McConnell Dowell Constructors (Aust) P/L & Anor v QCLNG Pipeline P/L [2014] QSC 157

ARBITRATION - AWARD - APPEAL OR JUDICIAL REVIEW - GROUNDS FOR REMITTING OR SETTING ASIDE - ERROR OF LAW - where applicants challenged findings as to the proper constructions of the contract and causation made by the majority in the arbitral award - where, even if successful on some grounds, it is unlikely that a different substantive outcome would be reached on an appeal on a question of law - whether particular grounds were a question of fact or law - whether leave to appeal should be granted

CONTRACTS - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - CONDITIONS - where arbitral tribunal held that the applicants could not recover for the respondent's breach of contract because their own breach precluded recovery - where the obligations required one party to obtain certain authorisations and the other to give "every assistance" - whether these respective obligations were "mutually dependent and concurrent conditions"

ARBITRATION - AWARD - APPEAL OR JUDICIAL REVIEW - GROUNDS FOR REMITTING OR SETTING ASIDE - ERROR OF LAW - CONSTRUCTION OF CONTRACT - where the applicants argued that their recovery of damages for the respondent's breach was not precluded because their own breach was a concurrent cause of their loss - where the respondent's breach involved a failure to obtain approvals so that work could commence - whether a question of fact or law

ARBITRATION - AWARD - APPEAL OR JUDICIAL REVIEW - GROUNDS FOR REMITTING OR SETTING ASIDE - ERROR OF LAW - where some potential errors of law in the arbitral award were identified - where the essential reasoning is likely to be sound - whether leave to appeal should be granted

Civil Liability Act 2003 (Qld), s 11(3)(b)

Commercial Arbitration Act 1990 (Qld), s 38(4)(b)

Adams v Lambert (2006) 228 CLR 40, cited

Alghussein Establishment v Eton College (1991) 1 All ER 267, cited

Beckwith v The Queen [1976] HCA 55; (1976) 135 CLR 569, referred to

Cheall v APEX (1983) 1 All ER 1130, cited

Dainford Ltd v Juana Pty Ltd [1986] 1 Qd R 396, referred to

Foran & anor v Wight & anor [1989] HCA 51; (1989) 168 CLR 385, followed

Hensley v Reschke [1914] HCA 88; (1914) 18 CLR 452, followed

Ireland v Leigh [1982] Qd R 145, cited

Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (2010) 15 BPR 28,563; [2010] NSWCA 268, followed

Rail Corporation New South Wales v Fluor Australia Pty Ltd [2009] NSWCA 344, referred to

Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434, cited

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, referred to

Segacious Pty Ltd v Fabrellas [1991] 1 Qd R 471, referred to

Waterford v The Commonwealth [1987] HCA 25; (1986-1987) 163 CLR 54, 77, cited

Westport Insurance Corporation v Gordian Runoff Ltd (2011) 243 CLR 239, cited

DF Jackson QC, GG McArthur SC and JJ Whelen for the applicants

[1] Jackson J: The applicants ("MCJV") apply for leave to appeal from part of an arbitral award. The award was made under the Commercial Arbitration Act 1990 (Qld) ("the Act"). Although the Act is now repealed, its transitional operation governs the application for leave.[1] The application for leave is thus made under s 38(4)(b) of the Act.

[2] The award was made on 18 December 2013. The application for leave is brought against those parts of the award which dismissed MCJV's claims for payment of costs incurred by reason of the suspension of works pursuant to cl 55 of the general conditions of contract and for damages for breach of an implied term as to compliance with cl 11.1 of the general conditions of contract.

[3] The award was made by majority. The statement of reasons of the majority thus constitutes the statement of reasons for making the award.[2] They explain the origin of the dispute succinctly as follows:

"1. MCJV is, and has been since November 2009, an unincorporated joint venture between McConnell Dowell Constructors (Aust) Pty Ltd and Consolidated Contracting Company Australia Pty Ltd. It was a party to a contract dated 23 August 2010, by which it was to design and construct a natural gas pipeline and associated facilities for QCLNG, a wholly owned subsidiary of the Queensland Gas Company Ltd and the BG Group PLC, for a lump sum of $730,000,000.

1. QCLNG is developing (and has almost completed) a project to convey coal seam gas from the Surat Basin, about 300 kilometres north-west of Brisbane, to Curtis Island where it will be converted into liquefied natural gas and shipped from the Port of Gladstone. The gas is to be extracted from a network of wells, then compressed and pumped through a buried pipeline (the gas collection header) 194 kilometres in length for delivery to a receipt station from which it will pass through another pipeline, 334 kilometres long (the export pipeline), to Curtis Island. Each pipeline has a diameter of 42 inches.

4. Pursuant to the contract MCJV agreed to design, procure, engineer and construct the gas collection header and export pipeline, five connections to the gas collection header from the network of wells, a fibre optic cable and above ground facilities, including the receipt station...

6. There were a number of activities necessary to construct the pipelines and associated facilities. These were to be performed essentially consecutively along the length of the route of the pipelines, from south to north. The activities included:

(a) surveying a 40 metre wide right of way (sometimes ROW);

(b) clearing the right of way of vegetation, removing and stockpiling topsoil and grading to establish a platform for pipeline construction. This activity began at [km point] KP0;

(j) lowering the pipe into the trench (about a kilometre at a time);

1. MCJV has made a number of claims against QCLNG arising out of the construction of the pipelines. All but one of them ... are based on the proposition that MCJV had mobilised its workforce and was ready to commence ROW works on 23 February and/or 2 March 2011 and/or 15 March 2011, but was prevented from undertaking those works until 12 June 2011. It actually started clear and grade work on 15 March but stopped on 17 March when QCLNG ordered the suspension of work. MCJV claims the reason for the suspension was that QCLNG had not obtained environmental approvals required by Commonwealth and State legislation. The suspension was lifted when the approvals were given for the work. During the period of suspension and for some time after MCJV had to pay for an idle workforce and its equipment. The delay until 12 June 2011 was said to have effected 'a fundamental change in the timing and sequence of the Works'. MCJV contends that because it was delayed in starting the ROW works in March it could not complete them before the onset of the 2011/2012 wet season and was further delayed when rain and floods compelled it to cease work for some weeks. It claims very substantial sums of money and extensions of time."

