Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd (No 4)
[2024] SASC 51
•11 April 2024
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ADELAIDE BRIGHTON CEMENT LTD v HALLETT CONCRETE PTY LTD & ORS (No 4)
[2024] SASC 51
Judgment of the Honourable Chief Justice Kourakis
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - GENERALLY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COURT SUPERVISION - AMENDMENT - ORIGINATING PROCESS, PLEADINGS ETC
This was an application brought by the first respondent for leave to amend its cross claim further.
In the cross claim that it had filed in the underlying proceedings, the first respondent had alleged that, in breach of contract, the applicant had not supplied it with cementitious products at a lower price than the first respondent’s competitors. The application for leave to amend, in this regard, sought to pursue claims against the applicant in respect of supplies of cement by the applicant to a number of companies, including Boral Ltd, Hanson Australia Pty Ltd, and Exact Contracting Services Pty Ltd.
In respect of its proposed claim against the applicant for its dealings with Boral Ltd, the first respondent asserted, on the basis of a discovered swap agreement between those parties in 2016, that it could be inferred that the applicant and Boral Ltd had executed a similarly wrongful swap agreement during the relevant period of the dispute. In respect of its proposed claims against the applicant for its dealings with Hanson Australia Pty Ltd and Exact Contracting Services Pty Ltd, the first respondent asserted that the applicant had sold cement to the former’s agent at a lower price than that at which it supplied cement to it, and that the applicant had similarly sold cement at a lower price than it was contractually entitled to do to Exact Contracting Services Pty Ltd.
The applicant resisted the first respondent’s application for leave to amend its cross claim further on the bases that: the allegations pleaded were factually hopeless and/or bound to fail; the claims pleaded were factually distinct from the claims the first respondent had already pleaded; the claims sought to be pleaded were, in any event, statute-barred and not of a kind likely to receive an extension of time; and that the applicant would be prejudiced if the application were granted and any further discovery necessitated thereby would impact the impending trial of the matter.
Held, granting the application in part:
1.Insofar as its application sought leave to plead a case against the applicant for its dealings with Boral Ltd, the pleaded facts, taken at their highest, could not make out a case to answer. No inference could be drawn from the existence of a swap agreement at a later point in time that there was an identical or similar swap arrangement during the period the subject of the parties’ dispute. There was, thus, no reasonable basis to that claim, such that it was an abuse of process.
2.Subject to the first respondent expressly pleading the existence of an agency relationship between Hanson Australia Pty Ltd and the corporate entity to which the applicant admitted selling concrete on advantageous terms, the first respondent is permitted to amend its cross claim to include the claim it sought to plead.
3.The first respondent is permitted to amend its cross claim to include a claim arising from the dealings between the applicant and Exact Mix Pty Ltd.
Limitation of Actions Act 1936 (SA) s 48; Uniform Civil Rules 2020 (SA) rr 64.2, 70.3, 143.1, 143.2, referred to.
Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd (2020) 137 SASR 117, considered.
ADELAIDE BRIGHTON CEMENT LTD v HALLETT CONCRETE PTY LTD & ORS (No 4)
[2024] SASC 51Civil: Application
KOURAKIS CJ: Adelaide Brighton Cement Ltd (ABCL) is a manufacturer of cementitious products. Hallett Concrete Pty Ltd (Hallett) is a manufacturer of pre‑mix concrete. In April 2008, they entered into a Cement Supply Agreement (the 2008 CSA) which was subsequently varied on 1 July 2014 (the 2014 CSA).
The 2014 CSA requires ABCL to supply specified cementitious products to Hallett at a lower price than it supplies those products to other ‘customers’ (the most favoured customer term). In turn, Hallett is required to purchase the ‘bulk cementitious material’ it needs for its business exclusively from ABCL (the exclusivity obligation).
In September 2019, ABCL commenced proceedings against Hallett for breach of the exclusivity obligation. ABCL alleges that, from early 2018, Hallett has not purchased its cement exclusively from ABCL. It alleges that Hallett, together with other named respondents, entered into arrangements to circumvent the exclusivity obligation by procuring cementitious material in large shipments of two tonne bags. Hallett filed a defence denying ABCL’s claim on the ground, inter alia, that the bagged cement, even of that weight, was not bulk cement material. On 14 February 2020, Hallett filed a cross claim for breach of the most favoured customer term.
On 17 May 2021, I gave Hallett permission to replead its proposed cross claim. Both parties have since revised their pleadings.
This is an application by Hallett further to amend the cross claim to include claims for breaches of the 2008 CSA in respect of the supplies of cement to Boral Ltd and or Boral Resources (SA) Ltd and their related entities (Boral), Hanson Australia Pty Ltd (Hanson), and Exact Contracting Services Pty Ltd (and its related entities) (Exact Mix).
ABCL contends that Hallett should not be permitted to make those claims in respect of the 2008 CSA on the grounds that:
·The allegations pleaded are factually hopeless and/or are bound to fail.
·The claims are factually distinct from the claims pursued for breach of the 2014 CSA.
·The pleaded claims are statute barred and there is no prospect of an extension of time being granted.
·ABCL would be prejudiced if permission were granted, because discovery going back over 10 years would be burdensome; documents prior to August 2019 are available in hard copy only; and many of the corporate officers who may be able to give relevant evidence have left and two of them are now deceased.
·Responding to the new pleas would disrupt ABCL’s trial preparation for the trial for eight weeks on the 2014 CSA which is listed to appear on 12 August 2024.
Doomed-to-Fail Abuse
It is convenient to deal first with the principles which are properly invoked by the first ground of objection. I observe first that ABCL’s objection does not raise any breach of UCR 64.2 of the Uniform Civil Rules 2020 (SA) (UCRs). The objection is, in effect, that the proposed pleading does not disclose a reasonable cause of action or is an abuse of process. In that respect, UCR 70.3 empowers the Court to strike out a claim or pleading on the grounds that:
(1)The Court may strike out all or part of a Claim or a Pleading if –
(a) It does not comply with these Rules;
(b) It is frivolous, vexatious or an abuse of the process of the Court; or
(c) It does not disclose a reasonable cause of action or defence (as applicable).
