PILBARA IRON COMPANY (SERVICES) PTY LTD -v- CHEVRON (TAPL) PTY LTD [2020] WASC 296 (14 August 2020)

[2] The Sellers accept that the Buyer's Notice would otherwise be effective: Defence [7(b)].

[4] Ultimately, no evidence was adduced.

[6] See, for example, ts 64 ‑ 65 (23/07/2020). Regrettably, the pagination of the transcript of the hearing was unhelpful and was not able to be corrected prior to the delivery of this judgment. The transcript of the first ended on page 86. The second day commenced on page 54. To avoid confusion, therefore, the dates of the transcript references have been added.

[7] See ts 160 ‑ 161 (24/07/2020). See also ts 69 ‑ 70 (23/07/2020).

[8] Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42].

[9] Electricity Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].

[10] Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109.

[11] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80 [296].

[12] DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, 430 ‑ 431 (Stephen, Mason & Jacobs JJ).

[13] Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, 641 ‑ 642 (Jordan CJ). See also Douglas v Cicirello [2006] WASCA 226; (2006) ANZ ConvR 2 [13] ‑ [15] (Steytler P, with McLure JA agreeing).

[14] Douglas v Cicirello [14] (Steytler P, with McLure JA agreeing).

[15] Plaintiffs' Reply Submissions [108].

[16] Douglas v Cicirello [15] (Steytler P, with McLure JA agreeing), citing Harrington v Browne [1917] HCA 36; (1917) 23 CLR 297, 304 ‑ 305. See also Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 (the relevant sections are not in the reported version) [125] ‑ [127] (Sheller, Beazley & Stein JJA).

[17] See, for example, Alliance Petroleum (105). See also ts 129 and 131 (24/07/2020).

[18] Heydon J D, Heydon on Contract - The General Part (2019) [7.310].

[19] Plaintiffs' Submissions [30]. See also Plaintiffs' Submissions [31].

[20] United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904.

[21] Gollin & Co Ltd v Karenlee Nominees Pty Ltd [1983] HCA 38; (1983) 153 CLR 455, 468; GR Mailman & Associates Pty Ltd v Wormald (Aust) Pty Ltd (1991) 24 NSWLR 80, 86, 88, 95, 99 ‑ 100.

[23] GR Mailman (88), citing Slade LJ in Trustees of Henry Smith's Charity v AWADA Trading & Promotion Services Ltd (1984) 7 P&CR 607.

[24] See, for example, GR Mailman (90G (Gleeson CJ), 97B (Samuels JA), 100E (Meagher JA)).

[25] See United Scientific, in particular at 930, 945 ‑ 946, 948, 950, 951, 961 ‑ 962.

[26] cf Gollin, where the provision was the only mechanism for determining the rent for the last five years of the lease.

[27] Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2013] QCA 271 [82] (Peter Lyons J, with Gotterson JA agreeing); see also [31] ‑ [34] (Fraser JA). The relevant clause is in [4].

[28] Bondi Diggers Club Ltd v Vitarni Pty Ltd (1996) 7 BPR 15,061 (Cohen J).

[29] Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd (No 5) [2016] QSC 199 [138] ‑ [151] (Flanagan J). The adjustments could include adjustments as to price.

[30] Alliance Petroleum Australia NL v Australian Gas Light Company (1985) 39 SASR 84, discussed later.

[31] See, for example, Callide Power (the relevant clause, cl 12.3(b)(ii) is at [13]) and Raves v Fobone Pty Ltd (1991) NSW ConvR 55‑564.

[32] See under the heading 'United Scientific Factors'.

[33] See under the heading 'United Scientific Factors'.

[34] Defendants' Propositions [8] ‑ [9]. See also Defendants' Submissions [101] ‑ [105], [116] ‑ [121] and ts 137 ‑ 138 (24/07/2020).

[35] Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537.

[36] Mango Boulevard [79] (Peter Lyons J, with whom Gotterson JA agreed at [67]).

[38] Clause 24(a), reproduced in Alliance Petroleum (86 ‑ 87).

[39] Clause 24(b), reproduced in Alliance Petroleum (87).

[40] Clause 24(c), reproduced in Alliance Petroleum (87).

[41] Clause 24(d), reproduced in Alliance Petroleum (88).

[48] Alliance Petroleum (105). See also Mango Boulevard [81].