[4] The environmental approvals referred to in that summary were required under the Environment, Protection and Biodiversity Conservation Act 1999 (Cth) ("the EPBC Act") and the Environmental Protection Act 1994 (Qld) ("the EP Act"). Each of those Acts prohibited relevant actions or activities without first obtaining particular approvals and contains provisions requiring compliance with those approvals. There are sanctions for non-compliance. Another relevant Act which affected the project was the State Development and Public Works Organisation Act 1971 (Qld) ("SDPWO Act"). The project was a significant project for the purposes of that Act, being so declared by the Coordinator-General on 4 July 2008. For present purposes, focus may be directed to the EPBC Act and the EP Act.

[5] On 22 October 2010, the Minister for Sustainability, Environment, Water, Population and Community ("SEWPaC") granted an approval under the EPBC Act to develop, construct, operate and decommission the proposed pipeline network. The conditions of the approval included conditions as follows:

"2. The proponent must prepare an Environmental Management Plan to manage the impacts of construction, operation and decommissioning of the pipeline... on listed threatened species and ecological communities, listed migratory species and values of the World and National Heritage-listed Great Barrier Reef ...

1. Before the clearance of native vegetation in the pipeline ROW, the proponent must:

(a) undertake pre-clearance surveys for the presence of listed threatened species and migratory species ...

8. If a listed threatened species or migratory species or their habitat, or a listed ecological community is encountered during the surveys ... the proponent must submit a separate management plan for each species or ... community ...

9. Each plan required under condition 8 must be submitted for approval of the Minister. Commencement in the location covered by the management plan must not occur without approval. Each approval plan must be implemented ..."

[6] The plan required by conditions 8 and 9 (and following conditions) is referred to as the Significant Species Management Plan ("SSMP").

[7] On 20 August 2010, an environmental authority under the EP Act was issued to QCLNG for the gas collection header. On 10 September 2010, an environmental authority under the EP Act was issued to QCLNG for the export pipeline. The gas collection header environmental authority was issued subject to relevant conditions. Condition E11 was as follows:

"(E11) An erosion and sediment control plan must be developed and implemented for all stages of the petroleum activities and which [sic] has been certified by a Certified Professional in Sediment and Erosion Control, or a professional with appropriate experience and or qualifications accepted by the administering authority."

[8] In June 2010, the Coordinator-General issued a report on the environmental impact statement for the project. The conditions imposed by the report are given statutory force under the legislation. Condition 10, relating to weed and pest management, provided:

"(1) Prior to the commencement of construction work, the proponent and its contractors must consult with the relevant officers from the Department of Employment, Economic Development and Innovation in respect of the detection and control of weeds and pests.

(2) Comprehensive weed management plans to be prepared in consultation with the relevant local governments and BioSecurity Queensland, for construction and operational stages of the proposed development (including gas fields, pipelines and the LNG facility)."

[9] The majority made findings of fact in relation to the operation of the environmental approvals and authorities and their conditions. They included that:

(a) the consultations required by the Coordinator-General's conditions 10(1) and (2) did not conclude until 20 May 2011 which is when those conditions were satisfied;

(b) the EMP required by condition 2 of the EPBC approval was approved on 3 June 2011;

(c) the SSMP required by condition 8 and following of the EPBC approval was approved on 3 June 2011; and

(d) condition E11 was satisfied at various dates (but with the exception of six kilometres of ROW) the earliest was 5 July 2011.

[10] The consequence of those findings of fact and the operation of the relevant legislation was a further finding by the majority that "the effect of the statutory provisions described earlier was to make construction unlawful unless the work was done in conformity with the conditions of all three sets of approvals".

[11] The majority made detailed findings as to the progress or lack of progress made towards satisfying the relevant conditions by the parties at various times. It is not necessary at this point to set out any of that detail other than to acknowledge that relevant employees of MCJV and QCLNG "were engaged in the twin tasks of gathering information to satisfy the conditions and blaming the other for not having done so earlier" over a relatively lengthy period during the first half of 2011.

[12] The contractual provisions which are the main focus of the application for leave are contained in cl 11 and cl 55 of the contract.

"11.1 (QCLNG) shall at its own cost and expense obtain and maintain the Authorisations listed in s 8.2 ... of Exhibit A (Scope of Work).

11.2 (MCJV) shall, in a timely manner so as to ensure realisation of the Plant in accordance with the Execution Plan, at its cost and expense obtain and maintain all Authorisations, other than those referred to in clause 11.1 above, in a timely manner and give all notices and pay all sums as may be necessary in connection with the Works other than those referred to in clause 11.1.

11.3 (MCJV) represents and warrants that it has obtained the Authorisations referred to in clause 11.

11.4 (MCJV) shall at no additional cost and without any entitlement for any extension of time, comply with all Authorisations referred to in clauses 11.1, 11.2. and 11.3 including all of the conditions attaching to all such Authorisations. (MCJV) shall, if so requested by (QCLNG) forthwith provide (QCLNG) with documentary evidence of compliance with the foregoing.

11.5 Notwithstanding anything contained in clauses 11.1, 11.2 and 11.3, (MCJV) and (QCLNG) shall give every assistance (other than financial assistance) to each other in connection with the performance by the other of their respective obligations under such clauses."

55.1 (QCLNG) may from time to time give notice to (MCJV) to suspend the Works or any part thereof.

55.2 Any cost incurred by (MCJV) by reason of the suspension shall be borne by (MCJV) but if the suspension is due to an act or omission of (QCLNG) or an employee, consultant, Other Contractor or agent of (QCLNG) and the suspension causes (MCJV) to incur more or less cost than otherwise would have been incurred but for the suspension, subject to (MCJV) taking all reasonable steps to mitigate the effects of the delay, (MCJV) may claim payment of such costs. Suspension shall not affect the Completion Date but the cause of the suspension may be a ground for extension of time.

55.3 (MCJV) shall wherever possible mitigate any additional costs and expenses arising from the suspension by utilising the Contractor's Personnel and Resources on work other than the Works during the period of such suspension, provided always that such utilisation will not render the Contractor's Personnel and Resources unavailable to (QCLNG) immediately on recommencement of the works, and will not prevent (MCJV) fulfilling its obligations under the contract unless otherwise agreed in writing by (QCLNG).