(2)If the Court strikes out all or part of a document under subrule (1), it may if it thinks fit, grant leave to file within a specified time an amended or substituted document rectifying the matter that caused the original document to be struck out.
A striking out is not a final adjudication. It is an adjectival order regulating the process by which the hearing and determination of a legal controversy is to be governed.
UCR 143.1 empowers the Court to dismiss an action for failure to disclose a proper basis:
(1)The Court may grant judgment dismissing an action on the ground that no reasonable cause of action in the case of a claim, or basis for the application in the case of an originating application, is capable of being disclosed.
A dismissal for failure to disclose a reasonable cause of action will generally not be a final judgment because it is premised on the proceeding not presenting a controversy for adjudication.
In respect of the dismissal of an action for an abuse of process, UCR 143.2 provides:
(1)The Court may grant judgment dismissing an action on the ground that it is frivolous, vexatious or an abuse of process of the Court.
Again, a dismissal for an abuse of process is generally not a final adjudication because, of its very nature, it is a refusal to allow the applicant to avail itself of the Court’s adjudicative authority.
In an application to strike out a pleading or action, or to refuse permission to amend a pleading for failure to disclose a cause of action, it is the coherence of the pleading and whether it discloses a reasonable cause of action which is put in issue. That may require a consideration of the documents on which the pleading expressly relies, but, unlike the hearing and determination of a claim, in accordance with the standard processes of the Court, or an application for summary judgment, the application does not call for an evidence-based adjudication of a legal controversy.
On an application to strike out a claim on the ground that is frivolous, vexatious, or an abuse of process, evidence as to a collateral purpose may be necessary. However, again, to a large extent, whether or not there is a legitimate purpose will largely be determined on the pleadings, including the relief claimed. An abuse of process might also be established by a failure properly to prosecute a claim in accordance with the rules of the Court. However, relevantly to this application, it may also be an abuse of process if the material facts pleaded by a party to support a claim could not, taken at their highest, make out the pleaded claim. If the very facts and circumstances pleaded by an applicant fail to disclose a reasonable foundation for the cause of action, it would follow that the action is not tenable unless evidence of the missing facts and circumstances supporting the claims might be discovered through the Court’s interlocutory processes. Such an action is a fishing expedition and, therefore, an abuse of process of the Court. The proper remedy, if any, available to a party in that position, is an application for pre‑action discovery or third-party discovery.
The following discussion in the judgment of Doyle J in Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd provides a useful metaphor:[1]
[1] (2020) 137 SASR 117, 124-5 [25]-[29].
[25]In my reasons of 8 May 2020, I commenced by observing that I did not think that the late timing of the proposed counterclaim was a significant matter, given the absence of any evidence of time-related prejudice. However, I said that it remained to consider the merits of ABCL’s pleading complaints, because if the deficiencies were significant, then this might have inclined me to refuse an extension of time to file the proposed counterclaim. Focussing upon the complaint that the breadth of the pleaded claim meant that it was unsustainable and/or involved a fishing expedition, I summarised the applicable principles in the following terms.
[26]It is true that courts routinely permit parties to plead cases with full particulars not provided until after discovery. Whether that is appropriate in a given case depends upon the circumstances of the case; it is a matter of fact and degree.
[27]On the one hand, courts should not allow a party without a tittle of evidence to make a broad allegation with the hope that by ransacking the other party’s documents through the discovery process which the allegation generates, they will find a case. On the other hand, a party does not need to know, and indeed often will not know, every detail of the claim they wish to pursue. They must have a reasonable basis for making their claim, but this basis may rely upon inferences that can properly be drawn from the limited information available to them prior to discovery. They may then plead a case based upon inference, the precise ambit of which will fall to be articulated with more precision once discovery has taken place.
[28]The former is often described as ‘mere’ fishing, or impermissible fishing. To stay with the fishing analogy, the former involves a situation where the party is in reality speculating as to the existence and location of the fish it hopes to catch, and is in effect utilising the court’s processes to trawl for those fish. The latter involves a situation where the party has a sound basis for inferring the existence of the fish it wishes to catch, but cannot be precise about the detail of the fish it expects to catch. It involves a more focussed use of the court’s processes.
[29] Applying those principles to Hallett’s proposed counterclaim, I concluded:
The issue is finely balanced, but ultimately I have concluded that Hallett’s pleading discloses a sufficient basis for the pleading to be filed in its proposed form. I consider that there is sufficient substance to the inferential case that Hallett has pleaded and wishes to pursue that it is appropriate for it to file its counterclaim, with an expectation that its precise ambit will be the subject of refinement, through particularisation or amendment, once discovery has been undertaken. That said, I am conscious of the burden discovery may impose upon ABCL, and will expect Hallett to engage constructively in relation to how that task may be defined and confined so as to ensure that it does not become oppressive.
I accept Hallett’s contention that the assessment of the sustainability of its pleadings, in the sense that they disclose a reasonable cause of action and are not an abuse, is not to be determined on the yet-to-be-tested evidence put on by ABCL, denying the pleaded facts or the claimed inferences. To approach the matter in that way would be to elide the distinction between a summary judgment application on the one hand and the striking out of a pleading or the dismissal of a claim on the other. The Court is not in a position on an application to amend a pleading to make findings of fact of that nature. The question for the Court is whether the pleading is tenable, having regard only to such extraneous material identified by the pleading and which is necessary properly to understand it.
Hallett has pleaded that certain inferences can be drawn from the facts it has pleaded. The essential question is whether the pleaded facts and circumstances would, if proved, make out the pleaded cause of action. Even though I doubt that it is necessary to plead an inference expressly where the pleaded facts are circumstantial, the question is whether the inference which can rationally be drawn from the pleaded factual circumstances could establish the claim.
The 2008 CSA
I next turn to the particular claims which Hallett seeks leave to add to its cross claim.
The term of the 2008 CSA which Hallett alleges was breached is clause 9.3:
9.3.1The Seller warrants that at any point in time after 31 May 2008 the Net Prices will be the same as the prices it charges Other SA Customers which purchase a Like Volume of the relevant Product for use and consumption in South Australia.
