In a decision published on Monday, WA Supreme Court Justice Marcus Solomon declined to declare that a series of COVID-related closures of the Western Australian border should be considered a force majeure event within the meaning of Acciona’s contract with Kwinana WTE Project Co, saying the declaration would amount to an “advisory opinion”. 

The judge rejected Acciona’s argument that the future prosecution of claims by the company would be “more confined and efficiently progressed” if it knew whether events arising from COVID-19 amounted to force majeure events. 

While the judge said such a declaration had an “alluring attraction as a sensible and pragmatic approach to what threatens to be unwieldy litigation with ever‑spreading, spiked and expensive tentacles”, it was not an “appropriate exercise” of the court’s jurisdiction to grant the relief sought by Acciona. 

“In reality, Acciona does not bring before the court the enforcement, or indeed even the assertion, of any contractual right that it has resolved to advance or enforce,” the judge said.

“What Acciona seeks in this proceeding is a declaration in respect of whether one part of a definition has been satisfied by a particular set of agreed facts without so much as asserting in that proceeding that it is otherwise entitled to anything at all.

“It seeks the court’s clarification of whether certain aspects of a definition have been met before it asserts its rights in a curial proceeding.  In my respectful opinion, that in substance amounts to the seeking of an advisory opinion.”

Project Co entered into an agreement with Acciona in October 2018 to provide engineering, procurement and construction services for developing a thermal treatment plant to produce energy from waste in Kwinana, WA.

Acciona claimed one or more force majeure events arose during COVID-19, claiming they had significantly affected its ability to perform the contract.

Project Co denies there has been a force majeure event and argued Acciona should not be entitled to declaratory relief because it was “hypothetical”.

NSW Supreme Court Justice James Stevenson ordered the proceedings be moved to the Supreme Court of WA in November last year.

Justice Stevenson noted the limited declaratory relief sought by Acciona could potentially pose problems for the construction company if and when the proceedings returned to court, given it would not resolve any of Acciona’s 85 claims.

“[But] it does not seek a declaration as to whether there has, in fact, been a force majeure event within the meaning of the [contract], a matter which would involve other elements of the definition of that expression beyond whether or not an ‘occurrence’ has taken place. Nor does it seek any order concerning its or Kwinana’s contractual entitlement under the [contract] whether arising from the occurrence of a force majeure event or at all.

“Acciona may have difficulty persuading a court to make the declarations sought in that isolated context. But that is for another day.”

The waste-to-energy plant project located in the Kwinana Industrial Area, 40 kilometres south of Perth was developed by Phoenix Energy and Macquarie Capital. Acciona and subsidiary John Beever entered into a deed with Kwinana for the plant in October 2018. A separate deed granted a security interest in the project to the BNY Mellon-owned BTA Institutional Services Australia, which is also listed as a defendant in the lawsuit.

Acciona notified BTA of a default under the contract on October 1 last year, pointing to a number of force majeure events “relating to the COVID-19 pandemic and its consequences”.

In a letter sent to Acciona on October 21, Project Co allegedly denied that a default had occurred and rejected the claim that Acciona was able to terminate the deed.

Construction was expected to be completed by the end of 2021, but as Justice Stevenson noted, “it is far from complete”.

Acciona is represented by Jeremy Giles SC and Russell Young, instructed by Corrs Chambers Westgarth. Kwinana is represented by Bret Walker SC and Timothy Boyle, instructed by King & Wood Mallesons.

The case is Acciona Industrial Australia Pty Ltd v Kwinana WTE Project Co Pty Ltd.

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