55.5 (MCJV) shall not be entitled to payment of any costs, expenses or loss nor an extension of time resulting from any suspension if:

(a) such suspension is otherwise provided for in the Contract;

(b) such suspension is necessary by reason of an act, omission or default on the part of (MCJV);

(c) such suspension is necessary for the proper execution or for the safety of the Works or any part thereof, unless such necessity results from an act, omission or default of (QCLNG); and/or

(d) subject to clause 50 (Force Majeure), such suspension is as a result of an event of Force Majeure.

"Clause 11.1 obliged QCLNG to obtain the EPBC approval and the EP authorities. It performed that obligation. It had the authorities by 14 April (or perhaps 23 May 2011) and the approval on 3 June 2011. MCJV's claims are for the costs it incurred in having to pay an idle workforce between 17 March and 10 June 2011 ["the delay period"]. To recover the costs as damages for breach of contract it has to establish a contractual obligation on QCLNG to obtain the authorisations on or before 17 March 2011".

[16] The subsequent part of the statement of reasons of the majority proceeds to analyse QCLNG's obligations under cl 11.1 in two steps. First, they held that because cl 11.1 provided no time by which QCLNG was to obtain the relevant authorisations, the parties "must have intended that they be obtained within a reasonable time". Second, they held that QCLNG was in breach of that implied term because "it did not obtain the authorisations within a reasonable time". Thus the majority found that QCLNG was in breach of contract because of its failure to comply with cl 11.1 within a reasonable time. Nevertheless the majority did not award damages for breach of contract for QCLNG's breach of the implied term. Instead, they reasoned from the finding of breach of contract by QCLNG as follows:

"Two obstacles remain. They are that MCJV was itself in breach of clause 11.5 so that its inability to commence ROW works on 2 March 2011 was a consequence of its own breach as well as QCLNG's. The other is that MCJV could not have commenced work without certified ESC plans and without having consulted the Western Downs Regional Council with respect to each management."

"Although QCLNG was in breach of the implied term MCJV was at the same time in breach of the express term found in clause 11.5. Its breach was a cause of QCLNG's breach. The facts have been set out. A reason for the lateness of obtaining EPBC approval was MCJV's recalcitrance in providing assistance by way of information with respect to mitigation measures needed to amplify the Framework EMP submitted to SEWPaC. A party to a contract cannot take advantage of its own breach of a contractual promise to obtain redress from the other party. The failure to obtain approval for the EMP prior to 15 March 2011 was the fault of both parties and, as explained, involved each of them in a breach of contract. To allow MCJV to recover damages from QCLNG for its breach of contract would reward MCJV for its own breach. A reason for QCLNG's breach was MCJV's failure to give every assistance. It is impossible to disentangle the causes and to allocate part of the suspension period to the fault of one and to the other.

Accordingly principle precludes MCJV's claim for damages. The cases on which QCLNG rely for the proposition are Alghussein Establishment v Eton College (1991) 1 All ER 267 and Cheall v APEX (1983) 1 All ER 1130."

[18] The majority went on to consider the second "obstacle" which was "that the breach did not cause MCJV to incur any loss" because:

"...[h]ad the contract, the implied term, been performed by QCLNG, MCJV would have been no better off. It could not have commenced work on the ROW lawfully, without certified ESC plans. It would have had to pay for its workforce and equipment to stand idle even if QCLNG had obtained approval for the EMP prior to 15 March 2011."

[19] The majority continued its analysis by reference to a number of legal treatises dealing with the operation of the principles of causation in the context of a claim for damages for breach of contract. They concluded:

"Looking at the claim from the perspective of common sense it cannot be concluded that QCLNG's breach of contract caused MCJV any loss. Its position of disadvantage was not brought about by that breach. There were two separate, independent and concurrent causes of MCJV's inability to commence work. The existence of concurrent causes of loss where only one of them is the defendant's breach of contract will not always disentitle a claimant from recovering damages but here the concurrent cause was MCJV's own failure to do what was needed to start work. That inability, which was its own doing, deprived QCLNG's breach of contract of causational effect. There was no change in position for MCJV which occurred by reason of QCLNG's breach."

[20] To successfully challenge the award dismissing MCJV's claim for damages for breach of contract for breach of cl 11.1, MCJV must take one of two pathways. Either it must establish that MCJV did not breach cl 11.5 or it must establish that MCJV's breach of cl 11.5 does not defeat MCJV's claim for damages for breach of cl 11.5. On either footing, the basis of the majority's first obstacle dissolves. If that point is reached, MCJV must also establish that the delay period loss would not have been suffered, in any event.

[21] If leave is granted, MCJV's ability to challenge the award is restricted to an appeal "on any question of law".[3] Thus, in deciding the application for leave, it is necessary to identify the question or questions of law which, if decided in MCJV's favour on appeal, would result in an order setting aside the award and granting other relief. Regrettably, the notice of appeal has been prepared without doing so.[4] For ease of understanding, therefore, it is convenient to consider the submissions made on the application for leave without attempting to reconcile each of the grounds to the relevant potential questions of law.

[22] MCJV submits that the majority erred in construing MCJV's obligation to give every assistance to QCLNG under cl 11.5 as "proactive". In my view, analysis of whether, on the proper construction of the contract, the obligation "to give every assistance" is "proactive" invites a question as to what co-operation short of taking the initiative or being ready to take the initiative might be required. MCJV submits that the alternative is that there can be no breach of cl 11.5 by MCJV unless QCLNG first identifies the information that is required by way of assistance. That submission tends to construe cl 11.5 as operating as a conditional obligation, dependent on QCLNG engaging the obligation by notifying the information required. In my view, that is unlikely to be the proper construction of cl 11.5.

[23] MCJV submitted that construing cl 11.5 as containing a "proactive" obligation was problematic because of uncertainty in the content of the obligation. However, that suggested problem does not arise only if the "proactive" characterisation is adopted. Even if the MCJV's cl 11.5 obligation is dependent upon QCLNG asking for assistance or providing information, there are potential difficulties in determining the content or extent of the obligation. In my view, this contention is likely to be a distraction. Parties to a contract are free to choose ill-defined obligations subject to the principle that uncertainty may operate as a cause of contractual failure.