9.3.2For the purposes of clause 9.3.1 above:
(a) “Other SA Customers” means any commercial entity or buying group that collectively is of a similar size to the Buyer in South Australia and purchases cement products from the Seller; and
(b) “Like Volume” means the volume of the relevant Product that is comparable to that taken by the Buyer under this Agreement.
9.3.3The Seller further warrants that any changes made to its wholesale list prices or rebates during the term of this Agreement will not alter the relativity between the Buyer’s net prices and the net prices of Product supplied by the Supplier to the major concrete producers in South Australia.
Clauses 9.3.1 is hereafter referred to as the Price Warranty and clause 9.3.3 as the Price Relativity Warranty.
The ‘Product’ is defined by clause 1 to mean bulk cementitious material including (but not limited to) type GP cement, which is in turn given the meaning that it bears in Australian Standard 3972-1987. Type SL cement is not expressly defined.
The width, indeed, protean nature of the expressions ‘Like Volume’, ‘similar size’, and ‘major concrete producers’ renders the proper construction of clause 9.3 problematic. Plainly enough, its construction may be affected by evidence of the nature of the cement and concrete markets in South Australia at the time. It may be possible to group ABCL’s customers by reference to the spread of buyer volumes. It may also be possible to group customers by reference to the size of the entity or by capitalisation, number of batching plants or otherwise. An alternative approach may be to make a mathematical assessment, in the abstract, for example, by adopting a rule that a variation of more than two, three, or four hundred per cent is or is not a like volume or size. It might also be arguable that those expressions take their meaning textually from the concept of a major concrete producer in clause 9.3.3, leading to a binary distribution between major and minor producers. The resolution of the proper construction of clause 9.3 must await the trial. No application in the nature of a construction summons is before me.
Hallett seeks permission to make claims against Boral for breach of the 2008 CSA in respect of supplies by ABCL to Boral:
64During the 2008 CSA Period, Boral purchased substantial volumes of Type GP Cement from ABCL, which were not paid for in cash but by way of swap, whereby ABCL would supply Boral with Type GP cement in South Australia and in return Boral would supply ABCL with an equivalent amount of Type SL cement from its plant in Berrima, New South Wales (2008 period swaps).
Particulars
Pending further discovery by ABCL of the contractual arrangements between ABCL and Boral during the 2008 CSA Period, the existence of the swap arrangement is to be inferred from:
64.1 records discovered by ABCL in the form of a spreadsheet referenced ABL.1525, which record the purported supply by ABCL of Type SL Cement in the period from July 2012 to July 2014, referred to as “SL Ex Berrima Bulk” which is a reference not to any facility owned by ABCL or its parent ABL, but to a cement manufacturing plant owned by Boral in Berrima NSW;
64.2 the absence in ABL.1525 of records of the supply of Type GP cement to Boral in South Australia, notwithstanding that ABCL supplied substantial volumes of GP cement to Boral in South Australia during the period July 2012 to July 2014;
64.3 the existence of a swap agreement between ABCL and Boral involving the swap of GP cement supplied in South Australia for SL cement supplied by Boral from its Berrima plant in later years, as pleaded in paragraph 39.3 above.
65During the 2008 CSA Period, Boral was within the scope of the definition of “Other SA Customers” in clause 9.3.2(a) of the 2008 CSA as:
65.1 it was a commercial entity;
65.2 it was of similar size to Hallett in South Australia having regard to the extent of its operations and the volume of Product that it purchased from ABCL pursuant to the 2008 period swaps; and
65.3 it purchased cement products from ABCL.
66During the 2008 CSA Period, Boral purchased a volume of relevant Product that was comparable to the volumes taken by Hallett under the 2008 CSA and therefore within the scope of the definition of “Like Volume” in clause 9.3.2(b) of the 2008 CSA.
Particulars
66.1 During the period from July 2012 to June 2014, the volumes of SL Cement swapped pursuant to the 2008 period swaps, compared to the volumes of Type GP Cement supplied by ABCL to Hallett were as follows:
Month Boral Hallett July 2012 744.58 1,838.20 August 2012 776.10 2,414.55 September 2012 723.20 2,682.00 October 2012 1,544.26 2,281.05 November 2012 1,327.54 2,549.65 December 2012 529.66 1,661.10 January 2013 510.30 1,953.90 February 2013 411.54 1,498.10 March 2013 532.78 1,313.65 April 2013 386.92 1,772.05 May 2013 695.74 647.15 June 2013 637.10 753.35 July 2013 1,237.28 2,625.90 August 2013 487.86 3,405.35 September 2013 1,027.60 910.65 October 2013 968.50 1,343.70 November 2013 720.28 2,648.25 December 2013 774.14 1,923.85 January 2014 388.11 1,261.20 February 2014 530.38 209.45 March 2014 636.54 2,726.80 April 2014 635.36 3,101.60 May 2014 1,014.92 3,405.35 June 2014 857.92 2,625.90
66.2 It is to be inferred from the above table that the volumes of Type GP Cement swapped by ABCL to Boral and supplied to Hallett were comparable throughout the 2008 CSA Period.
66.3 Further particulars will be provided following further discovery by ABCL of records of its supplies to Boral in the 2008 CSA Period from its SAP system, namely of documents of the same nature of ABL.1525 and ABL.0481.
67In the premises pleaded in paragraphs 65 and 66 above, sales by ABCL to Boral of Type GP Cement were subject to the Price Warranty.
68In breach of the Price Warranty, ABCL charged to Hallett a higher Net Price for equivalent Product than the price charged to Boral, in that:
68.1 the amount charged to Boral for Type GP Cement that was supplied in South Australia was the equivalent volume of Type SL cement supplied by Boral in NSW;
68.2 the amount charged by ABCL to Boral for the purpose of the 2008 CSA is to be quantified by reference to ABCL’s cost of production for the Type GP cement supplied to Boral or alternatively Boral’s cost of production for the Type SL cement supplied to ABCL;
68.3 pending further discovery by ABCL of the contractual arrangements between ABCL and Boral, and ABCL’s cost of production (being documents of the nature of ABL.1881 but extending to the 2008 CSA Period), Hallett cannot particularise the cost of production for ABCL for Type GP Cement or for Boral for Type SL Cement in the period from June 2008 to June 2014, but it can be inferred that such price was consistently lower than the price charged to Hallett for Type GP Cement, and assuming an annualised, year to date cost of production from 2014 of $87.43, Hallett’s loss totalled $11,233,395.99.
