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Case reveals costs of large-scale building and construction litigation

“Monumental” litigation in the Supreme Court of Queensland has revealed the costs and complexity of litigating disputes over large resource and infrastructure projects.

Santos Pty Ltd and Fluor Australia Pty Ltd have been embroiled since 2016 in a dispute arising from the construction between 2011 and 2014 of the upstream component of a coal-seam gas project.

In 2021, the Supreme Court referred all questions arising on the pleadings to three referees (the Referral Order). Hearings were held before the referees between November 2021 and August 2022. On 7 March 2023 the referees provided a draft of their report (the Draft Report) to the parties. The referees upheld Santos’ claim to be repaid more than $1.4 billion.

In response to the Draft Report, Fluor applied for orders setting aside the Referral Order. That large application is expected to take 10 days for the court to hear in July.

Last Friday, Principal Commercial List Judge Justice Peter Applegarth refused Fluor’s request to stay the completion of the report pending the hearing of its application.1

Justice Applegarth’s decision revealed that the matter had cost Santos “over 120,000 solicitor hours, $36.5 million in expert fees, $21 million in counsel fees and $2.5 million in other costs”.2

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Other details emerged about the scale of the litigation:

“(a) the pleadings – being the Fifteenth Amended Statement of Claim, the Ninth Amended Defence and Counterclaim and the Sixth Amended Reply and Answer – are approximately 2,019 pages in length
(b) the parties have disclosed 5,700,349 documents
(c) the parties’ experts have prepared eight as-built tables containing approximately 15,947 start and finish dates
(d) there are 90 lay witnesses who produced 178 witness statements
(e) there are 14 experts who produced 81 expert reports
(f) there were numerous interlocutory disputes and appeals
(g) the substantive hearing before the referees was held over 62 days from November 2021 to August 2022
(h) the transcript of the substantive hearing runs to approximately 8,442 pages
(i) the written submissions served by the parties in connection with the substantive hearing run to approximately 9,909 pages.”3

Justice Applegarth noted that, given the costs to date, the costs associated with finalising the report were likely to be “relatively insignificant in the scheme of this litigation”.4 He concluded:

“Permitting the reference to continue is unlikely to jeopardise public confidence in the administration of justice. The due administration of justice, and confidence in it, is best secured by allowing a protracted reference process that is close to finalisation to conclude with a final report, while allowing the defendants to advance their application to have the Referral Order set aside, with that application being determined by the Court before the Court deals with any application to accept the report and give judgment to the plaintiff.”

The court concluded that Fluor had not established that the interests of justice were best served by granting the requested stay.

Read the decision.

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Footnotes
1 Santos Limited v Fluor Australia Pty Ltd & Anor [2023] QSC 77, [124].
2 Ibid, [78].
3 Ibid, [42].
4 Ibid, [78].

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