THIESS CONTRACTORS PTY LTD V PLACER (GRANNY SMITH) PTY LTD (2000) 16 BCL 130
Supreme Court of Western Australia – 16 April 1999
Placer (Granny Smith) Pty Ltd (“Placer”) entered into a contract with Thiess Contractors Pty Ltd (“Thiess”) whereby Thiess would carry out mining operations for Placer at rates based on genuine estimates of the cost of its operation, plus an agreed profit margin of 5%. Placer terminated the contract on the basis that the cost of continuing with Thiess under the existing contract was substantially higher than prices otherwise available on the market. Clause 1.1.5 of the contract required that Thiess and Placer act in good faith.
Thiess commenced action against Placer alleging wrongful termination and alternatively, Placer acted in bad faith in terminating the contract.
Placer counterclaimed, alleging that it had overpaid Thiess because, in breach of the contract and despite its obligation of good faith, Thiess had deliberately inflated its estimates of costs to be incurred in carrying out the contract work.
Whether Thiess breached duty of good faith.