SIMPEC, Central Systems scrap over Solomon

Details of the falling-out between WestStar Industrial’s engineering arm SIMPEC and Central Systems have been laid bare in the Supreme Court, with alleged cost blow-outs and contract switch-ups to blame.

SIMPEC launched legal action earlier this year over claims it undertook electrical and instrumentation works on Fortescue Metals Group’s $57.5 million Solomon mine workshop for head contractor Central Systems that it wasn’t fully paid for.

In a writ obtained by Business News, SIMPEC claims it spent six months forming a verbal deal with Central Systems, signing a letter of award, gaining a service order and reviewing a draft subcontract before beginning the works.

But Central Systems allegedly backflipped, issuing a cancellation of the service order before releasing a fresh one with new projects.

But SIMPEC rejected them, arguing they didn’t align with its original submission.

The pair never settled the outstanding subcontract clarifications, prompting SIMPEC to push for $3 million in compensation for costs it incurred as a result of disruptions at the site, as well as the return of $325,000 withheld as security.

The parties spent two hours poring over details of the claim in court this afternoon, sparring over definitions, the alleged delays and the degree to which the changes constituted a departure from the works agreed.

Central Systems’ lawyer Wayne Zappia lodged an application to strike out swathes of the claim, arguing there was not enough detail and that SIMPEC had not pleaded the material facts.

But SIMPEC’s lawyers disagreed.

“What we’ve been able to do is piece together the essential terms,” SIMPEC’s lawyer Mr Miller said.

“A construction contract can be entered into - it’s very simple. 

“Thousands are entered into every day.

“We say, a deal is done. 

“The letter of award was issued, it was accepted and the primary essential things including the scope, duration and cost of the works were already agreed.”

Justice Marcus Solomon said that while the claim didn’t flow like “a work of poetry” and parts were clearly causing Mr Zappia “sleepless nights”, he understood that pleadings for construction disputes were notoriously difficult and believed the case in question simply needed tinkering.

SIMPEC’s lawyers told the court the company was lumped with more than 200 variations to the construction project during the works.

Further, SIMPEC’s lawyers told the court the company was hamstrung by the fact the site was not in a state where it could complete the works and that the failure to give access amounted to a breach of contract.

Justice Marcus Solomon ordered SIMPEC to clarify its pleading and ruled a defence be filed by December 2.

“On the scale of construction disputes, this one is not big,” he said.

“We’re not talking a lot of money here so we need to get this sorted.”

But with no “knock out blow” delivered by either side and the hearing deemed a useful exchange, Justice Solomon declared costs to be in the cause.

The pair have not ruled out the prospect of early mediation.