[24] Similarly, in my view, MCJV's focus on the majority's description of the cl 11.5 obligation as "proactive" overstates the effect of the majority's statement of reasons on this point. Contracts often contain provisions which require co-operative performance. For example, there has been a trend in contracting in the construction industry to utilise "alliance" contracts where the parties' express obligations are deeply co-operative.[5] As well, the implied "duty to co-operate in the doing of acts which are necessary to the performance by the parties...of fundamental obligations under the contract"[6] is one well recognised in the construction of commercial contracts as "a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract".[7]

[25] MCJV did not submit that the parties were not obliged to act co-operatively in relation to MCJV's obligation to give every assistance to QCLNG in connection with QCLNG's obligation to comply with cl 11.1. If MCJV's co-operation was required under cl 11.5, and was not dependent on further requests for assistance from QCLNG, QCLNG's failure to engage by making further requests for assistance from MCJV would only avail MCJV if MCJV was ready and willing to discharge its obligations under cl 11.5.

[26] MCJV's submissions did not address this question in relation to its submission that cl 11.5, properly construed, did not require it to be "proactive". In my view, in those circumstances, to grant MCJV leave to appeal on a question of law as to the proper construction of cl 11.5 does not carry sufficient promise that, if successful on that point, MCJV will be found not to have been in breach of cl 11.5.

[27] I also take into account that the question of law as to the proper construction of cl 11.5 is a question of construction of a term of a private contract, not in a standard form, which does not raise any general question of significance beyond the rights of the parties to this contract.

Breach of cl 11.5 as a bar to damages for breach of cl 11.1

[28] MCJV's alternative contention is that breach of cl 11.5 is no answer in law to MCJV's entitlement to damages for QLNG's breach of the implied term as to the time for compliance with cl 11.1. MCJV submits that the majority erred in law in finding that breach of cl 11.5 precluded recovery for damages for breach of contract. MCJV further submits that there is no principle that precludes damages where a claimant is found to have breached the contract. Alternatively, if such a principle does exist, MCJV submits it does not operate where the claimant's breach was only one of the reasons for the defendant's breach. In support of those contentions, MCJV submitted that the cases referred to by the majority, Alghussein Establishment v Eton College[8] and Cheall v Association of Professional Executive Clerical & Computer Staff,[9] support a different principle of law, namely that a contract is construed to prevent a party taking advantage of a breach of contract to obtain the benefit of a contractual right where the breach gives rise to the opportunity to obtain the benefit.

[29] In my view, it is likely that the principle which may preclude recovery by MCJV for QCLNG's breach is not as wide as the majority's statement of principle that "[a] party to a contract cannot take advantage of its own breach of a contractual promise to obtain redress from the other party". To this extent, in my view, MCJV is probably right.[10]

[30] Further, in my view, MCJV's submission that the principle which governs the present case is also not that which decided Alghussein and Cheall is probably right. MCJV's claim for damages for breach of cl 11.1 is not concerned with a question of the proper construction of a contract where a party has taken advantage of its own breach of contract to bring about a state of affairs where it claims a benefit under the terms of the contract.

[31] In argument, I raised whether there might be a relevant cognate principle, which precludes a party that is not ready and willing to perform their contractual obligations from claiming damages for breach of contract from the other party, in accordance with Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service,[11] Foran & anor v Wight & anor[12] and Hensley v Reschke.[13] The parties provided further written submissions on that question.

[32] MCJV recognises that there is a relevant principle operating as an answer to a claim for damages for breach of contract, and referred to other cases,[14] but submits that there is no blanket principle of the kind referred to by the majority (ie a party to a contract cannot take advantage of its own breach of a contractual promise to obtain redress from the other party). It developed the distinction between those propositions, submitting that MCJV "substantially performed" or was "ready [and] willing..." to perform the contract because it had the available workforce and intended to proceed, but for QCLNG suspending the work on 17 February 2011, thereby preventing MCJV from proceeding until 12 June 2011.

[33] This submission raises a question as to the materiality of MCJV's breach of cl 11.5 as an answer to its claim for damages for QCLNG's breach of cl 11.1, as a question of fact and law.

[34] QCLNG submits that cases such as Foran and Hensley are not directly applicable, because those cases concerned "mutually dependent and concurrent" obligations. In Foran there was discussion of the cases concerned with the obligations of parties under a contract of sale which is to be performed by an exchange of the purchase price for a conveyance of land. Those obligations are "mutually dependent and concurrent". The simultaneous exchange of the purchase money for the delivery of the conveyance is concurrent. The obligation to hand over either the money or the conveyance does not arise in the absence of the tender of the other - they are mutually dependent.

[35] Foran concerned an "innocent" party's right to terminate a contract for breach after the time for performance arrived where the vendor had informed the purchaser it would not be able to complete on the appointed day.[15] Neither party attended at the time and place for completion. The purchasers did not tender the purchase money. The question was whether the purchasers, as the innocent party, were required to prove that they were ready and willing to perform the contract as an element of their cause of action for a declaration that they had validly terminated the contract for the vendor's breach.

[36] However, some of the judges discussed whether readiness and willingness of the plaintiff to perform the mutually dependent and concurrent conditions is an element of a cause of action for damages for breach of contract.[16] Mason CJ, in dissent, was clearly of the view that it was. Brennan J treated the matter as one in proof of damages or causation,[17] as did Deane J.[18] At one point, Dawson J stated that readiness and willingness was a condition precedent to a right to recover in any action for breach of contract,[19] but at another point his treatment of the topic dealt with it as proof of damages.[20] Thus, no binding statement of principle emerges from Foran on this question.

[37] Hensley was also indirectly concerned with mutually dependent and concurrent conditions or obligations. The claim in that case was for damages by a sub-lessor against a sub-lessee for holding over at the expiry of the sub-lease. The damages included an amount for the plaintiff's liability to a third party to whom the plaintiff had agreed to sell the plaintiff's leasehold interest. The question was whether the plaintiff had to prove that the purchaser of the leasehold interest was ready and willing to perform the contract of sale, in order to recover against the defendant the amount that the plaintiff alleged she had been obliged to pay to the purchaser under that contract as damages. It did not arise as an element of the plaintiff's cause of action against the defendant. It was a matter of proof of the plaintiff's damages.