69In the alternative to paragraphs 65 to 68 above, if (which is denied) the supplies by ABCL to Boral were not within the scope of the Price Warranty, then:
60.1 Boral was throughout the 2008 CSA Period a major concrete producer in South Australia;
69.2 the effect of the 2008 period swap was to alter the relativity of the net prices charged to Hallett to the net prices charged to Boral when compared to the extent (if any) that Boral paid in cash at ABCL’s published prices for Type GP Cement supplied to it;
69.3 the 2008 period swap was accordingly in breach of the Price Relativity Warranty.
70By reason of ABCL’s breach of the Price Warranty or alternatively the Price Relativity Warranty, Hallett has suffered loss and damage, being the difference between the Net Price charged by ABCL to Hallett and the price that was promised to Hallett by the Price Warranty or alternatively the Price Relativity Warranty, by reference to supplies to Boral, which will be further particularised following further discovery by ABCL and/or Boral of their costs of production (as detailed in paragraph 68.3).
In its submissions, Hallett lays out the foundations of its claims against Boral under the 2008 CSA in the following terms:
·Boral and ABCL had swap arrangements in the period of the 2008 CSA, the effect of which was that ABCL was supplied with SL cement by Boral from its plant in Berrima New South Wales. In return for which ABCL supplied equivalent tonnages of cement to Boral in South Australia.
·Discovered document ABL.1525 on its face lists all invoices by ABCL to its customers in the period 2012 to 2014 and records numerous supplies to ABCL related entities in New South Wales from ABCL’s Birkenhead plant but with the description that the supply made SL cement ‘Ex-Berrima bulk’. The existence of a swap arrangement between 2012 and 2014 can be inferred from those invoices, in that, ABCL was recording in its own records as its own sales delivery, product from Borals plant in Berrima.
·It is likely that the 2016 swap arrangement for cement had its origins in pre‑existing arrangements made under the 2008 CSA.
·ABL’s[2] business documents in the nature of board papers refer to a national suite of agreements between ABL and Boral encompassing all the main land states and the Northern Territory.
·The arrangement breached the Price Warranty and the Price Relativity Warranty of the 2008 CSA.
[2] ABL is the acronym for the parent company of ABCL.
Hallett claims that its pleading makes it clear to ABCL the proper basis of its inferential case and gives proper notice of the case to be met.
It can be seen from the proposed pleading, and the submissions made in support of the amendment, that the indispensable intermediate fact on which Hallett’s claim is founded is the existence of a swap arrangement, the effect of which is the supply of cement at the cost of production. However, the only base facts pleaded in support of that conclusion is the physical supply of cement from Boral’s plant in Berrima and the subsequent existence of a swap agreement.
ABCL’s response is largely found in paragraphs [19] to [40] of the 20th affidavit of Thomas Dachs affirmed on 30 January 2024 (Dachs 20). Those paragraphs effectively deny the existence of a swap arrangement. The denial is based in part on ABCL’s own discovery of supply agreements with Boral, which do not include any supply agreements pre-dating 2016. ABCL also relies on the hearsay assertion in Dachs 20 repeating the self-serving statements of an executive of ABCL that there was no swap agreement prior to 2016. Mr Dachs also asserts that ABCL has discovered all records of supply of GP cement to all Boral entities for the period of July 2012 to June 2014. He explains that the swap arrangement from 2016 was accounted for within ABCL’s records by the creation of ‘customer credit memos’ and asserts that there are no such customer credit memos created before 2016.
The evidence set out in Dachs 20 foreshadows ABCL’s defence, but it cannot pre-empt the hearing and determination of Hallett’s claim if it is properly pleaded. The issue before me is whether the pleading is tenable and not an abuse of process.
However, Mr Dachs’ affidavit does properly provide context to the discovered document ABL.1525 on which Hallett relies. ABCL contends that it should be read together with the billing documentation in ABL.1526. Those records contain some 46 credits allowed against invoices sent to Boral. Of those, 34 credits were for returns. All 12 remaining credits were issued in either August 2012 or June 2013 and record the reason for the credit being incorrect, pricing, product availability or product quality. There is no credit referable on its face to a swap arrangement.
ABCL also takes issue with the contention that there is a tenable case of breach in respect of the Price Warranty. Dachs 20 sets out a table in [35] which shows that, in most months, Boral was supplied two to three times more GP cement than the quantities as pleaded by Hallett in [66.1] of the proposed cross claim. I observe here that the table in paragraph [66.1] sets out the quantities of SL cement supplied by Boral for Hallett’s use in New South Wales. Hallett claims that those quantities were offset against Boral’s tonnages of GP cement purchased in South Australia. The table in Dachs 20 sets out the total supplies of GP cement by Hallett to Boral in South Australia, a small proportion of which was offset by the sales of SL cement in New South Wales. In addition, a table in [38] of Dachs 20 sets out the difference in the prices charged by ABCL to Hallett and Boral in the periods July 2012 to March 2013, and April 2013 to June 2014. Hallett was charged $189 as against $188.16 charged to Boral in the first period, and in the later period Hallett was charged $195 as against $194.16 charged to Boral.
I accept Hallett’s contention that those parts of Dachs 20 foreshadow evidence which ABCL will adduce in defence of Hallett’s claim if the pleading is otherwise tenable. They are therefore matters for trial.
On the allegations of whether a swap arrangement breached the Price Warranty, Hallett contends that the factual issue as to whether Boral is a similar size to Hallett and whether the volumes supplied to Boral were like volumes are matters for trial given the breadth of those terms. Further, and in the alternative, Hallett contends that any swap arrangement must have breached the Price Relativity Warranty. I accept Hallett’s contention that they are matters for trial which can only be determined on an analysis of all of the invoices. Moreover, ABCL’s defences that they were not like volumes or that the price differential was immaterial can only be determined against a proper construction of clause 9.3 of the 2008 CSA.
