Mainteck Services Pty Limited v Stein Heurtey SA [2011] NSWSC 844

Supreme Court New South Wales

Medium Neutral Citation: Mainteck Services Pty Limited v Stein Heurtey SA [2011] NSWSC 844 Hearing dates: 01/08/2011 Decision date: 01 August 2011 Jurisdiction: Equity Division - Technology and Construction List Before: McDougall J Decision: Application for leave to amend dismissed with costs. Catchwords: PRACTICE - application to amend list statement - whether proposed amendments would promote the just, quick and cheap resolution of the real issues in the proceedings - application refused. Legislation Cited: Civil Procedure Act 2005 (NSW) Trade Practices Act 1974 (Cth) Category: Procedural and other rulings Parties: Mainteck Services Pty Limited (ABN 71 098 052 647) (Plaintiff) Stein Heurtey Australia Pty Limited (ABN 29 110 658 029) (Defendant) Representation: Counsel: F Kalyk (Plaintiff) P W Taylor SC / JTG Gibson (Defendant) Solicitors: Piper Alderman (Plaintiff) Jones Day (Defendant) File Number(s): 2007/266650

Judgment (ex tempore) 1HIS HONOUR: The plaintiff's case in these proceedings arises out of what it says is a contract made by it with one or other of the defendants relating to a walking beam furnace to be constructed in the rolling mill of Bluescope Steel's steel mill. In stating the matter that way, I have deliberately passed over much of the complexity of the contractual negotiations and documentation, and of the way in which the agreements between particular parties evolved. 2In very broad outline, the plaintiff claimed that: (1) it had underpriced the works that it was to undertake, because of misleading or deceptive conduct on the part of the relevant defendant; (2) alternatively, the relevant defendant owed it a fiduciary obligation to disclose certain matters (quite how there could be such a prescriptive fiduciary obligation is difficult to understand) and breached that obligation, thereby causing the plaintiff to price the works inaccurately; (3) further, the plaintiff was entitled to be paid for various variations; and (4) further again, the plaintiff was entitled to be paid for delay or prolongation costs. 3Again, this is a very brief and necessarily inadequate summary of the ways in which the plaintiff put its case. 4One of the difficulties in the case, and this is a matter of some significance, lies in the identification of whatever contract was made between the plaintiff and the relevant defendant. In Part A of the Technology and Construction List Statement, where the nature of the dispute was set out, the plaintiff identified some seven different sources which "together or partially together or individually, as the case may be", constituted the contract between it and the relevant defendant. One of those sources included "oral agreements". One could be forgiven for saying that this is rather a broad formulation of the plaintiff's case. Nonetheless, it is crystal clear that, one way or another, the plaintiff was asserting that there was a contract between it and the relevant defendant and, in various ways (specifically, in relation to variations and prolongation), was seeking to enforce that contract. 5The issues in the proceedings were referred for inquiry and report to the Honourable R L Hunter QC. Mr Hunter prepared an interim report dated 22 June 2004 (but, obviously, prepared in 2011) and a supplementary interim report dated 21 July 2011. Although the first report was described as an interim report, there is no doubt that, in at least some parts, it represented the referee's considered and final views on some of the issues entrusted to him for consideration. 6For reasons that are not clear, the referee considered whether the scope of work provisions of one of the agreements that, in his view, formed the contract between the plaintiff and the relevant defendant, was void for uncertainty, together with "the 'price' given as consideration for its performance" (see paragraph 587 of the first report). 7As the referee had acknowledged earlier (at paragraph 572), the question of whether a fundamental part of the contract was void for uncertainty was one that neither party had advanced and neither had been heard on. He said that it was "for that reason that I have not proceeded to a final report". 8It is not surprising that the parties had not adduced evidence on the point, nor put submissions. Neither of them had contended that the contract on which the plaintiff sued, or a fundamental part of it, was void for uncertainty. 9The referee, in substance, dismissed the plaintiff's claim for misleading or deceptive conduct. He did not deal with the question of whether there was any relevant fiduciary obligation. Nor has he dealt with the claim for variations and prolongation. In each case, he said, the uncertainty point should first be finalised. 