[38] Be that as it may, QCLNG submits that Macquarie International Health indicates that the principles from Foran and Hensley have general application and operate irrespective of whether the obligations that the plaintiff must be ready and willing to perform are performed in exchange for the obligation breached by the defendant. In Macquarie International Health, Hodgson JA said:

**"**Area Health's obligation of utmost good faith was not dependent on performance by Macquarie or MHC of its obligations under the HOA; and in my opinion the breach by Area Health of that obligation entitled Macquarie and/or MHC to nominal damages at least: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238

However, for Macquarie and/or MHC to be entitled to any more than nominal damages, it would be necessary that, but for the breach, some benefit to which they were entitled under the contract, and did not receive, would have been received. This is because otherwise they would have suffered no loss. This in turn means that, if they were entitled to such a benefit only if they for their part afforded substantial performance, they are not entitled to more than nominal damages unless they did provide, or would but for the breach have provided, substantial performance on their part.

Subject to rules of court dispensing with any requirement to plead conditions precedent, and of any necessity to prove satisfaction of conditions precedent unless put at issue by a defendant, a plaintiff seeking to obtain damages for breach of contract referable to its not receiving a benefit under the contract must prove that it did or would but for the breach have done what was required of it to become entitled to that benefit. That is, in general terms, if the plaintiff has not afforded substantial performance of the contract, it must prove it was ready, willing and able to do so..."[21]

[39] I do not consider that the principle followed in Macquarie International Health goes so far as QCLNG submits, or would need to do so, in the circumstances of this case. It is enough that Foran at least supports the principle under the common law of Australia that it is necessary in proof of damages for a cause of action for damages for breach of contract that a plaintiff claiming damages must be ready and willing to perform mutually dependent and concurrent conditions or obligations to the defendant's breach of contract.

[40] The Foran principle is not concerned with breach of a condition or obligation by the plaintiff which is a condition precedent to the relevant performance obligation of the defendant. If a condition precedent has not been satisfied, a dependent subsequent performance obligation will not arise.

[41] Hence, in my view, the Foran principle should be seen to operate in relation to mutually dependent and concurrent conditions. There may be a question whether it is limited to mutually dependent conditions.[22] However, that question may be passed by for the present.

[42] In my view, in the present case, the question is whether the facts which give rise to the relevant breach or breaches of cl 11.5 operated as breaches of mutually dependent and concurrent obligations to QCLNG's breach of cl 11.1.

[43] If they do, in my view, there is little reason to think that MJCV's breach or breaches of cl 11.5 did not represent a failure on its part to be ready and willing to perform its obligation under cl 11.5 in relation to the performance by QCLNG of its obligation to obtain approval of the EMP under cl 11.1.

[44] MCJV's contrary contention is also based on the ground that the majority misdirected themselves in law in relying upon Alghussein and Cheall.

[45] However, in my view, the correct principle is that discussed above and it is likely that it is engaged by the majority's finding that "a reason for QCLNG's breach was MJCV's failure to give every assistance", consistently with the concurrent nature of operation of obligations in question. The majority's finding that "it is impossible to disentangle the causes and to allocate part of the suspension period to the fault of one or the other" is to the same effect.

[46] The interdependent or cooperative nature of those obligations in the current context is supported by the terms of cl 11. MCJV's obligation to design and construct the gas collection header and export pipeline, coupled with the nature of the approvals and authorities which QCLNG was required to obtain under cl 11.1, made it inevitable that the "every assistance" to be provided by MCJV included information for the compilation of the EMP. That was not done by MCJV before the delay period commenced. MCJV's lack of readiness and willingness predated 17 March 2011 and continued until a date likely to have had the consequence that the delay period was suffered by the parties.

[47] If that reasoning is correct, in my view, it is not likely that a grant of leave to appeal on the questions of law whether the principle stated by the majority was correct, or whether Alghussein or Cheall applies to a claim for damages for breach of contract, will produce an outcome that MCJV, if successful on those questions, is entitled to succeed on its claim for damages for breach of cl 11.1.

[48] Let it be assumed, for the purposes of this discussion, that MCJV is correct in submitting that the majority made an error in their statement of principle or in applying Alghussein or Cheall. Let it also be assumed that the Foran principle does not apply and will not lead to the same outcome for MCJV's cl 11.1 claim for damages for breach of contract. MCJV will still not succeed in that claim unless it overcomes the "second obstacle" identified by the majority's statement of reasons.

[49] As previously stated, the majority found that there were "two separate, independent and concurrent causes of MCJV's inability to start work". The first was MCJV's breach of cl 11.5. The second was as follows: "the concurrent cause was MCJV's own failure to do what was needed to start work. That inability, which was its own doing, deprived QCLNG's breach of causational effect".

[50] It is necessary to distinguish some relevant principles of causation. Where there are multiple contributing causes of an outcome, it may be that each cause is sufficient to bring about the outcome individually, or it may be that they do so in combination, without each cause being sufficient of itself. Where each of two causes is individually sufficient, the outcome would have occurred even if the other was not operating. The majority considered what would have happened in the present case if approval of the EMP had been obtained. It is in that sense that the majority found that "MCJV's own failure to do what was needed to start work" operated to cause delay during the suspension.

[51] The majority found that there were two aspects of MCJV's failure. The first was the failure to prepare erosion and sediment control plans ("ESC plans") in accordance with condition E11. The second was the failure to prepare comprehensive weed management plans in consultation with relevant local governments and BioSecurity Queensland in accordance with condition GC10(2).

[52] There is no dispute that during the delay period MCJV had not complied with either condition. But it submits that non-compliance with either condition did not make it unlawful to start work. It also submits that the majority erred in making findings that MCJV would not have started work until the conditions were complied with.

