GCS Facades Pty Ltd v Yuanda WA Pty Ltd - [2019] WASC 459

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   GCS FACADES PTY LTD -v- YUANDA WA PTY LTD [2019] WASC 459
CORAM:   MASTER SANDERSON
HEARD:   1 OCTOBER 2019
DELIVERED          :   17 DECEMBER 2019
FILE NO/S:   CIV 2914 of 2018
BETWEEN:   GCS FACADES PTY LTD
Plaintiff

AND

YUANDA WA PTY LTD
Defendant

Catchwords:

Practice and procedure - Applications to strike out paragraphs of further amended statement of claim - Turns on own facts

Legislation:

Nil

Result:

Part of further amended statement of claim struck out

Category: B

Representation:

Counsel:

Plaintiff	:	Mr C Ko
Defendant	:	Mr V Ghosh

Solicitors:

Plaintiff	:	Trinix Lawyers
Defendant	:	Baker And McKenzie - Brisbane

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

BP Refinery (Western Port) Pty Ltd v Shire of Hastings [1977] 16 ALR 363
Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85
Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No. 6] [2016] WASC 218

MASTER SANDERSON:

This was the defendant's application to strike out certain paragraphs of the plaintiff's Further Amended Statement of Claim (FASOC) filed 24 July 2019. In their submissions both parties have referred to the plaintiff as GCS and the defendant as Yuanda. Those are the descriptions I will use in these reasons. Before dealing with the specific complaints made by Yuanda it is necessary to say something about the background facts.
Yuanda engaged GCS to supply and install the secondary framework and to install the sheets of glass that comprise the curtain wall at Optus Stadium in Perth. This was done pursuant to a subcontract dated 28 September 2015. The subcontract was comprised of a signed Formal Agreement and Annexures A – F. A disagreement arose between the parties and on 5 November 2018 GCS commenced proceedings against Yuanda. The Writ that was issued was endorsed with a statement of claim. Yuanda's solicitors maintained there were certain deficiencies in the statement of claim and on 26 March 2019 GCS filed an amended statement of claim. Yuanda's solicitors were still not satisfied and again wrote pointing out alleged deficiencies in the pleading. In due course that lead to the filing of the FASOC. In the meantime, on 12 April 2019, Yuanda filed a request For Further and Better Particulars of the Amended Statement of Claim filed 16 March 2019. A response was filed by GCS on 22 May 2019.
Both parties in their outline of written submissions set out what they say is the current state of the law in relation to pleadings. Not surprisingly each party relied on different cases to support their respective positions. For the purposes of this application it is unnecessary for me to canvass the authorities. However, by way of a broad over-arching statement of principle, I would with respect adopt what was said by Le Miere J in Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd[No. 6] [2016] WASC 218:
The contemporary role of pleadings has to be viewed in the context of contemporary case management techniques and pre-trial directions which include … and the exchange of witness statements and expert reports prior to trial [46].

