Ruling says licensed electricity provider can retain interim payments received under court orders
The Federal Court has found that an applicant is entitled to the liquidated damages it requested in a case involving two power purchase agreements (PPAs) for the Batchelor solar farm (Batchelor PPA) and for the Hudson Creek power station (Hudson Creek PPA).
The Batchelor PPA, dated 27 February 2020, scheduled the target commercial operation date for the solar farm as 30 June 2021. The Hudson Creek PPA, dated 18 February 2020, set the target date as 1 July 2021. Both PPAs were potentially subject to extensions of time.
In Rimfire Energy Pty Ltd v BSF Co Pty Ltd (No 2), [2025] FCA 384, the applicant was a licensed electricity provider based in the Northern Territory. It would purchase wholesale electricity mainly from the Power Generation Corporation (PWC), owned by the Northern Territory government. The applicant was the buyer under the PPAs.
On the other hand, the respondents were licensed electricity generators and the owners under the PPAs. The first respondent, the owner under the Batchelor PPA, agreed to develop and construct a 10-megawatt solar farm near Batchelor.
The second respondent, the owner under the Hudson Creek PPA, agreed to develop and construct a 12-megawatt gas-fired power station near the Hudson Creek terminal station in Darwin. The applicant agreed to purchase all electricity generated at the solar farm and power station.
On 21 November 2022, the applicant issued one invoice each to the first respondent for $365,000 and to the second respondent for $1,035,000. The applicant claimed the respondents failed to comply with the target commercial operation date under the PPAs. The respondents paid 50 percent of those invoices on an interim basis under the PPAs, as ordered by the Federal Court.
In the present case, the applicant alleged that it was entitled to retain the sums paid and receive the remaining 50 percent from the respondents, plus interest calculated under the PPAs. The applicant argued that certain extension of time (EOT) notices were invalid and the respondents were unentitled to the claimed EOTs.
The applicant advanced an alternative unconscionability claim under the Australian Consumer Law (ACL). The applicant contended that the interest rate applicable under the ACL to any recoverable damages would be marginally higher than the interest rate otherwise payable under the PPAs.
The Federal Court found the applicant entitled to retain the sums the respondents had already paid on an interim basis as a result of the court’s orders dated 7 June 2024. The court then ordered each respondent to pay the applicant the remaining 50 percent of the liquidated damages owed under the invoice, plus interest calculated under the applicable PPA.
The court upheld the applicant’s interpretation of clause 5 of the PPAs and the EOTs. Thus, the court ruled that the applicant should receive the amount of liquidated damages it requested, along with interest at the rate provided by the PPAs.
The court agreed with the applicant’s argument that the EOTs claimed by the respondents were invalid. The court held that an EOT claim based on a connection works delay should mention detailed particulars regarding the extent to which the claimed delay was not caused by:
The court noted that a failure to provide these particulars would render the EOTs invalid. In this case, the court determined that the evidence – including the EOTs and the correspondence accompanying or surrounding them – failed to state the extent to which the contractor or owner did not cause the claimed delay.
“In cases such as the present, where the parties to an infrastructure project must coordinate between themselves to progress a significant number of iterative tasks in parallel, there is a clear need to identify precisely how or why a delay by one party is not ultimately attributable to, or caused by, the failures of another party,” wrote Justice David O'Callaghan for the court.
Regarding the ACL claim, the court noted that the applicant only faintly alleged this claim. The court refused to rule on the ACL claim since the applicant failed to establish that it would be helpful to do so in this case.
