Electricity Trust of South Australia (Respondent) v Union Insurance Company Limited and Ors (Appellants) No. Scgrg-94-1591 Judgment No. 6241 Number of Pages 5 Procedure

[1997] SASC 6241

IN THE SUPREME COURT OF SOUTH AUSTRALIA

PERRY, J

Practice and procedure - application to strike out part of defence - a Master allowed the plaintiff's application to strike out parts of the defence on the ground that they were under-particularised - he ruled that the defendants could apply to amend later if the information necessary to furnish the particulars, peculiarly within the knowledge of the plaintiff, was ascertained when discovery was made - observations as to the difficulty posed when a defendant wishes to raise a line of defence as to which full particularity can only be pleaded after discovery has been completed appeal from the Master's order allowed to the intent that the impugned parts of the defence should stand and the strike-out application adjourned to be dealt with after discovery had been completed and any amendments to the defence had been made.

Supreme Court Rules R 58.01 and 58.04, referred to. Beneficial Finance Corporation and Ors v Price Waterhouse (Reg) Full Court, per Perry J, 23 December 1996, unreported judgment 5964, available in SCALEplus); Mulley v Manifold (1959)103 CLR 341, considered.

ADELAIDE, 20 May 1997 (hearing), 9 July 1997 (decision)

#DATE 9:7:1997

#ADD 23:7:1997

Appearances:

Appellants:

Mr A Besanko Qc with him Mr I Robertson

Solicitors: Piper Alderman

Respondent:

Counsel, Mr R White

Solicitors: Mouldens

Order: Appeal allowed to the intent that the order under appeal be quashed, that the further amended defence (court file document 22) stand, and that the application to strike out the paragraphs of that defence now in question be adjourned to a date to be fixed pending completion of the process of discovery and the making of any further amendments to the defence which might be permitted in the light of that discovery.

PERRY J

This is an appeal from an order made by a Master in which he directed that a number of paragraphs of the defence filed on behalf of the defendants be struck out. The Master gave short reasons which I will set out as a convenient means of explaining the issues on the appeal. The reasons were published on 25 March 1997 and are as follows: "In this action the plaintiff seeks to recover from the defendants moneys paid in relation to insurance claims arising from the 1983 bushfires. Various agreements were negotiated in respect of the fires in specific areas. It is not necessary to consider this in detail for present purposes.

In the course of its pleadings, the plaintiff claims that certain payments were made as a result of a mistake of fact or a mistake of law, induced by the actions of a representative of the defendants, that the defendants have been unjustly enriched by the same actions and that they are estopped again by the same actions.

The defendant has pleaded, in its amended defence in paragraphs 18.11, 21.5.2, 24.6, 25.1, 15.1.2, 25.2 and 25.1.3 that the plaintiff did not rely on the defendants' representatives (sic) action, but relied on the action and advice of its own legal advisers.

The plaintiff seeks to strike out the whole of the defence, on the grounds that the pleadings in the paragraphs mentioned are simply bald statements with no supporting particularity, and they are of such consequence to the whole defence that the whole defence should be struck out.

The defendants acknowledge that there is not the requisite particularity, but say that this information is peculiarly within the plaintiff's own knowledge, and that the defendants will not be able to particularise the pleas until such time as they have obtained discovery and inspection of documents.

It seems to me that the defendants are, to some extent, putting the cart before the horse. If and when the defendants have the relevant information to enable them to provide the particularity, they should at that stage seek to amend their defence.

I agree that the offending portions of the pleadings should be deleted, but I do not consider that it would justify striking out the whole of the defence. It is obvious that the removing of the offending portions of the pleading will necessitate some tidying up." Before going any further, I should correct one observation made in those reasons. In the fourth paragraph the learned Masters says:

"The plaintiff seeks to strike out the whole of the defence ...".

The application was not to strike out the whole of the defence. The application (court file document 23) was to strike out only four paragraphs of the amended defence, namely paragraphs, 18.11, 21.5.2, 24.6 and 25.

