Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2) - [2008] SASC 356

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ALSTOM POWER LTD v YOKOGAWA AUSTRALIA PTY LTD & ORS (No 2)
[2008] SASC 356
Reasons for Decision of The Honourable Justice Anderson
19 December 2008
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PLEADINGS
APPLICATION FOR FURTHER AND BETTER PARTICULARS
Application by defendants for further and better particulars and material facts in relation to eight paragraphs of the amended statement of claim and reply - plaintiffs rely on r 46A.09 of the Supreme Court Rules 1987 - whether material facts pleaded disclose facts sufficient to give defendants fair notice of the case they must meet - whether particulars are necessary to avoid significant prejudice.
Held: further and better particulars ordered in relation to six paragraphs.

PROCEDURE - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION
Application by defendants for production of certain documents over which privilege has been claimed - whether plaintiff waived privilege by virtue of allegations in statement of claim relating to its corporate state of mind.
Held: Kadlunga list contains adequate description of documents generally - paragraphs relied on by defendants for waiver of privilege do not reveal a necessary connection between the plaintiff's state of mind and any legal advice - no implied waiver of privilege - defendants' application for production refused.
Supreme Court Rules 1987 r 46A.09, r 58A and r 59; Evidence Act 1929 (SA) s 67C, referred to.
Alstom Power Ltd v Yokogawa Australia Pty Ltd & Ors [2008] SASC 15; Kadlunga Proprietors & Ors v Electricity Trust of South Australia & Ors (1985) 29 SASR 410, considered.

ALSTOM POWER LTD v YOKOGAWA AUSTRALIA PTY LTD & ORS (No 2)
[2008] SASC 356
Civil

ANDERSON J. In this matter I made orders and published reasons on 4 February 2008: see Alstom Power Ltd v Yokogawa Australia Pty Ltd & Ors [2008] SASC 15. Those orders related to further and better discovery and for a Kadlunga list to be prepared.
The background of the matter is briefly set out in those reasons and in particular the reference to two settlement agreements. As I there point out, Alstom Power Pty Ltd (“Alstom”) blamed Yokogawa Australia Pty Ltd and others (“YDRML”) for delays in construction and the need for it to negotiate a settlement with the owner of the power station, Flinders Power Partnership (“FPP”). This involved a settlement figure of approximately $20.5 million, which Alstom now seeks to recover from YDRML.
Since the time of my order, the parties have corresponded in relation to YDRML’s request seeking both further and better particulars and also the production of documents which were discovered by Alstom pursuant to the orders I made on the earlier occasion.
Application for further and better particulars
The solicitors for YDRML, following the discussions between the parties, grouped their requests into five categories. In relation to categories 1, 2 and 3, and to a lesser extent category 5, Alstom has claimed that particulars will be provided upon the provision of expert reports. YDRML indicated that they were prepared to wait for the particulars until after the exchange of expert reports in respect of categories 1, 2 and 3. After discussion, it was agreed that category 5 could also be placed into this list.
I then made orders that all expert reports, with the exception of Mr Tonkin’s, are to be provided by Alstom on or before 23 January 2009.
That left category 4 to be argued at this stage. Category 4 includes eight paragraphs of either the amended statement of claim or the reply in respect of which particulars are sought. I intend to deal with each of those requests separately.
Statement of claim paragraph 184
Alstom pleads that, as a consequence of YDRML’s breaches of contract and duty referred to in paragraphs 140 to 164 and in schedules 1 and 2 of the statement of claim, it was exposed to a potential liability to FPP of up to the contract price under the head contract for the whole of the power station refurbishment works, namely, $148.5 million.
There were numerous contractors involved in the work at the Playford B Power Station at Port Augusta. YDRML’s work was for the electrical control and instrumentation works (“EC & I works”) only.
YDRML objects in its defence to Alstom’s claim on the basis that it is embarrassing and not particularised. In its request for particulars YDRML asks how it is alleged that the alleged breaches of the EC & I works subcontract by YDRML could expose Alstom to a potential liability for the whole of the contract price. On the face of it, that is a reasonable question on the pleadings and should be capable of an answer.
