SUPREME COURT OF QUEENSLAND

Transcription

1 SUPREME COURT OF QUEENSLAND CITATION: Mineralogy P/L v BGP Geoexplorer [2017] QSC 18 PARTIES: MINERALOGY PTY LTD (ACN ) FILE NO/S: DIVISION: PROCEEDING: (plaintiff) v GEOEXPLORER PTE LTD (defendant) CLIVE FREDERICK PALMER (defendant by counterclaim) BS3482/16 Trial Division Application DELIVERED ON: 28 February 2017 DELIVERED AT: Brisbane HEARING DATE: 24 February 2017 JUDGE: ORDER: CATCHWORDS: COUNSEL: SOLICITORS: Jackson J The order of the court is that: 1. The trial set down to commence on 20 March 2017 is adjourned to a date to be fixed. PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - TIME, EXTENSION AND ABRIDGMENT where an application has been made to adjourn a trial to a date to be fixed and to amend the statement of claim where a previous application to adjourn the trial was refused and is the subject of an appeal where an expert report necessary for the trial has not yet been produced whether the trial should be adjourned and the amendments granted A Nelsen for the plaintiff J Bell QC and T Pincus for the defendant No appearance by the defendant by counterclaim GRT Lawyers for the defendant [1] Jackson J: As filed, the present application seeks a variation of the directions made on 28 September 2016, as already varied on 7 December 2016, for the filing and

2 2 service of expert reports and orders to prohibit the defendant from contacting an Australian associate of a proposed expert witness of the plaintiff. [2] However, as it proceeded, the application was for the vacation of the dates for the trial of the proceeding due to commence on 20 March 2017 for five days. This is the second application by the plaintiff to adjourn the trial. The first application was made on 1 December 2016 and was dismissed by order made on 7 December 2016 ( first adjournment application ). [3] By a draft order handed up at the hearing of the present application the plaintiff applies to adjourn the trial to a date to be fixed and for directions that the plaintiff have leave to amend the statement of claim in the form of Ex SM4 to the affidavit of Shirley Morgan filed on 20 February 2017, that the defendant file and serve any amended defence and counterclaim within 28 days, that the plaintiff file and serve any amended reply within 14 days of service of the amended defence and that the defendant by counterclaim file and serve an amended answer within 14 days of the service of any amended counterclaim. As well, the plaintiff seeks a direction extending the date to file and serve any expert reports upon which the parties intend to rely to 30 June [4] The defendant opposes any adjournment of the trial and any substantial amendment. [5] The consequences of refusing the application are potentially serious for the plaintiff. First, the plaintiff will be unable to obtain an expert report by the time of the trial to support one basis of its claim. Second, if the amendments are refused the plaintiff will be shut out from a number of proposed additional grounds for its claim. Because of those serious consequences and because of the lengthy material filed in support of the application and numerous arguments advanced on both sides, it is necessary to deal with the matter at greater length than would ordinarily be the case. As well, this application is made in the unusual context that the plaintiff has an unresolved appeal against the order refusing the first application for an adjournment ( the appeal ). Background [6] On or about 28 July 2010 Palmer Petroleum Pty Ltd ( Palmer Petroleum ) and the defendant entered into an agreement in writing entitled No 3D Marine Seismic Integrated Services Contract ( the contract ). Under the contract, the defendant agreed to conduct surveys of the areas of certain petroleum prospecting licences held by Palmer Petroleum in the Gulf of Papua and to provide a report to Palmer Petroleum relevantly including a comprehensive evaluation of hydrocarbon type analysis of exploration targets, resources volumetric calculation, risking and ranking of prospects and leads and well propositions. [7] The areas in question were initially known as PPL254, 255 and 256 but later were renumbered respectively to PPL379, 380 and 381. It is admitted that the contract was amended on four occasions as listed in paragraph 7 of the statement of claim. However, the plaintiff now seeks in the proposed amended statement of claim to add to the variations by relying on four additional documents.

