Downer, Alinta legal row continues

Alinta Energy has failed in its bid to stop pre-action discovery in an ongoing legal clash with Downer EDI over the $165 million Chichester Solar Gas project.

Downer was a contractor under Alinta to work on the gas hybrid project in the Pilbara region, having signed two contracts which included the appointment of a superintendent who could be an Alinta employee but must act honestly and fairly.

Downer alleged the superintendent stopped being a free agent and had been improperly influenced by Alinta, requesting a court order against the energy giant to release related documents in June.

According to a Supreme Court of Western Australia judgment handed down this morning, Justice Gail Archer determined that a pre-action discovery was reaonably necessary to achieve proper administration of justice.

“Downer submits that the documents sought are of critical significance,” she said.

“It submits that, without them, it will remain unclear whether there has been improper interference and the degree of any improper interference by Alinta with the certification functions.

“Having regard to all of these factors, I consider that the burden on Alinta in complying with an order for pre-action discovery would not be out of proportion to the forensic benefit likely to be obtained and the value and importance of the potential proceedings.”

The Supreme Court judgment said Downer sought the pre-action discovery to determine whether it should start legal proceedings.

Alinta disputed the pre-action application, claiming Downer had sufficient information to sue and that the contractor already believed interference with the superintendent had occurred.

Downer also seeks from Alinta $10.5 million in delay costs after three extension of time claims in the dispute, according to the judgment.

In response, Alinta claimed it was Downer that was late in completing the work under the contracts and was thus liable for $15.5 million liquidated damages.

Justice Archer found Alinta had recovered more than $15 million of liquidated damages from Downer.

But Justice Archer said if Downer succeeded in proving the superintendent’s independence was compromised, Alinta might lose its entitlement to retain the liquidated damages.

“Although a precise estimate is impossible, I consider the value of the potential claims is likely to be in the millions,” she said in her judgment.