STATE OF NEW SOUTH WALES v AUSTEEL PTY LTD [2003] NSWCA 392

New South Wales Court of Appeal

CITATION : STATE OF NEW SOUTH WALES v AUSTEEL PTY LTD [2003] NSWCA 392 HEARING DATE(S) : 12 December 2003 JUDGMENT DATE : 12 December 2003

JUDGMENT OF : Mason P at 1; Meagher JA at 28; Giles JA at 29 DECISION : Appeal dismissed with costs.

CATCHWORDS : Construction contract - dispute resolution clause - validity of notice of dispute (ND) PARTIES : STATE OF NEW SOUTH WALES v AUSTEEL PTY LTD FILE NUMBER(S) : CA 41112/03 COUNSEL : Appellant: H Insall SC / P Brereton Respondent: M Holmes QC/ I Peden SOLICITORS : Appellant: Freehills Respondent: Kemp Strang

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT FILE NUMBER(S) : LOWER COURT Palmer J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41112/03

MASON P MEAGHER JA GILES JA

12 December 2003

STATE OF NEW SOUTH WALES v AUSTEEL PTY LIMITED JUDGMENT 1 MASON P: The appellant challenges the orders of Palmer J dismissing its summons with costs, (State of New South Wales v Austeel Pty Limited [2003] NSWSC 1077). The appeal has been expedited. 2 The appellant and the respondent are parties to an Agreement dated 14 February 2001, subsequently twice amended, whereby to induce the respondent to construct a large steel plant in Newcastle, the State agreed to invest in necessary infrastructure. The scope and value of the contract work are vast, there is much more than building works, extending to major components of urban planning. 3 The Agreement contains a dispute resolution clause (cl 14) that contemplates a tiered approach to dispute resolution: first there is to be a meeting of representatives; second a meeting of very senior officers; third expert determination or mediation; and finally if all else fails, there is to be arbitration. 4 Very tight time frames are stipulated. 5 Clause 14 purports to stipulate the procedure that must be followed to resolve "any difference or dispute". The first stage is giving "written notice of the dispute to the other party". Representatives nominated by each party must meet within five business days and attempt in good faith to resolve the dispute. Various options then cascade down, within exiguous time spans, culminating (if all else fails) in arbitration conducted in accordance with the existing laws of this State including the Commercial Arbitration Act 1984. 6 There have been earlier Dispute Notices, one culminating in a formal First Amendment to the Agreement, others being withdrawn. One was extant at the time of issue of the present notice. 7 On 7 November 2001 the respondent issued what purports to be a Notice pursuant to cl 14.1. Its terms are summarised by Palmer J at [9]-[11] of his reasons. The appellant promptly disputed its validity and instituted proceedings by Summons in the Equity Division seeking a declaration that the Notice is invalid and an order restraining the respondent from taking any steps pursuant to cl 14 in reliance on the Notice. 8 It is fairly clear that, behind the legal posturing, there are concerns about the impact of cl 14 upon the range of disputes that have been tendered for resolution in the notice of 7 November 2003. We have been given a tiny insight into what these wider concerns are but it is important I think that this Court focus and confine itself to the issue that is tendered by the summons and the appeal. 9 The appellant contends that the notice is entirely bad. It does not argue that because it may be rough around the edges as regards some of the issues that have been tendered it is entirely bad. Palmer J held that the notice was valid. 10 Some of the arguments that his Honour rejected have been repeated in this Court in the written and oral submissions. Mr Insall SC with great clarity formulated three issues as the distillation of the written submissions. His first submission was that cl 14 requires in effect that there be one notice for each separate "dispute or difference". He submitted that there were more than one dispute or difference, a factual proposition that was rejected by Palmer J. 11 The appellant's submission on the factual matter depends upon the terms of the notice itself as distinct from any evidence on the question. In my view it is not necessary to consider the correctness of that factual proposition because there is a more fundamental problem with this first submission. 12 A "dispute or difference" capable of triggering a Notice need only satisfy the description as one that "arises out of or in connection with [the] Agreement". These are words of the broadest import. 13 There is ample evidence of one or arguably more than one dispute of this nature from within the four corners of the notice, the letters it recites and the allegations of breach recited in the Notice itself. The Notice avers that these allegations have been denied and there is nothing suggesting otherwise in the evidence. 14 Senior counsel for appellant submitted that a number of disputes had arisen and were extant at the time of the Notice. He contended that there were more than one "dispute or difference" and he denied that all of the issues notified had crystallised into a dispute or difference by the time of the Notice. He accepted that there was at least one extant dispute or difference. 15 The reason why in my view it is unnecessary to consider the factual issue whether there was one or more dispute or difference is that cl 14.1 merely speaks of "written notice of the dispute". It does not talk of "a notice". The capacity of a single notice to cover more than one dispute or difference is also underlined by cl 1.2(f) of the Agreement that stipulates that unless the context indicates a contrary intention words importing the singular include the plural and vice-versa. 16 The second challenge to the validity of the notice related to its lack of clarity and specificity. The written submissions cited various cases about the scope of a proper notice in particular contexts. These decisions contained dicta about the level of specificity required in their particular contexts. 17 I get little assistance from these dicta because the present context is different. Here the notice sets the scene for dispute resolution, but it does so in a fairly preliminary manner. Discussion and mediation will follow if necessary. Inevitably some issues will drop away and others will be reformulated. Ultimately if necessary there will be an arbitration in which attention will have to be given to proper points of claim. If those points of claim go beyond the scope of the notice then certain rights may arise. 