In AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140, Justice Allanson considered a number of construction law issues raised by AGC Industries to recover losses on the Karara Iron Ore Project.  The following are of particular interest:

  • AGC Industries attempted to rely upon the prevention principle as the basis for claiming "lost opportunity" damages. AGC Industries alleged that it was unsuccessful in achieving completion milestones under an incentive regime in respect of dirty concentrate works because delays by Karara Mining prevented it from achieving completion by the milestone dates. However, Justice Allanson concluded that there was no earlier authority that suggested that the principle could be a basis for liability, and that instead the principle operated to excuse non-performance where the other party's act of prevention caused the non-performance.
  • AGC Industries was, however, able to establish an entitlement to claim lost opportunity damages flowing from a negative variation (one which omits work).After the failure to achieve the milestone completion dates, Karara Mining varied the scope of works by taking some of the dirty concentrate works away from AGC Industries and awarding it to another contractor. This was not expressly permitted by the variation regime in the contract, and therefore the act was contrary to the principle established by the High Court in Carr v JA Berriman Pty Ltd (1953) 89 CLR 327.

However, this was of no practical effect, because AGC Industries was barred from claiming compensation by other provisions of the contract, such as:

  • a widely drafted consequential loss clause that excluded Karara Mining's liability for consequential loss."Consequential loss" was defined in the contract to include loss of opportunity, loss of revenue, loss of profit or anticipated profit, loss of contracts, loss of goodwill, loss arising from business interruption or any indirect loss.The exclusion clause provided that "in no event" would Karara Mining liable for the defined consequential loss.After construing this clause to give it its "natural and ordinary meaning", Justice Allanson held that Karara Mining was not liable to AGC Industries; and
  • final payment claim provisions, which included a bar on claims not included in the final payment claim within the prescribed time limit.Barring provisions in connection with final payment claims are relatively standard in the construction industry, and Justice Allanson applied the provision despite noting that it might produce a harsh result.