3 3 [8] Also on or about 28 July 2010, the plaintiff executed a document headed Guarantee pursuant to which the plaintiff guaranteed the obligations of Palmer Petroleum pursuant to the contract ( the guarantee ). [9] Both the claim and counterclaim arise from the contract and the guarantee. 1 [10] In or about May 2012, the defendant provided a written report to Palmer Petroleum including an evaluation of hydrocarbon resources within PPL 380. The report made no express reference to the potential existence or volume of any oil or condensate. However, the defendant alleges that ss 3.4, 7.3, 8.1, 8.2.4, 8.3 and table 8.3 of the report impliedly refer to the potential existence and volume of oil or condensate. [11] By the contract as amended the total amount payable by Palmer Petroleum to the defendant for the services or deliverables to be supplied was capped at US$35,000,000. Palmer Petroleum has paid US$18,220, to the defendant on account of that sum. [12] On 26 March 2013, Palmer Petroleum wrote to the defendant apologising for the delay in payment of outstanding monies. The letter stated that Palmer Petroleum had budgeted to pay US$3,257, on time from funds to come from Citic Pacific but Citic Pacific had failed to meet their contractual obligations to pay approximately US$203,000,000 to the plaintiff by March The letter said the plaintiff had taken court action against Citic Pacific and looked to recover the amount owed from Citic Pacific as soon as possible so that Palmer Petroleum could in turn make its budgeted payments as soon as possible. [13] On a date which is not identified Palmer Petroleum retained ISIS Petroleum Consultants Pty Ltd ( ISIS ) to review the 3D Seismic data regarding PL380. Palmer Petroleum provided the data collected by the defendant pursuant to the contract regarding, inter alia, PPL380 to ISIS and instructed ISIS to provide a technical interpretation of the data. [14] In September 2012, ISIS delivered a written report to Palmer Petroleum entitled Gulf of Papua PPL380 Papua New Guinea 3D Seismic Interpretation and Prospectively Evaluation ( ISIS report ). Table 13 of the ISIS report contained an interpretation of the quantity of gas, oil and condensate in PL380. [15] On 17 October 2012, an updated payment schedule was devised and agreed upon between the plaintiff and Palmer Petroleum by . In accordance with the updated schedule, Palmer Petroleum paid the defendant US$7,979, on 2 November [16] Under the updated schedule the amount of US$3,257, was due and payable on 4 March Palmer Petroleum failed to pay that amount. 1 The plaintiff presently alleges in the statement of claim that the defendant asserted that the plaintiff had executed the guarantee but in fact the plaintiff did not do so. By one of proposed amendments to the statement of claim the plaintiff intends to abandon its claim that it did not execute the guarantee. That is an unopposed amendment.

4 4 [17] In April 2013, Palmer Petroleum and the defendant entered into an amended payment plan by which Palmer Petroleum was to pay the defendant all outstanding amounts by the end of May In addition an invoice for immediate payment of US$1,630,000 was issued to Palmer Petroleum in accordance with the amended payment plan. [18] On 15 May 2013, Palmer Petroleum paid the defendant the additional amount but failed to make payment of all outstanding amounts under the amended payment plan. This was followed by the exchange in June [19] On 8 June 2013, there was an exchange between representatives of the defendant and either Palmer Petroleum or the plaintiff again referring to Palmer Petroleum s inability to pay due to the fact that Citic Pacific had failed to make payments to the plaintiff. [20] On 18 June 2013, Palmer Petroleum wrote to the defendant as follows: I refer to the above and your reports and interpretation that have been provided to Palmer Petroleum. Palmer Petroleum has serious questions over the interpretation of the data and the professionalism and techniques used in carrying out this work. As a consequence, Palmer Petroleum disputes your company s entitlements to any further payments of this type. We have commissioned an independent group to fully undertake an audit and evaluation of your company s shortcoming and will provide it you next month for further comment. Palmer Petroleum does not recognise any obligation to make any further payments to your group as a consequence of your group s performance of its contract and hold your company liable for specific performance and/or damages. Palmer Petroleum reserves its rights accordingly. [21] On the hearing of the present application the defendant submits and the plaintiff does not dispute that this was the first occasion on which any allegation was made by Palmer Petroleum or the plaintiff that the defendant had not properly carried out its work. The defendant submits that until that time the plaintiff s basis for nonpayment had been shortage of funds. [22] On 15 December 2015, the defendant served a statutory demand in the amount of US$16,726, on Palmer Petroleum. Palmer Petroleum did not pay that or any amount. [23] On 19 February 2016, Palmer Petroleum applied to set aside the statutory demand. [24] On 4 March 2016, Palmer Petroleum s application was dismissed. [25] On 5 April 2016, the plaintiff filed the claim and statement of claim in this proceeding. [26] On 22 July 2016, Palmer Petroleum went into liquidation. [27] On 15 July 2016, the plaintiff was ordered to deliver a complete and unredacted copy of the ISIS report as referred to in pars 18(g) and 18(h) of the statement of

5 5 claim to the defendant s lawyers. The plaintiff was also directed to file and serve an amended statement of claim making any further amended allegations it wished to raise in relation to or arising out of the ISIS report by 21 August The plaintiff did not amend in accordance with that direction. [28] On 28 September 2016, the court ordered that the proceeding be placed on the Commercial List and directed the plaintiff to file and serve an amended statement of claim by 19 October The plaintiff did not amend in accordance with that direction. [29] Other directions made on 28 September 2016 provided for subsequent pleadings, disclosure, the filing and serving of expert reports, the filing and serving of summaries of evidence and that the proceeding be listed for trial commencing 20 March 2017 for five days. [30] On 23 November 2016, the plaintiff filed the first adjournment application seeking to vacate the trial dates and the directions for the filing of expert reports, and to replace them with directions that any expert reports be filed and served by 26 May 2017 and the trial be listed for five days after 12 June The application was heard on 1 and 6 December. [31] On 1 December 2016, the court ordered that the plaintiff provide particulars of par 18(e) of the statement of claim. [32] On 7 December 2016, the court dismissed the first adjournment application and directed that the date for compliance with par 7 of the order of 28 September 2016 to file and serve any expert report on an issue raised by par 18 of the statement of claim be extended until 20 February [33] On 9 January 2017, the plaintiff started the appeal by filing a notice of appeal against the order made on 7 December [34] On 3 February 2017, the plaintiff filed its outline of argument in the appeal. [35] The plaintiff did not seek to expedite the appeal. The directions for the hearing of the appeal that have been made will extend the prehearing period until after 3 April 2017, that is, after the trial will be completed. [36] On 8 February 2017 the plaintiff filed two affidavits in support of the present application. However, the present application does not appear on the electronic file. Leave to file it was given at the hearing on 24 February 2017 although in substance the application has been on foot since 8 February The existing claim [37] In my extemporaneous reasons on 7 December 2016 I described the plaintiff s claim and the issues raised on the pleadings thus: In broad terms there are four issues raised by the plaintiff s statement of claim. The first claim is for declaratory relief that the plaintiff is not bound by a guarantee of Palmer Petroleum s 2 A mediation order was also sought but it is not presently relevant.

