Summary judgment application by defendant - Turns on own facts

Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500

Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26

MGC Properties Pty Ltd v Tang [2009] QSC 322

1 MASTER SANDERSON: By amended chamber summons issued 20 August 2010, the defendant sought and extension of time within which to bring an application for summary judgment in respect of part of the plaintiff's claim. The defendant then sought, in the alternative, an order that the plaintiff's claim for damages for consequential loss be dismissed, or certain paragraphs of the statement of claim be struck out. At the conclusion of argument, I indicated I would grant the extension of time to bring the application, but dismiss the summary judgment application itself. I said that I would publish reasons for that decision. These are those reasons.

2 By its statement of claim, the plaintiff says it was at all material times the registered proprietor of certain land in Kununurra which it proposed to develop. It is alleged that in January of 2008, the plaintiff engaged the defendant to provide to the plaintiff civil engineering and project management services in relation to a proposed development on the plaintiff's land. The plaintiff pleads the terms and conditions of the defendant's engagement were embodied in a document entitled 'Consultancy Agreement'.

3 The plaintiff alleges that between January 2008 and February 2009, the defendant prepared civil engineering designs for the development on the plaintiff's land and procured tenders for undertaking the civil engineering works. The plaintiff alleges the defendant was negligent in undertaking these tasks and, as a consequence, the plaintiff suffered loss and damage. In particular, by par 20 and par 21B to E, the plaintiff alleges it suffered what, in general terms, might be called consequential loss. The defendant also objected to pars 4 and 14 of the statement of claim. This objection was really consequential upon the primary objection to the claim for consequential loss.

4 At the heart of the defendant's claim is cl 6 of the Consultancy Agreement. It is in the following terms:

To the maximum extent permitted by law:

Subject to Clause 6, the Consultant's liability to the Client arising out of or in connection with this Agreement (including the performance or non-performance of the Services), whether under the law of contract, in tort, in equity, under statute or otherwise shall be limited in aggregate to the amount specified in Attachment 1 or $300,000 [whichever is the greater].

The Consultant is not liable to the Client in respect of any indirect, consequential or special losses (including loss of profit, loss of business opportunity and payment of liquidated sums or damages under any other agreement).

The Consultant shall be deemed to have been discharged from all liability in respect of the Services whether under contract, in tort, in equity, under statute or otherwise, at the expiration of the period specified in Attachment 1, or if no date is specified, on the expiration of 1 year from the completion of the Services.

5 The approach to be taken to the construction of exclusion clauses was considered by the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500, 510, where Mason, Wilson, Brennan, Deane and Dawson JJ said:

These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where and, where appropriate, construing the clause contra proferentem in a case of ambiguity ... And the principle, in the form in which we have expressed it, does no more than express the general approach to the interpretation of contracts and it is of sufficient generality to accommodate the different considerations that may arise in the interpretation of a wide variety of exclusion and limitation clauses in formal commercial contracts between business people where no question of reasonableness or fairness of the clause arises. (emphasis added)

6 The phrase 'indirect, consequential and special losses' is not a term of art. It has no fixed meaning. The meaning of the phrase depends on the intention of the parties in the particular circumstances, as determined by the contract in which the phrase is used. The contract must be read as a whole and considered in the light of admissible background material: see MGC Properties Pty Ltd v Tang [2009] QSC 322 [23] - [25] (Douglas J).

7 The defendant relied on the analysis of the meaning of the term 'consequential loss' undertaken in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26. The defendant submits, based on that case, the phrase 'indirect consequential and special losses' applies to exclude the defendant's liability for each head of loss and damage referred to in the summons and in the defendant's submissions.

8 There are a number of difficulties with that approach. The 'agreement document' which was the relevant contract in the Environmental Systems case is materially different from the contract in this case. Not only were the terms of the contract different, but the contract itself was entered into for very different reasons in both cases. Furthermore, the plaintiff alleges the pleaded evidence of circumstances in which the contract was entered into is relevant to understanding the language used by the parties. That submission may or may not be correct, but it is at least arguable. That being so, it is not appropriate on a summary judgment application to deal with the matter without the plaintiff having the opportunity to put evidence before the court, or at least attempt to persuade the court, that the evidence it seeks to lead is relevant.

9 That is enough to dispose of this application. In my view, the facts of the case and the possibility that the plaintiff may lead evidence as to the proper interpretation of the limitation clause warrant the summary judgment application being dismissed. While I am satisfied that there should be an extension of time to bring the application, I would dismiss the application itself.