DM Drainage & Constructions Pty Ltd as trustee for DM Unit Trust Trading as DM Civil v Karara Mining Ltd [No 3] - [2018] WASC 398

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   DM DRAINAGE & CONSTRUCTIONS PTY LTD as trustee for DM UNIT TRUST TRADING AS DM CIVIL -v- KARARA MINING LTD [NO 3] [2018] WASC 398
CORAM:   VAUGHAN J
HEARD:   12 DECEMBER 2018
DELIVERED          :   13 DECEMBER 2018
PUBLISHED           :   18 DECEMBER 2018
FILE NO/S:   CIV 2410 of 2012
BETWEEN:   DM DRAINAGE & CONSTRUCTIONS PTY LTD as trustee for DM UNIT TRUST TRADING AS DM CIVIL
Plaintiff
AND
KARARA MINING LTD
Defendant

Catchwords:

Practice and procedure - Application to amend statement of claim - Application made during trial - Whether appropriate to grant leave to amend

Legislation:

Rules of the Supreme Court 1971 (WA), O 21 r 3

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	F C Corsaro SC & C L Donald
Defendant	:	P Cahill SC & D J Pratt

Solicitors:

Plaintiff	:	Lavan
Defendant	:	Jackson McDonald

Case(s) referred to in decision(s):

Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387

VAUGHAN J:

(These reasons were delivered orally. They have been edited to correct matters of grammar and infelicity of expression. Authorities and other references have also been footnoted rather than appearing in the body of the reasons.)

Introduction

The plaintiff applies, by notice of motion dated 10 December 2018, for leave to amend its statement of claim. Certain amendments were foreshadowed on 30 November 2018 after the plaintiff had completed a five-day opening. Other amendments were foreshadowed on 6 December 2018.
Only one of the proposed amendments is contentious. That is proposed par 13V as foreshadowed on 30 November 2018.
The application is supported by an affidavit of the plaintiff's solicitor, Gregory Nairn, sworn 10 December 2018. The defendant opposes the application so far as it seeks to introduce par 13V. The defendant relies on an affidavit of its solicitor, Anthony Bereyne, sworn 10 December 2018 in opposition to the application.
Paragraph 13V is sought to be introduced as part of what the plaintiff refers to as its 'equitable estoppel reprice claim'.
At existing pars 13A to 13S the plaintiff pleads a series of alleged conduct. At par 13T the plaintiff pleads that, in the premises of that conduct, the defendant induced it to assume that it could proceed with works on the basis that there would be a reprice process as pleaded. The plaintiff then pleads at par 13U that in reliance on that assumption it acted to its detriment in various ways. Later, at par 20B, it is pleaded that in the premises it is unconscionable for the defendant to have failed to assess the reprice submitted by the plaintiff on 21 April 2011. The plaintiff claims that it is entitled to an assessment of the reprice.
There is no plea in terms of the fourth integer of the well-known passage of Brennan J in Waltons Stores (Interstate) Ltd v Maher where his Honour stated:
To establish an equitable estoppel it is necessary for the plaintiff to prove that … (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so … [1]
[1] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 388.
The plaintiff pleads an assumption. That is par 13T. The plaintiff pleads detrimental reliance. That is par 13U. But there is no express plea that the defendant knew or intended the plaintiff to act or abstain from acting in reliance on the assumption. It is that which is sought to be overcome by the introduction of par 13V.
Proposed par 13V is in these terms:
KML [the defendant] knew alternatively intended that DM Civil [the plaintiff] would:
13V.1make the assumptions referred to in paragraph 13T above; and
13V.2act to DM Civil's detriment in the manner described in paragraph 13U above.
Certain particulars of par 13V have been proffered. The plaintiff has identified the natural persons who are said on behalf of the defendant to have had the requisite knowledge or intention. Also, while it has not yet happened, senior counsel for plaintiff has said that by the end of tomorrow the plaintiff can identify all the documents on which the plaintiff will rely to make good the allegation. Importantly, the plaintiff has said that it does not intend to introduce any new oral evidence from a witness called by it to establish the allegation. That is, it will not seek to enlarge its witness statements. Rather, the allegation is to be proven by documents and cross-examination of the defendant's witnesses.