The response given to this request for particulars is that the request does not meet the criteria of r 46A.09, Supreme Court Rules 1987.
Rule 46A.09 provides:
(1)No order is to be made that any further material facts are to be pleaded other than where the material facts pleaded do not disclose facts sufficient to give the other parties fair notice of the case which they will have to meet and the party seeking them would be significantly prejudiced in the conduct of its case by not having them. (The intent of Rule 46A is that parties should include all material facts in their pleadings as initially filed so that there is no unfairness to another party by any lack of particularity and if they have not done so the trial Judge may refuse to allow that party to present a case which is outside the terms of its pleading.)
(2)No pleading is embarrassing for want of particularity unless the missing particulars would be ordered under (1).
(3)Where an order is made under (1) the pleading is to be amended.
(4)No costs are to be allowed to the party making any amendment under (3) in respect of it unless the Court or a taxing officer for good reason slows them.
YDRML claims that it is entitled to particulars of what the claim amounts to, how it is made up and the basis for it. It says that if the particulars are not provided there will be an unfairness.
It is my view that the response to the request for particulars, namely, that the request does not meet the criteria of r 46A.09, is not justified. It seems to me that without the information requested it becomes unnecessarily onerous for YDRML to answer the allegation in the statement of claim. Given that YDRML’s work comprised only part of the overall work being performed at the power station by Alstom under the head contract, on the face of it, the particulars sought are necessary to enable the solicitors to assess all the relevant information.
I consider that the lack of the particulars sought by YDRML does prejudice it in the preparation for trial. Mr Harris QC for Alstom argues that the request does not meet the threshold test of r 46A.09. It appears that he relies on the fact that only potential liability is pleaded. (My underlining.) If the word “potential” is used deliberately then it seems to me that particulars are necessary. If, however, the word was used loosely then it should be amended. It should be possible for Alstom to particularise the breaches in respect of which it is alleged that there is an exposure to either a real or potential liability for the total amount of the contract price. I order that the particulars be provided as sought.
Statement of claim paragraph 185
Alstom pleads that it had potential claims in respect of matters including but not limited to (my underlining) various supplies including fuel oil, coal, demineralised water and other costs associated with the work. This was because FPP had notified claims to Alstom. YDRML in its request seeks particulars of the date or dates of notification by FPP to Alstom and whether the notifications were in writing. Again it is met with the response that the request does not meet the criteria of r 46A.09. It seems to me that this is an obvious case for the provision of particulars and the response is unrealistic. It is almost a classic case for the provision of particulars. I order that the particulars be provided as sought.
Statement of claim paragraph 194
In paragraph 193 of the statement of claim Alstom pleads that it has “determined that a substantial number of purchase orders and change orders were issued for works which were already within the scope of EC & I works YDRML was obliged to perform under the EC & I subcontract”.
Alstom pleads in paragraph 194 that by reason of YDRML’s existing obligations it has failed to provide good consideration for the purchase orders and change orders referred to in paragraph 193. YDRML seeks full particulars of the existing obligations which are referred to. Again it is met with the response that the request does not meet the criteria of r 46A.09.
YDRML is entitled to know by what alleged circumstances any contractual obligation arises. It is not sufficient merely to point to the fact that a contract exists.
Again it is my view that the request for particulars is appropriate. I order that the particulars be provided as sought.
Statement of claim paragraph 195
Paragraph 195 of the statement of claim is in the alternative to the allegations in paragraph 194.
Alstom pleads that the purchase orders and change orders were issued by them under a mistake of fact as to whether the works the subject of the purchase orders or change orders were within YDRML’s scope. YDRML requests particulars of the facts which Alstom claims were mistaken and particulars of the basis on which it is alleged that YDRML ought to have been aware of the alleged mistakes. Again it was met with the response that the request does not meet the criteria of r 46A.09. It is my view that requests for particulars as to any mistake alleged are relevant and it is a proper request. Likewise, how it is to be argued that YDRML knew of these mistakes, is a proper request for particulars. I therefore order that the particulars be provided as sought.
Reply paragraph 13.3B
In its defence YDRML pleads that certain representations were made by Alstom. Those representations are particularised. In its reply Alstom raises matters relevant to the supervision of the contract. The plea in the reply is that the representations could not have been relied on because of certain terms of the head contract. That is not a contract between these parties but the head contract between Alstom and FPP.