Be that as it may, the claim against Boral for breach of the 2008 CSA critically rests on the existence of a swap arrangement. No more can be inferred from the fact that Hallett purchased or procured, in some way, cement from Boral in New South Wales for on-supply to its own customers. That bare fact says nothing as to whether the purchase was by way of barter or swap on the one hand, or for monetary consideration on the other. No inference can be drawn, from the existence of a swap arrangement in 2016, that there was the same or a similar swap arrangement in 2012, or at any time after 2008. There is no inherent quality or nature in commercial arrangements generally, or in arrangements of the particular kind alleged by Hallett that, if found to exist at one point in time, are likely to have existed throughout the entire period in which the parties were engaged in commerce, or are likely to continue to exist for so long as the entities continue to trade with each other. Whether or not such commercial arrangements are entered into, their timing and duration necessarily depend on a wide range of disparate considerations which fluctuate greatly over time, including the nature of the market, competitive tensions, and taxation considerations.
If I were to make use of the metaphor, taken from the judgment of Doyle J referred to at [15] above, the plea is a fishing expedition in a rather arid sea with no sign of marine life to excite the angler. To speak more directly, in legal terms, the foundation of the claim is speculative. The pleaded facts could not make out a reasonable cause of action. There is no reasonable basis to the claim. It is an abuse of process.
I refuse Hallett’s permission to plead the claim against Boral in respect of the 2008 CSA.
Hanson
The breach of the 2008 CSA by ABCL in respect of Hanson is pleaded as follows:
71During the 2008 CSA Period, Hanson purchased substantial volumes of GP Cement from ABCL.
72Paragraphs 36.1 to 36.10 above are repeated as to the relationship between Cement Australia, Hanson and Holcim on the one hand, and ABCL on the other.
73During the 2008 CSA Period, Hanson was within the scope of the definition of “Other SA Customers” in clause 9.3.2(a) of the 2008 CSA as:
73.1 it was a commercial entity;
73.2 it was of similar size to Hallett in South Australia having regard to the extent of its operations and the volume of Product that it purchased from ABCL; and
73.3 it purchased cement products from ABCL.
74During the 2008 CSA Period, Hanson purchased a volume of relevant Product that was comparable to the volumes taken by Hallett under the 2008 CSA and therefore within the scope of the definition of “Like Volume” in clause 9.3.2(b) of the 2008 CSA.
Particulars
74.1 During the period from July 2012 to June 2014, the volume of Type GP Cement purchased by Hanson, compared to the volume of Type GP Cement purchased by Hallett, were as follows:
Month Hanson Hallett July 2012 2,403.75 1,838.20 August 2012 3,432.05 2,414.55 September 2012 3,975.85 2,682.00 October 2012 4,729.65 2,281.05 November 2012 3,294.70 2,549.65 December 2012 2,433.45 1,661.10 January 2013 2,584.00 1,953.90 February 2013 3,457.25 1,498.10 March 2013 3,631.10 1,313.65 April 2013 3,296.00 1,772.05 May 2013 4,607.15 647.15 June 2013 3,228.60 753.35 July 2013 4,517.90 2,625.90 August 2013 4,377.95 3,405.35 September 2013 4,724.40 910.65 October 2013 4,462.80 1,343.70 November 2013 3,998.85 2,648.25 December 2013 3,163.50 1,923.85 January 2014 1,950.45 1,261.20 February 2014 3,262.65 209.45 March 2014 4,481.40 2,726.80 April 2014 3,804.65 3,101.60 May 2014 4,436.15 3,405.35 June 2014 3,873.25 2,625.90
74.1 Further particulars will be provided following further discovery by ABCL of records of its supplies to Hanson in the 2008 CSA Period from its SAP system, namely of documents of the same nature of ABL.1525 and ABL.0481.
75In the premises pleaded in paragraphs 71 to 74 above, sales by ABCL to Hanson of Type GP Cement were subject to the Price Warranty.
76In breach of the Price Warranty, during the 2008 CSA Period, ABCL provided a rebate in respect of supplies of Type GP Cement to Hanson in respect of supplies to its Mount Gambier facility, which meant that the price charged to Hanson for Type GP Cement for use in South Australia was less than the price charged to Hallett, the best particulars of which Hallett can currently provide pending further discovery from ABCL of the contractual arrangements between ABCL and Hanson, the customer invoice reports from the SAP system relating to the 2008 CSA period of the same nature as ABL.1525, ABL.0481 and COPA reports of the same nature as ABL.0482 are as set out in Schedule 11.
77In the alternative to paragraphs 75 to 76 above, if (which is denied), supplies by ABCL to Hanson were not within the scope of the Price Warranty, then:
77.1 throughout the 2008 CSA period, Hanson was a major concrete producer within South Australia, such that supplies by ABCL to Hanson were subject to the Price Relativity Warranty;
77.2 the prices charged by ABCL to Hanson in respect of supplies to Mount Gambier altered the relativity of the Net Price charged to Hallett and the Net Price otherwise ordinarily charged by ABCL to Hanson for supplies to Hanson.
78By reason of ABCL’s breach of the Price Warranty or alternatively the Price Relativity Warranty, Hallett has suffered loss and damage, being the difference between the Net Price charged to Hallett and the price that was promised to Hallett by the Price Warranty or alternatively the Price Relativity Warranty, which Hallett will particularise further after further discovery by ABCL of documents of the type identified in paragraph 76, but as particularised in Schedule 11 hereto totalled over $1.3 million in respect of the period from July 2012 to June 2014.
The entity(ies) ‘Cement Australia’ referred to in paragraph [72] is Cement Australia Pty Ltd and the Cement Australia partnership and its related entities as defined in [37.2] of the Cross Claim. Moreover, [37.3A] pleads that Cement Australia Pty Ltd acted as the agent of the Cement Australia partnership, of which Hanson was a member.