This action is, in terms of contemporary construction disputes, relatively modest. The FASOC seeks damages in an amount of just over $1 million. While the fact the claim is small cannot excuse a deficient pleading it does highlight the need for proportionality. There is no point in becoming bogged down in tedious pleading disputes at significant cost to the parties when little or nothing is achieved by striving for pleading perfection. In a case such as this there really must be a significant defect in the pleading, one which really goes to the heart of the dispute between the parties, before a strike out order can be made.
Yuanda's complaints about the pleading focus on five groups of paragraphs and one particular paragraph. The first complaint is to paragraphs 5, 5A and 6. In paragraph 5 of the FASOC GCS alleges that:
(a)Yuanda failed to provide access to the site to permit GCS to commence the Works at the time specified under the original programme or subsequently provide access in accordance with the revised programmes;
(b)Between March and June 2016 Yuanda made variation directions to the sub-contract through revisions 4, 5 and 6 of the programme (together the revised programmes); and
(c)Consequently Yuanda directed GCS to significantly change the programme for the completion of the Works namely that the completion would not occur until late 2017.
In paragraph 5A of the FASOC (read with answers 3(a) and 4(a) of the Further Particulars) GCS alleges that the revised programme significantly changed the character of the work which increased the works and the plaintiff was required to complete. In paragraph 6 of the FASOC GCS alleges that it wrote to Yuanda on numerous occasions detailing the need for additional measures, departures from the programme and resulting increasing costs. GCS alleges that Yuanda breached the subcontract by failing to pay the so called 'variation costs'.
Yuanda submits the revised programmes did not change the character of the Works and thus could not constitute directions to vary the Works entitling GCS to costs under the subcontract. Clause 1.15 of Annexure A of the subcontract defined 'variation' to mean:
(a)an increase or decrease in or omission from the Works;
(b)a change in the character or quality of material or work;
(c)a change in the levels, lines, positions or dimensions of a part of the Works;
(d)execution of additional work.
Clause 30.1 of Annexure A of the subcontract states:
The subcontractor shall not vary work unless directed in writing.[1]
[1] Defendant's outline of submissions filed 13 September 2019 par 35 - 36.
GCS alleges that the revised programs constituted variation directions because they changed the character of the work. The alleged change to the character of the work is based on delays in providing access to parts of the site which it is said resulted in changes to the sequence of work and increased costs. Yuanda submits paragraphs 5, 5A and 6 disclosed no reasonable cause of action because access delays that result in changes in the sequence of work do not change the character of the work. Yuanda submits GCS was contracted to supply and install the framework and install the glass sheets comprising the stadium wall as set out in Annexure C of the subcontract. The work itself did not change. The character of the work - its distinctive or essential nature - did not change.
Furthermore Yuanda submits changes in the revised programmes did not constitute variations (as defined in cl 1.15 of Annexure A of the subcontract) and the issue of the revised programmes were not directions to vary the works pursuant to cl 30.1 of Annexure A of the subcontract. As a result Yuanda submits it did not breach the subcontract as alleged.
To further support this submission Yuanda relies on the decision of Flanagan J in Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2017] QSC 85. That case concerned a series of directions issued by Wiggins to CMC. The directions prevented the plaintiff 'from following the planned and contractual methodology and sequencing for the construction' of reclamation bunds (which were designed to dredge oil from earth moving works) and resulted in CMC undertaking the works in a different sequence and using different methodology.[2] It was an issue in the case whether the directions resulted in a change of the character of the work and thus constituted variations. Flanagan J held in circumstances where the bunds as built substantially reflected the bunds as planned the directions were neither properly characterised as directions to undertake variations nor did the directions change the character of the work. Yuanda submits the reasoning is applicable to the present matter because the revised programmes were analogous to the directions considered in CMC and Wiggins. The revised programmes on GCS' pleaded case only changed the sequence and timing of the work they did not change the character of the work. Yuanda further submits there were no formal signed written instructions to undertake additional work. Clause 30.1 of Annexure A of the subcontract requires any variation of the work to be in writing. Clause 3.4 of Annexure D sets out conditions precedent to GCS being paid for the costs of variations. One of these requirements is that a copy of a formal signed Yuanda written instruction must be provided. As no written instructions were provided no claim for payment can be made.