6 6 performance of the contract with the second defendant on the ground that the guarantee was not executed by the plaintiff. Second, the plaintiff claims an order pursuant to s 87 of the Trade Practices Act 1974 avoiding the guarantee for alleged misleading or deceptive conduct on the ground that the defendant falsely represented that it was competent. Third, the plaintiff claims a declaration that the plaintiff was not obliged to pay any sum to the defendant because a term of the contract provided that Palmer Petroleum was entitled to withhold payment due to the defendant on account of unsatisfactory performance of the contract. Fourth, the plaintiff claims an order pursuant to s 237 of the Australian Consumer Law relieving the plaintiff of any obligation to pay any sum by reason of unconscionable conduct constituted by the defendant s decision not to provide to Palmer Petroleum a true and accurate report of oil and condensate resources or prospective resources in the area of PPL380. [38] It is convenient to put aside the plaintiff s allegation that it did not execute the guarantee because that allegation is now abandoned. [39] The thrust of the remaining grounds of non-liability upon the guarantee emerges first from par 15 of the statement of claim which alleges that the defendant represented to Palmer Petroleum and the plaintiff that it had the professional skill and competence to provide a true and accurate report, inter alia, on volumes or prospective volumes of oil and condensate in the area of the Petroleum Prospecting Licences and the defendant intended to provide such a true and accurate report. [40] Those representations are alleged to have been misleading or deceptive because the defendant did not have the skill and competence to give a true and accurate report identifying the existence or prospective existence and volume of resources of oil and condensate and or did not intend to give such a true and accurate report. [41] The misleading or deceptive conduct is alleged to be an inference to be drawn from the facts alleged in par 18. The sting appears from subparas (e), (f) and (g), namely that a competent person in the position of the defendant would have identified that there was evidence in the onshore wells to the east of the permit area of an oil prone tertiary petroleum system indicating that an assessment of the existence of oil could and should be made, that the defendant failed to make any assessment with respect to oil reserves and that ISIS utilised the same data as the defendant but estimated that the mean oil case in respect of PPL380 indicated the existence of 3.9 billion barrels of oil in place of 1.4 billion barrels of oil recoverable and a mean condensate case of 421 million barrels of condensate and 169 million barrels recoverable. [42] Those are the allegations which appear to support the alleged inference that the defendant did not have the skill and competence to give a true and accurate report. As to the allegation that the defendant did not intend to give a true and accurate report, subpar (k) alleges that shortly after the receipt of the defendant s report by Palmer Petroleum representatives of the defendant said to Mr Palmer words to the effect that their parent company could be interested in acquiring Palmer Petroleum s prospecting licences.

7 7 [43] An alternative contractual case of breach of contract is set up by pars, 22, 28 and 29 of the statement of claim. Paragraph 22 reiterates the allegation that the defendant did not intend to give a true and accurate report adding that the defendant decided it would not do so in the area of PPL380 at some time after the contract was entered into. However, par 22 does not appear to be relevant to the alleged breach of contract. [44] The alleged breach of contract is set out in par 29 and is described as unsatisfactory performance within the meaning of cl 5.8 of the contract because the defendant s report failed to report on the existence of oil and condensate resources when it ought to have reported the existence or prospective existence of very substantial volumes of oil and condensate. That finding would not require a finding that the defendant decided not to provide a true and accurate report. However that may be, par 30 of the statement of claim alleges that Palmer Petroleum was not obliged to pay the sum claimed by the defendant under the guarantee because of the alleged breach of cl 5.8 of the contract. [45] A third basis to claim the relief sought is that the plaintiff characterises the conduct of the defendant (presumably the decision not to give a true and accurate report and the claim to an entitlement to payment under the guarantee) as unconscionable conduct in contravention of s 21 of the Australian Consumer Law. Refusal of the first adjournment application [46] The court s extemporaneous reasons to refuse the first adjournment application were given on 7 December For present purposes it is necessary to point to only a few matters. [47] First, putting the application for a mediation order to one side, the only basis for the adjournment sought was that the plaintiff would be unable to obtain a report from its chosen expert CGG Services UK Ltd ( CGG ) because the timeline between then and the trial dates commencing 20 March 2017 was too short. [48] In October 2106, the plaintiff obtained a proposal for a report by CGG which refers to a conversation on 7 October 2016 between CGG s regional manager, a senior petroleum geologist and the defendant by counterclaim. The proposal contained details of the proposed work program with options, costing and timing of the report described as an interpretational report of the defendant s study, which apparently meant a review and evaluation of the hydrocarbon potential in the Gulf of Papua blocks PPL378, 379 and 380, offshore Papua New Guinea paying particular attention to the chances of finding liquid hydrocarbons in additional to wet/dry gas. [49] CGG said that it anticipated that the study would take approximately three months from receipt of the data and should two dimensional modelling be included as an option that would extend the time to four months. The plaintiff submitted that the report it sought would go to proof of pars 18(e) and (f) of the statement of claim, although pars 18(g) and (h) seem also potentially relevant. [50] An additional problem was that the plaintiff did not have a copy of the data acquired or collected by the defendant under the contract. Because it would take some time to obtain the data, the plaintiff submitted that it would be unable to obtain the report it required from CGG before the trial was due to commence. It was proposing, if the