[53] MCJV developed an elaborate argument that although condition E11 required that an ESC plan "must be developed and implemented for all stages" and that a relevant plan "has been certified by a ... professional", there was no requirement to do so before starting or carrying out the ROW works, the subject of the relevant plan. MCJV submitted that construction was supported by the principle of statutory interpretation that a statutory instrument should be construed as not prohibiting conduct as illegal without doing so expressly, relying on Beckwith v The Queen[23] and other cases.

[54] Despite the length of the parties' submissions on the proper construction of condition E11, in my view the answer to this question seems relatively straightforward. The text of condition E11 is clear enough. It provides that the plan "must be developed and implemented for all stages". The ordinary grammatical meaning of that text requires that development precede implementation. The requirement of certification supports the view that development precedes implementation. The contrary view involves an element of absurdity. In my view, the purpose of the requirement to implement a plan would be defeated if the preparation of the plan could follow the carrying out of the stage of the works to which it relates. In no sense could the plan be said to have been "implemented". Even if there were some deficiency in the text of condition E11, the modern approach to statutory interpretation would permit a construction to be adopted to avoid absurdity or inconsistency.[24] But, in my view, there is no textual deficiency. There is no reasonably arguable violation of any principle of statutory interpretation in the conclusion reached by the majority that condition E11 required the plan to be developed before the works of a relevant stage were carried out. There is no question of law on that point which is strong enough to warrant a grant of leave.

[55] However, MCJV submits that, in any event, if the EMP and SSMP had been approved, MCJV would have started the works and avoided the delay period or some of it, so that its failure to do what was necessary to get the ESC plans developed was not a concurrent cause of the delay period loss. QCLNG submits that this question is not a question of law. MCJV submits that it is a question of law because there was no evidence to support the majority's contrary finding. Both parties submit that the majority's view is based on an implicit finding that if the ESC plans had been the only outstanding item, MCJV would not in fact have commenced work.

[56] As previously stated, QCLNG lifted the cl 55 suspension on 10 June 2011. On 12 June 2011 MCJV commenced clearing and grading. MCJV submitted that the inference that should have been drawn by the majority is that, had QCLNG not been in breach of cl 11.1,[25] MCJV would have started the clearing and grading work earlier.

[57] To some extent findings as to what a party would have done in an hypothetical state of affairs like this are likely to be attended by the twin difficulties of the absence of actual evidence about the matter at the time and the tendency of the party in question to say what suits their case when the question is considered at trial. In the law of negligence, these considerations have received both judicial[26] and statutory recognition.[27]

[58] It is at first blush a surprising thing to hear a submission made by a party with experience in the conduct of major mining or petroleum construction activities, in the context of a project of State significance, that it would have proceeded upon the cavalier approach that condition E11 did not need to be complied with before the work on relevant stage was started or carried out.

[59] However that may be, the question for decision is whether there was at least some evidence in the present case to support the finding of the majority. MCJV sought to put the point another way, in effect by submitting that the majority had assumed as a matter of law that if MCJV was prohibited from commencing work until condition E11 was satisfied, it could not have done so in fact. I am not persuaded that the majority reasoned in that way, looking at the reasons as a whole. In my view, the majority appreciated that whether MCJV might have started work before condition E11 was satisfied, had QCLNG not been on breach of cl 11.1 was a question of causation, and therefore a question of fact. I proceed to the question whether there was any evidence to support the finding of causation, to assess whether MCJV's challenge to the finding would be an appeal on a question of law.

[60] First, QCLNG is not likely to have knowingly permitted MCJV to start or to continue work if it had been aware that condition E11 had not been complied with for a relevant stage. It was not submitted that QCLNG did not have the power to suspend the works under cl 55. The majority touched on this point in finding that MCJV's failure to have ESC plans certified before 5 July 2011 was an omission which together with MCJV's failure to consult the Western Regional Downs Council ("WRDC") made "[t]he suspension... necessary to prevent MCJV working in contravention of those conditions".

[61] There is an air of unreality about the proposition that the question of whether any loss was caused by QCLNG's breach of cl 11.1 should be assessed as a matter of causation on the footing that QCLNG would not have maintained the suspension of the works under cl 55, if the EMP and SSMP had been approved, notwithstanding MCJV's non-compliance with condition E11. However, MCJV's submissions on this point proceeded on the hypothetical factual basis that QCLNG would have done so, presumably because the cl 55 suspension was lifted on 10 June 2011, before condition E11 was complied with.

[62] Second, there were contemporaneous documents referred to by the majority that supported the inference that MCJV was not likely to have done so. A matter known to both parties was that to start work without complying with condition E11 would expose them to sanctions under the legislation. In the section of their reasons headed "Erosion and Sediment Control Plans", the majority made findings as to the dealings between the parties on that subject matter following the suspension of the works in March 2011. They included that:

(a) on 29 March 2011, Mr Twycross emailed to Mr Rogers that the lack of a signoff on the ESC plan in his view "screwed" MCJV's case that QCLNG was responsible for the then current delay;

(b) on 6 April 2011, QCLNG wrote to MCJV that it did not accept that a letter provided by Mr Frankcombe as sufficient certification of the ESC plans as required by condition E11;

(c) prior to 13 May 2011, QCLNG informed MCJV that failure to obtain certified ESC plans was one of the reasons for the suspension;

(d) on 8 June 2011, Mr Morgan wrote to Mr Quirk that until the ESC plan procedure was finalised the project will be "well F*>ked"; however

(e) on 12 June 2011, almost a month before the ESC plans had been certified, MCJV in fact commenced clearing and grading.

[63] Many of the same considerations apply to the second aspect of MCJV's failure to do what was needed to start the work, namely the failure to consult with the WDRC, in contravention of condition GC10. MCJV developed a similar set of arguments about condition GC10.

[64] MCJV also submits at considerable length that the majority misconstrued condition GC10(2). They held that condition GC10(2) required MCJV to prepare the comprehensive weed management plan in consultation with WRDC. MCJV submitted that it was not required to comply with condition GC10(2) because the proponent's contractors are not mentioned in that sub-condition. Alternatively, it submitted that its obligation was a joint obligation with QCLNG, and not engaged independently of QCLNG's performance. It is not necessary to explore those questions to consider MCJV's prospects of success on the question whether QCLNG's breach of cl 11.1 was a cause of any loss to MCJV.