Basis for opposition for leave to amend

In opposing leave, senior counsel for the defendant made five main submissions. In essence, however, it was contended that the breadth of the amendment was such that, having regard to the extent of the actual and potential prejudice caused by the amendment, leave ought to be refused.
The essential submissions on behalf of the defendant were as follows.
(1)First, proposed par 13V was a very broad plea not tied to the allegations in pars 13A to 13U. That is, it was said that par 13V was unconstrained by pars 13A to 13U. The defendant made the point that it did not know what documents were relied on or what, if any, conversations were relied on. This affected the defendant in the ongoing conduct of the case. For example, it might be that matters should be raised in cross‑examining the plaintiff's witnesses.
(2)Second, it was pointed out that the plaintiff itself had said that the plea may not be necessary for the plaintiff's case. Why, the defendant asked rhetorically, should it be exposed to the prejudice of a late amendment if the amendment may prove unnecessary?
(3)Third, the defendant contended, referring to Mr Bereyne's affidavit, that if it had to answer the plea, it would be prejudiced. That was all the more so given ongoing trial commitments.
(4)Fourth, the defendant expressed concern that if the amendment resulted in additional witnesses or additional cross-examination the evidence phase of the trial might not be completed by the time presently allocated, that is, by the end of February 2019.
(5)Fifth, the defendant said that the plaintiff's delay in making the amendment was unexplained in circumstances where the possible deficiency had been apparent to all since mid‑September 2018.
At yesterday's hearing there was considerable debate as to whether a plea of knowledge or intention that the plaintiff would rely on the alleged assumption was inherent in the current pleading. The defendant contended that it did not understand the plaintiff's case in that way and said that it thought the plaintiff was seeking to advance its unconscionability case on a different basis. It was said that a plea of knowledge was not apparent in the way in which the plaintiff had run the case to date. For its part, the plaintiff said that the defendant knew that this was an equitable estoppel case and that meant that the defendant's knowledge of the plaintiff's actions was self‑evidently in issue.
I do not consider it necessary to resolve who knew what and when - at least as far as the pleading point is concerned. It is evident from the defendant's written opening submissions that in mid‑September 2018 the defendant was approaching the case on the basis that the plaintiff had not advanced the plea in terms of Brennan J's fourth element. I am content to approach the application for leave to amend on the basis that this was the position.

Applicable legal principles

I turn then to address the applicable legal principles on the application to amend the pleading.
Order 21 of the Rules of the Supreme Court1971 (WA) concerns the amendment of writs and pleadings. Ordinarily O 21 r 3(1) permits a party to amend a pleading without the leave of the court at any time up to seven weeks prior to the commencement of the trial. Order 21 r 3(3) was introduced in July 2010. It involved a significant change to the procedure relating to amendments, although amendments without leave may still be disallowed.
The effect of O 21 r 3(3) is that the court's supervision over amendments to pleadings is now primarily concerned with the period immediately before and at trial. Order 21 r 5 provides that the court may allow the amendment of a writ or pleading on such terms as to costs or otherwise as may be just and in such manner as the court may direct. The principles concerning whether the amendment should be allowed are not prescribed by O 21 r 5. They involve the exercise of a discretion in the interest of justice.
The overarching principles concerning amendment of pleadings were considered by the High Court in Aon Risk Services Australia Ltd v Australia National University.[2] In the joint judgment of the plurality their Honours said:
An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend.[3]
[2] Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175 (Aon).
[3] Aon [111].
The principles in Aon were applied by Beech J, as his Honour then was, and summarised in the context of the Rules of the Supreme Court 1971 (WA) in Hightime Investments Pty Ltd v Lungan [No 2].[4] Beech J made ten observations:
[4] Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [52].
(1)The effect of an amendment on the court and other litigants is relevant.
(2)There is no right to amend to introduce an arguable case and it is wrong to say that only in extreme circumstances would a party be shut out from litigating an arguable case.
(3)Justice requires that the parties have a proper opportunity to plead their case, but limits may be placed on re-pleading when delay and cost are taken into account.
(4)A just resolution does not mean that a party will always be permitted to raise any arguable case at any point in a proceeding on payment of costs, even indemnity costs.
(5)The inevitable strains of litigation must be taken into account in weighing the adverse consequences of delay - this applies to natural persons and other litigants.
(6)The nature and importance of the amendment to the party seeking to amend must be taken into account.
(7)Attention must be given to the extent of the delay, the costs associated with it, the prejudice which might reasonably be assumed to follow from it and any prejudice that is shown.
(8)The point in the litigation relative to the trial may be an important consideration.
(9)Where a discretion is sought to be exercised in favour of a party, an explanation will be called for.
(10)The point can be reached where a party has had a sufficient opportunity to put its case.
Beech J's observations were noted and adopted by Edelman J in Sino Iron Pty Ltd v Mineralogy Pty Ltd.[5] Having noted the ten points enunciated by Beech J, Edelman J offered two additional matters of moment in the particular context of the Rules of the Supreme Court. They were:
(1)O 1 r 4A provides that a goal of the Supreme Court's practice and procedure is the elimination of delay; and
(2)O 1 r 4B provides for the principles of case flow management, including:
(a)the just determination of litigation as well as the following (which are, in any event, aspects of this par (a));
(b)the efficient disposition of the court's business, the efficient use of judicial resources, the timely disposal of that business and proportionality.
[5] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2014] WASC 406 [31].