8 8 court granted an adjournment of the trial, to obtain the data from the liquidator of Palmer Petroleum, but had not done so up to that date. [51] As the extemporaneous reasons record, part of the plaintiff s explanation for those circumstances was that the plaintiff had decided that although the ISIS report is referred to par 18(g) of the statement of claim, ISIS were unsuitable as the plaintiff s expert because on advice the plaintiff had decided that the defendant might challenge ISIS s independence. [52] Accordingly the plaintiff had decided to engage CGG as a different expert with which it had had no prior association. As the extemporaneous reasons also record, the defendant had tendered evidence which tended to falsify those statements in part, because there had been no communication between the plaintiff and ISIS since late 2012 or early 2013 when Palmer Petroleum refused to pay ISIS s invoice on the ground that ISIS had allegedly misused information it had acquired in producing the report. [53] On the first adjournment application, there was no evidence that the plaintiff could not obtain the data required in a timely and cost efficient way from the liquidators, for example, within a period of a few weeks. [54] Further, it was clear then that the plaintiff was proposing to obtain the CGG report in order to support likely amendments (that) will include allegations that the data collection methods employed by the defendant in the course of performing the contract the subject of the proceeding were defective. This stance of the plaintiff was important in two ways. First, in my view, the statement of claim did not raise allegations that the data collection methods employed by the defendant were defective. Although the plaintiff had twice before been given leave to amend the statement of claim it had not done so. Second, accordingly, it was not relevant to obtain an expert report from CGG going to a matter that was outside the scope of the pleadings and it might have been that the time required for the scope of work proposed by CGG in its written proposal would be affected if the relevant questions were confined to those raised by the existing allegations in the statement of claim. [55] Another significant factor at the time of the first adjournment application was that the plaintiff must have known from before the time when it commenced the proceeding that it would be unlikely to be able to obtain any assistance from ISIS as an expert without resolving the alleged dispute with ISIS over payment of a sum of approximately $100,000 and the plaintiff has at no time suggested that it intended to resolve that dispute. Second, it also must have been apparent to the plaintiff from the time that Palmer Petroleum went into liquidation that the plaintiff would need to obtain the data collected and acquired by the defendant in order to obtain another expert report. [56] That is to say, the plaintiff must have been aware of the need to obtain the data from as early as April and no later than July Third, the plaintiff had made no attempt or request to obtain the data from anyone until 28 September 2016, the day on which the proceeding was set down for trial. The plaintiff suggested that it was entitled to expect that the defendant would disclose the data, but as it transpired the defendant had not kept any copies of it. The plaintiff became aware of this fact no later than 2 November 2016.

9 9 [57] The relevant data is in three forms depending on its state of processing. The first form is raw data that is unprocessed. The second form is processed data. The third form of more highly processed data is interpreted data. [58] Between September 2011 and October 2011 the defendant s original and a copy of the raw data media were delivered to Palmer Petroleum. Further, in March 2013, the defendant arranged for a full set of the processed data and the interpreted data to be delivered to Palmer Petroleum by hand in Brisbane. At this point, the defendant retained only an electronic copy of the data. At an unstated date, the defendant deleted all the raw data, processed data and interpreted data on its own computers. [59] The plaintiff has known all this information since no later than 2 November 2016, although it seems likely that it was aware that Palmer Petroleum had possession of the data from 2011 or [60] The last conclusion flows from the circumstance that Palmer Petroleum commissioned two reports upon the relevant data. The first report is the ISIS report as referred to in par 18(g) of the statement of claim, that utilised the same data utilised by the defendant. Second, in July 2013, an entity described as Robertson a CGG Company produced a report for Palmer Petroleum Mineralogy Pty Ltd which also relied on the relevant data. It refers to the defendant s reports produced under the contract and to the ISIS report. [61] The existence of the Robertson report only emerged at the hearing of the present application, although on the first adjournment application the defendant submitted there was evidence that the plaintiff and Palmer Petroleum had a prior association with the CGG Group because of press announcements made by the defendant by counterclaim in The defendant relied upon that fact to falsify the plaintiff s explanation that it wanted to retain CGG as its expert on the footing that it had no prior association with CGG. For present purposes, an additional circumstance that emerged is that Robertson as one of the CGG Group appears to have or to have had a copy of the relevant data. What became of that copy was left unexplained. [62] The plaintiff disclosed in oral argument as otherwise appeared from the evidence that it had made no further contact with CGG since the hearing of the first adjournment application. [63] On 3 November 2016, the court ordered that the plaintiff be permitted to inspect and make copies from the books of Palmer Petroleum (now named Aspenglow Pty Ltd ACN (in liq)) of the electronic data compiled by or on behalf of the defendant pursuant to the contract. However the right to inspection and copying is subject to payment in advance of the liquidator s reasonable expenses for locating, making available and copying the books. [64] On 10 November 2016, the plaintiff s in-house counsel provided copies of lists of relevant data or tapes to the liquidators to facilitate the process of accessing the data. [65] On 11 November 2016 the liquidators responded proposing to divide the work of accessing the data into two phases of investigation and collection and copying. [66] On 16 November 2016 the liquidators advised the plaintiff s in-house lawyer they were unable to form a reliable estimate of the costs of the second phase for copying