18 All this may not come to pass of course if the dispute is resolved earlier. But in determining what this contract requires in order to satisfy the obligation of the initiating party to give "written notice of the dispute that has already arisen out of or in connection with the agreement" we should focus on the context. As I have indicated, it is a context of laying the ground work for various tiers of informal and ultimately formal dispute resolution. 19 A notice must, like a pleading, attempt to capture or describe the essence of the existing dispute or difference, at least from the perspective of the initiating party, but like any business document it is to be construed fairly in its context. It was not submitted that it had to be drawn with all the formalities of a pleading. 20 There is some relevant and helpful discussion in the present context in the judgment of Debelk J with whom Cox J and Prior J agreed in Santos Pty Limited v Pipeline Authority of South Australia, unreported South Australia Supreme Court Full Court 24 April 1996. In my view the notice was amply sufficient to comply with cl 14.1. I think it was sufficient as to its entirety but it was certainly sufficient as to its greater part. The fact that it contained one particular expressed in rather broadbrush terms about the complaint of collusion does not in my view offend the requisite requirement of specificity. But even if it did that would not bring down the whole notice and the issue tendered by the appellant is one said to strike at the validity of the notice as a whole. 21 The third issue that has been raised was not advanced before Palmer J. Part of the notice re-states issues tendered in an earlier notice dated 5 September 2003 that was still extant. It was in fact withdrawn later on 7 November 2003 after service of the present notice. 22 My present strong inclination is that as a matter of construction the notice of 7 November swept away the earlier notice and replaced it. As presently advised, I cannot see anything in cl 14.1 to prevent the type of consolidation that has occurred here, and I have not been shown any evidence that would indicate to me that the respondent was estopped from making this fresh start. But I would reject the third argument on a more fundamental ground, namely the fact that it was not advanced at trial. I am satisfied that it is possible that, had the point then been taken, evidence may have been led touching issues of waiver, estoppel or the like to have met the arid formality of the point. Because of that, in light of Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 and Multicom Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631) it would be contrary to the interests of justice to allow this third point to be agitated. 23 I just want to say one thing further about the factual issue as to whether or not this notice encompassed more than one dispute or difference. Palmer J held that it did not. I, for reasons indicated, have felt it unnecessary to embark upon that issue. 24 It is fairly apparent that one of the major if not the only major matter that lies behind the whole appeal is concern by the appellant that it may be faced concurrently with dispute resolution procedures touching what it contends are multiple disputes or differences. As presently advised, I cannot see what is wrong with that as regards a matter of the contractual rights of the parties. Lying behind the appellant's concern seems to be the contention that there is an implied term in the agreement that more than one dispute may not be notified at the one time. I would be very surprised if the agreement embodied that implied term, but having embarked upon some obiter dicta on that point I simply record that that issue is not before us. 25 In something of a flourish, the appellant's written submissions contended that Palmer J's decision is a "vehicle for oppression". The respondent may have laid out a heavy bundle of rods in the notice of 7 November 2003 but they stand ready to be applied to its own back as well as the back of the appellant. Good faith, common sense, the presence of third party mediators and arbitrators and ultimately curial control provide ample protection against oppression and abuse of process. 26 The rather fantastic concerns raised by the appellant do not persuade me that the contract should be read in such a way as to entirely invalidate the notice of dispute dated 7 November 2003. 27 Accordingly I propose that the appeal be dismissed with costs. 28 MEAGHER JA: I agree. 29 GILES JA: I also agree, although so far as the President referred to points of claim it may not be necessary in the dispute resolution process, if it comes to that stage for that sort of formality. 30 The problem for the appellant began with the framing of the relief claimed in the summons which sought a declaration that the "Notice of Dispute...is not a valid notice" and consequential orders. As has been pointed out, cl 14 does not require a Notice of Dispute. What was intended in the summons is clear enough. The issue posed was whether the dispute resolution process had been enlivened by the document of 7 November 2003, and the summons proffered that it had not been enlivened at all. 31 Clause 14 requires firstly that there be a difference or dispute, and it was acknowledged that there were differences and disputes. It then requires written notice of the dispute. If the document of 7 November 2003 on its proper construction was written notice of one dispute, then there was enlivening of the dispute resolution process in full. If however, as the appellant contended, there were a number of different disputes, then it undoubtedly gave notice of some disputes. The fact that there may be difficulty in seeing other disputes within it, or unclarity in the definition of other disputes, does not matter. In part it enlivened the dispute resolution process. 32 Accordingly, the relief claimed cannot be given. This might be thought unsatisfactory, in that it leaves a dispute between the parties as to what they are in dispute about. However that was not an issue which had been tendered for us. I join in the President's remarks in their application in this respect so far as he referred to good faith and common sense. There does not seem to have been terribly much of that thus far. One hopes that it may break out. 33 MASON P: The appeal is dismissed with costs.