Allianz Australia Insurance Ltd v Wallaby Grip (BAE) Pty Ltd (in Liquidation) - [2013] SADC 33

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
ALLIANZ AUSTRALIA INSURANCE LTD v WALLABY GRIP (BAE) PTY LTD (IN LIQUIDATION) & ORS
[2013] SADC 33
Judgment of His Honour Judge Jennings
14 March 2013
PROCEDURE
Interlocutory Application by First and Second Defendants seeking Order that the Plaintiff's Statement of Claim be struck out or stayed - Whether if there is not a reasonable prospect of success the action or defence should be struck out - Ability to establish existence of a contract and therefore whether there has been any breach of contract - Whether it would be unfair to require the applicant to defend allegations of a breach in view of contracting party in liquidation and therefore any relevant documents lost or trail of evidence gone stale.
Held: Application dismissed.
Davies v Minister for Urban Development (2011) 109 SASR 518; Spencer v The Commonwealth (2010) 241 CLR 118; Masquerade Music Ltd v Springsteen (2001) 51 IPR 650; Jones v Sutherland Shire Council [1979] 2 NSWLR 206; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR, applied.

ALLIANZ AUSTRALIA INSURANCE LTD v WALLABY GRIP (BAE) PTY LTD (IN LIQUIDATION) & ORS
[2013] SADC 33
Introduction

In this matter Allianz Australia Insurance Ltd (the Plaintiff) filed a (Fourth) Statement of Claim against Wallaby Grip (BAE) Pty Ltd (In Liquidation) (First Defendant) [“BAE”] and Wallaby Grip (NSW) Pty Ltd (In Liquidation) (Second Defendant) [“NSW”] and AMACA Pty Ltd (Third Defendant) in which it is seeking damages for negligence and breach of contract in an amount equivalent to the amount of a judgment in favour of one Mr Griffin against the Plaintiff in District Court of South Australia Action No 1041 of 2010 costs.
Mr Griffin in that action had alleged, as a consequence of his being exposed to asbestos at the Adelaide Ship Construction (“ASC”) premises, he sustained injury loss and damage. Allianz had assumed the liabilities of the Chamber of Manufacturers Insurance Limited which had issued the Employers Indemnity Policy to ASC.
On 20 September 2010 judgment was given in favour of Mr Griffin in the sum of $650,000 inclusive of interest, costs and disbursements and statutory repayments.
The application before the Court taken by the First and Second Defendants seeks an order that the Plaintiff’s Statement of Claim against them for breach of contract set out between paras 14 and 20 of the Fourth Statement of Claim be struck out or stayed.
Set out hereunder are paras 14 – 20 of the Fourth Statement of Claim:
“14.   The materials containing asbestos to which Mr Griffin was exposed either when working with those materials or working in the vicinity of others working with those materials or when working in areas contaminated with asbestos dust and fibre from those materials were manufactured by the first, second and third defendants and supplied to Adelaide Ship; Construction or applied and/or installed at Adelaide Ship Construction by the first, and second defendants pursuant to contacts between Adelaide Ship Construction and the first and second defendants (‘the contracts’):
14.1   to supply the materials including asbestos coated cables, asbestos blankets, asbestos composition, asbestos cloth, asbestos rope and pre-formed asbestos pipe sections;
14.2   to spray, apply or otherwise install the materials including asbestos composition, pre-formed asbestos pipe sections, asbestos rope, asbestos cloth and asbestos blankets and limpet asbestos spray on vessels.
15.     Because of the passage of time, Allianz is unable at this time to further particularise the specific contracts in question but reserves the right to do so following discovery by the first and second defendants.
16.     It was implied term of the contracts that:
16.1 in the case of the supply of the materials, the first and second defendants would supply to Adelaide Ship Construction only products which did not give rise to the risk of injury to Adelaide Ship Construction’s employees;
16.2 in the case of the installation of material:
(a)    the first and second defendants would install at Adelaide Ship Construction’s premises only products which did not give rise to the risk of injury to Adelaide Ship Construction’s employees;
(b)    the first and second defendants would comply with all relevant statutory provisions and in particular would comply with the provisions of the Health Act 1935 (SA) and later the Industrial Safety Health & Welfare Act 1972 (SA) and the Regulations made under those Acts;
(c)    the first and second defendants would take reasonable care for the safety of Adelaide Ship Construction’s employees, including Mr Griffin;
16.3   the materials supplied by the first and second defendants would be reasonably fit for purpose and of merchantable quality.
17.     It is necessary for the terms referred to in paragraph 16.1 and 16.2 to be implied into the contracts to give them business efficacy and the terms of paragraph 16.3 are implied by virtue of the provisions of the Sale of Goods Act 1895.
