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  4. Santos Limited v Fluor Australia Pty Ltd & Anor (No 2) - [2020] QSC 373

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Santos Limited v Fluor Australia Pty Ltd & Anor (No 2)[2020] QSC 373

Santos Limited v Fluor Australia Pty Ltd & Anor (No 2)[2020] QSC 373

SUPREME COURT OF QUEENSLAND

CITATION:

Santos Limited v Fluor Australia Pty Ltd & Anor (No 2) [2020] QSC 373

PARTIES:

SANTOS LIMITED

ACN 007 550 923

(plaintiff)

v

FLUOR AUSTRALIA PTY LTD

ACN 004 511 942

(first defendant)

FLUOR CORPORATION

(second defendant)

FILE NO/S:

BS No 12939 of 2016

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

15 December 2020

DELIVERED AT:

Brisbane

HEARING DATE:

17 and 18 February 2020
Further written submissions received 27 May, 4 and 15 June and 1 and 8 July 2020

JUDGE:

Bradley J

ORDER:

I will consider the parties’ submissions on the appropriate form of order.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS – SEPARATE DECISION OR DETERMINATION – GENERALLY – where the plaintiff and defendants are in dispute about amounts paid by the plaintiff to the first defendant pursuant to a contract for the engineering, procurement and construction of certain facilities – where the dispute is complex and the quantum of the plaintiff’s claims is in excess of $1.4 billion – where it is estimated that a trial of the claims would take between six and nine months – where the plaintiff has applied for an order that the questions “raised on the pleadings as amended from time to time” be referred to three referees to conduct an inquiry into, and prepare a report to the Court on, those questions – where the defendants oppose the making of such an order, primarily on the bases that r 501 of the UCPR does not allow the Court to “refer out the whole proceeding” and that making a referral would not, in any event, be an appropriate exercise of the Court’s discretion – whether r 501 allows the Court to refer all of the questions in a proceeding to a referee or referees – whether referring all or some of the questions in this proceeding to three referees would facilitate the just and expeditious resolution of the real issues in the proceeding at a minimum of expense

Uniform Civil Procedure Rules 1999 (Qld), r 5, r 501

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, applied
Austin Engineering Pty Ltd v DA Story Pty Ltd [2000] QSC 97, cited
Buckley v Bennell Design & Constructions Pty Ltd (1978) 140 CLR 1, considered
McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd & Anor [2019] QSC 320, cited
Netanya Noosa Pty Ltd v Evans Harch Constructions Pty Ltd [1995] 1 Qd R 650, explained
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, cited
Rankine v Rankine (1995) 124 FLR 340, considered
Wenco Industrial Pty Ltd v WW Industries Pty Ltd (2009) 25 VR 119, cited

COUNSEL:

M Stewart QC, with D J Piggott QC and J Mitchenson, for the plaintiff

D B O'Sullivan QC, with D M Turner, for the defendants

SOLICITORS:

Corrs Chambers Westgarth for the plaintiff

Jones Day Lawyers for the defendants

  1. [1]
    This is a decision on an application by the plaintiff (Santos) pursuant to r 501[1] to refer questions in the proceeding to a panel of three referees.  The questions Santos seeks to refer are “those raised on the pleadings as amended from time to time”.  The reference is opposed by the first defendant (Fluor Australia) and the second defendant (Fluor Corporation), together the Fluor parties. 

The application

  1. [2]
    The application was heard on 17 and 18 February 2020.  It was followed on 19 February 2020 with the hearing of an application by Fluor for summary judgment or a strike out of part of the Santos claim.  The decision in each application was reserved. 
  2. [3]
    Prior to the hearing, Santos[2] and the Fluor parties[3] had each filed written submissions.  Santos had filed a further set of written submissions in reply.[4] 
  3. [4]
    In support of the application, Santos adduced evidence of enquiries of eight potential referees about their qualifications, experience and availability.  Two of those persons were resident in Australia, one in Queensland and the other in New South Wales, and six resided in the United Kingdom.
  4. [5]
    On 20 March 2020, Australia closed its borders to all non-residents.  On 1 May 2020, the Chief Health Officer of Queensland issued Public Health Direction – Border Restrictions (No 5) pursuant to s 362B of the Public Health Act 2005 (Qld), which directed that a person who arrived in Queensland from another State or Territory of Australia would not be allowed to enter Queensland, unless they were an exempt resident or an exempt person.
  5. [6]
    On 18 May 2020, Santos advised the court of a wish to adduce further evidence to “address the risk that travel restrictions related to the [Covid-19] pandemic” may affect the ability of proposed referees to travel to participate in a hearing.  The Fluor parties did not consent at that time, and the matter of re-opening was set down for hearing on 28 May 2020. 
  6. [7]
    Shortly before the hearing was to commence, the parties advised the court they had agreed a proposed consent order pursuant to which Santos would have leave to reopen its case and the parties would exchange further affidavit material and written submissions.  The proposed directions left open the possibility of a further oral hearing to address the matters raised in the additional evidence and submissions.  An order was made in those terms by consent and the hearing on 28 May 2020 was vacated.
  7. [8]
    A further order was made on 26 June 2020, at the request and by consent of the parties.  It provided for the further affidavits to be evidence in the application and for the filing and service of another outline of submissions by each party.  The last of these, the plaintiff’s further supplemental reply submissions, was filed on 8 July 2020.  In total, 37 pages of submissions and 402 pages of affidavit material were filed by the parties in relation to the impact of Covid-19 on the application.  Neither party sought a further oral hearing.
  8. [9]
    Recently, the restrictions on persons entering Queensland from other parts of Australia have been lifted.  Since 1 December 2020, travel to Queensland by residents within the country has been unrestricted.  At the date of this decision, Australia’s international borders remain closed to most non-residents. 