Disposition

I turn then to apply those principles. In so doing I must first describe the nature of the litigation before me and the stage that has been reached. The criterion of interests of justice is necessarily evaluative and fact‑specific. It should be noted, however, that the parties are well‑aware of the nature of the litigation and the stage that it has reached. Accordingly, I will address the current position of the litigation in an abbreviated fashion.
Today is day 12 of what was originally listed as an 80 day trial. Due to longer sitting days - trying to fit five days into four - and having regard to some unavailable dates, that time period has reduced to a provisional listing of some 56 days which equates to 70 normal sitting days. The parties have opened. The plaintiff has also commenced its evidence. It is anticipated with the Christmas break that the plaintiff will not close its case until mid‑January 2019. Evidence is expected to conclude at the end of February with closing addresses in May.
The matter was set down for trial in late 2017. At that stage the plaintiff's equitable estoppel reprice claim had been in its present form for at least two years. The parties prepared their evidence based on the current state of the pleadings. The evidence is voluminous by any measure.
Originally, the trial was scheduled to commence on 1 October 2018. Through no fault of the parties, commencement of trial was delayed. Despite the delayed start to trial, my assessment is that the ongoing demands of the trial present challenges for all involved. However, the parties are represented by experienced and highly competent senior counsel who are supported by large commercial litigation firms.
The application to amend thus arises in a very unusual factual scenario. The proposed amendment is very late. However, it does not introduce a new cause of action. Rather, it augments a cause of action that has been on foot for more than three years and the amendment is sought in the context of a long trial. The amendment will not necessitate any further evidence‑in‑chief from the plaintiff. Indeed, the plaintiff has eschewed the possibility that it will seek to adduce any additional evidence on the allegation by witness statement. Rather, directed as it is to the defendant's knowledge and intention, the amendment will impact on the preparation and presentation of the defendant's case. In that regard, the defendant's witnesses will not be called for some five weeks.
Balancing the various case management considerations and assessing the interests of justice - giving weight to the object of promoting the just determination of the litigation - I am persuaded that the amendment ought to be allowed. However, I will impose some conditions to ameliorate the prejudice that is suffered by the defendant as a result of the late amendment.
I have reached this conclusion for essentially five reasons.
First, while I accept that the amendment involves the introduction of an additional factual inquiry to what is already a fact dense case, it is an issue which is associated with matters that have been in issue for some time. The question of unconscionability is plainly in issue. The defendant's knowledge and intention as to the steps the plaintiff might have taken in reliance on the alleged assumption is wrapped up in the question of unconscionability.
Second, the amendment will not entail any additional witness statement evidence on the part of the plaintiff.
Third, to the extent that the amendment causes prejudice to the defendant, and I accept that there will be some prejudice, that prejudice can be minimised. In particular, if the defendant wishes to put on material in answer to the allegation, there is, in my view, time for it to do so.
Fourth, the amendment is not such that it will cause any adjournment of the trial.
Finally, and in my view most importantly, justice requires that this matter - which represents a possible deficiency in the pleadings - be addressed where it is possible to do so without substantial injustice to the defendant. In a case of this size and evident importance to the parties, it would be unthinkable for the plaintiff to fail on a mere pleading point. Such an outcome would, in my view, bring the due administration of justice into disrepute among right-thinking people.
In that regard the modest nature of the amendment is, nevertheless, of potential real importance to the just determination of the litigation.
I have carefully considered the submissions made by senior counsel for the defendant in opposing the amendment. There is much force in those submissions. Nevertheless, balancing all the relevant factors in the unusual circumstances of this case, I consider that the interests of justice favour permitting the amendment.
Responding directly to the defendant's submissions, I note as follows.
I do not view proposed par 13V as itself being as wide and expansive as contended by the defendant. It is not, in my opinion, 'open textured'. Rather, it is a plea as to knowledge and intent and arises in the context of particular alleged assumptions and alleged acts of reliance as pleaded in pars 13T and 13U. I accept that the pleas in pars 13T and 13U are not expressed with the precision that one might expect. That is particularly the case with par 13T. To that extent there is a derivative effect as to the precise ambit of what is alleged as to knowledge and intent on the part of the defendant in proposed par 13V. But the deficiency in pars 13T and 13U is something that the defendant has chosen to live with and to proceed to trial notwithstanding. I do not perceive the difficulty in understanding par 13V as has been asserted by Mr Bereyne in his affidavit. The real difficulty, in my view, is with par 13T and that has been the case since 2015.
It is the case, however, that further particularisation ought to be provided as to the allegation in proposed par 13V. Particulars of knowledge ought always be provided - see O 20 r 13(4) of the Rules of the Supreme Court. That obligation is all the more so where, as here, there is a late amendment and the other party is facing potential prejudice in dealing with the new allegation.
Senior counsel for the plaintiff has said that the plaintiff can inform the defendant of the documents the plaintiff relies on in support of the plea. That must be done. In addition, I consider that particulars must be provided of all conversations and other facts relied on in support of the plea. An obligation to do so will be imposed as a condition of the grant of leave to amend.
As to the necessity, or otherwise, of the proposed plea, it is unnecessary to come to any final view on that matter of law now. That may be a question to be finally determined at the conclusion of the trial. It is enough for now that the plea may be necessary. On that basis, the amendment is of importance. The interests of justice are better secured in allowing the question to be resolved on its substantive merits. The plaintiff should not be shut out from litigating its equitable estoppel reprice claim in a manner consistent with the formulation of Brennan J in Waltons Stores (Interstate) Ltd v Maher.
It is the question of prejudice to the defendant which gives me the most pause in permitting the amendment.
The plaintiff has identified four natural persons who were said to have the alleged knowledge or intent on behalf of the defendant. Two of those are already to be called to give evidence. There is sufficient time, in my view, for them to be proofed and to provide a further witness statement to deal with the additional allegation if the defendant deems it appropriate to do so. Alternatively, such evidence could be led as evidence‑in‑chief.

