that contention. 5. Since then, the Security Trustee has not expressed an intention of exercising any rights under the Consent Deed whether arising from that correspondence or at all. 6. On 29 October 2021, Acciona commenced these proceedings. Acciona seeks declaratory relief about whether certain "occurrences" specified in the definition of a Force Majeure Event in the EPC Contract took place. In particular, Acciona seeks a declaration as to whether there has been a "declared national emergency", a "blockade or embargo" or a "biological contamination" within the meaning of that definition. 7. Acciona does not seek any other relief in the proceedings. It does not seek a declaration as to whether there has, in fact, been a Force Majeure Event within the meaning of the EPC Contract, a matter which would involve other elements of the definition of that expression beyond whether or not an "occurrence" has taken place. Nor does it seek any order concerning its or Kwinana's contractual entitlement under the EPC Contract whether arising from the occurrence of a Force Majeure Event or at all. 8. Acciona may have difficulty persuading a court to make the declarations sought in that isolated context. But that is for another day. 9. By Notice of Motion filed on 12 November 2021, Kwinana seeks: "1. An order pursuant to section 67 of the Civil Procedure Act 2005 (NSW) or alternatively the Court's inherent jurisdiction that the proceedings be stayed until further order of the Court, pending compliance with the dispute resolution mechanism in Schedule 20 to the EPC Contract. 2. Upon the expiration of the stay in paragraph 1, or in the alternative, an order pursuant to section 5(2) of the Jurisdiction of the Courts (Cross-vesting) Act 1987 that proceedings the subject of Case No. 2021/00307737 be transferred to the Supreme Court of Western Australia. 3. An order that the Plaintiffs pay the First Defendant's costs of this application." 1. Kwinana seeks a stay of the proceedings by reason of the admitted fact that Acciona has not sought to follow the procedures specified in the EPC Contract concerning dispute resolution. 2. Clause 40 of the EPC Contract provides: "Any Dispute which arises between the Parties shall be resolved in accordance with Schedule 20." 1. Schedule 20 requires that "Disputes" (defined in the EPC Contract to include matters arising from the "interpretation" of the contract) must, within 21 business days after service of a "Dispute Notice", be discussed at a meeting of senior representatives of each party. Those representatives must have the power to settle the dispute and must act in good faith to resolve it. 2. The effect of Sch 20 is that if those senior representatives cannot resolve the dispute by agreement, then either party is free to litigate. 3. Schedule 20 also make provision for there to be, in certain circumstances, a reference out for "Expert Determination". There is no suggestion that this part of Sch 20 is engaged here. 4. The relevant principles concerning such agreements are not in dispute. 5. As Chesterman J held in Zeke Services Pty Ltd v Traffic Technologies Ltd: [1] "The discretion whether or not to grant the stay is obviously wide. The starting point for a consideration of its exercise is that the parties should be held to their bargain to resolve their dispute in the agreed manner. This factor was emphasised by the House of Lords in Channel Tunnel, [2] by the High Court in … Huddart Parker Ltd v … Ship Mill Hill … [3] and by Gillard J in Badgin. [4] However, a stay will not be granted if it would be unjust to deprive the plaintiff of the right to have his claim determined judicially or, to put it slightly differently, if the justice of the case is against staying the proceedings. The party opposing the stay must persuade the court that there is good ground for the exercise of the discretion to allow the action to proceed and so preclude the contractual mode of dispute resolution. The onus is a heavy one. The court should not lightly conclude that the agreed mechanism is inappropriate." 1. Acciona submits there are two reasons why a stay should not be granted. 2. The first is that cl 40 of the EPC Contract is not engaged because on its proper construction a "dispute" referred to in cl 40 does not include a dispute arising out of a notice of default served under the Consent Deed (such as the 1 October 2021 letter to which I referred). 3. Mr Shipway, who appeared for Acciona, was not able to articulate how cl 40 could possibly be read so as to include those words. 4. In its written submissions, Acciona also submitted that cl 40 should be construed so as not to be enlivened if the dispute referred to would affect the interests of the Security Trustee under the Consent Deed. I do not accept that submission. It seems to me that almost every dispute that would arise under the EPC Contract, which would otherwise be engaged by cl 40, would be one in which the Security Trustee had an interest. 5. I do not accept Acciona's submission that cl 40 is not engaged. 6. Alternatively, Mr Shipway submitted that, as a matter of discretion, Acciona should not be constrained from pursuing these proceedings in the face of the dispute resolution provisions of the contract because it would not be "apt" to require the senior representatives of the company to meet and endeavour to resolve what, in effect, was a matter of the proper construction of the contract. 7. Mr Shipway also referred to the fact that the current proceedings have been brought in the shadow, as it were, of the ongoing mediation and that it would not be appropriate to require there to be a "further dedicated round of discussions" confined to what he contends to be the relatively narrow question of construction. 8. However, the words used by the parties in the EPC Contract show they contemplated that a matter that might be the subject of a meeting of the kind referred to in Sch 20 could be a proper interpretation of the contract. 