The proceeding

  1. [10]
    The proceeding concerns a dispute between Santos and the Fluor parties arising from a contract (the Contract) executed by Santos and Fluor Australia on 13 January 2011, the terms and conditions of which were amended and set out in an attachment to a deed dated 26 August 2011.  Fluor Corporation was a party to another deed, executed on 26 January 2011, pursuant to which its liability to pay Santos the sums that Santos claims in this proceeding is said to arise.
  2. [11]
    Santos was the proponent of a project to extract coal seam gas from fields in the Surat Basin and supply the gas for commercial sale or for conversion to liquefied natural gas (the Project).  Fluor Australia was responsible for the engineering, procurement and construction of certain facilities for the Project. 
  3. [12]
    Partly itself and partly through various subcontractors, Fluor Australia performed work on: three new gas compression facilities (the Hubs); existing gas compression facilities; wellpads throughout two gas fields and associated infrastructure and facilities, including flow lines to transport coal seam gas to the Hubs; and roads, construction lay-down yards and high-voltage transmission lines from the Hubs to the wellpads and other facilities.  Fluor Australia progressively claimed and was paid by Santos for this work throughout the life of the Project.
  4. [13]
    During 2015, Santos audited the costs incurred by Fluor Australia under the Contract.  Santos formed the view that Fluor Australia was not contractually entitled to all the costs it had claimed and was paid.  It proceeded to issue Fluor Australia with payment certificates.  The payment certificates remained unmet when this proceeding was commenced on 13 December 2016.
  5. [14]
    Fluor Corporation is the ultimate holding company of Fluor Australia and, according to Santos, guaranteed the payment by Fluor Australia of sums claimed by Santos in the proceeding.
  6. [15]
    Santos’ claims are set out in its sixth amended statement of claim.[5]  There are five discrete, though factually interrelated claims, together exceeding $1.4 billion.  The Fluor parties’ most recent pleading is their fifth amended defence and counterclaim.[6]  In these reasons it is convenient to refer to the current pleadings simply as the statement of claim and the defence.
  7. [16]
    Santos pleads the following claims:
    1. (a)
      Mechanical Completion Delay Costs Claim, pleaded in Part B of the statement of claim;
    2. (b)
      Breach of Subcontract Claims, pleaded in Part C of the statement of claim;
    3. (c)
      Alternative Design Delay Claim, pleaded in Part D.1 of the statement of claim;
    4. (d)
      Forensic Accounting Claims, pleaded in Parts D.2 and D.3 of the statement of claim; and
    5. (e)
      Wellpads Disruption Claim, pleaded in Part D.4 of the statement of claim.

Court supervision

  1. [17]
    The quantum of Santos’ claims and the complex nature of the parties’ dispute led to the proceeding being listed on this Court’s Supervised Case List on 23 March 2017.  Since that time, the parties have been preparing and filing evidence, as the matter progresses towards being ready for a hearing.  A considerable amount of such evidence has been exchanged.
  2. [18]
    A number of matters have been dealt with on an interlocutory basis, not limited to directions, including applications for further particulars and for disclosure of particular documents. 
  3. [19]
    The parties’ estimates are that a trial of all issues arising on the pleadings would take between six and nine months in court. 
  4. [20]
    The Fluor parties’ application for summary judgment was heard immediately after the hearing of this application.  Shortly before these reasons were published, the court ordered summary judgment for the Fluor parties in respect of the Mechanical Completion Delay Costs Claim.[7]  Subject to the exercise of any appeal rights Santos may assert and the outcome of any appeal, that claim has now been determined. No further questions arise on the pleadings in respect of that claim.

General approach to references

  1. [21]
    A decision to order a reference is a case management decision.  It calls for close attention to the Court’s role in ensuring effective, flexible principles of case management are applied to the resolution of disputes.[8] The primary question is whether the decision will facilitate the just and expeditious resolution of the real issues in the proceeding at a minimum of expense.  The power to appoint a referee is to be applied to facilitate that purpose and with the objective of avoiding undue delay, expense and technicality. 
  2. [22]
    I had cause to consider the principles in McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd & Anor.[9]  It is unnecessary to repeat all those matters in full here, save for the general observation :

“The just resolution of the real issues and the avoidance of undue technicality requires the Court to identify the real substance of a party’s claim or defence and deliver a judgment applying the law to the facts admitted or found on the evidence.  The expeditious resolution of those issues and the avoidance of delay require the Court to deliver such a judgment within a reasonable time.  The requirement to provide a resolution at a minimum expense, and to avoid undue expense, directs the Court to undertake its role with an economic and proportionate use of resources – both the public resources of the Court and the litigants’ private resources.  Inefficiencies in the use of the Court’s resources affect not only the immediate parties, but other litigants seeking their share of those resources. There is an obvious public interest in the efficient use of Court time funded by the community.”[10]

  1. [23]
    It is not in contest that the appropriate use of referees can facilitate the expeditious resolution of disputes and avoid undue delay.  For proceedings that require a lengthy period to present and examine evidence, the availability and flexibility of referees can allow a question to be heard sooner than the processes for the compilation of the court calendar may allow.
  2. [24]
    Where, as here, a major component of a parties’ case concerns the effect of alleged conduct on the progress of work in a large and complex construction process, the referees’ particular knowledge and experience with respect to prolongation and delay claims and the competing methods of analysing critical paths may facilitate the avoidance of undue technicality and so expedite the resolution of the dispute.  Familiarity with the use of particular processes for the presentation and testing of evidence may lead to the same beneficial outcome.
  3. [25]
    The use of a reference allows the Court to hear and determine other causes in the interim.  The outcome of a reference may assist the parties to reach a settlement.  If not, a considered report from the referee assists the court in determining whether to accept, vary or reject the referee’s decision, opinion and findings, to allow any additional evidence and to give judgment.  The earlier resolution of a question may result in a saving in expense for the parties and for the community. 