[50] Duckworth v Water Corporation [2012] WASC 30; (2012) 261 FLR 185, [31].

[51] In relation to exclusion clauses, see Plaintiffs' Submissions [19] and Plaintiffs' Reply Submissions [104] ‑ [106]. In relation to penalties, see Plaintiffs' Submissions [20], [103] and Plaintiffs' Reply Submissions [100] ‑ [103].

[53] Plaintiffs' Reply Submissions [103]. See also ts 75 ‑ 76 (23/07/2020).

[55] Earlier, the defendants had noted that 'TJ' is an acronym for 'terajoule'. One terajoule is equal to one trillion joules (a unit of energy).

[56] See cl 5. See also cl 11, cl 12 and Items 1, 4, 5 and 6 of the Key Commercial Terms.

[57] Defendants' Submissions [20], Plaintiffs' Submissions [52] ‑ [55].

[58] Defined in cl 1.1 of the Contract to mean any 'hydrocarbon or mixture of hydrocarbons and other gases, consisting primarily of methane, which at a temperature of 15˚C and an absolute pressure of 101.325 kPa is predominately in the gaseous state'.

[59] Defined as gigajoules in cl 1.1 of the Contract.

[60] The Start Date was [date redacted].

[61] Defined in cl 4.4 of the Contract to be the 'End Date' unless the parties agreed to an earlier date or the Contract was terminated before the End Date. The End Date was [number redacted] years from the Start Date - see the definition in cl 1.1 and Item 8 of the Key Commercial Terms.

[62] Clause 28 requires notices to be in writing, signed and served. It also sets out address details, and provides for when notices are taken to have been received. It does not address the consequences of a failure to issue a notice within a time stipulation.

[63] Defined in cl 1.1 of the Contract to mean contracts for the wholesale supply of Gas for a term of [number redacted] years or greater and an average quantity of [number redacted] TJ or more per Day, but excluding this Contract.

[64] Defined in cl 1.1 of the Contract to mean [redacted].

[65] Defined in Item 1 of the Key Commercial Terms as [redacted].

[66] Defined in Item 1 of the Key Commercial Terms as [redacted].

[67] Defined in cl 1.1 of the Contract to mean [redacted].

[68] Defined in cl 1.1 of the Contract to mean [redacted].

[69] Defined in cl 1.1 of the Contract to mean the wholesale market for Gas under contracts for supply for resale to Gas customers in Western Australia and as direct sales by Gas producers to end users in Western Australia for whose business Gas retailers and/or other Gas producers would normally be expected to compete.

[73] Defendants' Propositions [15] (see also ts 106.5 ‑ 107 (24/07/2020)). The footnote to [15] stated 'Raves v Fobone Pty Ltd (1991) NSW ConvR 55‑564 at 59,176; Craig Hargraves Investments Pty Ltd v Australian Business Insurance Advisors Pty Ltd (2011) 111 SASR 506 at [56] ‑ [59]. Only two members of the House of Lords in United Scientific expressly addressed this question and each reached a different conclusion: see 939E‑G (Viscount Dilhorne); 955G‑H (Lord Salmon)'.

[74] See ts 102 (24/07/2020). And see ts 107 (24/07/2020), noting that the plaintiffs did not subsequently indicate that they disputed this.

[75] See also EIT Kwinana Partner Pty Ltd v Electricity Generation and Retail Corporation [2020] WASC 238 [74] ‑ [75] and the cases there cited.

[76] Plaintiffs' Submissions [84] ‑ [85]. See also ts 16 (23/07/2020).

[77] Defendants' Submissions [111] and ts 89 ‑ 90 (24/07/2020).

[79] See under the heading 'Non‑promissory conditions precedent'.

[80] See GR Mailman 93G-94B. The clause under consideration was 2.02(b), set out on page 83D. The deeming provision was 2.02(d), set out on page 84A.

[81] See under the heading 'No deeming provision'.

[82] Defendants' Submissions [97]. See also ts 120 ‑ 121 (24/07/2020).

[83] ts 120 ‑ 121 (24/07/2020). And see, for example, Callide Power and Raves v Fobone Pty Ltd.

[85] See the Plaintiffs' Reply Submissions [86] ‑ [92].

[86] See under the subheading 'Clause 14 as a whole - the purpose of the price review process'.

[87] See under the subheading 'Rent review clauses'.