Another potential witness, Mr Morrow, is contactable.
Mr Bereyne has, however, deposed to anticipated difficulties in obtaining cooperation from the last potential witness, Mr Murdoch. However, this is as a result of the terms of Mr Murdoch's departure from his employment with the defendant in 2013. Any difficulty experienced is not the result of a late amendment. It would have been experienced had proposed par 13V been introduced in 2015 with the rest of the equitable estoppel reprice plea.
I also note that Mr Bereyne has deposed to an inability to proof the potential witnesses. He says at pars 53 and 54 of his affidavit:
In addition to senior counsel, junior counsel and myself, Jackson McDonald has a core team of three solicitors and one member of our legal support team engaged in the preparation and management of this case.
I know from my own knowledge that each of these people is currently devoting all or almost all of their working hours to this case and, in particular, to attendance at Court, conferences with counsel and on preparation for cross‑examination of the plaintiff's witnesses, including experts. Even if each of the potential witnesses referred to above were available to give evidence, in my opinion, we would not reasonably be able to proof them and have their proofs settled by counsel within the time currently allocated for trial.
I accept, of course, that Mr Bereyne genuinely holds that opinion. But I do not accept that the defendant's legal team is unable to address any further evidence within a reasonable time before the defendant is expected to commence calling its witnesses. The defendant has a very large legal team. I have observed that at all times there have been at least three present in court to assist senior and junior counsel. On occasions there has been four. That level of assistance is a luxury that is not required. It is evident to me that senior counsel for the defendant is fully across the documentary material and well-capable of conducting the cross-examination with simply the assistance of junior counsel. There is no reason, in my view, as to why one or two of the instructing solicitors could not absent themselves from court to conduct any necessary proofing.
That task will, in any case, be lessened by the additional particulars that will be required as a condition of leave to amend.
There is a further issue as to prejudice. Senior counsel for the defendant has commenced cross‑examination of the plaintiff's witnesses. It may be that additional matters ought to be the subject of cross‑examination as a result of the amendment. It is difficult, I acknowledge, for the defendant to form a view on that without the additional particulars. In my view, any possible prejudice in this regard is best addressed by requiring that witnesses be subject to being recalled if senior counsel for the defendant forms the view that this is necessary to properly address the amendment. I am only prepared to grant leave to amend subject to an appropriate undertaking in this respect on the part of the plaintiff.
I do not share the defendant's pessimism that the additional allegation may result in additional evidence or witnesses that may see the evidence phase of the trial not being completed by the end of February. I perceive that there is some additional capacity in the trial timetable in any case. For example, there are very generous allowances for the cross‑examination of the defendant's witnesses. To the extent that there is a risk of not completing the evidence, the parties and the court will have to accommodate longer hours in any case.
The last matter is the unexplained delay in the application.
It is true that the plaintiff was on notice of a possible necessity for such an amendment by 18 September 2018. However, in circumstances which were not the fault of the plaintiff, its then senior counsel had to withdraw from the case. Replacement senior counsel had to be engaged at short notice. New senior counsel for the plaintiff has had to come to grips with a very large and complex case in a short period of time so as to be able to open on 26 November 2018. From a standing start in early October 2018 that would have been a very difficult task. No doubt the application could have been brought at an earlier time and there were opportunities to do so. But in the challenging circumstances that confronted the plaintiff and its new senior counsel in the lead-up to trial, I cannot accept that there has been any blameworthy or disentitling delay in not bringing an amendment application in a more timely way.
In any case, the delay must be balanced with the other factors in arriving at an overall assessment of the interests of justice.