[2] Defendant's outline of submissions filed 13 September 2019 par 41.
It is further submitted by Yuanda the risk of resourcing revised programmes was expressly allocated to GCS. This was a lump sum contract. Various provisions of Annexure A were to the effect that GCS' access to the site might not be continuous, that GCS was to provide all necessary resources to comply with Yuanda's programme which might be updated from time to time and Yuanda could, by written notice suspend performance of all or part of the Works from time to time.[3] In addition there was the following catchall in cl 1.9 of Annexure D:
Yuanda do not guarantee continuity of work on site. The contractor will maintain sufficient staff and supervision on site to maintain the program as amended from time to time.[4]
[3] Defendant's outline of submissions filed 13 September 2019 par 49 - 52.
[4] Defendant's outline of submissions filed 13 September 2019 par 53.
Yuanda maintains it was entitled to update or amend the programme from time to time and that in doing so it was not directing a variation. Consequently for GCS to characterise costs incurred as a result of delays and access and disrupted work as variation is wrong in law. Accordingly the claim for 'variation costs' is misconceived and fails to disclose reasonable cause of action for breach of the subcontract.
In answer GCS maintains Yuanda is making the mistake of looking at the pleaded facts as a cause of action rather than as a set out of facts which if proved may give rise to a right to relief. To emphasise this point counsel maintains that even if proof of the material facts does not give rise to a variation claim they might still give rise to a right to relief under the Australian Consumer Law as pleaded in paragraphs 12 - 21 of the FASOC or an Estoppel Claim as pleaded in paragraphs 22 - 27 of the FASOC.
What is striking about the arguments over these paragraphs is that they do not appear to actually involve a great deal of disputed evidence. GCS says there were delays and changes to the sequence of the Works which amount to variations. Yuanda seems to accept that there were delays and changes to the sequence but says they do not amount to variations. It may be the concessions made by Yuanda as to the delays and changing of the sequence are made solely for the purpose of the strike out application where an argument about facts is not relevant. Even if that is the case this looks more like the sort of argument which might be raised in an application for defendant's summary judgment. In my view while the complaints could be characterised as a proper complaint found a pleading summons it is not one of those cases whether the pleading is unintelligible or so hopelessly miscast that it should be struck out. The case Yuanda has to meet is clearly stated and obvious from the pleadings. In those circumstances I would not strike out the paragraphs of which complaint is made.
The second group of paragraphs of which complaint is made are paragraphs 9, 9A and 9B. In paragraph 9 GCS alleges that it performed the 'variation works' and reasonably undertook 4,500 hours of additional labour over and above the number of hours it reasonably expected to undertake to perform the relevant works. In paragraph 9A of the FASOC GCS alleges it would not have undertaken the alleged additional 4,500 hours of labour if not for the matters pleaded in the FASOC. It further alleges it is impractical for it to disentangle which of those additional hours are attributable to which of those matters and this impracticality is not due to its own conduct. In paragraph 9B GCS alleges it provided details of the additional 4,500 hours of labour reasonably undertaken to perform the 'variation works'. The particulars to paragraph 9B are the logs and timesheets allegedly detailing the additional hours.
Yuanda says that these claims are what are known as 'global/total cost claims'. A global claim made pursuant to a construction contract is one in which a plaintiff contends there were multiple interacting events for which the defendant is responsible and without identifying the precise loss from each event, the plaintiff claims the global loss it says was caused by all events. A 'total costs claim' is one where the plaintiff alleges a number of breaches of contract and quantifies the global loss as the actual cost of work less the contractually expected cost.[5]
[5] Defendant's outline of submissions filed 13 September 2019 par 77 - 78.
Yuanda says paragraph 9 of the FASOC is a total costs claim because the 4,500 hours of additional labour are claimed on the basis that it exceeded the number of hours GCS reasonably expected. GCS pleads that Yuanda directed variations by issuing revised programmess and this resulted in additional hours and additional costs. Yuanda alleges GCS does not attempt to plead the causal nexus between each variation that is alleged to have been directed through the issue of the revised programmes and the additional labour hours that GCS is alleged to have incurred as a result of each variation. Instead GCS pleads that it is impractical to disentangle which of these additional hours are attributable to which variation.[6]
[6] Defendant's outline of submissions filed 13 September 2019 par 79 - 81.