In fact the order which the learned Master went on to make after publishing the reasons which I have just quoted was directed to those four paragraphs (although in the case of paragraph 25, he referred to the various sub-paragraphs). The terms of the order, although favourable to the plaintiff (the respondent to the appeal), were expressed in a rather indirect way. The order was: "1. Leave to the defendants within 14 days to submit to the plaintiff's solicitors a proposed amended defence which deletes the offending portions in paragraphs 18.11, 21.5.2, 24.6, 25.1, 25.1.2, 25.2 and 25.1.3 and makes any other consequential adjustments.

2. The plaintiff's solicitors to advise in writing within 7 days of receipt of the proposed amended defence whether they consent to the filing of the defence and, if not, the reasons why not." I must say that in my opinion that is not an appropriate form of order where there is a successful application brought to strike out parts of the pleading. In such case the order should be that the relevant parts of the pleading be struck out, and if it is necessary for some consequential adjustments to be made to the pleading, leave should be given to file a fresh pleading, omitting the pleas ordered to have been struck out, and making any consequential amendments.

It is not appropriate to create a situation in which an opposing party can say whether or not they consent to the filing of a pleading. If they do not consent, there would inevitably be some other interlocutory application which the learned Master would then have to deal with without an amended pleading having been filed. I do not regard that as a satisfactory way to ensure that an action is proceeded with expeditiously.

There is always a difficulty with a defendant who wants to raise a line of defence as to which full particularity can only be pleaded after discovery has been completed. It is not uncommon to see in a pleading the assertion that the pleader is unable to furnish further particularity until discovery has been completed. I have never regarded such a plea as necessarily bad.

Of course, a matter pleaded by way of defence should not be permitted to stand if it amounts to pure speculation on the part of the defendants, is under-particularised, and if there is no prospect of proper particulars being given.

But in this matter it seems clear enough that throughout, the plaintiff was in receipt of legal advice from Mouldens. In those circumstances, it is an obvious, and I would have thought proper line of defence for the defendants to pursue, to assert that it was the legal advice, rather any representation given by the defendants or their agents, which was causative of any misapprehension on the part of the plaintiff relating to the recoverability of the payments in question.

This case is an example of the fact that questions of the timing of discovery and completion of the pleadings are not always easy to resolve.

True it is that SCR R 58.01(1) provides for the filing and delivery of lists of documents "within 21 days after the close of pleadings". But pursuant to SCR R 58.04, the court may, on an application for discovery made at any stage of the proceedings, order the filing and delivery, inter alia, of a list of documents.

It is common place, particularly in larger matters, to direct discovery to be made before the pleadings are completed. Commonly, before a plaintiff institutes proceedings, he or she will have assembled the documents thought to be relevant to the case. If this was not to be so, one would have to raise the question whether the proceedings have been instituted without appropriate preparation and advice.

I repeat what I said in Beneficial Finance Corporation and Ors v Price Waterhouse (Reg):

"So that nowadays, if it seems convenient to do so, the court does not wait for the completion of pleadings before directing discovery. As I have said, parties may be taken to realise what documents they have which relate to the proceedings and would sensibly be regarded as discoverable within the proceedings. The days are past when the courts were distracted by arid arguments over the niceties of the precise joinder of issues in the context of discovery. The importance of the Mulley v Manifold formulation does not lie in the words 'matter in issue' but in the concept that the documents must fairly be regarded as relating to the advancement of a party's own case or the defence of the opposing party's case." But as I have already acknowledged, questions of timing of discovery and pleadings are not always easy to resolve. When it is plain that there is sufficient substance in a defence to allow it to stand, but a lack of particularity, the court has to make a decision whether or not to allow the pleading to go forward only to be amended later after discovery has been completed, or to permit the filing of the pleading to be delayed pending completion of discovery. Cases will differ as to what approach should be adopted by the court when those situations arise.