Conclusion and orders

For the reasons given, I assess that the prejudice caused by the late amendment can be accommodated in the context of this unusually long trial. As a result, the interests of justice are best served by allowing the amendment so that the case is fought and determined on its substantive merits. For these reasons, I will make orders in the terms foreshadowed this morning.
The orders made are as follows:
1.The court notes:
(a)the plaintiff's statement, by its senior counsel, that as and by way of further and better particulars of proposed paragraph 13V of the amended statement of claim the natural persons within the defendant who it is alleged knew or alternatively intended in terms of paragraph 13V are:
(i) Sean King;
(ii) Phil Pass;
(iii) Rob Morrow; and
(iv) Steve Murdoch; and
(b)the plaintiff's undertaking, by its senior counsel, that it will if requested by the defendant recall a witness where senior counsel for the defendant informs the plaintiff that counsel believes that it is necessary for the defendant to cross-examine the witness in relation to proposed paragraph 13V of the amended statement of claim.
2. The plaintiff have leave to amend its statement of claim in accordance with:
(a) the minute of proposed re-amended papers for the judge dated 30 November 2018 (in all respects other than in respect of Schedule L to the statement of claim); and
(b) the minute of proposed amended substituted Schedule L dated 6 December 2018 (in respect of Schedule L to the statement of claim).
3. By 5 pm on Friday, 14 December 2018 the plaintiff:
(a) file and serve a list identifying all documents on which it relies in support of paragraph 13V of the amended statement of claim;
(b) file and serve particulars of all conversations relied on in support of paragraph 13V of the amended statement of claim, giving full and precise particulars of:
(i) the date and time of the conversation;
(ii) the place of the conversation;
(iii) the participants to the conversation; and
(iv) the substance of the conversation; and
(c)file and serve particulars of any other fact, matter or circumstance relied on in support of paragraph 13V of the amended statement of claim.
4. The plaintiff do pay the defendant's costs thrown away by reason of the amendments.
5. The defendant have leave to file and serve further witness statements to answer the allegation in paragraph 13V of the amended statement of claim (including, if necessary, witness statements as to why the defendant is unable to adduce evidence from a particular witness).

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CC
Research Associate to the Honourable Justice Vaughan
18 DECEMBER 2018