10 10 the data because it was necessary to carry out the initial first phase to ascertain what was involved. [67] On 8 November 2016, the plaintiff wrote to the defendant s solicitors foreshadowing that it would be unable to produce its expert report by 21 December The plaintiff did not, however, promptly pay the liquidators request for $15,000 on account of the estimated phase one costs of investigation. That was not done until 6 December Steps to obtain the data after 7 December 2016 [68] It does not appear that the plaintiff acted with any real urgency to obtain the data following the dismissal of the first application for an adjournment. [69] On 23 December 2016, the liquidators sent an to the plaintiff s in-house counsel giving an estimate of $75,000 as the costs of the phase two collection and copying process over a time period of possibly 11 days or possibly more. 3 [70] It appears that the plaintiff did not respond promptly to the liquidator s invitation to proceed with phase two or to forward the sum of $75,000. [71] On 25 January 2017, the plaintiff s in-house counsel requested an estimate of the time it would take to complete phase two on payment of the estimated fee. [72] On 31 January 2017, the plaintiff s in-house counsel advised that the plaintiff wished to progress phase two as soon as possible and sought a response. [73] On 1 February 2017, the plaintiff s in-house counsel received an from the liquidator advising their estimate that it would take four to six weeks to complete phase two. [74] On 2 February 2017, the plaintiff s in-house counsel requested the liquidator to undertake and invoice the phase two work in fortnightly instalments. [75] On 7 February 2017, the plaintiff paid the sum of $25,000 together with GST as the first fortnightly instalment for the phase 2 work. Progress of the appeal [76] The chronology of the steps taken in the appeal to date are set out above. For present purposes, there are a few points of relevance. [77] On 9 January 2017, the defendant s solicitors in the appeal wrote to the plaintiff s solicitors in the appeal seeking confirmation that the plaintiff had requested the appeal to be expedited. [78] On 10 January 2017, the plaintiff s solicitors in the appeal wrote to the defendant s solicitors, ignoring the from the day before about expedition, requesting that the defendants consent to the vacation of the trial date until delivery of the judgment 3 At the same time the liquidator responded in relation to a notice to produce which the plaintiff had served on the liquidator but it concerns another subject matter. Thus, although in that respect the liquidator asked for an extension of time until 20 January that was additional to the order of 3 November, meaning in addition to the proposed work under phase two.

11 11 of the Court of Appeal and impliedly threatening an application for a stay or order pending appeal if they did not consent. [79] On 11 January 2017, the plaintiff s solicitors in the appeal wrote to the registrar asserting that the appeal raised particularly important issues of law as set out in the grounds and stating that it should not be expedited as the applicant requires adequate time in accordance with Practice Direction 39(a) to address the matters in the submissions. The letter continued to request the Court of Appeal to hear the appeal constituted by five judges, asserting that the appeal is important for the administration of justice in Australia as it is founded on the rights of a citizen to procedural fairness and natural justice and the preparation of a party case for trial. [80] On 11 January 2017, the plaintiff s solicitors in the appeal wrote to the defendant s solicitors asserting that the defendant cannot write to the registrar seeking an urgent appeal so as to further deny our clients their rights to procedural fairness and natural justice. It would be improper for your client to seek to interfere with the appeal process as set down by the Practice Direction and the Rules so as to deny our clients their constitutional rights to a fair hearing in accordance with procedural fairness and natural justice. The letter continued that par 39(a) of the Practice Direction must be respected and asserted that the court is further privy to the fact that the trial date is set for 20 March 2017 as the orders sought refer to the orders of his Honour Justice Jackson dated 7 December [81] I observe in relation to the last assertion that the notice of appeal does not refer to the content of the order at all and that during oral hearing on the argument in the present application I requested counsel for the plaintiff to inform me whether the registrar had been informed that the trial would commence on 20 March The response was that the registrar had not been informed of the trial date. [82] Accordingly, on 16 January 2017 directions were made in the appeal beginning with the plaintiff s outline of appeal by 6 February followed by the respondent s outline on 27 February 2017, the appellant s reply seven days after receipt of the respondent s outline and the record book being due on 3 April 2017, with the hearing date not yet set. [83] Before 6 February 2017, in accordance with the directions so made, the plaintiff s outline of argument as appellant was filed and served. [84] Thus, the plaintiff has not sought to expedite the appeal so that any success or failure may be known before the commencement of the trial on 20 March Instead, when faced with the defendant s intimation that the defendant would seek to have the appeal expedited the plaintiff objected on the ground that it would be improper for the defendant to do so. The apparent basis for that assertion is unusual to say the least. [85] It is unnecessary and would be inappropriate to engage in any detailed examination of the prospects of the appeal in the circumstances. However, because the plaintiff reiterated particular submissions made at the hearing of the first adjournment application in support of the present application, it is necessary to note some points. [86] First, in par 31 of the outline of the argument on the appeal and also in par 30 of the plaintiff s outline of argument on this application the submission is made that the