18.     Allianz says that the first and second defendants have breached the contracts in the manner following:
18.1 by supplying products (namely asbestos and asbestos based products) giving rise to the risk of injury to Adelaide Ship Construction’s employees;
18.2 by spraying and otherwise installing materials (namely asbestos fibre) giving rise to risk of injury to Adelaide Ship Construction’s employees;
18.3 by failing to comply with relevant statutory provisions and in particular the provisions of the Health Act 1935 (SA) and later the Industrial Safety Health & Welfare Act 1972 (SA) and the Regulations made under those Acts;
18.4 by failing to otherwise take reasonable care for the safety of Adelaide Ship Construction’s employees.
18.5 by supplying the materials which were not of merchantable quality and/or not reasonably fit for the purpose for which they were intended.
18.6 Allianz refers to the particulars in paragraph 24 hereof.
19.     Had the first and second defendants not been in breach of the contractual terms in the manner alleged in paragraph 18 herein, Mr Griffin would not have suffered injury in the course of his employment with Adelaide Ship Construction and accordingly Adelaide Ship Construction and/or Allianz has suffered damage, being its liability to Mr Griffin as pleaded in paragraph 13 hereof and in addition the costs incurred by Allianz in defending and negotiating the settlement of Mr Griffin’s claim and its costs in pursuing this claim.
20.     Allianz claims the amount set out in paragraph 19 herein (less the sum of $15,000 recovered by Alliance from the insurer of ACI Glassworks) as damages for breach of contract.”
Attached to the affidavit of Mr Stephen McKenzie, solicitor for the First and Second Defendants, in support of the application is correspondence between the Plaintiff’s solicitors and the First and Second Defendants’ solicitors in which the latter sought further and better particulars of the Statement of Claim. Those further and better particulars sought the dates, tasks and exact locations that Mr Griffin performed work for ASC, and the first date he was exposed to materials containing asbestos whilst employed by ASC. It sought particulars as to the materials containing asbestos, and the manufacturers and suppliers of same. It sought particulars concerning any sub-contract involving BAE at ASC’s Port Adelaide premises during the period of Mr Griffins employment including whether the contract(s) were oral, written or implied or partly oral, partly written or partly implied; and further particulars concerning each of those alternatives. It also sought particulars as to what duties BAE undertook at ASC’s Port Adelaide premises during the relevant period. It sought similar particulars in relation to NSW’s contractual arrangements at ASC’s Port Adelaide premises.
The Plaintiff’s solicitor’s response for further particulars numbered 1 to 15, was to refer the Defendant’s solicitors to documents that had previously been provided: their client’s Statement of Claim, the Statement of Claim filed by Mr Griffin against ASC on 10 June 2010; and their request of Mr Griffin for further particulars dated 22 June 2010 and the response dated 30 June 2010.
They advised that to the extent that the information that the Defendant’s solicitors had requested was not contained in that material, it was known only to Mr Griffin.
In response to the request for further particulars number 16 to 27, the Plaintiff’s solicitor referred the Defendant’s solicitors to paragraphs 14 and 15 of their client’s Third Statement of Claim. These paragraphs allege that the First and Second Defendants performed work at ASC’s premises during the period of Mr Griffin’s employment pursuant to contracts between ASC and the First and Second Defendants. Further, they assert that because of the passage of time since the contracts were entered into and performed, the Plaintiff was unable to further particularise the specific contracts in question, but it reserved the right to do so following discovery by their clients.
There then ensued the following exchange of correspondence which ultimately led to the application currently before the Court.
“1 March 2012
Ms C Phillips
Minter Ellison
…
In your letter you state that the information requested in paragraphs 1 to 15 of BAE and NSW’s request for particulars dated 14 February 2012 is only known to Mr Griffin.
Paragraph 14.1 of Allianz’s third statement of claim alleges BAE and NSW supplied materials ‘including asbestos coated cables, asbestos blankets, asbestos composition, asbestos cloth, asbestos rope and pre formed asbestos pipe sections’.
To enable BAE and NSW to respond to Allianz’s allegations, BAE and NSW require Allianz to specify the particular materials containing asbestos that BAE and NSW allegedly manufactured and/or supplied and/or installed at Adelaide Ship Construction’s (‘ASC’) Port Adelaide premises.
Should Allianz not specify the particular materials containing asbestos that BAE and NSW allegedly manufactured and/or supplied and/or installed at ASC’s premises, BAE and NSW will make an application under Rule 102 of the District Court Rules 2006 for Allianz to file further particulars of its case.”
“13 March 2012
Ms E Devery
Middletons
…
We refer to your letter dated 1 March 2012.