Part 7 of Chapter 13 of the UCPR

  1. [26]
    Within the UCPR, rr 501 to 505 and 505A to 505D were introduced to “facilitate the increased use of referees in Queensland civil proceedings to assist in the effective and expeditious completion of Court business”.[11] 
  2. [27]
    Santos seeks an order referring the questions “raised on the pleadings as amended from time to time”.  The breadth of such an order might raise a question about whether it would permit the parties to expand the scope of the referred questions by making amendments – perhaps substantial amendments – to its pleading.  
  3. [28]
    The proceeding is on the Supervised Case List.  The amendments that a party might make would be constrained, to some extent, by the rules relating to amendment, including the ability of another party to apply to the court to disallow any particular amendment.  In any event, it seems more appropriate for any referral order to describe the claims referred by reference to the way they are advanced in the statement of claim, which is in separate parts of the pleading.

Does the court have power to refer all questions arising on the pleadings?

  1. [29]
    The Fluor parties submit the court has no power to refer all questions raised on the pleadings to a referee.  This submission is based on three propositions. 
  2. [30]
    First, the Fluor parties contend that the text of r 501 “tends to support a conclusion that a question in the proceeding may be referred, but the whole proceeding itself may not be”.  They submit the historical context of referral rules in Queensland put this conclusion beyond doubt. 
  3. [31]
    Secondly, they contend this court, in Netanya Noosa Pty Ltd v Evans Harch Constructions Pty Ltd,[12] has “authoritatively held” that the former rules did not permit the court to refer “the whole of the cause”; that the language of the former rules has been retained; and so the present rules should be interpreted to exclude a power to refer “the whole of the proceeding” to a referee. 
  4. [32]
    Thirdly, the Fluor parties submit that the court should construe the present rules as they contend because differently expressed rules in the Federal Court, the Supreme Court of New South Wales and the Supreme Court of the Australian Capital Territory would have been known to the Rules Committee and the failure of the committee to adopt the Federal, NSW or ACT language must have presaged the intention that the UCPR rules were to have a different meaning and effect.

The text of r 501

  1. [33]
    The first contention of the Fluor parties is semantic and relies on setting up a straw opponent.  It may be disposed of briefly. 
  2. [34]
    The text of the rule plainly authorises the court to order a question in the proceeding be referred to a referee.  The familiar operation of s 32C(a) of the Acts Interpretation Act 1954 (Qld) applies so that the court may refer a number of questions, and do so to a panel of referees.  That proposition cannot be reasonably disputed.
  3. [35]
    It appears the Fluor parties contend the court could refer all but one of the questions arising in the proceeding to a referee, so that the reference order would be within power provided the court retained a single question to determine itself.  That contention should be rejected as unprincipled. 
  4. [36]
    The subject of a reference under r 501 is a “question in the proceeding”.  It is a question “of fact or law, or both” that is “identified by the court or raised by pleadings, agreement of the parties or otherwise”.[13]  It must be a question in the proceeding.  It cannot be an abstract question or one that is hypothetical in the sense that it is unrelated to any actual controversy between parties.  A “question” is not otherwise a technical term.  The expression “a question in the proceeding” has been used interchangeably with “an issue in the proceeding” in contests over relevance and disclosure of documents.  It has also been used to describe paragraphs in a party’s prayer for relief.[14] 
  5. [37]
    The generality of the term “question” is indicated by the power of a referee to submit a “question that arises during the inquiry” for the decision of the court.[15]  
  6. [38]
    Under the UCPR, the question is referred to a referee for inquiry and report.  This signals the rules are a successor to those for a reference for inquiry and report under the former s 56 of the Supreme Court of Judicature Act 1873 (UK) (the 1873 Act).  That provision found its local adaptation in the form of s 11(1) of the Judicature Act 1876 (Qld): see [50] below.  It is not a reference of the kind provided for in s 57 of the 1873 Act, which produced a verdict akin to that of a jury.[16] 
  7. [39]
    The subject matter of a reference for inquiry and report has always been limited to the cause or matter pending before the court.[17]
  8. [40]
    In Baroness Wenlock v The River Dee Co (No 3),[18] Lord Esher MR explained the nuance conveyed by the word “inquiry”:

“The word ‘inquiry’ in my opinion signifies an inquiry in which [the referee] is to take evidence and hold a judicial inquiry in the usual way in which such inquiries are held.  The word “inquiry” is used because it is not meant to have the same result as a trial.”