[65] There was other evidence relevant to whether MCJV would have commenced the work without complying with condition GC10. The majority found that (until it was complied with) condition GC10 was an "impediment to MCJV sending its crews to work" and that "without breaching the contract MCJV could not have commenced right of way works until 20 May 2011". The evidence included that:

(a) on 14 March 2011, QCLNG told MCJV that until a number of points including meeting with WRDC were "concluded", MCJV could not commence works;

(b) prior to 13 May 2011, QCLNG informed MCJV that failure to consult as required by condition GC10 was one of the reasons for the suspension.

[66] In the circumstances of this case, in my view, an appeal on the question whether MCJV would have commenced the works, if QCLNG had not been in breach of cl 11.1, would be an appeal on a question of fact, not a question of law, because there was some evidence that supported the finding that it would not have done so. In my view, therefore, it is not a question on which MCJV is entitled to appeal.

[67] If that view be correct, there would be no point to a grant of leave to appeal on a question of law as to the proper construction of cl 11.5 or whether the majority made an error in their statement of principle that "a party to a contract cannot take advantage of its own breach of a contractual promise to obtain redress from the other party" or in applying Alghussein or Cheall. MCJV's inability to appeal against the majority's finding that MCJV would not have commenced the works would require that an appeal against the dismissal of MCJV's claim for damages for QCLNG's breach of cl 11.1 be dismissed.

[68] For completeness, I mention that MCJV also submitted that its claim for damages for QCLNG's breach of cl 11.1 is not defeated by illegality merely because if it had started work in breach of condition E11 it would have contravened provision of the EP Act or the SDWP Act. It is also unnecessary to consider that question on this application. It is not a question which would constitute an appeal on a question of law from the award. The majority did not reason in that way.

[69] The majority dismissed MCJV's claim for costs under cl 55.2 because "[t]he suspension was not due to an act or omission of QCLNG. It was due to an act or omission of QCLNG and of MCJV." They found that "[c]lause 55.2 does not therefore entitle MCJV to the costs it incurred by reason of the suspension." Later, in considering the effect of the lack of certified ESC plans, they added: "[c]lause 55.2 appears to confer a right on the contractor to the costs incurred because of a suspension only where the sole cause of it is an act or omission of the company", referring to part of the text of cl 55.2.

[70] MCJV challenges that construction of cl 55.2, submitting that there is no express requirement in cl 55.2 that the act or omission of QCLNG be the "sole" cause. From that starting position, MCJV submits that, properly construed, cl 55.2 "import[s] the principles of causation at common law" which accommodate "cases where there are multiple causes of the plaintiff's loss".

[71] In my view, cl 55.3 and 55.5 provide context as to the proper construction of cl 55.2 on these questions. Because cl 55.5(b) expressly provides that MCJV "shall not be entitled to payment... if... such suspension is necessary by reason of an act, omission or default on the part of [MCJV]", it is unlikely that cl 55.2 permits recovery of costs where a suspension is caused by an act or omission of QCLNG and the suspension is necessary by reason of an act or omission or default on the part of MCJV. Without confronting this obvious operation of the text, MCJV submitted that the real question is "whether the suspension caused MCJV 'to incur more... cost than otherwise would have been incurred but for the suspension."

[72] In my view, that is unlikely to be the real question. If cl 55.5(b) is engaged, MCJV's challenge to the majority's construction of cl 55.2 will most likely have no effect. MCJV did not address this question. In particular, it did not submit that there was no act or omission or default of MCJV by reason of which suspension was necessary. The majority expressly found[28] that condition E11 and condition GC10 had the effect at 15 March that "[t]he suspension was necessary to prevent MCJV working in contravention of those conditions". And, as set out previously, the majority's view was that MCJV was in breach of condition E11 and condition GC10.

[73] The majority found that the suspension was ordered because of noncompliance with five conditions, being: there was no approved EMP, there was no approved SSMP, there were no certified ESC plans, certain soils management procedures had not been developed or approved and the weed management plan had not been developed in consultation with local authorities or BioSecurity Queensland.

[74] As part of its challenge to the majority's finding as to the causes of the suspension, MCJV submitted that it was an error for the majority to accept Mr French's evidence in support of that finding and that the error involved an error of law, because Mr French was unable to give admissible evidence on that matter. However, MCJV did not submit that the parties had agreed that arbitrators were bound by the rules of evidence. Unless that agreement was made, the arbitrators were not so bound.[29] There is no such provision in the arbitration agreement. In my view, MCJV did not identify the question of law which the alleged error in accepting Mr French's evidence would raise.

[75] There is another obstacle to MCJV's prospects of success on appeal based on a question of law as to the proper construction of cl 55.2. The majority further found that "MCJV may only recover the additional costs it incurred which it would not have incurred but for the suspension." That was another finding as to the proper construction of cl 55.2.

[76] The majority continued that "[w]hether or not QCLNG had suspended the works MCJV could not have begun constructing the pipelines because it had not obtained certified ESC plans and it had not prepared a weed management plan in consultation with State and local governments". As MCJV acknowledged, these points are much the same points as to causation that were discussed in relation to MCJV's claim for damages for QCLNG's breach of cl 11.1. For the reasons previously discussed, in my view, they are a finding of fact as to whether more cost was incurred than otherwise would have been incurred but for the suspension, under cl 55.2.

[77] Thus, in my view, although there is a reasonable question whether the majority's construction of cl 55.2 was correct, MCJV's success on that question is not likely to result in a successful appeal from the arbitrators' dismissal of MCJV's claim for an award of costs it incurred by reason of the suspension under cl 55.2.

[78] MCJV submitted that the majority erred in reaching their conclusions on both the claim for damages for QCLNG's breach of cl 11.1 and the claim for costs under cl 55.2 because of their failure to consider the significance of QCLNG's failure to obtain the SSMP. In relation to both claims, MCJV submitted that the majority erred in law in failing to consider its submissions on this point.

[79] QCLNG submitted that the majority were not required to deal with every submission made by MCJV, and that the findings made by the majority negative the significance of QCLNG's failure to obtain the SSMP.