10The plaintiff now wishes to amend its summons and list statement so as to allege that the scope of works was void, and that as a result the relevant contract was void. It wishes to allege, in consequence, that it has an entitlement to be paid on a quantum meruit basis for the reasonable value of the works completed by it, less, of course, all payments made it to date. That is said to be done so as to bring the pleadings (to use an inaccurate but convenient term) into line with the referee's interim findings and so as to provide an appropriate basis for the issue of uncertainty to be dealt with by the referee and then, no doubt, by the Court, on a final basis. 11If the amendment is to be granted, then a necessary inquiry will be as to the amount (if any) that the plaintiff is entitled to be paid on a quantum meruit basis. One of the points taken by the defendants, in opposing the application for leave to amend, is that this would open up a whole new field of inquiry, in circumstances where the plaintiff had nailed its colours to the mast on the basis of the case that it had pleaded and put before the referee. 12For the plaintiff, Mr Kalyk of counsel points to two of the prayers for relief in the summons as it stands, in which the plaintiff claimed, "based upon the legal principles of restitution for the costs of the work contractually undertaken by the plaintiff less the amount paid for those works"; that appears in prayer 2 and in prayer 2B. 13In prayer 2, the claim is made in the alternative to claims for relief under s 87 of the Trade Practices Act 1974 (Cth), obviously enough, in relation to so much of the claim as was based on misleading or deceptive conduct. As I have indicated, the claim for monetary relief was for the difference between the way in which the plaintiff actually priced the works and the way in which it would have priced those works but for the alleged misleading or deceptive conduct. That the claim on a restitutionary basis, and such evidence as there was in support of that claim, was not intended to open a far wider claim for relief is made clear, in my view, by written submissions on this point that the plaintiff put to the referee. 14The second reference, in prayer 2B, occurs where the plaintiff is seeking compensation for the breach of fiduciary duty that is alleged in the declaration sought in prayer 2A. The relief sought is that the contract be set aside and that the plaintiff be compensated in one way or another for the true value of what it has done, or, alternatively, that it receive damages for equitable fraud. As I have said, that aspect of the case has not been considered by the referee. 15I have referred already to a feeling of some disquiet at the notion that there can be a claim for a fiduciary obligation that imposes prescriptive rather than proscriptive duties. Nonetheless, since no challenge was taken, either to so much of the statement of contentions as supports these prayers for relief, or to the prayers for relief themselves, I think I should proceed on the basis that the claim is not wholly unarguable as a matter of legal principle. 16It does not follow, however, that because a claim for restitution is made in support of a claim for breach of fiduciary duty, that the defendants should have appreciated that the same claim for compensation was also one that they may need to consider in respect of a claim that had not even been pleaded, for recovery on a quantum meruit basis because the contract, or an essential part of it, was void for uncertainty. 17In my view, to treat the prayers for relief to which I have referred as justifying the extension of the case in the way now sought is to ignore s 56 of the Civil Procedure Act 2005 (NSW) and the obligation that is cast on parties and their legal representatives to identify and deal with the real issues in dispute. 18In short, I am entirely unpersuaded that the prayers for relief to which I have referred operate as a "hook" which is sufficient for the plaintiff to use to hang its case for amendment. 19I think the reality is that the plaintiff, having failed in its claim under the Trade Practices Act , has seized on the referee's interim observations as to uncertainty to justify the application for leave to amend, so that it can recover on an even wider basis than hitherto it had sought to do. 20Leaving aside the question of motive, it is necessary to pay some attention to the form of the proposed amendments. Proposed paragraph 47A states, after some prefatory words, that: if it be found that on the date of the Mainteck Contract...the scope of the works to be performed by the plaintiff under that contract was as defined by, or by reference to, the head contract, or by, or by reference to, the technical specifications, then the provisions of the Mainteck contract as to scope of works were void for uncertainty or were illusory. 21The reference to the "Mainteck Contract", is a reference back to the contract that is said to be constituted by the seven matters to which I have referred, "together or partially together or individually, as the case may be". 22It is said that this does no more than reflect what the referee has said to date. I do not agree. It is explicit in the way that the plaintiff wishes to put the paragraph from which I have quoted that it is maintaining that its contract with the relevant defendant is constituted by some or all of the elements to which I referred earlier. However, the referee's finding as to the contract was much narrower. Thus, in this important respect, what the plaintiff wishes to plead does not correspond with what the referee found on an interim basis. 