12 12 allegations pleaded in pars 12, 13, 15, 18, 20 and 29 of the statement of claim encompass the incompetence and inadequacy of BGP s acquisition of data and [the] misleading or deceptive character of its representations relevant to data acquisition. [87] Because that submission was reiterated in the present application I adverted to the relevant paragraphs of the statement of claim and enquired of the plaintiff s counsel whether any question about the acquisition of the data was fairly raised, particularly having regard to the reference in paragraph 18(g) of the statement of claim that the ISIS estimate utilised the same data utilised by (the defendant) and the allegation in paragraph 32(c)(iv) of the defence that there has been no allegation by Palmer Petroleum or the defendant that there was anything wrong with the data (which allegation was not denied in the reply). 4 The plaintiff s counsel was unable to inform me how the relevant paragraphs alleged incompetence or failure in relation to the acquisition of the data as opposed to its interpretation. [88] Second, I note that one of the grounds of the appeal is that it was not open to the court to find that the plaintiff had dissembled about the reasons why it had not previously sought to obtain an independent expert report on the footing that a conclusion of that gravity was not open on the evidence. [89] Before me the defendant pressed not only that conclusion as having been justified but added to the evidence on the particular subject matter and made further submissions to the effect that I should now find, as I was not prepared to do on 7 December 2016, that the plaintiff is actively seeking to avoid a trial as a strategy. The relevant findings I made on 7 December 2016 were: (a) (b) (c) (d) (e) However, the deponent continued that on further advice, the plaintiff decided that the defendant might challenge ISIS s independence so that the plaintiff decided to engage CGG as a different expert with which it had no prior association ; It is a matter of some concern that on the hearing of this application the defendant adduced evidence which tends to falsify those statements in part ; a representative of ISIS said that ISIS has had no communication with the plaintiff since, around late 2012 to early 2013, Palmer Petroleum refused payment on the basis that ISIS had allegedly misused information it acquired in producing its report ; It is difficult to understand how the plaintiff could have been expected to obtain expert evidence from ISIS when those unresolved disputes had not been addressed since 2012 or 2013 ; and the plaintiff has dissembled about the reasons why it has not previously sought to obtain an independent expert to give a report in support of the relevant allegations in par 18. [90] I declined to make a finding on 7 December 2016 as to whether the plaintiff was seeking generally to avoid a trial. 4 I note that the reply purports to join issue with matters not specifically pleaded to but that is an impermissible plea under the UCPR because a denial of a positive allegation made in a defence or in a reply must comply with UCPR r 166(4), that a denial must be accompanied by a direct explanation for the party s belief that the allegation is untrue, and r 166(5), that non-compliance with sub rule (4) is taken to be an admission.

13 13 [91] Further, on 1 or 6 December 2016 the defendant submitted that part of the plaintiff s in-house counsel s statement that CGG was a different expert with which it had no prior association was false. I found it unnecessary to pursue that point on that occasion. However, it now appears that the Robertson report demonstrates an association between the plaintiff and the CGG Group. Indeed, one of the persons proposed for the CGG report for this case, Ms Cole, was an author of or contributor to the Robertson report. [92] Nevertheless, as will appear later, it is unnecessary and therefore inappropriate to make any finding about whether that evidence demonstrates further dissembling by the plaintiff in its explanation for proposing CGG as the independent expert instead of ISIS. Proposed amendments [93] As previously mentioned, on two earlier occasions the plaintiff was given leave to amend the statement of claim but failed to do so. The presently proposed amendments do not concern the defendant s competence or the adequacy of its performance of the contract in providing its report in relation to PPL380 to Palmer Petroleum. [94] Instead, on 13 January 2017, the plaintiff sent a draft of a proposed amended statement of claim to the defendant in the form in which it now proposes to amend the statement of claim in the material respects. There are several proposed additional grounds either of invalidity of the guarantee or for the conclusion that no sum is payable under it. It will be necessary to consider them in some detail. [95] The starting point is that it is extraordinary that these proposed additional grounds of non-liability have not been raised until now. The plaintiff s in-house counsel swears on information and belief from the defendant by counterclaim that the plaintiff considered that it was not in a position as at the date of filing the statement of claim in April 2016 to include these relevant grounds and it is only as a result of (the defendant s) disclosure and the further investigations conducted by (the plaintiff) in consequence of the disclosure that (the plaintiff) is now in a position to properly make the amended pleading. As it will appear, it is difficult to accept that statement in a number of respects. I turn to the proposed additional grounds to show why that is so and to consider whether or not the amendments should be allowed. Failure to provide proper invoices or documents evidencing the amounts claimed [96] Paragraph 34 and following of the proposed amendments begin with allegations of terms of the contract requiring the defendant to invoice Palmer Petroleum for any approved invoiced charges and to accompany the invoice with relevant documents to support the invoiced amounts. [97] The critical allegation is in par 35 that the defendant failed to invoice Palmer Petroleum in accordance with the requirements of article 5 of the agreement. The particulars identify the invoices disclosed in the defendant s list of documents, allege that the invoices were not accompanied by all relevant documents to support the invoiced amount as required by article 5.1, were not verified and signed by a Palmer Petroleum representative prior to submission to Palmer Petroleum for