  1. [41]
    When an order for a referral to a referee is made, the Court may, on its own initiative or on the application of a party or referee, exercise control over the proceeding.  It may do so by setting aside or varying the reference order,[19] or by giving directions about the conduct of an inquiry before a referee or a matter arising under the inquiry.[20]  Also, as noted above, a referee may submit a question that arises during the inquiry for the decision of the Court.[21]  If the Court decides the question, the referee is bound by that decision.[22]
  2. [42]
    As well as retaining specific powers to intervene during the course of an inquiry, the Court is not bound to dispose of a question in accordance with a referee’s report once the inquiry has been completed.  Rule 505D provides:

“505D Use of referee’s report

  1. (1)
    The court may do 1 or more of the following—
  1. (a)
    accept, vary or reject all or part of the referee’s decision, opinion or findings in the referee’s report;
  1. (b)
    decide any matter on the evidence given before the referee, with or without additional evidence;
  1. (c)
    make an order or give a judgment in the proceeding on the basis of the decision, opinion or findings in the referee’s report as it considers appropriate.
  1. (2)
    An application by a party for an order or judgment under subrule (1) must be made on at least 7 days notice to the other parties.
  1. (3)
    Evidence additional to the evidence given before the referee may not be adduced before the court in relation to the question the subject of the inquiry except with the leave of the court.”
  1. [43]
    A reference under r 501 does not contemplate the referral of the proceeding to a referee to provide a verdict or even a judgment.  Santos does not seek a referral of “the whole proceeding” to a referee.  It seeks the referral of all questions in the proceeding.  The Fluor parties’ submission elides the important difference between the two.  The process authorised by rr 501 to 505 would require the referee to inquire into the referred questions and provide a report to the court.  The court would then consider whether to accept, vary or reject all or part of the conclusions in the referee’s report, to decide any matter on the evidence given before the referee (and whether to admit any additional evidence) and/or to give judgment in the proceeding. 
  2. [44]
    Historically, the power to refer a question for inquiry and report was exercised where the question could not conveniently be decided in the usual way by the court.  Common examples were questions involving the prolonged examination of documents or accounts,[23] scientific or local investigation[24] or other questions of detail that occupy too much time in court.[25]  A reference for inquiry and report required the referee to find the materials on which the court was to act and the report was to enable the court to determine the question the subject of the reference.[26]  So the report would state the facts the referee had found and the figures used to calculate any conclusions.  The report would not dispose of the matter.  The court could adopt the report or revise it to come to a different conclusion.[27] Its origin lies as a practice in the Court of Chancery.  The sequence of statutes since 1873 made it available in courts of common law. 
  3. [45]
    The power to refer a matter for trial before a referee resulting in a verdict has had a distinct and separate legal history.  This power, formerly under s 57 of the 1873 Act, could be exercised without the consent of all parties where the matters in dispute consisted wholly or in a substantial part of matters of account.[28]  An action on a builder’s bill was an example of such a matter.[29]  The initial view, that only such matters of account could be referred to a referee for trial under s 57,[30] was revised: so that, if matters of account were to be referred, then the court could order the referral of all other matters arising in the same action to the referee.[31] 
  4. [46]
    Where there was consent, the whole of a proceeding could be referred.  In such a case, the statutory power overlapped the court’s inherent jurisdiction to make an order for a particular mode of trial with the consent of the parties.  The decision or award of the referee was the equivalent of a verdict of a jury, directing how judgment should be entered.  It could be enforced or set aside in the same way as a jury verdict. 
  5. [47]
    The historical context presents no impediment to the use of a reference to inquire into and report on all of the issues arising on the pleadings in a proceeding, in an appropriate case.

The decision in Netanya Noosa

  1. [48]
    In Netanya Noosa, Lee J considered the scope of O 39, r 7 of the then Rules of the Supreme Court and s 11 of the then Judicature Act 1876 (Qld).
  2. [49]
    The relevant rule was in these terms:

“Subject to such right as existed at the commencement of the Judicature Act to have particular cases submitted to the verdict of a jury, and subject to the like right under any later Statute, the Court or Judge may at any time direct the trial of any question or issues of fact, or partly of fact and partly of law, arising in any cause or matter to be tried without a jury, either by a Judge or by a Judge with assessors, or may refer the same for inquiry and report to a special referee.”

  1. [50]
    Section 11(1) of the Judicature Act provided:

“Subject to any rules of court and to such right as may now exist to have particular cases submitted to the verdict of a jury any question arising in any cause or matter before the Court may be referred by the Court or Judge before whom such cause or matter may be pending for inquiry and report to a special referee and the report of any such referee may be adopted wholly or partially by the Court and may (if so adopted) be enforced as a judgment by the Court.”

  1. [51]
    The moving party in Netanya Noosa sought the referral of the entire proceeding to an expert for a report.  Lee J concluded:

“Whilst there is considerable temptation to make the orders sought, I have come to the conclusion that the present case cannot be referred in the way sought in the absence of some specific power to do so.  Until an appeal court decides otherwise I feel constrained to follow the earlier authorities in limiting the powers of reference contained in s. 11 and O. 39 r. 7 in the manner outlined.  The extent and breadth of the questions sought to be submitted makes it plain to me that what the plaintiff really seeks is to have all its grievances litigated in a different forum, a course which neither provision contemplates or authorises.”[32]

  1. [52]
    Earlier, his Honour had noted:

“The reference is not for decision, merely report.  A fortiori, there is no power in the Court to refer the entire cause or matter or all of the factual disputes in it, or for that matter questions which may, in the end result, prove unnecessary to answer.  The object of the report being to better enable the Court to decide the ultimate issues, s. 11 does not permit the Court to abdicate its fact finding function in favour of reference to some external tribunal.  That function always remains a function of the Court, it being given the sole discretion to decide what assistance, if any, is to be derived from the referee’s report.  The use of comparable language in O. 39 r. 7 indicates that similar limitations apply.”[33]

  1. [53]
    As Mullins J noted in Austin Engineering Pty Ltd v DA Story Pty Ltd,[34] the reference by Lee J to s 11 not permitting “the court to abdicate its fact finding function” was a reference to the status of a referee’s report before it is adopted by the court, and:

“The discretion to decide what assistance is derived from the report is a reference to the discretion exercised by the court in deciding whether to and to what extent to adopt the report.”