9. Further, there is authority for the proposition that provided that, as here, the dispute resolution clause is wide enough, the mere fact that it might cover "pure issues of construction" would at best provide a "weak basis for inviting the court to withhold enforcement" of the dispute resolution provision: Cable & Wireless plc v IBM United Kingdom Ltd. [5] 10. Mr Shipway also submitted that invocation of the dispute resolution process would necessarily cause delay as it must only occur within 21 business days of service of a notice of default. Mr Shipway informed me that it may be that delay damages are accruing against his client, quite possibly at a rate as high as $120,000 per day. 11. The answer to that submission is that Acciona has been aware for quite some time of Kwinana's contention that Acciona ought to comply with the dispute resolution provisions of the agreement. It could, on any one of the 17 business days since these proceedings were commenced, have decided to involve itself in the process. In that regard, as Mr Breakspear submitted, the fate of these matters has been in Acciona's hands. 12. My conclusion is that Acciona should be held to their bargain. Accciona should engage in the dispute resolution process contemplated by Sch 20. The proceedings should be stayed until that has occurred. Transfer to Supreme Court of Western Australia. 1. Again, there is no dispute as to the principles to be applied by the Court when exercising jurisdiction under s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth). 2. If it is more appropriate that these proceedings be transferred to the Supreme Court of Western Australia, I must so transfer the proceedings. 3. As Gleeson CJ, McHugh and Heydon JJ stated in BHP Billiton Ltd v Schultz: [6] "In the context of the Cross-vesting Act, … the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s 5 of the Cross-vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court 'shall transfer' the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a 'clearly inappropriate' forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate." 1. In this case, the only connection between these proceedings and New South Wales is that (a) the defendants have their registered office in Sydney (a factor of little weight in this context) and (b) Acciona have an office in Sydney at which, evidently, members of its finance team are based and to whom its CFO and other executives occasionally visit. 2. Otherwise every connection in this case is with Western Australia. The "centre of gravity" [7] of this case is Western Australia. 3. No explanation has been offered as to why Perth lawyers would cause a dispute about a contract made in Western Australia concerning a major infrastructure project in Western Australia to be brought here. 4. Obviously, the project itself is in Kwinana. 5. Acciona has made a large number of claims. The current proceedings will not resolve any of them. The current proceedings would involve one integer in what will be a lengthy and complicated dispute resolution process between these parties. 6. It may well be that the current proceedings, which involve a question of construction, can be resolved without calling witnesses. However, the vast majority of witnesses involved in the factual background to this case are in Western Australia. 7. Further, the vast majority of the solicitors are Western Australians and must have had to observe this application by video link starting at 7.15am in Perth time. This time zone problem would endure as long as this case was proceeding in New South Wales, showing the high inconvenience of running any part of this case in New South Wales. 8. Further, unless it is to be supposed that Acciona will abandon the detailed claims it has made under the EPC Contract, it seems to me to be probable, if not inevitable, that it will have to initiate further litigation. 9. Such litigation will very likely give rise to "real on the ground", to use Mr Breakspear's expression, factual issues involving, amongst many other things, (a) whether there has been a Force Majeure Event; (b) what impact any Force Majeure Event has had on Acciona's actions under the EPC Contract; (c) whether Acciona is entitled to any Extensions of Time, (d) what entitlements Acciona has by reason of any Change of Law; and (e) the likely interaction and implications of all those matters. 10. Finally, the contract is said to be governed by the law of Western Australia. That probably is not a particularly weighty factor because no doubt judges in this Court are capable of understanding what the law of Western Australia is. 11. The parties also submitted to the non-exclusive jurisdiction of the Courts of Western Australia and waived objection to the jurisdiction of those Courts. For reasons articulated in Joshan v Pizza Pan [8] that may not have great weight. It may be that the latter aspect of that provision would have the effect that, were Kwinana to commence proceedings under the EPC Contract in Western Australia, it would not be open to Acciona to cavil with that decision. 12. For all those reasons, I make the following orders: 1. Order pursuant to s 67 of the Civil Procedure Act 2005 (NSW) or alternatively the Court's inherent jurisdiction that the proceedings be stayed until further order of the Court, pending compliance with the dispute resolution mechanism in Schedule 20 of the EPC Contract. 2. Upon expiration of the stay in paragraph 1 or alternative, an order pursuant to s 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) that proceedings the subject of proceedings numbered 2021/307737 be transferred to the Supreme Court of Western Australia. 3. Order that the Plaintiffs pay the First Defendant's costs of this application. 1. I note that the parties will inform the Court in due course of the outcome of the dispute resolution process to be undertaken and inform the Court of any dispute as to when the stay I have ordered should be lifted. ********** Endnotes 1. [2005] QSC 135 at [21]. 2. Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334. 3. (1950) 81 CLR 502; [1950] HCA 43. 4. Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188. 5. [2002] EWHC 2059 (Comm); [2002] C.L.C 1319 at 1328 (Colman J); cited with approval in Santos Ltd v Fluor Australia Pty Ltd [2016] QSC 129 at [25] (Douglas J). 6. (2004) 221 CLR 400 at [14]; [2004] HCA 61. 7. To adopt the language of Bell P in Joshan v Pizza Pan Group Pty Ltd [2021] NSWCA 219 at [115]. 8. At [84]. Amendments 16 December 2021 - Typographical error in quote at [37] corrected. 16 December 2021 - Quote in [37] corrected DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 December 2021