23Further, and more significantly, by the proposed paragraph 47C, the plaintiff wishes to allege that after 9 September 2004, (which was the date, it says, when the "Mainteck Contract" was made), the parties agreed as to the scope of works and that the second defendant would pay the plaintiff a reasonable sum for those completed works. That agreement is said to arise out of a vast number of documents that are particularised in a global fashion in Schedule 3 to the draft further amended summons. Thus, what the plaintiff is seeking to do is to sue, not on the contract that was pleaded and particularised and relied upon up to the time when the referee produced his interim reports, but on a different contract arising at a later date than the former contract and in an entirely different way. It is only after one gets past that that one finds out, apparently (although it is far from clear), as yet another alternative that the plaintiff wishes to assert, that after 9 September 2004, it undertook works at the request, or direction of, or for the benefit of the defendants, and is entitled to be paid a reasonable sum. 24I can understand the proposition that if there were a contract (or purported contract) which, or an essential part of which, was void for uncertainty, and if, not knowing of that, the plaintiff carried out works under it, the plaintiff might be entitled to be paid a reasonable price for the performance of those works. But what the plaintiff wishes to do in this case is to go beyond that and allege an alternative contract (which is said to be either an express contract, or in some way an implied contract, or a contract that the parties are estopped from denying has been made). That cannot be said, by any stretch of the imagination, to be an amendment merely to give a basis in the pleadings for the interim findings expressed by the referee to date. 25Thus, assuming for the moment that it is legitimate to make an application for leave to amend because some interim or tentative findings have been made which might support it, the amendment that is sought cannot be justified on that basis because it does not merely reflect those interim or tentative findings. 26But to put the matter in the way that I have is, in my view, to put the cart before the horse. It has not been suggested that there was anything put to the referee to justify or require him to deal with an issue of uncertainty. As I have said, it was not raised on the pleadings. There is no suggestion, let alone evidence, that it was raised in submissions. It appears to have been something that the referee thought required attention, because he took the view that the contract that the parties were putting before him was one which was "uncommercial" in the way it operated. 27In those circumstances, it is necessary to ask why a party who becomes the accidental beneficiary of interim findings that were not called for should be permitted, having run its entire case, to amend so as to rely upon those findings when they were not called for. The submissions for the plaintiff simply did not grapple with that difficulty. 28This is a substantial dispute. I can infer that it has been hard fought. For example, apparently, the proceedings on the reference occupied some 39 days, and there were many thousands of pages of material put before the referee for his consideration. To permit proceedings of that complexity to be reformulated and reargued, simply because the referee reflected upon matters that were not raised for his consideration, does not seem to me to be consistent with the interests of justice as between the parties. 29The defendant submitted that there was a considered decision not to raise the uncertainty point. I am not sure that this is so; but there is certainly no evidence from the plaintiff to indicate that (for example)the point was considered and rejected, or that it was simply overlooked. 30Many other matters were put before the Court to justify, or oppose, the application for leave to amend. They included an attempt by Mr Taylor of Senior Counsel, who appeared with Mr Gibson of counsel for the defendants, to demonstrate that the referee's interim findings on uncertainty were hopelessly wrong and hence, that an amendment based upon them had no prospect of success. It seems to me to be very difficult to say that a conclusion expressed, even on an interim basis, by a distinguished referee, such as we have in the present case, can be said to be, on its face, so plainly wrong as of itself to justify refusing an application for leave to amend. But in circumstances where the point was not fully argued (and it was not argued because I indicated to Mr Taylor that I did not want to hear from him on it), it is unnecessary to go further. 31For the reasons I have given, the plaintiff's notice of motion filed in court on 22 July 2011, seeking leave to amend, should be dismissed with costs and I so order.