14 14 payment as required by article 5.3, included charges for reimbursable items that were not fully supported by sufficient original documentation as required by article 5.4 or did not include supporting documents for the scope or type of services carried out during the service period as required by article 5.6. [98] Particularly bearing in mind the proximity of the trial, the degree of particularisation is completely inadequate. Accordingly, on the hearing of the present application I asked the plaintiff s counsel to identify what were the relevant documents to support the invoiced amount that did not accompany the invoices. Having spoken to his instructors he was unable to respond as to a single document. [99] I infer that this alleged breach of the agreement between the defendant and Palmer Petroleum was one that emerged from the plaintiff s in-house counsel s review of disclosed documents. But if that and nothing more is the basis on which the plaintiff seeks to raise the allegation (and nothing else was raised as justification), in my view there is at least a risk of a false assumption, namely that the disclosure made by the defendant was of the supporting documentation. As these allegations are not presently in issue in the case it is hard to understand why the defendant would be required to have disclosed any such documents as directly relevant. The failure to disclose those documents in these circumstances would not constitute any evidence or suggestion of a failure to provide the relevant documents. [100] Additionally, I raised with the plaintiff s counsel that there was at least some evidence of a history of dealings between the defendant and Palmer Petroleum on the footing that the sum claimed by the defendant was due or payable but the payment was to be deferred and no account seems to have been taken of any of those dealings in relation to this proposed additional ground of non-liability. [101] In the result, I am not persuaded that the proposed additional ground or grounds in pars 34 to 50 would raise allegations that would have any real prospect of success or that could be formulated in a way that would create a proper issue or issues for trial. In this respect, it should not be forgotten that the plaintiff or the plaintiff s controllers were in control of Palmer Petroleum until 22 July 2016, yet no suggestion of this kind appears to have been raised before 13 January 2017 when this proposed ground of non-liability was included in a draft statement of claim. [102] In the circumstances, I indicated during argument that my provisional view was that this amendment should not be allowed at this stage. I adhere to that view. Destruction of records by BGP [103] Paragraphs 51 to 63 of the proposed amended statement of claim begin with cl 8.1 of the agreement as follows: Contractors shall maintain true and correct records of charges including gifts and entertainment expenses and accounts in connection with the work and all transactions related thereto and shall retain all such records and accounts for a period of not less than 36 months after termination or completion of this contract [104] The critical paragraph is par 57 that alleges that the defendant has destroyed or disposed of documents of a type described in articles 8.1 and 8.2 of the agreement

15 15 and particularises as the destruction of those documents that the electronic copies of the raw data, processed data or interpreted data were removed from the defendant s computers. [105] It will be recalled that multiple copies of the relevant forms of the data were provided by the defendant to the plaintiff before the defendant removed its copy or copies as unnecessary. It might be thought mildly surprising, therefore, that par 58 alleges that removal of the data was a breach of an intermediate term which resulted in serious consequences that would have entitled Palmer Petroleum to terminate the agreement. And even more surprising is the proposed allegation in par 58(a) that any breach of cl 8.1 is a breach of an essential term. However, it is unnecessary to pursue those points further. [106] An obvious response to this alleged ground of non-liability is that cl 8.1 is not concerned with data because data is not a record of a charge, gift or entertainment expense or an account in connection with the work or a transaction related thereto. There is a similar difficulty with the application of cl 8.2. In support of the contention that cl 8.1 and cl 8.2 were not engaged by any removal of the various forms of the data by the defendant, the defendant also relies on cl 27.6 of the agreement as follows: Upon completion of the work or receipt by contractor of companies notification of suspension or termination of the work or any part thereof, as the case may be, contractor shall return to company all drawings and documentation, materials, information and data provided to contractor by company together with any copies contractor has made thereof and all drawings and documentation created by contractor with respect to this contract. [107] Additionally, this ground of non-liability was raised as a matter of fact at the latest by an affidavit that was served on the plaintiff on 2 November In correspondence not long after that date the plaintiff s in-house counsel alleged that removal of the data from the defendant s computers was a breach of cl 8.1. No explanation was provided for the delay between 2 November 2016 and 13 January 2017 for the plaintiff to raise the point as a proposed ground of non-liability. [108] Ultimately, in oral argument, the plaintiff s counsel did not press this proposed ground of non-liability. It is unnecessary to say more about it. Failure to arbitrate [109] Paragraphs 64 to 72 of the proposed amended statement of claim rely on cl 33.1 of the contract that contained an arbitration clause. [110] The critical paragraph is par 66 which alleges that cl 33 required a party to arbitrate any dispute before taking any legal or other enforcement process. The plaintiff alleges breach of contract by the defendant serving a statutory demand upon Palmer Petroleum under s 459E of the Corporations Act (Cth). [111] Paragraph 69 alleges that the breach discharged or released the plaintiff from any liability under the guarantee and paras 70 to 72 make further allegations as to the plaintiff s entitlement to expect the defendant to act fairly to arbitrate, the plaintiff s

