Causmag Ore Company Pty Limited v Blue NRG Pty Limited

1. [1]

   By Summons filed on 10 September 2021, Causmag Ore Company Pty Ltd (“Causmag”) seeks leave (out of time) to appeal a decision of Kiely LCM made in the Local Court sitting at Young on 31 May 2021.

2. [2]

   Causmag’s complaint is that her Honour failed to state her finding as to the proper construction of clause 5.2 of the contract between Causmag and Blue NRG Pty Ltd (“Blue NRG”) and that she failed to give any, or any adequate reasons for that finding, and second, that her construction, to the extent she made one, was wrong and she ought to have found Blue NRG repudiated the Contract and so Causmag are entitled to “loss of bargain” damages.

3. [3]

   It was conceded these are questions of law, and so leave to appeal is not required. An extension of time was sought as the appeal was filed nine days late. No submissions were made about this at the hearing although an affidavit of Mr Pandi sworn 15 October 2021 was read which explained the delay. Accordingly I extend the time within which the appeal could be filed, as there is apparently no opposition to that course.

4. [4]

   For the reasons that follow however, I have concluded that the grounds of appeal are not made out and the appeal is dismissed.

Factual background

1. [5]

   The facts are fairly and comprehensively set out in her Honour’s judgment at pages 1 to 4:

2. [6]

   Her Honour then quoted Clause 5.2, which I reproduce here in the form it appears in the Contract, for clarity:

3. [7]

   Her Honour continued:

4. [8]

   As I understand it, no challenge is made to her Honour’s recount of the facts. The challenge is limited to her Honour’s conclusions set out on page 5 of her judgment and in particular the part italicised below:

Summons for leave to appeal

1. [9]

   The grounds of appeal are expressed in the Summons as follows:

Appeals from the Local Court and the Supreme Court

1. [10]

   An appeal to this Court from a judgment of the Local Court is governed by Part 3 Division 4 of the Local Court Act 2007 (NSW). Section 39 provides for appeals on a question of law:

2. [11]

   Section 40(1) enables a party to appeal to this Court on a “question of mixed law and fact”, but only with leave of this Court.

3. [12]

   Argument proceeded before me on the basis that there was no issue that the appeal was dealing with anything other than a question of law. Failure sufficiently to disclose the reasoning process is an error of law which may vitiate a decision: Spitzer v Ward & Anor [2004] NSWSC 100 at [27].

Ground 2 - Her Honour’s construction of clause 5.2 of the Contract was wrong and there should have been a finding that Blue NRG had repudiated the Contract.

1. [13]

   The grounds of appeal can conveniently be dealt with together.

2. [14]

   Causmag submitted that despite the proper construction of clause 5.2 being a central issue in the claim, (if not the central issue), there was no finding by Kiely LCM as to what the proper construction was, let alone any reasons in support of that construction. It submitted that the closest the reasons go to addressing the issue is in the italicised part of the reasons set out in [8] of this judgment and “seems to assume” that the proper construction of the clause was that Blue NRG merely had to provide notice of an intention to raise its rates and give reasons. The reasons of her Honour do not explain whether that construction was found by her Honour, or merely a construction that her Honour considered was agreed between the parties, which was not the case.

3. [15]

   Causmag complained that if that was her Honour’s finding, it was wrong because her Honour should have concluded that the second sentence of clause 5.2 limits the situations when Blue NRG could increase its rates, and in fact limits the scope of increase(s) permitted. This means any increase had to reflect the types of changes in costs described in the condition.

4. [16]

   Blue NRG submitted, (correctly in my view), that her Honour’s reasons self-evidently demonstrate that her Honour accepted the construction of clause 5.2 sought by Causmag and that the obvious effect of the second sentence of clause 5.2 (beginning “We may vary…”) was to limit the situations in which Blue NRG could increase its rates and the scope of such increases, but in applying that construction, her Honour found that there was no breach or act of repudiation by Blue NRG.