  1. [54]
    It does not appear the reasoning of Lee J was informed by the High Court’s decision in Buckley v Bennell Design & Constructions Pty Ltd.[35]  The report of the decision does not indicate his Honour was taken to it.  His Honour appears to have proceeded on the assumption that the proposed reference was to “some external tribunal”.  As Stephen J explained in Buckley, a reference ordered by the court might, at most, be considered a particular form of trial within the court’s jurisdiction and control.  It is not an abdication by the court of its decision-making role or an abandonment of its jurisdiction over the dispute.[36]  A referral for inquiry and report, under the former s 11, might have been considered even less an “abandonment” than a referral for trial of all issues before a referee under s 12.
  2. [55]
    In Rankine v Rankine,[37] Thomas J, with the agreement of Macrossan CJ and McPherson JA, raised the possibility that Netanya Noosa “unduly fetters” the use that may be made of ss 11 and 12 of the Judicature Act and O 39 rr 7, 44 and 46 to 49.  That observation may be regarded as influential, if obiter dictum. 
  3. [56]
    The same is the most that might be said of the observations of Lee J.  His Honour’s opinion as to the scope of the power under s 11 was not essential to the decision in Netanya Noosa.  His Honour concluded, expressly quite apart from the conclusion on statutory power, that the case was “an inappropriate one for referral”. 
  4. [57]
    Lee J commented on the desirability of a proposed referee being possessed of characteristics that would allow them to facilitate an outcome at least as expedient for the parties as judicial determination of their dispute:

“Unless the proposed special referee, because of his skill and experience, enjoys some special advantage which would enable him to dispose of such questions in a more timely and cost effective manner, a judge is just as able to deal with such evidence and, in my opinion, the proper course is for him to do so.”[38]

  1. [58]
    His Honour was not persuaded this benchmark was met.  The  reasons explain:

“…so far as the technical issues are concerned, the proposed referee is not a person possessed of any particular skill or expertise in the field under consideration and, from that point of view, is in no better position than a judge of this Court to adjudicate upon those issues.  The glaring absence of any material deposing to any long term saving or advantage likely to be gained from the exercise persuades me that there is nothing exceptional in the issues involved which would justify the imposition of the additional financial burden which emerges from the plaintiff’s submissions as to the cost of the reference on the parties.”[39]

  1. [59]
    The UCPR, including the instruction in r 5 as to their application, superseded the rules the subject of the decision in Netanya Noosa.  The introduction of the new r 501 requires a consideration of the present provisions in their own right and in accordance with r 5.  The clear meaning of r 501 does not call for somewhat contentious historical glosses to be applied on the reference power. 
  2. [60]
    The use of the term “reference out” in the parties’ submissions may demonstrate the persistence of an erroneous understanding of a court-ordered reference.  The consideration for the court in an application for a reference under r 501 is whether the more appropriate choice is a referral for inquiry and report or a trial before a judge.  The proceeding remains within the court.  The referee is an officer of the court.  There is no “contracting out” and, in a referral for inquiry and report, there is no delegation by the court of its power to determine all relevant questions, reach a verdict and enter judgment in the proceeding. 

The difference between r 501 and rules in other Australian jurisdictions

  1. [61]
    The Fluor parties contend r 501 should be construed according to the differences between its language and that in other Australian jurisdictions.  Such an approach is unusual.  The proper construction of a statutory provision is determined by reference to the provision itself and to the instrument viewed as a whole, on the basis that “its provisions are intended to give effect to harmonious goals”.[40] 
  2. [62]
    If r 501 were ambiguous, then the court could examine the existing state of the law and the mischief to be overcome.[41] 
  3. [63]
    Such considerations do not arise in the case of r 501.  This submission lies in the penumbra of the Fluor parties’ contention that Santos seeks to refer “the whole proceeding” to a referee for a verdict or even judgment.  That is not the nature of the application.  The existence of rules and laws in other jurisdictions providing for “the whole of the proceedings”[42] or “the proceeding”[43] or “a proceeding”[44] to be referred to a referee does not require r 501 to be given a narrower construction than its own terms require.  The UCPR provisions descend from the inquiry and report provisions.  Those in other jurisdictions include rules descended from the historical process of referral for trial before and verdict of a referee or arbitrator. 

Is a reference appropriate?

  1. [64]
    The Fluor parties next submit that, in the exercise of discretion, the court should decline to refer “the whole proceeding” to three referees pursuant to r 501.  As noted above, that is neither what is sought nor what could occur. 

The expertise of the proposed referees

  1. [65]
    The Fluor parties doubt that the potential referees nominated by Santos “have superior expertise that would cause the proceeding to be decided more quickly, or more correctly, than a judge”.  This rather one-dimensional view is out of step with the philosophy of the rules and the historical purpose of references. 
  2. [66]
    Historically, matters were referred because they involved time-consuming, even tedious, consideration of documents or accounts, local inspections and broad enquiries of witnesses.  The test is not whether a panel can be assembled that is superior to a court.  It is whether the just resolution of the real issues, the avoidance of undue technicality and the minimisation of expense are facilitated by a reference. 
  3. [67]
    As identified by Santos in its submissions, the knowledge and experience of the proposed referees is in both curial and extra-curial processes for resolution of large construction disputes.  The nominees’ “expertise” is said to be in resolving disputes, like the present, efficiently.  It includes experience in the use of measures, such as a “stop-clock” or “chess clock”, and the like. 
  4. [68]
    The potential referees seem ably qualified to consider any question of law that might arise during an inquiry.  In any event, the court would be available to assist pursuant to r 505A, if a particular question arose.

