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The NSW Court of Appeal has dismissed the appeal lodged by Port Macquarie-Hastings Council in the matter with Mid Coast Road Services.
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The decision was handed down on Friday morning.
The protracted legal battle was heard in the Court of Appeal on March 1 with judgement reserved.
The appeal was heard before justices Beazley, Simpson and Payne.
At the end of 2016, Mid Coast Road Services won their Supreme Court of NSW action against the council. MCRS sought to recoup damages and costs from the council after a dispute involving MCRS’s supply, delivery and laying of asphalt at works on Ocean Drive in 2012.
In December the NSW Supreme Court ruled in favour of MCRS and ordered the council to pay the damages and costs – believed to total around $750,000.
In early 2017 the council announced they would appeal the ruling.
In dismissing the appeal, the panel also determined that the council would pay the respondent’s costs of the appeal as agreed or assessed; funds paid into court by the council on February 3 would be released to the respondent; and, the council was to pay the respondent interest … on the sum released from February 3.
The grounds of the appeal as listed on January 30, 2017 contained four grounds:
1 The primary judge, Hall J, erred in construing the agreement between the parties (the Agreement) as containing an option to extend the Agreement for a twelve-month period, exercisable by the Respondent (Diveva) as a result of:
a. Disregarding or giving insufficient weight to the circumstances known to both parties that, in respect of earlier contacts the option in identical terms had been exercised by the Appellant (council);
b. failing to have sufficient regard to the factual matrix and the Agreement as a whole, in particular as to the commercial benefit and convenience in respect of the option being available to the council;
c. treating the contra proferentem rule as applicable; and
d. having regard to assumptions as to the costs of tendering and its influence of the commercial benefits and behaviour of Diveva, which were not established by the evidence.
2 The primary judge should have held, that on its true construction, the Agreement was for twenty-four months with an option for a further 12 months available to the council (or alternatively by mutual agreement) without the requirement of a further tender.
3 The primary judge erred in awarding Diveva damages, calculated on the basis that:
a. a historical decline in Diveva’s profitability over the period of a number of years should be disregarded in favour of accepting a single year in which such decline was reversed where such acceptance implicitly contained an assumption that such reversal reflected underlying prospects of growth and improvement when no person from Diveva or with knowledge of its business plan, management, application of resources gave evidence supporting the assumption;
b. it was unlikely that had a subsequent tender, made in mitigation of damage, been made by Diveva, it would have been considered by the council, in circumstances where the witnesses called by the council denied that was the case and no person from Diveva gave evidence of the reasons it did not re-tender for the work;
c. damages were recoverable in respect of periods beyond the Agreement and alleged option term based on a loss of opportunity to obtain further work, described as the First Renewal Period and the Second Renewal Period, where such damage:
i. was too remote;
ii. was not supported by any evidence given by some one on behalf of Diveva of the ability or intention to tender for such work;
iii. Diveva in fact obtained work and applied its resources elsewhere; and
d. in concluding with regard to the First Renewal Period and the Second Renewal Period that the [sic] was 80% and 60% chance respectively such work would have been obtained, it was done so without regard to the both the potential political and management changes of Council and obligations of Council to consider tenders without regard to the factors adverted to by the primary judge.
4 The primary judge erred in awarding Diveva its costs of the proceedings (Costs Judgement) as a result of concluding that an expert accountants opinion (from which that expert subsequently resiled) as to the calculation of Diveva’s loss warranted the commencement of the proceedings in this Court in circumstances where the profitability and financial circumstances of Diveva and potential losses were known or should have been known to Diveva.
The Port News has sought comment from Mid Coast Road Service and Port Macquarie-Hastings Council on the news of the court’s decision to dismiss the council’s appeal.