ABCL’s contention is that the customer for the purposes of the pricing warranty was Cement Australia and not Hanson. In its submissions in response, Hallett claims that Cement Australia was acting as the disclosed agent of Hanson. However, that material fact is not pleaded. It should be. That deficiency in the pleading should be attended to so that the pleading of agency in respect of the 2014 CSA is repeated in respect of the 2008 CSA. It is not in itself a reason to refuse permission to amend. The pleaded relationship between Cement Australia and Hanson in respect of the 2014 CSA is such that the plea of agency in respect of the 2008 CSA is tenable.
ABCL also relies on evidence it has adduced on this application to the relative quantities of cement supplied to Cement Australia and Hanson on the one hand, and Hallett on the other. If Cement Australia is the relevant comparator, Hallett’s annual purchases were only about one-fifth of the quantities supplied by Cement Australia in the financial years between 2013 and 2014. It contends that, in any event, Hanson was nonetheless part of a buying group as defined in clause 9.3.2(a) of the 2008 CSA which included Cement Australia. In those circumstances, the volume again was not a like volume.
I explained in [22] above the problematic question of construction posed by clause 9.3 of the 2008 CSA and that the delineation of what is a like volume may be affected by the market context in which Hallett and ABCL were operating. Whether or not Hanson was part of the Cement Australia buying group is also a matter of construction which will depend on the sales evidence and market context.
I allow Hallett to plead the claims against Hanson in respect of the 2008 CSA subject to Hallett expressly pleading that Hanson was the disclosed principal of Cement Australia.
Section 48 extension of time claim
By its proposed amendments, Hallett seeks an order pursuant to s 48 of the Limitation of Actions Act 1936 (SA) (the Limitation Act) extending the time in which it can bring its claims; Hallett pleads:
85To the extent necessary, Hallett seeks an extension of time pursuant to s.48 of the Limitation of Actions Act 1936 (SA) in respect of the matters pleaded in paragraphs 55 to 81 above on the basis that:
85.1 facts material to Hallett’s case were not ascertained by it until some point after the expiration of the applicable limitation period and these claims were made by amendment within 12 months after the ascertainment of those facts by Hallett;
85.2 further or in the alternative, that Hallett’s failure to institute the actions within the period of limitation resulted from representations or conduct of ABCL and was reasonable in view of those representations or that conduct and any other relevant circumstances; and
85.3 in all of the circumstances it is just to grant the extension of time.
Particulars
85.3.1 Pursuant to orders of Doyle J made on 15 April 2020 a confidentiality regime was established in respect of discovery made by ABCL in these proceedings, whereby Hallett and its officers were restricted from having access to discovered documents marked confidential by ABCL, or information derived from those documents (including pleadings), with access to those documents restricted to Hallett’s solicitors, counsel and experts who had provided undertakings to the Court to keep those documents and their contents confidential, including from Hallett and its officers.
85.3.2 ABCL’s discovery in these proceedings contains information relevant to ABCL’s compliance with the 2008 CSA, including documents relevant to the prices that it charged to other customers in the period from 2012 to 2014, and in the period from 2014 to 2020. These documents include:
(A) the following documents marked confidential by ABCL:
(I) the document ABL.1525 which provides records of prices charged by ABCL in the period from July 2012 to June 2014;
(II) documents relating to the prices charged, and contractual arrangements with, customers in the period July 2014 to April 2020; and
(III) documents relating to ABCL’s cost of production.
(B) the pleadings filed in these proceedings that refer to confidential information, including a complete copy of the Cross Claim – Revision 4.
(Together, the Confidential Documents).
85.3.3 Representatives of Hallett have only been able to review complete copies of the Confidential Documents since 4:00pm on 6 October 2023, following the Court of Appeal dismissing ABCL’s appeal against orders varying the confidentiality regime to permit representatives of Hallett to view the Confidential Documents on strict conditions.
85.3.4 The Confidential Documents disclose facts material to Hallett’s case in respect of overcharging by ABCL prior to 2014 in breach of the 2008 CSA as to:
(A)the existence of Hallett’s cause of action for breach of the 2008 CSA; and
(B)the assessment and quantum of Hallett’s loss for breach of the 2008 CSA, by disclosing information including prices charged to and arrangements with other customers by ABCL in the period from July 2012 to June 2014, and in the period July 2014 to April 2020 which were not previously known to Hallett.
85.3.5 Further:
(A)During the 2008 CSA period and Relevant Period, ABCL kept the prices that it charges to other customers confidential and did not disclose the same to Hallett,
(B)At no time prior to the disclosure of the Confidential Documents to Hallett’s representatives at 4:00pm on 6 October 2023 had ABCL disclosed to Hallett that it was in breach of the Price Warranty or Price Relativity Warranty or any other pricing obligation, under any iteration of the CSA. In these proceedings, ABCL denies any breach of its obligations.
(C) ABCL resisted the Confidential Documents being provided to Hallett’s representatives throughout the course of these proceedings, including by appealing to the Court of Appeal against orders to permit Hallett’s representatives from viewing those documents to be able to provide instructions as to matters including the pleading of the counterclaim.
(D) ABCL did not disclose during the 2008 CSA Period, Relevant Period or at all that it had breached the Price Warranty or Price Relativity Warranty.
(E) In circumstances where, as pleaded in paragraphs 18 and 58 above, ABCL was obliged at its own expense to do all that is reasonably necessary to give effect to the 2008 CSA, ABCL was under a duty to at least inform Hallett of any breach by ABCL of the Pricing Warranty, or alternatively the Price Relativity Warranty, but it did not do so.
(F) Hallett’s failure to institute an action in respect of breach of the 2008 CSA prior to any expiry of any applicable limitation period was reasonable in view of ABCL’s conduct.
85.3.6 It is in all of the circumstances pleaded in paragraphs 82.3.1 to 82.3.5 above just to grant Hallett an extension of time to the extent necessary.
Section 48 of the Limitation Act relevantly provides:
48—General power to extend periods of limitation
(1)Subject to this section, where an Act, regulation, rule or by-law prescribes or limits the time for—
(a) instituting an action; or
(b) doing any act, or taking any step in an action; or
(c) doing any act or taking any step with a view to instituting an action,
a court may extend the time so prescribed or limited to such an extent, and upon such terms (if any) as the justice of the case may require.
