On 30 September 2011 the Supreme Court of Victoria in
the decision of SMEC Australia Pty Ltd v McConnell Dowell
Constructors (Aust) Pty Ltd (No2)  VSC 492 struck out a
$26 million claim for variations, extra work, delay costs and
misrepresentations by the design team on the Adelaide Desalination
Plant Project. While the claim may be redrawn, this is an
extraordinary step. It highlights the need for complex claims to be
well considered and particularised before proceeding to litigation.
With the prospect of litigation between SA Water and AdelaideAqua
looming, the future of this project will be one to watch with
ADELAIDE DESALINATION PLANT PROJECT
On 16 February 2009 SA Water entered into a DBOM contract with
the 'AdelaideAqua' consortium (consisting of McConnell
Dowell Constructors (Aust) Pty Ltd, Abigroup Contractors Pty Ltd,
Acciona Aqua Australia Pty Ltd) and Trility Pty Ltd (formerly
United Utilities)) for the design, construction and commissioning
of the $1.83 billion, 100GL seawater desalination plant at Port
Stanvac, south of Adelaide (Project).
During the bid phase, AdelaideAqua entered into a series of
tender services agreements with SMEC Australia Pty Ltd and Hatch
Associates Pty Ltd (Design JV) for the initial
tender and design services to be provided for the Project.
Following the consortium's successful appointment, it also
entered into a professional services contract for the detailed
design of the Project.
The Project is yet to reach practical completion.
DESIGN JV'S $26 MILLION CLAIMS
On 20 July 2011, the Design JV filed proceedings in the Supreme
Court of Victoria claiming:
$6.7 million for alleged variations;
$16 million for alleged additional project support;
$3.7 million for a delay costs; and
unspecified damages for misrepresentations under the Trade
Practices Act 1974 (Cth) (now the Competition and Consumer
Act 2010 (Cth)).
The Design JV also alleged that the AdelaideAqua's conduct
set "time at large" arguing that the Design JV was not
obliged to pay liquidated damages, perhaps in anticipation of
substantial counterclaims yet to be seen.
In response to the claims and even before submitting any
defence, AdelaideAqua argued that the Design JV's claims should
be struck out on the basis that the claim "may prejudice,
embarrass or delay the fair trial of the proceeding".
In a stinging rebuke, the Supreme Court of Victoria struck out
the claim holding that the allegations were not properly
particularised,inconsistent, incomplete and referred to them as
"hopeless". For example, the Court noted, that Design JV
had, rather curiously, made allegations but sought no relief or
damages in respect of those allegations.
Further, the Court considered there to be a "fundamental
defect" with what the Court described as a "global"
or "total" delay costs claim – the claim did
not connect the delays to the loss claimed. As a consequence, it
did not enable AdelaideAqua to know what the case was about.
On global or total claims, the Court confirmed that courts
"should approach a total cost claim with a great deal of
caution, even distrust" and that the causal connection between
the claim and the loss must be spelt out in the pleadings unless it
is impossible or impractical to do so.
The Court offered the Design JV an opportunity to re plead its
claim in a "complete and comprehensive manner".
FUTURE OF THE PROJECT
The decision highlights the need for complex claims to be well
considered and particularised before proceeding to litigation. It
is also a timely reminder that global or total delay costs claims
should be treated with caution.
Interestingly, in a previous preliminary decision by the Court
in this matter, AdelaideAqua suggested that litigation between it
and SA Water is "almost certain to be commenced". With
the prospect of such litigation looming, the future of this complex
project will be one to watch with interest.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).