Yuanda points out that total cost claims play significant burdens upon the defendant. These burdens include the need to give extensive discovery of documents relating to the performance of the project, the need to displace the assumption that the defendant is itself responsible for every item of the plaintiff's costs overrun and require the defendant to lead evidence to explain what in fact was the impact of each of the acts complained of in the project.[7] That being so, total cost claims must be treated with caution and GCS must demonstrate that it is impossible or impractical for it to spell out the costs for particular variations.
[7] Defendant's outline of submissions filed 13 September 2019 par 82.
Yuanda says in this case GCS has not demonstrated that it is impractical for it to plead the causal nexus between the variations alleged to have been directed and the additional hours required as a result. It says GCS should be able to identify the line items in the revised programmes that it says are relevant. These relevant line items should be able to be matched to the relevant logs and timesheets by approximate date. Moreover these matters relate directly to GCS' own operation and it is reasonable to suppose GCS has some idea how the alleged variations led to the additional labour hours being incurred.[8]
[8] Defendant's outline of submissions filed 13 September 2019 par 89 - 91.
In my view these complaints are reasonably made. It is difficult to see how there is such complexity in costs associated with particular variation that individual items cannot be teased out by GCS. They were the ones who undertook the work and maintained the appropriate timesheets. It is for them to establish what work was undertaken to deal with each particular variation. On that basis I would uphold the complaints made by Yuanda and paragraphs 9, 9A and 9B ought be struck out.
The third set of paragraphs of which complaint is made are paragraphs 11A, 11B and 11C. Yuanda says these paragraphs do not seek to link specific events or breaches to additional hours of labour attributable to those events or breaches. Once again this is a form of global or total costs claimed. Once again I would accept that argument. The reasoning in relation to paragraphs 9, 9A and 9B apply.[9]
[9] Defendant's outline of submissions filed 13 September 2019 par 106.
The fourth group of paragraphs of which complaint is made are paragraphs 12.3 and 12.4. In these paragraphs GCS alleges further or in the alternative to the matter set out in paragraphs 5‑10 of the FASOC that Yuanda caused or was responsible for panel modifications and decreased clearances for working in FT O2 and the inconsistent supply of product by Yuanda to GCS. In response to a request for particulars GCS did supply some particulars of this complaint but as is alleged by Yuanda the response is both illogical and impermissibly vague.[10] I accept there is a failure on the part of GCS to adequately particularise the paragraphs complained of and that as a result the paragraphs are vague and embarrassing. While I would not strike out these paragraphs if they are to remain in the pleading they must be properly particularised.
[10] Defendant's outline of submissions filed 13 September 2019 par 108 - 115.
The fifth group of paragraphs of which complaint is made at paragraphs 16.1 and 16.2. These paragraphs alleged GCS has undertaken so called 'Additional Works' by undertaking works in an inefficient manner, knowing areas would need to be visited on multiple occasions and double handling a significant amount of materials to ensure areas of the project site with only partial access could be attended to. Yuanda says the allegations contained in both paragraphs are impermissibly vague. That complaint is made out. The complaints are overly general and should be more carefully particularised. While these paragraphs will not be struck out, they must be properly particularised if they are to remain in the pleading.
Finally complaint is made at paragraph 29 of the FASOC. This paragraph pleads an implied term of the Retention Agreement to the effect that the retention sum would be returned upon practical completion. The particulars to paragraph 29 say that the term was implied to give business 'efficiency' to the Retention Agreement. Yuanda says that if a term is to be implied facts must be pleaded which will then lead to the necessary implication. Reference is made to the High Court decision in BP Refinery (Western Port) Pty Ltd v Shire of Hastings [1977] 16 ALR 363 at 376.[11] This complaint is well made. The pleading in its present form is unsatisfactory and cannot stand. Paragraph 29 should be struck out with leave to re-plead.
[11] Defendant's outline of submissions filed 13 September 2019 par 125 - 129.

Orders

1.Paragraphs 5, 5A and 6 to remain.
2.Paragraphs 9, 9A and 9B are struck out.
3.Paragraphs 11A, 11B and 11C are struck out.
4.Paragraphs 12.3 and 12.4 are not struck out but if they are to remain they must be properly particularised.
5.Paragraphs 16.1 and 16.2 are not struck out but if they remain they must be properly particularised.
6.Paragraph 29 is struck out with leave to re-plead.
7.Leave is granted to the plaintiff to file a substituted statement of claim within 28 days of publication of these reasons.

Unless one or other of the parties wishes to do so I would not see it as necessary the substituted statement of claim be marked up to show earlier versions of the statement of claim. I will hear the parties as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
17 DECEMBER 2019