…
(3)This section does not—
…
(b) empower a court to extend a limitation of time prescribed by this Act unless it is satisfied—
(i)that facts material to the plaintiff’s case were not ascertained by him until some point of time occurring within twelve months before the expiration of the period of limitation or occurring after the expiration of that period and that the action was instituted within twelve months after the ascertainment of those facts by the plaintiff; …
and that in all the circumstances of the case it is just to grant the extension of time.
(3a)A fact is not to be regarded as material to the plaintiff’s case for the purposes of subsection (3)(b)(i) unless—
(a) it forms an essential element of the plaintiff’s cause of action; or
(b) it would have major significance on an assessment of the plaintiff’s loss.
…
(3b)In determining whether it is, in all the circumstances of a case, just to grant an extension of time, the court should have regard to—
(a) the period of extension sought and, in particular, whether the passage of time has prejudiced a fair trial; and
(b) the desirability of bringing litigation to an end within a reasonable period and thus promoting a more certain basis for the calculation of insurance premiums; and
(c) the nature and extent of the plaintiff’s loss and the conduct of the parties generally; and
(d) any other relevant factor.
(4)Where an extension of time is sought pursuant to this section in respect of the commencement of an action, the action may be instituted in the normal manner, but the process by which it is instituted must be endorsed with a statement to the effect that the plaintiff seeks an extension of time pursuant to this section.
…
The 11th affidavit of Michael James O’Donnell (O’Donnell 11), the principal solicitor for Hallett, was filed in support of the application to amend the cross claim. Mr O’Donnell also deposes to the recent disclosure of documents to Hallett which provided a firm basis to infer breaches of the 2008 CSA:
[50]In addition to the matters in paragraph 48, further material was identified following the variation to the Confidentiality Regime and the New Access Regime being established which relate to the period that the 2008 CSA was in effect (2008 CSA Period), which either confirm, or provide a firm basis to infer separate breaches by ABCL of the 2008 CSA. In summary, the additional information includes:
(a) information which demonstrates breaches by ABCL in and around mid-2014, including in relation to:
(i)Exact Contracting Services Pty Ltd and/or Exact Mining and/or Exact Mining Services and/or Exactmix Pty Ltd and/or their related entities (Exact Mix);
(ii)Cement Australia Holdings Pty Ltd and/or Cement Australia Pty Ltd and/or the “Cement Australia Partnership”, as that term is used in the Cross Claim – Revision 4, and their related entities (Cement Australia); and
(iii)Boral Limited and/or Boral Resources (SA) Limited and/or their related entities (Boral),
which information is proximate to the 2008 CSA Period;
(b) documents which were created during the 2008 CSA Period that confirm the prices charged by ABCL to at least Exact Mix and Hanson for the period 2012 to 2014, including ABL.1525, were lower than the prices being charged by Hallett during that same period, enabling the ascertainment of the likely quantum of Hallett’s 2008 CSA Claim; and
(c) other documents which confirm the arrangements in place between ABCL and its Customers during the 2014 CSA period, which documents give rise to inferences that similar arrangements were in place during the 2008 CSA period, including in particular the swap arrangements with Boral.
[51]In respect of the matters summarised in paragraph 50 regarding 2008 CSA Claim, relevant information in ABCL’s discovery (including information which only became available to Messrs Pickard and Hosking and following the variation to the Confidentiality Regime) included:
(a) an unredacted copy of the Cross Claim, including details of the prices charged by ABCL to Exact Mix during the Relevant Period (and in particular, in 2014) and the allegation advanced by Hallett in connection with the swap agreement with Boral in paragraph 39.5;
(b) information regarding the contractual arrangements and prices charged by ABCL to Exact Mix in the Relevant Period, as is explained in paragraphs 172 to 181 of 18 Robinson, including relevantly to the 2008 CSA Claim, the prices being charged in 2014;
(c) information regarding the arrangements and pricing between ABCL and Cement Australia (and Hanson/Holcim). As explained in paragraphs 211 to 217 of 18 Robinson, prior to this time, the Respondents’ Representatives had only been able to access a sub-set of the information relating to these customers;
(d) information regarding the arrangements and pricing between ABCL and Boral. Relevantly to the 2008 CSA Claim, the information in ABCL’s discovery included:
(i)information regarding the contractual arrangements between ABCL and Boral in the Relevant Period, including the precise terms of the swap agreements in place between the parties in the Relevant Period;
(ii)such information enabled the core allegation in paragraph 39.5 of the Cross Claim – Revision 4 regarding the effect of the Swap Agreements in place to be advanced. As explained in Robinson 18, while some information which indicated a swap was able to be provided as part of the tutoring exercise, the Respondents’ solicitors remained constrained in articulating the allegations and effect of the swap arrangements that were being advanced in the Cross Claim for the earlier period of time; and
(iii)information regarding ABCL’s costs of production, which is contended by Hallett to be the relevant Comparison Price applicable for the purposes of the swap arrangements between Hallett and Boral;
(e) a complete copy of ABL.1525, which is a Customer Invoice Report generated by ABCL for all customers supplied with cementitious products by ABCL during the period 1 July 2012 to 30 June 2014. It discloses the prices charged by ABCL to these customers during this period, which is when the 2008 CSA was in effect. Based on this document, Hallett has been able to confirm that the prices charged by ABCL to Exact Mix and Hanson were lower than the prices charged to Hallett, and can infer that swap arrangements with Boral were in place during this period as is pleaded in the Proposed Amended Cross Claim. Such information has enabled Hallett to ascertain the potential quantum of the 2008 CSA Claim. In respect of this document, and for completeness, I observe that:
(i)Access was sought by the Respondents to ABL.1525 in the various iterations of its Confidentiality Application. ABL.1525 was one of the documents in respect of which a filtered copy was made available by ABCL on 29 November 2022 as part of the “tutoring exercise” to which I refer in paragraph 24 above. The document was filtered such that the information relating to mining customers, including Exact Mix, was deleted in the version made available by ABCL to the Respondents’ Representatives.