[88] Defendants' Propositions [7] and Defendants' Submissions [70] ‑ [74].

[89] Defendants' Submissions [70]. See also at [71] ‑ [72].

[90] See, for example, Starmark Enterprises Ltd v CPL Distribution Ltd [2002] 4 All ER 264.

[92] See under the heading 'Commerciality/harsh result'.

[93] See under the subheading 'Rent review clauses' under the heading 'Legal Principles'.

[94] Defendants' Submissions [61] and [92]. See also ts 108 ‑ 111 (24/07/2020).

[95] See also the defendants' oral submissions at ts 111 ‑ 112 (24/07/2020).

[96] See the discussion under the heading 'Clause 32.1 - general provision permitting later exercise of right'. See also the defendants' oral submissions at ts 112 ‑ 113 (24/07/2020).

[97] Nominal damages may be awarded not to compensate for loss but to vindicate the right of the non‑defaulting party and to mark the infringement by the defaulting party - see Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365, 375.

[99] See, for example, GR Mailman (88 (Gleeson CJ, citing Trustees of Henry Smith's Charity v AWADA Trading & Promotion Services Ltd) and 95 (Samuels JA)). See also Louinder v Leis (526 ‑ 527).

[100] GR Mailman (88). See also Samuels JA at 95.

[103] See ts 119 (24/07/2020). See also Louinder v Leis (526 ‑ 527).

[104] And more broadly - see again Louinder v Leis (526 ‑ 527).

[105] ts 108 ‑ 111, 113 ‑ 114 (24/07/2020).

[106] See under the heading 'Clause 14 as a whole - the purpose of the price review process'.

[110] See, for example, Mango Boulevard [84] and Bondi Diggers Club Ltd v Vitarni Pty Ltd (1996) 7 BPR 15,061, 15,068 (Cohen J).

[111] See under the headings 'The definition' and 'An initiating power or a machinery provision?'

[112] ts 81 ‑ 82 (24/07/2020). See also ts 56 (24/07/2020).

[113] See in particular the Defendants' Submissions at [38] ‑ [48], [63] ‑ [68] and ts 56 ‑ 85 (24/07/2020) and the Plaintiffs' Reply Submissions at [42] ‑ [56] and ts 73, 77 ‑ 79 (23/07/2020) and 148 ‑ 150 (24/07/2020).

[114] See clauses 14.7, 14.8, 14.9 and 14.11. It will be 54 days if the steps are completed within, but at the end of, the applicable time periods, and if there are no other obstacles. A party has even more time within which to file a revised Final Price - up to another 15 business days - see cl 14.11(b).

[115] The definitions of 'Long Term Contracts', 'Market Price' and 'Relevant Gas Market' are set out earlier.

[116] This was not disputed by the defendants. And see cl 14.11(a)(i)(D), cl 14.11(b), cl 14.12 and Exhibit E items E.9(b) and E.15(d).

[117] Defendants' Submissions [63(d)].

[118] See under the subheadings 'Clause 14 as a whole - the purpose of the price review process' and 'Certainty'.

[119] Defendants' Submissions [54] and ts 95 ‑ 96 (24/07/2020).

[121] The matter may be referred to arbitration 10 days after the Price Review Date. The appointment of the arbitrators is intended to be achieved within a further 30 days, but may take longer. Each party's Price Review Submission must be filed within 10 business days of the establishment of the tribunal. The arbitrators are to provide a copy to the other party within five business days. Within 10 business days of receiving that, the receiving party is to file its Price Review Response, at which time a revised Final Price may be filed. If the steps are completed within, but at the end of, the time periods, and if there are no other obstacles, a party will have to file its Price Review Response 75 days after the Price Review Date.

[122] Defendants' Propositions [13] and Defendants' Submissions [79].

[123] This is discussed in the next section.

[124] Plaintiffs' Reply Submissions [54] and see ts 19 ‑ 24 (23/07/2020) and ts 148 ‑ 150 (24/07/2020) and the Defendants' Submissions [42] ‑ [44] and see ts 68 ‑ 73 (24/07/2020) and ts 167 ‑ 168 (24/07/2020).

[126] Defined in cl 1.1 of the Contract.

