Central Exchange Ltd v Anaconda Nickel Ltd [2001] WASC 128

Central Exchange Ltd v Anaconda Nickel Ltd [2001] WASC 128 - WASC 2001 case summary — Zoe

[52]

17 The plaintiff confines its submission that there should be implied into the Deed a term that the defendant will deal with the plaintiff in good faith to an implication by law rather than an implication in fact or ad hoc. This distinction receives some consideration by Priestley JA in Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 255 - 256. As his Honour there pointed out the rules governing implication ad hoc are those stated by the Privy Council in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 and the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337. At heart implication ad hoc is founded in the actual intention of the parties to a particular contract. Whether a term is to be implied by law is a different issue, however, and is based on imputed intention rather than actual intention, on the analysis favoured by Priestley JA which drew in turn on the discussion by Hope JA, Samuels and Priestley JJA agreeing, in Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 where at 486 - 490. There it was said that probably in deciding whether an implication by law attached to a particular class of contract which had not previously been held to be subject to such an implication, a court should only adopt the implication if it could be seen that the type of contract required such implication as a matter of necessity and also of reasonableness. This view was expressed as a tentative one open to further examination in later cases. In Renard Constructions Priestley JA was led to conclude at 262 that in the building and engineering contract there in question there should be implied inter alia by law into cl 34 a requirement of reasonableness on the part of the principal, both when considering whether the contractor "has failed to show cause" and when considering whether to exercise one or more of the powers available to the principal where the contractor had failed to show cause. Clause 34 stipulated the procedure to be followed on the happening of any breach by the contractor, no matter how minor the breach or at what stage of the contract it occurred. It empowered the principal to cancel the contract.

[68]

25 On the assumption, for the purposes of this decision, that an obligation of good faith is to be implied into this Deed and that by virtue of this the defendant may not render illusory the contractual entitlements of the plaintiff, and is to cooperate with the plaintiff in achieving the contractual objects, and is to act honestly and reasonably having regard to the respective interests of the parties, it might well be the case that were the defendant to act dishonestly, or unreasonably, or not to cooperate, or act to frustrate or deny to the plaintiff its contractual entitlements, in the relevant senses, it would be open to a court in appropriate proceedings to find the defendant in breach of the implied term with damages or other appropriate remedies to follow. In the course of any litigation to determine any such issue, the processes of discovery would no doubt be available to the plaintiff to better enable it to pursue the particular breach of the implied contractual term which it alleged. What the plaintiff seeks at present, however, is on a quite different basis and to quite different ends. It is the plaintiff's contention that an implied obligation of good faith should have the consequence that the defendant is obliged in the course of the ordinary ongoing working out of the contract, not merely to keep the plaintiff informed of events and developments which give rise to a contractual entitlement in the plaintiff (or have the potential to do so in the future), but also to provide to the plaintiff full access to the defendant's records and information, as and when required by the plaintiff, to enable the plaintiff fully to assess for itself whether any possible entitlement has in fact arisen or potentially may do so. By these means, it is contended, the plaintiff should be as fully informed in these respects as the defendant and able at any time, and on an ongoing basis, to determine for itself, according to its own view of the contract and the circumstances, whether or not a contractual entitlement has arisen or whether events relevant to the future arising of a potential contractual entitlement have occurred. Indeed, as in the present circumstances, inter alia the plaintiff seeks to be fully provided with documents and material information now, so that, should it be disputed, it may now litigate to determine as between the plaintiff and the defendant whether or not an event has occurred, against the possibility that the event may later prove to become relevant to, or determinative of, a contractual entitlement of the plaintiff.

[76]

33 At present the only identified difference between the parties is as to whether an event referred to in the definition of Review Date has occurred, ie whether the treatment plant was commissioned on 7 May 1999. The plaintiff contends that this does not constitute a dispute within the meaning of cl 4.4. It says there can't be a dispute as, without the information and documents it seeks in this application, it cannot reach a final decision. Thus it submits that it doesn't know whether or not it disputes the contrary opinion of the defendant. This argument appears to me to be without substance and places too limited a construction on the notion of a dispute within the meaning of cl 4.4. In the present case the plaintiff has formed and relied on its opinion that the plant was commissioned on 7 May 1999. It has done so on the basis of information capable of supporting that view which is known to it from the public domain. That opinion is denied by the defendant. As a matter of ordinary usage there appears to me to be a dispute between the parties whether the plant has been commissioned. I would not understand cl 4.4 to require more. It is true that cl 4.4, by incorporating the cl 4.2 procedures, contemplates negotiations in good faith between the parties after notice of dispute. It is only if those negotiations fail to resolve the dispute within seven days that either party may refer the dispute to an independent expert. The plaintiff contends it cannot negotiate effectively without the information and documents it now seeks. While in the present circumstances it is no doubt true that the plaintiff would be in a different position, one that may be either stronger or weaker, if it had access to the defendant's documents and information, that is hardly conclusive of the propositions that the parties can't have intended that the plaintiff should not have access to the defendant's records, or that the agreement is fundamentally deficient because it has failed to provide for the plaintiff to have the information and documents which it believes it needs to negotiate effectively in the present circumstances.

[96]

"In the situation which resulted both parties remained bound by the contract. The fact that there was no longer a fixed date for performance brought into application the principles which impose on parties, in all cases where the performance of their obligations requires co-operative acts, the duty of complying with the reasonable requests for performance made by the other. In Mackay v Dick Lord Blackburn says:- 'I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect'. What it was reasonable for the plaintiff to demand was that within a specified time when the plaintiff's apparatus was not unreasonably committed elsewhere the defendant should name a time for the plaintiff to commence the fortnight's exhibition or demonstration and should make available its store for a reasonable period in advance of the date for the plaintiff to install its equipment and make the necessary preparations. Of course the plaintiff could not give the defendant an unreasonably short period of time or one specially inopportune to the defendant, having regard to the purposes to be served by the exhibition. All that the plaintiff was bound to do was to take reasonable measures to obtain from the defendant a time when he might enter the store for the purpose of performing his part of the contract and no doubt there were more ways than one in which the plaintiff was entitled to require the defendant to make its store available to the plaintiff to perform its obligation at some proper and reasonable time. It is hardly necessary to repeat the commonplace statement that what is reasonable depends on all the circumstances including the nature and purpose of the express stipulations."

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Judgment (117 paragraphs)

Central Exchange Ltd v Anaconda Nickel Ltd [2001] WASC 128 (25 May 2001)

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Legislation Cited (1)

Cases Cited (16)