[80] On the claim for costs under cl 55.2, in my view, the majority's finding that the suspension was caused by a number of factors, including absence of approval of the EMP (due at least in part to MCJV's breach of cl 11.5), MCJV's failure to comply with condition E11 and MCJV's failure to comply with condition GC10(2) supports that conclusion.

[81] On the claim for damages for QCLNG's breach of cl 11.1, the question is more difficult. MCJV's breach of cl 11.5 may be an answer to its claim for damages for QCLNG's breach of cl 11.1, in failing to obtain approval of the EMP within a reasonable time, whether on the basis found by the majority or, as I think more likely, because MCJV was not ready and willing to perform its obligations under cl 11.5 in relation to that breach of contract by QCLNG. However, there is no finding that MCJV was in breach of cl 11.5 in relation to QCLNG's breach of cl 11.1 in failing to obtain approval of the SSMP within a reasonable time.

[82] Prima facie, therefore, if MCJV can show that the majority's statement of principle that a party to a contract cannot take advantage of its own breach of a contractual promise to obtain redress from the other party is too widely stated, or does not apply to QCLNG's breach of cl 11.1 in failing to obtain approval of the SSMP within a reasonable time, MCJV's breach of cl 11.5 may not be an answer to QCLNG's breach of cl 11.1 in that respect.

[83] However, as previously set out, the question remains whether MCJV would have commenced the works, if QCLNG had not been in breach of cl 11.1. The majority's finding of fact that MCJV would not have commenced the works would still require that an appeal against the dismissal of MCJV's claim for damages for QCLNG's breach of cl 11.1 be dismissed.

[84] If MCJV identifies a question of law on which an appeal may be brought,[30] the court's discretion under s 38(4)(b) of the Act may be enlivened when the determination of the question "could substantially affect the rights of the parties to the arbitration agreement" within the meaning of s 38(5)(a) of the Act.

[85] However, success on one or more of the questions of law I have referred to in the present case is only one hurdle that MCJV would have to overcome on appeal to obtain an order which could substantially affect the parties' rights.

[86] As previously mentioned, the subject of any appeal is limited to an appeal on any question of law. In my view, on MCJV's claim for damages for QCLNG's breach of cl 11.1, an appeal could not affect the rights of the parties substantially unless MCJV were entitled on appeal to an order overturning the majority's finding on the question of fact of causation of loss. The same reasoning applies to MCJV's claim for payment of costs under cl 55.2. For the reasons previously given, in my view those findings on the question of causation are factual findings which do not depend on a question of law.

[87] As well, in my view, there are other hurdles to MCJV's prospects of success on an appeal on a question of law, on both claims, as set out previously. Even if the questions of causation could be characterised as being within the scope of an appeal on a question of law, those matters go to whether there should be a grant of leave.

[88] The grant of leave is discretionary. Notwithstanding the many points raised by MCJV in support of the application, in my respectful view the essential reasoning of the majority is likely to prove to be sound, subject to the points discussed above. In my view, it is not necessary in these circumstances to further consider a number of other points raised by MCJV's written submissions.

[89] The gateway of leave is intended to accord a greater degree of finality to an award made by arbitrators under the Act than exists upon an appeal from a judgment of a court. There are commercial policy reasons that support that finality under the Act. The objects of the Act and of arbitration under it are furthered by having regard to whether the favourable exercise of the discretion to grant leave is likely to result in success for the appellant having regard to the overall prospects.

[90] In the circumstances of this case, in my view, it is not appropriate to grant leave to appeal to MCJV. The application should be dismissed.

[1] Commercial Arbitration Act 2013 (Qld), s 42(2).

[2] Commercial Arbitration Act 2013 (Qld), s 29(1)(c).

[3] Commercial Arbitration Act 1990 (Qld), s 38(2); See Waterford v The Commonwealth [1987] HCA 25; (1986-1987) 163 CLR 54, 77 referred to in Westport Insurance Corporation v Gordian Runoff Ltd (2011) 243 CLR 239, 266 [27].

[4] I have not overlooked the references to questions of law in MCJV's submissions, but as the cross referenced paragraphs in par [109] of those submissions show, those submissions do not precisely identify the relevant questions of law. I also note that Grounds 3 and 14 to 19 of the proposed grounds of appeal were abandoned by MCJV's written and oral submissions and ground 13A as set out in par [39] of the written submissions was added by leave to the proposed grounds of appeal.

[5] For example, Rail Corporation New South Wales v Fluor Australia Pty Ltd [2009] NSWCA 344.

[6] Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607.

[7] Butt v M'Donald (1896) 7 QLJ 68, 70-71.

[8] [1991] 1 All ER 267.

[9] [1983] 2 AC 180.

[10] It is unnecessary for this decision to pursue the scope of the suggested principle more fully.

[11] (2010) 15 BPR 28,563; [2010] NSWCA 268.

[12] [1989] HCA 51; (1989) 168 CLR 385, 400-401.

[13] [1914] HCA 88; (1914) 18 CLR 452, 460 and 466-467.

[14] Dainford Ltd v Juana Pty Ltd [1986] 1 Qd R 396, 400-401; Segacious Pty Ltd v Fabrellas [1991] 1 Qd R 471, 479.

[15] Ireland v Leigh [1982] Qd R 145, 153.

[16] [1989] HCA 51; (1989) 168 CLR 385, 400-403, cf 430-431; 438-9; 451 and 455;

[21] [2010] NSWCA 268 [159]-[161].

[22] Seddon, Bigwood and Ellinghaus, Cheshire and Fifoot Law of Contract, 10th Australian edition, par [23.2] only refers to "concurrent obligations".

[23] [1976] HCA 55; (1976) 135 CLR 569.

[24] Adams v Lambert (2006) 228 CLR 409, 417 [21].

[25] It must also be assumed that a cl 55 suspension would not have been in place.

[26] Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434, 462 [87] and 505 [221]; Civil Liability Act 2003 (Qld).

[27] Civil Liability Act 2003 (Qld), s 11(3)(b).

[28] Although the finding was made in another context.

[29] Commercial Arbitration Act 1990 (Qld), s 19(3).

[30] That is, an error of law "manifest... on the face of the award" or of which "there is... strong evidence that the arbitrator... made...: s 38(5)(b).