THE owner of Muswellbrook's Mount Pleasant mine has taken legal action over the construction of a coal handling and preparation plant seeking more than $270 million in damages and losses.
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MACH Energy has filed a cross-claim in the NSW Supreme Court against G&S Engineering Services and DRA Pacific, a joint venture known as CDJV, alleging it engaged in misleading and deceptive conduct.
It alleges that in April 2018, CDJV signed an agreement setting out various completion milestones for the coal plant without the ability and finances to fulfil the deal.
The agreement was designed to resolve disputes over extension of time claims lodged by CDJV and delays in the project.
MACH Energy told the court it would not have signed the agreement if it knew the milestones would not be met, instead it would have moved to ensure the project was completed faster.
"The representations were false and misleading or deceptive because G&S Engineering was insolvent or near insolvent in April 2018 and CJDV had significantly understated the time and cost to complete the works under the contract," it was alleged.
The complicated legal dispute started in March 2019, when CDJV was granted an injunction to prevent MACH Energy from calling on its surety bonds on the $149 million construction project.
MACH had alleged that CDJV had failed to meet deadlines on the project and was therefore liable to pay liquidated damages. CDJV disputed the matter and successfully sought to restrain MACH from having recourse to its securities on a number of grounds.
Then MACH lodged a cross-claim in March seeking more than $270 million.
The Newcastle Herald reported in June 2018, that about 250 workers downed tools for three days after a colleague was injured in a rigging accident during construction of the coal-handling plant and rail-loading facility.
Then just days before Christmas 2018, more than 380 workers at the mine were sacked after MACH announced it was terminating the CDJV project.
In a Supreme Court judgment handed down last week, Justice Trish Henry was asked to consider if CDJV could lodge new defences to the claim that it engaged in misleading or deceptive conduct.
The joint venture alleged that it was MACH that made misleading representations prior to the parties entering into the original 2017 contract for the job.
CDJV alleged MACH indicated that it would not be liable for and did not need project insurance to protect itself in relation to the type of losses that are now being claimed.
It told the court that had it known these representations made by MACH were allegedly misleading, CDJV would have negotiated the contract on substantially different terms, including adding the cost of professional indemnity insurance.
The court heard that MACH alleges it will lose $262 million in lost coal production and sales over the life of the plant to December 2025.
It is also claiming $8.1 million in payments made under the agreement to get the project finished.
Justice Henry allowed CDJV to lodge additional defences and said objections raised by MACH were best determined by a trial judge.
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