[127] Defendants' Submissions [67]. The defendants also included 'the relevance of the Final Price to the allocation of arbitration costs'. However, a revised Final Price may be provided a considerable period of time after the Price Review Date - see cl 14.9 and cl 14.11 and the discussion under the previous subheading.

[128] See under the heading 'Work to do'.

[129] By the operation of cl 14.7 and cl 14.8.

[134] Defendants' Submissions [84] ‑ [85] and ts 99 ‑ 100 (24/07/2020). I will not address the submissions that turned upon a construction of cl 14.3 under which time was at large, as I consider such a construction is not open.

[135] See cl 15.2, cl 16.4(b), cl 16.8(b), cl 17.4 and cl 17.9.

[136] Plaintiffs' Reply Submissions [20] ‑ [23] and ts 78 ‑ 79 (23/07/2020).

[137] See under the heading 'Work to do'.

[138] Defendants' Submissions [30] ‑ [31].

[141] Until the next Price Review Date.

[142] ts 32 ‑ 33 (23/07/2020). See also Plaintiffs' Reply Submissions [96] ‑ [99].

[143] Heading above [96] in Plaintiffs' Reply Submissions.

[144] Defendants' Submissions [139].

[145] See ts 69 (23/07/2020). The defendants also understood the plaintiffs' submissions in this way - see ts 140 (24/07/2020).

[149] Defendants' Submissions [113(a)].

[150] Defendants' Submissions [113(b)] and ts 139 ‑ 140 (24/07/2020).

[151] Defendants' Submissions [113(b)].

[153] ts 140 (24/07/2020). In their written submissions at [113(b)], they referred to cl 14.18, but I have concluded that was a typographical error.

[154] See the discussion under the subheading 'Clause 14 as a whole - the purpose of the price review process'.

[155] See also Alliance Petroleum (92).

[156] See under the heading 'General provisions'.

[161] See cl 11.1(b), cl 11.2(b) and cl 11.3(b).

[163] Under the subheading 'No fixed start time for arbitration'.

[166] See, for example, the observations of Cox J in Alliance Petroleum (105 ‑ 106).

[167] Plaintiffs' Submissions [91], Defendants' Submissions [107].

[168] Defendants' Submissions [60] and [115].

[169] Set out under the heading 'General construction principles'.

[170] See, for example, ts 121 (24/07/2020).

[172] See Gollin. See also Alliance Petroleum (92, 102 ‑ 104).

[173] See under the subheading 'No deeming provision'.

[174] Defendants' Submissions [115(b)]. See also the last sentence in [115(c)].

[175] See under the subheading 'Negotiation - value and role'.

[176] See under the subheading 'Clause 14 as a whole - the purpose of the price review process'.

[177] Defendants' Submissions [115(c)].

[178] Defendants' Submissions [115(c)].

[180] Pilbara Iron Company (Services) Pty Ltd v Chevron (TAPL) Pty Ltd [2020] WASC 296.

[181] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) [12] ‑ [16].

[182] The legal principles referred to in this section are drawn, or reproduced, from my decision in Mirvac (WA) Pty Ltd v Binningup Nominees Pty Ltd [2020] WASC 28 (S).

[183] Affidavit of George Alexander Croft in Support of Plaintiffs' Application for Special Costs Orders sworn on 15 September 2020 (Croft Affidavit) [9].

[184] Atwell v Roberts [2013] WASCA 37 (S) [23].

[185] See Eclipse Resources Pty Ltd v The State of Western Australia [No 2] [2015] WASC 137 [33] (Beech J), citing Martin CJ in Mentha as Receiver and Manager of Westgem Investments Pty Ltd (in liq) v Hughes as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S).

[186] Sino [No 2] [12]; Blatchford v Laine [2018] WASC 207 (S) [43].

[187] And see Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [20] (Martin CJ) and Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) [4] (Martin CJ).

[190] See, for example, The Hancock Family Memorial Foundation Ltd v Fieldhouse [No 5] [2013] WASC 121 (S) [20] (Le Miere J); Duro Felguera Australia Pty Ltd v Samsung C&T Corporation [2017] WASC 348 (S) [10]; Insurance Commission of Western Australia v Antony Leslie John Woodings as Liquidator of the Bell Group Ltd (in liq) [No 3] [2018] WASC 44 (S) [55] (Pritchard J, as her Honour then was).

[191] Croft Affidavit [15] ‑ [17].

[192] Plaintiffs' written submissions [24].