(ii)The tutoring exercise was undertaken for a limited purpose and there were significant restraints regarding the ability of the Respondents’ Representatives to provide advice and instructions in relation to the documents provided by ABCL, and that notwithstanding that exercise, the Respondents were significantly prejudiced in the conduct of the matter including as outlined at paragraph 128 of 18 Robinson.
[52]A detailed summary of the nature of the information contained within the Restricted Documents which the Respondents’ Representatives were able to access is described in paragraphs 132 to 263 of 18 Robinson.
[53]In the circumstances outlined in paragraphs 46 to 51, Hallett has now become able to advance a claim in respect of the 2008 CSA. Hallett was previously unable to advance a claim in respect of the 2008 CSA as a result of:
(a) the matters identified in paragraphs 46 to 49, arising as a result of the inferential nature of the claim originally pleaded by Hallett in respect of the 2014 CSA;
(b) the impact of the Confidentiality Regime and the restrictions on Hallett’s ability to access materials in these proceedings until the New Access Regime came into effect; and
(c) the impact of the progressive discovery made by ABCL in the proceedings, which has been made progressively by ABCL’s filing of 15 lists of documents to date, 9 of which have been filed since the most recent iteration of the cross claim, the Cross Claim – Revision 4, was filed by Hallett.
The 12th affidavit of Mr O’Donnell sworn on 13 February 2024 (O’Donnell 12) supplemented O’Donnell 11 and deposed that, ambiguously, the source of his instructions were ‘from each of Mr Pickard and Mr Hosking’.
Objection was taken to the admission of those parts of O’Donnell 12 on the grounds that the affidavit did not disclose the source of the information on which the assertion that Hallett was not previously aware of the material facts and circumstances on which the amended claim is based. It was necessary, therefore, to call Mr O’Donnell to give evidence of those matters.
Mr O’Donnell testified that he met with Messrs Mark Pickard and Barrie Hosking of Hallett on 28 November. Also present were Hallett’s junior counsel, Mr Kentish, and Mr O’Donnell’s colleagues, Mr Liam Cobain and Ms Chloe Robinson. A number of ABCL’s documents were presented at the meeting. One of those documents bore the discovery number which Mr O’Donnell mistakenly thought was 1523, but was in fact document 1525. Mr O’Donnell testified that Mr Pickard told him that he was not previously aware of the information contained in that document.
Mr O’Donnell explained that Mr Hosking was the former chief executive of Hallett, having completed his term in 2013. When he saw the document, he uttered an exclamation which indicated to Mr O’Donnell that he had not before seen the document. He also expressly confirmed that he had not known the information contained in the document prior to that occasion. Mr Hosking and Mr Pickard tacitly agreed with all the statements made by the other in the course of the discussion in the sense that there was never an occasion in which one contradicted the other or said anything to the effect that it was not his view or his recollection. Mr O’Donnell testified that their instructions that they had no prior knowledge of the documents on the information contained in the documents they were viewing were consistent. I pause here to observe that the existence of ABL.1525 is, in itself, a material fact.
Thomson Geer commenced drafting the pleading after the 28 November meeting. On 5 December, Mr O’Donnell met with Mr Hosking. Mr Kentish and Mr Cobain were also present. They discussed an early draft of the cross claim in respect of the 2008 CSA. They obtained further factual information from Mr Hosking even though he was not authorised formally to instruct them.
On 21 December, Mr O’Donnell met again with Mr Pickard and Mr Hosking. Chloe Robinson and Liam Cobain were also present. They received instructions from Mr Pickard to proceed with the proposed amendments and to file O’Donnell 11. Mr Hosking informed Mr O’Donnell that the facts asserted in the affidavits were correct.
I am satisfied that the affidavits, together with Mr O’Donnell’s testimony, establish an appropriate foundation for the interlocutory application to plead for an extension of time pursuant to s 48 of the Limitation Act for the proposed claims against ABCL for breaches of the 2008 CSA in respect of Hanson and Exact Mix.
It is not to the point that Hallett’s solicitors had access to those documents under confidentiality regimes for a period of longer than 12 months before the application was made. The section conditions the power to grant an extension of time within the period of 12 months from the time at which the applicant to the action becomes aware of the material fact(s). ABCL joined in a confidentiality regime which restricted Hallett’s access to its discovery of documents. It is a matter for trial whether or not the assertions of Messrs Pickard and Hosking, that they had not seen the documents before November 2023 are believed.
The circumstance that the information was available to Hallett’s solicitors is unlikely to materially affect the exercise of the discretion to grant an extension of time in which to bring the claim materially. An application by Hallett’s solicitors to seek a relaxation of the confidentiality regime without the instructions of Hallett would have been problematic as a matter of professional practice. It would likely have been opposed. Formulating the possible claim in the absence of instructions informed by access to the documents would have been difficult.
The tutoring exercise in which Hallett was allowed to engage was for the limited purpose of testing the efficacy of finalities in the pleadings in respect of the 2014 CSA.
I accept that the exercise of identifying, finding, and collating the documentation of transactions over a decade old may not be completely successful. However, I am not satisfied that the potential prejudice to ABCL is such that the discretion is bound to be exercised adversely to Hallett.
Accordingly, the precondition to the s 48 application is properly pleaded and is supported by the evidence. It is reasonably based and is not an abuse of process.
Disruption to trial preparation
I am not satisfied that allowing the amendments with respect to Hanson and Exact Mix will obstruct the orderly progression of the action to a hearing in August. The greater burden of preparing a defence of the claims in respect of Boral can now be put to one side.
At this stage, and on the information before me, I have no reason to think that case management orders will not allow the matter to progress to trial and so that the claims are heard and determined in the time listed in August. Should difficulties become apparent closer to that date, the timing of the hearing and determination of the 2008 CSA claim can be further considered.
Conclusion
I grant leave to Hallett to plead its claims, with an application to extend time pursuant to s 48 of the Limitation Act, against ABCL for breaches of the 2008 CSA in respect of Hanson and Exact Mix.
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