Generally speaking, the approach to pleading and discovery these days is very much conditioned by what seems to be fair and reasonable to enable the parties to put forward the case which they wish to present, and at the same time to ensure that pleadings are not unduly delayed or undue costs incurred by pleadings going into a number of editions.

Dealing specifically with the situation which has arisen in this case, and having regard to the observations which I have made, I incline to the view that the proper course would have been to allow the impugned paragraphs of the defence to stand but to direct that the defendants give further and better particulars of those paragraphs of the defence following completion of discovery. To that end, the application to strike out the relevant paragraphs should have been adjourned to a date to be fixed.

But it does not follow that the appeal should be allowed, as it is necessary for the appellant to demonstrate that the learned Master fell into error as opposed to adopting one of two possible courses legitimately open to him.

The answer to that is that the course which I have indicated ought to have been followed would have been much more likely to forestall arguments as to the scope and adequacy of discovery which might arise if the matter was to be left on the basis ordered by the Master. If the order is left to stand as it is, there will be no specific pleading raising as a ground of defence the matters alleged in the impugned paragraphs. In those circumstances, the mere fact that the plaintiff's state of mind is referred to incidentally in its statement of claim may not be sufficient to provide a frame work within which to resolve the argument that will inevitably arise as to the discoverability of the documents which record the nature of the legal advice given to the plaintiff. A much sharper focus to those arguments will be provided if the impugned paragraphs of the defence were to be allowed to stand, albeit in their under-particularised state.

The inevitable argument which will arise as to the discoverability of documents relating to the ground of defence sought to be raised by those paragraphs will no doubt involve consideration of the question whether there has been a waiver of privilege on the part of the plaintiff of documents recording the legal advice which it received at the relevant time. While it is true that the balance of authority is in favour of the view that any question of waiver of privilege is to be determined by the assertions made in a plaintiff's statement of claim rather than in a defence, I think it better that the defendants be as specific as they can, and at least identify the line of defence which they wish to raise, even though it will have to be particularised later.

If the defendants eventually do not secure access to documents necessary to provide a basis for better particularisation of the relevant paragraphs of the defence, the adjourned application to strike out those paragraphs might then be entertained if the plaintiff chooses to bring it on.

The appeal will be allowed to the intent that the order under appeal be quashed, that the further amended defence (court file document 22) stand, and that the application to strike out the paragraphs of that defence now in question be adjourned to a date to be fixed pending completion of the process of discovery and the making of any further amendments to the defence which might be permitted in the light of that discovery.

I should say that I am not unmindful of the argument put by the plaintiff that to allow the amended defence to stand means that the plaintiff's solicitors may be put in a position of conflict, which might in turn mean that the plaintiff may have to engage other solicitors. But the potential of conflict has already arisen and its existence is not dependent upon the state of the pleadings.

Before parting with the matter, I express my concern that an action commenced in September 1994 is still at a stage where its progress is bogged down by essentially unproductive arguments about the pleadings. That the pleadings have proceeded through more than one edition is itself indicative of a failure by the solicitors concerned to obtain adequate instructions and put forward a proper pleading initially. I do not overlook that it is suggested that some amendments to the defence, indeed, the impugned amendments, were triggered off by amendments to the statement of claim, but it is unfortunate that the statement of claim had to be amended in the first place.

In almost every case which has come to trial before me in the civil jurisdiction in the last year or two there has been more than one edition of the pleadings, associated with arid and unproductive arguments in support of strike-out applications or arguments over the adequacy of particularity.

The Masters' jurisdiction is a particularly important means of ensuring the prompt and orderly disposal of interlocutory proceedings consistently with case flow management procedures. I offer no criticism of the Master or Masters who may have been involved in the pre-trial proceedings to date in this matter, but appropriate directions should be given in order to ensure that the arguments over pleadings and discovery be put to rest promptly and the action brought to trial without further delay.

I will hear the parties as to costs.