It is alleged that Mr Griffin was exposed to the following specific asbestos containing materials during his employment at Adelaide Ship Construction’s (ASC) Port Adelaide premises which was manufactured and/or supplied by BAE and Wallaby NSW:
1       asbestos containing electrical switchboards (zelemite);
2       pre-formed asbestos insulation materials (including asbestos pipe sections);
3       asbestos coated cables;
4       asbestos blankets;
5       asbestos rope;
6       asbestos cloth;
7       K-lite;
8       85% magnesia;
9       asbestos composition;
10     limpet asbestos sprayed insulation.
It is alleged that all of these products excluding 85% magnesia and K-lite were manufactured by BAE.
Yours sincerely
Cheryl Phillips”
[Minter Ellison]
“20 July 2012
Ms C Phillips
Minter Ellison
…
Allianz’s fourth statement of claim filed 19 April 2012 alleges against BAE and NSW that:
·       BAE/NSW manufactured and/or supplied and/or installed asbestos containing materials at Adelaide Ship Construction’s (‘ASC’) premises pursuant to contracts between ASC and BAE/NSW; and
·       Allianz holds no documents evidencing the contracts and is unable to particularise the contents of those contracts.
BAE and NSW submits that in light of the above:
·       there is no reasonable basis for Allianz’s contract claim against BAE/NSW; and
·       the contract claim is an abuse of process pursuant to Rule 104 of the District Court Civil Rules 2006.
BAE and NSW require Allianz to amend its statement of claim against BAE and NSW to remove the claim for breach of contract.
Should Allianz not consent by 3 August 2012 to amend its claim against BAE and NSW to delete the contract claim, BAE and NSW will file an application seeking orders that Allianz’s contract claim be struck out.
Yours faithfully
Erin Devery”
[Middletons]
Consideration
The applicant’s argument in support of its application is based upon three pillars.
The first is that the present rule relating to strike out applications sets the relevant threshold at a lower level than that which used to be the case, and that now, if the Court is satisfied that the other party does not enjoy a reasonable prospect of success, the action or defence, as the case may be, must be struck out.
The second is that absent any written evidence supporting the existence of a contract between the parties the claimant will be unable to establish the existence of a contract and even if it can, it will be unable to establish that the terms of the contract were such that it will be unable to establish that there had been a breach of contract.
The third is that in any event, given the delay between the alleged contract and the ensuing trial it would be manifestly unfair to require the applicant to defend allegations of a breach of contract. It was said that this was so because the relevant contracting party was in liquidation; relevant documents, if they existed, have now been lost; the trail of evidence, such as may have existed, has now gone stale.
The first proposition is plainly correct. This is made clear from the judgments of Bleby J in Davies v minister for Urban Development (2011) 109 SASR 518 and the High Court in Spencer v The Commonwealth (2010) 241 CLR 118 but it begs the question as to whether the cause of action in contract has no reasonable prospect of success.
As to the second, the so called “best evidence rule” would demand the claimant to produce a written contract or documents that establish the existence of a contract if they were in the possession of the claimant or if they could be obtained by the claimant. However, if the claimant produces cogent evidence that establishes that the relevant documents cannot be produced there is no legal principle that prevents the claimant from attempting to prove the existence of a contract by other means. See, for example Masquerade Music Ltd v Springsteen (2001) 51 IPR 650.
Moreover there is no reason to assume that there necessarily was a written contract or documents that would establish the existence of and terms of the contract. Indeed, many contracts are characterised by a lack of formality that leaves much to inference and implication. The purchase and sale of goods in markets and the engagement of casual employment are obvious examples. Even in a commercial setting goods might on occasions be expected to have been purchased through the placement of an oral order, say by telephone and simply invoiced upon supply. It would not be in the least surprising that if such invoices or receipts upon payment did at one time exist, that they would no longer exit. Provided there was some evidence establishing that reasonable, but unsuccessful efforts had been made to ascertain the whereabouts of those documents it would be open for the claimant to adduce oral evidence about those matters or about other matters in support of the contention that a contract existed. It would then be for the Court to determine how much weight to give to that evidence.
No doubt an important consideration that the Court will apply in determining that weight to be given about evidence of a contract where no supporting documentation is before it will be the delay between the alleged events and the ensuing trial. The Court will recognise its need at feel and “actual persuasion” before making findings of fact. See: Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 227 per Mahoney JA. It will be mindful of what McHugh J said in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551:
“the general perception that ‘[w]here there is delay the whole quality of justice deteriorates’. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo ‘what has been forgotten can rarely be shown’. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now ‘knowing’ that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued.”
But these are matters to be determined at trial, or at least on a proper evidentiary platform. They are not to be determined on an interlocutory application based upon bald assertions without any evidentiary material in support. That is all I have before me now.
I dismiss the application.