16 16 inability to rely upon a proper independent award as to any amount payable by Palmer Petroleum and that those matters have been unfair to the plaintiff and caused prejudice to the plaintiff thereby discharging the plaintiff. [112] Some of these allegations seem, on first blush, to be extraordinary propositions of law. Accordingly, I sought from the plaintiff s counsel any submissions as to authorities or principle which would support them. He was unable to provide any assistance in that respect. [113] As well, these matters are not matters that were raised or brought to the plaintiff s attention by anything observed in the defendant s disclosure. The plaintiff has been aware of the facts relating to this proposed ground of non-liability since before the proceeding was started. The only justification for not having raised it before is that the plaintiff considered that it was unnecessary to do so, for whatever reason, before 13 January That is an inadequate explanation. [114] Nevertheless, it seems to me that the proposed ground of non-liability is essentially a legal contention based on uncontentious facts and it would be unlikely to cause any significant disruption to the trial. Accordingly, I indicated at the hearing of the application that my provisional view was that the plaintiff should be permitted to raise this ground of non-liability. I adhere to that view. Amendments to the contract and waiver [115] Paragraphs 74 to 79 of the proposed amendments set out terms of the contract in relation to the performance of the work. Paragraphs 80 to 82 set out provisions contained in exhibits 1 and 2 of the contract. [116] Paragraphs 83 to 85 allege that the defendant sought amendment of the contract on two occasions in circumstances amounting to a substantial breach of contract. Paragraph 86 alleges that those breaches would have entitled Palmer Petroleum to terminate the contract. Instead, paras 87 and 88 allege that Palmer Petroleum and the defendant amended the agreement. [117] The critical paragraphs fall into two groups. First, paras 89 to 91 allege that the effect of the amendments was that they created a real possibility of prejudice or prejudiced the plaintiff and that they were substantial. [118] Another critical paragraph is par 92 which alleges that the substance and effect of the amendments was not an alteration to or deletion from the agreement or the scope of the work to be carried performed within the meaning of cl 4(a) of the guarantee. That clause provides that the guarantor s liability shall not be released or discharged by any alteration to, addition to or deletion from the contract or the scope of the work to be performed under the contract. [119] It is to be observed that the amendments relied upon are those described as amendment deed No 1 and amendment deed No 2. Those documents are referred to in the existing statement of claim at pars 7(a) and 7(b). In other words, there is nothing recent about the facts or any reason to suppose that the plaintiff has recently discovered any facts which give rise to the plaintiff s application to amend to raise the effect of the variations as a ground of non-liability.

17 17 [120] The defendant opposes these amendments because the plaintiff has provided no articulation of why the amendments were not an alteration to or deletion from the agreement or the scope of the work to be performed within the meaning of cl 4(a). As well, the defendant submits that the plaintiff s allegations that the amendments were substantial in paragraph 90(c) and that the plaintiff was prejudiced in pars 90(b) and 91 are unconfined and would not create clear issues for the trial. [121] Notwithstanding those objections, and the inadequate explanation for the delay on the part of the plaintiff in raising this proposed ground of defence, in oral argument I indicated my provisional view that the amendment should be permitted provided there was sufficient time to hear the relevant issue in the allotted trial dates or possible further dates extending the trial within a short period after the existing allotted dates. I formed that view because it seemed to me that although there was some substance in the defendant s objections as to the possible scope of the issues that would be raised, it was more likely than not that they would be largely legal arguments and would not require any substantial evidence. Accordingly leave to amend should be granted. I adhere to that view. Guarantee void for uncertainty [122] Paragraphs 95 to 102 begin with cl 3 of the guarantee which provides as follows: Our guarantee and undertakings hereunder shall be unconditional and revokable and without prejudice to the generality of the foregoing we shall be released or discharged from our liability hereunder by any waiver by BGP of or in respect of any of Chinampa Exploration Pty Ltd s obligations under the contract if all obligations and payments had been made by Chinampa Exploration Pty Ltd that are due to be made to BGP. 5 [123] Paragraph 96 alleges that cl 3 is uncertain. The plaintiff s counsel submitted that the ground of uncertainty is that the clause makes no sense if read literally. The difficulty is that the operation of the clause is qualified by the condition if all obligations and payments have been made by Chinampa Exploration Pty Ltd that are due to be made to BGP. If the payments are made the guarantee could never come into operation because the principal debtor s obligations will have been discharged because they were performed by the principal debtor. [124] On the face of it there does seem to be a drafting error in cl 3. So the question is raised whether the clause should be construed as if the word or appeared between the word contract and the word if. [125] Although this ground of non-liability may at first blush appear to be unpromising, in my view that is not a sufficient ground to refuse the application for amendment. Again there is no proper explanation as to why it is raised so late. It is clearly not a point that emerges from the defendant s disclosure, so the only reason for not having raised it before is that the plaintiff thought it was unnecessary to do so. [126] Nevertheless, in my view, this ground of non-liability is not one which will cause any disruption or delay to the trial. It is a pure matter of law and raises a simple 5 Chinampa Exploration Pty Ltd was an earlier name of Palmer Petroleum.