5. [17]

   Her Honour identified the primary issue in dispute, being compliance with clause 5.2 of the Contract, and then addressed the constituent parts of that clause on page 2 of her reasons.

6. [18]

   Her Honour then identified the evidence upon which she relied to conclude that the variations proposed by Blue NRG in fact reflected changes in wholesale electricity prices. That evidence included:

7. [19]

   Her Honour then correctly concluded that Blue NRG had provided the necessary notice to increase its rate.

8. [20]

   In concluding that Blue NRG was not in breach of clause 5.2 of the Contract when it proposed to increase its rates, her Honour accepted that the basis given by Blue NRG for its proposed rate increases did in fact reflect changes in wholesale electricity prices as set out in clause 5.2(a) of the Contract. That is the construction which Causmag argued was the correct one and was the construction her Honour adopted.

9. [21]

   At the time of purported repudiation by Blue NRG, 21 December 2017, the sum effect of the variations proposed by Blue NRG were to increase the peak rate from 9.55 to 13.21c/kWh and the off-peak rate from 5.81 to 9.70c/kWh, consistent with the 21 December 2017 email of Ms Jennings which was also broadly consistent with the rates offered in the open tender documented by TTEG and detailed to Causmag in the TTEG report.

10. [22]

    In the context of evidence that wholesale prices had risen by 100%, and that there was a need to cover exposure to a highly volatile floating pool price (at times up to 1,420.00c/kWh), her Honour was correct to conclude that the proposed increases by Blue NRG in fact reflected changes in wholesale electricity arrangements that increased the cost to Blue NRG of purchasing electricity it sold or the cost of hedging its wholesale price (5.2(d)). There was no error.

Decision

1. [23]

   Her Honour was dealing with a simple construction point and its application to relatively confined facts. The content of reasons depends on the particular circumstances of the matter being considered by the Court: US Manufacturing Co Pty Limited v ABB Service Pty Limited [2008] NSWSC 705 at [96]. It is unnecessary for a judge, (or Magistrate), to refer to all evidence led in the proceedings, and reasons need not be lengthy or elaborate (at [97] and [99]).

2. [24]

   A judicial officer is not required to spell out in minute detail, every step in the reasoning process or refer to every piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings critical to the determination of the proceedings: see Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 (‘Stoker’).

3. [25]

   The reasons need to be read as a whole, including the context of the dealings between Causmag and Blue NRG that involved the fact of significant market increases in cost of supply which Causmag knew about, having been fully informed by the TTEG report supplied to Mr Pandi on 24 November 2017, even before the reasons were spelt out in the emails of Ms Jennings in December.

4. [26]

   It was open to her Honour to conclude as she did, that Blue NRG was not in breach of clause 5.2 when it gave notice that it intended to increase its rates.

5. [27]

   There is nothing controversial or unclear about her Honour’s approach. Her Honour’s reasons show the centrality of the need for there to be a clause 5.2 referenced explanation for the increases, and she found that there was. She reached a conclusion on breach different to what Causmag, rather optimistically, if not opportunistically, had hoped for.

6. [28]

   The appeal must fail. Her Honour’s construction of clause 5.2 is sufficiently clear in her Honour’s focus on the components of clause 5.2(d) and the evidence responsive to the requirements of that part of clause 5.2. There was no error in construction. Indeed it was the construction sought by Causmag. There was no error in the application of that construction to the facts found, and her Honour’s conclusion that there had been no breach by Blue NRG was in my view, not only open, but correct. The reasons provided by her Honour were sufficient in the circumstances.

7. [29]

   Given these conclusions, there is no need to deal with the Notice of Contention filed by Blue NRG or to deal with the claim for loss of bargain damages.

Orders

1. [30]

   I make the following orders:

   1. (1)

      The time within which to file the Summons is extended to 10 September 2021.

   2. (2)

      The appeal is dismissed.

   3. (3)

      The appellant is to pay the respondent’s costs of the appeal.