The request for particulars by YDRML is for Alstom to provide full particulars of the contractual limitations on the capacity of Alstom to provide any assistance or indulgence and of the assistance and indulgence referred to. Again the request is responded to by reference to r 46A.09. The plea by Alstom of the fact that “Alstom was extremely limited in its capacity to provide YDRML with any assistance or indulgence”, in my view, invites a request for particulars. It seems to me that YDRML is entitled to them. Alstom has pleaded a conclusion, namely, an extremely limited capacity, without any material facts to support that conclusion. I order that the particulars be provided as sought.
Reply paragraph 57.3.3
In answer to YDRML’s defence, Alstom replies that it provided YDRML with regular information on the status of the works, as required, so that YDRML could program and integrate its works.
The request for particulars by YDRML asks for particulars of the dates the information was provided, the details of that information and how that information was capable of being utilised by YDRML to program and integrate its works. The response again is r 46A.09. The plea in the reply does not provide the necessary material facts which underlie the plea. In my view, the request is proper and should be capable of an answer. I order that the particulars be provided as sought.
Reply paragraph 94
In its defence YDRML refers to certain articles in the contract and alleges that the obligations in the articles “were contingent upon Alstom providing YDRML with sufficient information to provide, respectively, the report and the punch list”. The reply was that the report and punch list were and should have been “entirely within the possession or knowledge of YDRML as an ordinary part of its work”.
The request for particulars was to state full particulars of the information that was necessary to complete the punch list and with respect to each item of information particularised, whether it was in Alstom’s possession or YDRML’s possession or whether they both possessed it. The request again was refused pursuant to r 46A.09.
In this case I am against YDRML’s assertions. It seems to me that the request is far too onerous and oppressive. In addition, YDRML has sufficient knowledge to the extent that it cannot claim to be prejudiced. On the face of it, the information should have been within the possession or knowledge of YDRML.
Reply paragraph 233
In paragraph 233 of the amended defence, YDRML states, as an alternative, an explanation of why it may have failed to effectively make any of the notices for extension of time in regards to the performance of the EC&I subcontract in accordance with the matters that were pre-conditions to a lawful claim. These preconditions are set out in Article 4.3. YDRML states this was due to the program sharing breach. In its reply to this paragraph, Alstom pleads that YDRML was at all times, by virtue of regular daily meetings between YDRML and Alstom, aware of the relevant programming information.
YDRML requests particulars of which daily meetings are referred to, and details of the discussions which are alleged to have made them aware of the relevant programming information. Alstom, again, responds with reference to r 46A.09.
In my view, this is an oppressive request and is not within the spirit of r 46A.09. The request should be refused. Again, the information should be within the possession or knowledge of YDRML.
Production of documents
As I previously indicated, the second aspect of this interlocutory hearing related to the production of documents sought by YDRML from the Kadlunga list which was previously provided by Alstom following my earlier orders. The list contains references to 290 documents. The list asserts the type of privilege claimed and the basis of that privilege. YDRML in its notice for specific directions seeks production of all the documents in the Kadlunga list.
In addition to its application for production of all documents in the Kadlunga list, YDRML claims that Alstom has waived privilege in respect of documents relating to both the February 2005 settlement and the September 2003 settlement.
Mr Harris argues that the onus is on YDRML because the privilege, once claimed, has to be challenged. The Kadlunga list is a shorthand method of discovery of privileged documents and nominates whether the privilege claimed is legal professional privilege or related to without prejudice discussions, either at common law or pursuant to s 67C of the Evidence Act 1929.
Mr Harris argued that the only area of dispute signalled by YDRML prior to this hearing was that any claim for privilege had been waived by virtue of the allegations in the statement of claim by Alstom relating to its corporate state of mind.
Mr Harris argued that he was therefore entitled to believe that the only issue raised in this interlocutory hearing relating to production was the question of waiver of privilege. I allowed him to file a written response to Mr Wells’ oral argument on privilege generally and on the onus of proof. Mr Harris submitted that the matter had been dealt with at all stages by the respective solicitors only in relation to the question of waiver following the production of the Kadlunga list.