The nature of some of the questions arising

  1. [69]
    The Fluor parties contend it is inappropriate to refer a question where “key issues of fact turn upon credit findings”, where statutory misleading or deceptive conduct is alleged, where the construction of a contract is in issue and where “ultimate questions of Fluor’s liability” are involved. 
  2. [70]
    These are matters that may be quite suitable for inquiry and report by a referee.  The claims are of the kind regularly advanced in construction contract disputes.  The size and scale of the Project and the ensuing claims seems to recommend itself to a reference, rather than to disqualify it.  There is no allegation of fraud. 

Processes for an inquiry

  1. [71]
    I accept the Fluor parties’ submission that the processes for a hearing that properly might be adopted by a panel of referees could be adopted by the court for a trial of the proceeding.  This might reduce the length of a trial, but no estimate of any such reduction – and no agreement by the Fluor parties to adopt any such measures – was proffered. 
  2. [72]
    I also accept that whether the rules of evidence are to apply to an inquiry before a referee is a matter for the referee, subject to any court direction.  This decision cannot be made on an assumption that a referee or a panel of three would approach that topic in any certain manner. 
  3. [73]
    It follows that I accept the submission by the Fluor parties that the six week estimate of a hearing before a panel of referees seems very optimistic.  However, it is not difficult to see that an inquiry and report process would reduce the time the court is occupied by the presentation of evidence and argument about the questions that might be referred.  The flexibility in sitting times and scheduling of hearings would likely facilitate a more expeditious process. As Santos put it, even if the hearing occupied 12 weeks, there would still be a very considerable saving of time. 
  4. [74]
    The Fluor parties’ submissions that they might approach a hearing for the adoption of a report with a view to re-arguing every point the subject of the report are best regarded as in terrorum.  The scope of such a hearing is well understood.[45] 

Should the decision be deferred?

  1. [75]
    The Fluor parties propose a deferral of any decision on a reference.  They are open to some parts of the claims being heard by a referee, but not at present.  Whatever might be observed about the genuineness of this approach, it is not in keeping with the philosophy of the rules.  It is of very limited assistance in determining the appropriate case management directions for the proceeding. 

Post-hearing submissions

  1. [76]
    Much of the post-hearing written submissions were concerned with the manner in which a party may adduce additional evidence and the procedure to be adopted to bring about an opportunity to do so.  None of those matters requires any consideration or determination in this application.  After many strenuous words, the Fluor parties consented to Santos adducing the further evidence. 
  2. [77]
    The evidence identified a further two persons suitable for appointment as referees, both resident within Australia, but outside Queensland. 

Developments in the proceeding

  1. [78]
    It is regrettable that this decision was not delivered sooner.  The extended post-hearing process about a re-opening, the requests for further directions and for hearing dates to be set aside, contributed to the delay.  However, the delay since July has been within the court. 
  2. [79]
    Other events have occurred in the proceeding that are relevant to the application.  First among these is the court’s decision on summary judgment.  It was heard immediately after this application.  It was known to the parties to be a matter of relevance to the decision on this application.  As summary judgment has been ordered in respect of the Mechanical Completion Delay Costs Claim, there are no questions arising in that respect to refer to a referee.
  3. [80]
    On 16 July 2020, the court heard competing applications for disclosure of particular documents and for further particulars.  The disclosure sought by Santos was refused, in part because the evidence Santos adduced at the hearing revealed that Santos was seeking the disclosure so that its expert could determine whether the allegations pleaded by Santos in paragraphs 275 and 276 of the statement of claim were correct.  These allegations are an element of the “Labour Rates Profit” or “Profit in the rates” claim advanced by Santos in Part D.3 of the statement of claim.  In this application, Santos described these are among its Forensic Accounting Claims. 
  4. [81]
    The refusal of the orders sought by Santos was the subject of an appeal.  On 17 November 2020, the Court of Appeal dismissed the appeal.[46]  It follows that some uncertainty attends the claim in Part D.3 of the statement of claim.   

Conclusion on the application

  1. [82]
    I have reached the following conclusions.

Potential referees

  1. [83]
    I am satisfied that each of the ten persons nominated by Santos is suitable to act as a referee, having significant experience and knowledge of construction practices, methods and systems, as well as of suitable processes for the hearing and consideration of disputes of this nature.

A panel of three referees

  1. [84]
    Given the scale of the Project and of the elements of it the subject of dispute in the proceeding, a panel of three referees is appropriate.  The underlying documentary evidence will be significant.  The factual evidence of witnesses may also be considerable.  The expert evidence will be technical and may be challenging. 
  2. [85]
    A panel may generate new ideas and solutions for the reference that a single referee may not have arrived at individually.  A group of three is more likely than an individual to notice and correct mistakes that might affect sound decision making.  Three referees will have better collective memory, meaning that three minds hold more relevant information than one, and interactions between them may facilitate the recall of important material more efficiently than reliance on a single referee.  While each panel member will have significant experience and knowledge, by sharing the task it may increase the total knowledge and experience the panel can draw on when making decisions. 
  3. [86]
    The reference of a complex construction contract dispute to a panel of referees pursuant to specific statutory power and procedures is a well-understood and widely employed means of facilitating the just and expeditious resolution of the issues in the dispute. 

Mechanism for selection and appointment of referees

  1. [87]
    The mechanism for the appointment of the panel should be the subject of submissions.  One possibility is that the court directs Santos to nominate one of the proposed referees and the Fluor parties to nominate another.  The court could appoint the two nominees as referees and direct them to appoint a third referee from the list of all those proposed by Santos. 

Questions to be referred

  1. [88]
    The questions arising on the pleadings about the alleged breaches of subcontracts and the allegations of breach of the Contract by Fluor Australia not delivering the design on time and not performing the wellpad works in accordance with the Contract could efficiently be the subject of an inquiry and report by a panel of three referees.  They should be referred. 
  2. [89]
    The Mechanical Completion Delay Costs Claim has been determined.  It should not be referred to the panel.
  3. [90]
    Nor should the Forensic Accounting Claims.  They may require further consideration by the parties, in light of the recent Court of Appeal decision.  It may be that a separate referral to a different referee or panel might be considered appropriate.  I express no view at this time. 

Powers of the referees

  1. [91]
    The referees are to inquire into and make findings of fact or law they consider necessary or convenient for making any decision on the questions the subject of the reference.  They should provide their opinion as to any matter of opinion or discretion they consider necessary or convenient in making those decisions. 
  2. [92]
    The reference could involve appropriate and just limits on the time each party may have to present its case, the number of witnesses (including expert witnesses) each party may call on any issue, the time to be taken in the examination of witnesses, the time to be taken in oral submissions, and the length of any written submissions.  These are matters for the referees.  The referees could also determine whether the rules of evidence should apply to the hearing. 
  3. [93]
    They should be authorised to hear and decide any applications or matters relating to the pleadings, procedural directions, document management (including disclosure) and any other matter in relation to managing the orderly progression of the inquiry and decision.
  4. [94]
    As there are to be three referees, for the purpose of this inquiry, actions permitted or required to be undertaken by a referee under pt 7 of ch 13 of the UCPR shall be taken by the referees jointly making a decision to do so.  If the referees do not agree in the making of any decision (whether substantive or procedural), then to the extent of the disagreement:
    1. (a)
      each referee shall state their own decision and, if it is a substantive decision, their reasons for their decision;
    2. (b)
      if there is a majority, that decision shall prevail; and
    3. (c)
      if there is no majority, the decision of the most senior referee shall prevail.
  5. [95]
    I will consider the parties’ submissions on the appropriate form of order.

Footnotes

[1]In these reasons, each reference to a rule is to a rule in the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR) unless otherwise specified.

[2]Outline of submissions on behalf of Santos filed 31 January 2020.

[3]Outline of submissions on behalf of the defendants filed 11 February 2020.

[4]Outline of submissions in reply on behalf of Santos filed 14 February 2020.

[5]Sixth amended statement of claim filed 7 December 2020.  At the hearing of the application, Santos’ case was as described in a second amended statement of claim filed 31 October 2018.  The disposition of this application has been somewhat delayed.  In any event, it was common ground at the hearing that Santos would have to replead its case to align it with the expert evidence it sought to adduce.

[6]Fifth amended defence and counterclaim filed 3 December 2020.

[7]Santos Limited v Fluor Australia Pty Ltd & Anor (No 1) [2020] QSC 372.

[8]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 211-214 [92]-[101] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[9][2019] QSC 320 at [24]-[38].

[10][2019] QSC 320 at [25].

[11]Explanatory Note, Uniform Civil Procedure (Referees) Amendment Rule 2019 (Qld).

[12][1995] 1 Qd R 650 (Netanya Noosa) at 652, 655 and 656 (Lee J).

[13]r 501(4).

[14]Leroy v Koutavas [2017] FCA 381 at [7] (Robertson J).

[15]r 505A(1).

[16]cf Judicature Act 1876 (Qld), s 12(1). 

[17]The Darlington Wagon Co Ltd v Harding and The Trouville Pier and Steamboat Co Ltd [1891] 1 QB 245.

[18](1887) 19 QBD 155 at 158.

[19]r 502.

[20]r 505.

[21]r 505A(1).

[22]r 505A(2).  If the court does not consider it appropriate to decide the question, the court must give directions about the future conduct of the inquiry: r 505A(3).

[23]Re Taylor (1890) 44 Ch D 128.

[24]Broder v Saillard (1876) 2 Ch D 692.

[25]Rust v Victoria Graving Dock Co (1887) 36 Ch D 113.

[26]Longman v East (1877) 3 CPD 142 at 149 (Bramwell LJ).

[27]Dunkirk Colliery Co v Lever (1878) 9 Ch D 20 at 28 (Bramwell LJ).

[28]Hurlbatt v Barnett & Co [1893] 1 QB 77.

[29]Ward v Pilley (1880) 5 QBD 427.

[30]Longman v East (Bramwell, Brett and Cotton LJJ).

[31]Ward v Pilley at 429 (Bramwell LJ, Baggallay LJ agreeing) and 431 (Brett LJ).

[32]Netanya Noosa at 656.

[33]Netanya Noosa at 654 (citations omitted).

[34][2000] QSC 97 at [17].

[35](1978) 140 CLR 1 (Buckley).

[36]Buckley at 15.

[37](1995) 124 FLR 340 at 348.

[38]Netanya Noosa at 654.

[39]Netanya Noosa at 656.