Alstom claimed that YDRML were not entitled to inspection of the documents in the Kadlunga list. That response was met with this application for production of the documents contained in the list.
As is pointed out in the written reply, there was no challenge to the claim for privilege in the normal way in respect of the documents in the list other than the question of the alleged waiver.
Production of documents is governed by r 59 of the Supreme Court Rules 1987. This was not an application for further and better discovery pursuant to r 58A. Likewise there was no request for the Kadlunga list of documents to be verified on oath.
Rule 59 disputes often result in the court inspecting the documents to decide the fate of the privilege claimed.
YDRML, without any permission from the court, filed a belated written response to Mr Harris’s response. In the view I take, it is unnecessary to decide the question of where the onus lies because if it lies on Alstom, which I doubt, it is my view that it has been discharged, and if it lies on YDRML then I am not convinced that it has been discharged. I do not consider that the documents, in respect of which privilege is claimed, should be produced for the reasons I have given.
The basis of a Kadlunga list of documents is that there should be a sufficient description of the documents, without disclosing the contents of the documents, so as to enable the court to decide if the privilege claimed is maintainable: see Kadlunga Proprietors & Ors v Electricity Trust of South Australia & Ors (1985) 39 SASR 410.
In Kadlunga the description of the documents was held not to be sufficient. In this matter, on the face of the Kadlunga list, it seems to me that generally adequate descriptions have been given. Mr Wells spoke only in general terms as to the documents in the Kadlunga list. If there are any specific documents upon which it is asserted that the descriptions are inadequate, I will consider whether to hear counsel further on this matter and deal with those documents individually.
It has been pointed out to me that it is undesirable that the trial judge should attend to the process of inspecting the documents to rule on the privilege. I agree with that and indicate that I will not be the trial judge in this matter.
I therefore decline to order production of any documents in the Kadlunga list.
Waiver of privilege
In general terms the documents, in respect of which privilege is said to be waived, relate to either the February 2005 settlement agreement or the September 2003 settlement agreement because of the orders that I made earlier.
The principle upon which Mr Wells relies for this claim is that by its pleading Alstom has put into issue its state of mind so that there is an inconsistency in claiming the state of mind and at the same time maintaining a claim for privilege so that the state of mind cannot be explored.
From the correspondence exchanged, and in particular a letter of 12 September 2008, YDRML’s solicitor’s are relying on the pleadings by Alstom in three parts, namely, paragraph 127, paragraphs 183 to 191 and paragraphs 281 and 282, to support their submission.
Mr Harris argues that when those pleadings are analysed, the argument put by YDRML cannot be sustained. In paragraph 127 he points out that there is no reference to any legal advice, and it is not necessary to infer that any such advice was given to influence the relevant belief of the officers of Alstom. I agree with that submission.
Paragraphs 183 to 191 involve an agreement between Alstom and FPP. Again it is pointed out that the state of mind referred to relates to Alstom’s officers in relation to their assessment of their ability to meet the requirements of the head contract. There is no necessary connection between that state of mind and any legal advice. It would seem to me that it is more likely that the state of mind arose as a result of engineering and associated matters and involved the expertise and judgment of the officers of Alstom. Again I agree with the submission put by Alstom.

Paragraphs 281 and 282 do not exist. It was not suggested in argument that the reference was other than an error but I was not referred to any other paragraphs in lieu of those two.
In my view, there is no implied waiver of privilege in Alstom’s pleadings. YDRML’s claim for production should be dismissed, for the reasons given as to the documents related to the settlements in respect of which the waiver argument was advanced, and generally for the reasons I expressed as to the Kadlunga list.
I therefore make orders as follows:
1.That the plaintiff, within 21 days, provide further and better particulars as sought in relation to paragraphs 184, 185, 194 and 195 of the Amended Statement of Claim (FDN 58); and paragraphs 13.3B and 57.3.3 of the Reply and Defence to Counterclaim to the Amended Defence and Counterclaim of the Defendants (FDN 76).
2.That the defendants’ claim for production, as sought in paragraph 3 of the Notice for Specific Directions (FDN 84), be dismissed.