[40]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[70] (McHugh, Gummow, Kirby and Hayne JJ).

[41]CIC Insurance Ltd v Bankstown Football Club (1997) 187 CLR 384 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).

[42]Uniform Civil Procedure Rules 2005 (NSW), r 20.14(1).

[43]Court Procedures Rules 2006 (ACT), r 1531(1)(b).

[44]Federal Court of Australia Act 1976 (Cth), s 54A(1)(a).

[45]Wenco Industrial Pty Ltd v WW Industries Pty Ltd (2009) 25 VR 119 at [17] (Redlich and Bongiorno JJA and Beach AJA).

[46]Santos Limited v Fluor Australia Pty Ltd & Anor [2020] QCA 254.

Close

Editorial Notes

  • Published Case Name:

    Santos Limited v Fluor Australia Pty Ltd & Anor (No 2)

  • Shortened Case Name:

    Santos Limited v Fluor Australia Pty Ltd & Anor (No 2)

  • MNC:

    [2020] QSC 373

  • Court:

    QSC

  • Judge(s):

    Bradley J

  • Date:

    15 Dec 2020

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
2 citations
Jump To
Cite 1 - (2009) 239 CLR 175
Cite 2 - (2009) 239 CLR 175
Austin Engineering Pty Ltd v D A Story Pty Ltd & Ors [2000] QSC 97
2 citations
Jump To
Cite 1 - [2000] QSC 97
Cite 2 - [2000] QSC 97
Broder v Saillard (1876) 2 Ch D 692
1 citation
Jump To
Cite 1 - (1876) 2 Ch D 692
Buckley v Bennell Design & Constructions Pty Ltd (1978) 140 CLR 1
3 citations
Jump To
Cite 1 - (1978) 140 CLR 1
Cite 2 - (1978) 140 CLR 1
Cite 3 - (1978) 140 CLR 1
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
1 citation
Jump To
Cite 1 - (1997) 187 CLR 384
Dunkirk Colliery Co v Lever (1878) 9 Ch D 20
1 citation
Jump To
Cite 1 - (1878) 9 Ch D 20
Hurlbatt v Barnett & Co [1893] 1 QB 77
1 citation
Jump To
Cite 1 - [1893] 1 QB 77
Leroy v Koutavas [2017] FCA 381
1 citation
Jump To
Cite 1 - [2017] FCA 381
Longman v East (1877) 3 CPD 142
1 citation
Jump To
Cite 1 - (1877) 3 CPD 142
McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd [2019] QSC 320
3 citations
Jump To
Cite 1 - [2019] QSC 320
Cite 2 - [2019] QSC 320
Cite 3 - [2019] QSC 320
Netanya Noosa Pty Ltd v Evans Harch Constructions Pty Ltd[1995] 1 Qd R 650; [1994] QSC 271
6 citations
Jump To
Cite 1 - [1995] 1 Qd R 650
Cite 2 - [1995] 1 Qd R 650
Cite 3 - [1995] 1 Qd R 650
Cite 4 - [1995] 1 Qd R 650
Cite 5 - [1995] 1 Qd R 650
Cite 6 - [1995] 1 Qd R 650
Project Blue Sky v Australian Broadcasting Authority (1998) 194 C.L.R 355
2 citations
Jump To
Cite 1 - (1998) 194 C.L.R 355
Cite 2 - (1998) 194 C.L.R 355
Rankine v Rankine (1995) 124 FLR 340
2 citations
Jump To
Cite 1 - (1995) 124 FLR 340
Cite 2 - (1995) 124 FLR 340
Rust v Victoria Graving Dock (1887) 36 Ch.D. 113
1 citation
Jump To
Cite 1 - (1887) 36 Ch.D. 113
Santos Limited v Fluor Australia Pty Ltd [2020] QCA 254
1 citation
Jump To
Cite 1 - [2020] QCA 254
Santos Limited v Fluor Australia Pty Ltd & Anor (No 1) [2020] QSC 372
1 citation
Jump To
Cite 1 - [2020] QSC 372
The Darlington Wagon Co Ltd v Harding and The Trouville Pier and Steamboat Co Ltd [1891] 1 QB 245
1 citation
Jump To
Cite 1 - [1891] 1 QB 245
Tussaud v Tussaud (1890) 44 Ch D 128
1 citation
Jump To
Cite 1 - (1890) 44 Ch D 128
Ward v Pilley (1880) 5 QBD 427
2 citations
Jump To
Cite 1 - (1880) 5 QBD 427
Cite 2 - (1880) 5 QBD 427
Wenco Industrial Pty Ltd v WW Industries Pty Ltd (2009) 25 VR 119
2 citations
Jump To
Cite 1 - (2009) 25 VR 119
Cite 2 - (2009) 25 VR 119
Wenlock (Baroness) v The River Dee Co. (1887) 19 QBD 155
1 citation
Jump To
Cite 1 - (1887) 19 QBD 155

Cases Citing

Case NameFull CitationFrequency
Santos Limited v Fluor Australia Pty Ltd (No 2) [2021] QSC 1891 citation
Santos Limited v Fluor Australia Pty Ltd (No 3)(2021) 9 QR 353; [2021] QSC 2814 citations
Santos Limited v Fluor Australia Pty Ltd (No 4) [2021] QSC 2962 citations
Santos v Fluor [2025] QSC 1841 citation
Tri-Star Petroleum Company v Australia Pacific LNG Pty Ltd (Formerly Oil Company of Australia Limited) [2023] QSC 83 2 citations
1

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