H B Brady Co Pty Ltd v MBT (Australia) Pty Ltd
[2003] WASC 56
H B BRADY CO PTY LTD -v- MBT (AUSTRALIA) PTY LTD & ANOR [2003] WASC 56
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 56 | |
| Case No: | CIV:2066/1999 | 17 MARCH 2003 | |
| Coram: | MASTER NEWNES | 26/03/03 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | H B BRADY CO PTY LTD MBT (AUSTRALIA) PTY LTD (ACN 000 450 288) DEGUSSA AKTIENGESELLSCHAFT |
Catchwords: | Practice and procedure Application to set aside service of notice of writ Limitation point Turns on own facts |
Legislation: | Limitation Act 1935 (WA), s38(1) Rules of the Supreme Court 1971 (WA), O 18 r 6, r 8, O 20 r 19(1)(b), r 19(1)(c) |
Case References: | Agar v Hyde (2000) 201 CLR 552 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Wardley Australia Ltd & Anor v State of Western Australia (1992) 175 CLR 514 Calmao Pty Ltd v Stradbroke Waters Co Owners Cooperative Society (1987) 89 ALR 507 Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 GRE Insurance Limited v Bristile Ltd (1991) 5 WAR 440 Jobbins v Capel Court Corporation Ltd (1989) 91 ALR 314 Ketteman v Hansel Properties Ltd [1987] 1 AC 189 Letany v Cooper [1965] 1 QB 232 Ronex Properties Ltd v John Laing Construction Ltd [1983] 1 QB 398 Swingcastle Ltd v Gibson (1990) 1 WLR 1223 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MBT (AUSTRALIA) PTY LTD (ACN 000 450 288)
First Defendant
DEGUSSA AKTIENGESELLSCHAFT
Second Defendant/Third Party
Catchwords:
Practice and procedure - Application to set aside service of notice of writ - Limitation point - Turns on own facts
Legislation:
Limitation Act 1935 (WA), s38(1)
Rules of the Supreme Court 1971 (WA), O 18 r 6, r 8, O 20 r 19(1)(b), r 19(1)(c)
Result:
Application dismissed
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr R J Nash
First Defendant : No appearance
Second Defendant/Third Party : Mr L F A Nixon
Solicitors:
Plaintiff : Nash Clabey
First Defendant : No appearance
Second Defendant/Third Party : Clayton Utz
Case(s) referred to in judgment(s):
Agar v Hyde (2000) 201 CLR 552
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Wardley Australia Ltd & Anor v State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Calmao Pty Ltd v Stradbroke Waters Co Owners Cooperative Society (1987) 89 ALR 507
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
GRE Insurance Limited v Bristile Ltd (1991) 5 WAR 440
Jobbins v Capel Court Corporation Ltd (1989) 91 ALR 314
Ketteman v Hansel Properties Ltd [1987] 1 AC 189
Letany v Cooper [1965] 1 QB 232
Ronex Properties Ltd v John Laing Construction Ltd [1983] 1 QB 398
Swingcastle Ltd v Gibson (1990) 1 WLR 1223
(Page 3)
1 MASTER NEWNES: On 25 March 2002 leave was granted to the plaintiff to join the second defendant as a party to this action and to serve notice of the amended Writ of Summons on the second defendant out of the jurisdiction.
2 This is an application by the second defendant under O 12 r 7 for an order setting aside the notice of writ and service of it on the ground that the plaintiff's claim is statute barred. I should note that it was not suggested that service of the notice of writ was otherwise defective or that this Court is not the appropriate forum.
3 An application is also brought by the second defendant, in the alternative, for an order that the amended statement of claim against the second defendant be struck out and that the action against it be dismissed under O 20 r 19(1)(b) or r 19(1)(d) or under the inherent jurisdiction of the Court.
4 In its statement of claim the plaintiff pleads that at all material times it carried on business as a manufacturer of plaster and plaster products for use in the building industry, including plasterglass sheets for use in the construction of ceilings. The second defendant is a company incorporated in Germany. On 9 February 2001 it merged with another German company, SKW Trostberg ("SKW"), to form a single new incorporated entity, Degussa A-G, the second defendant, which is in law successor to all liabilities and obligations of SKW prior to 9 February 2001.
5 At the time with which this action is concerned SKW was engaged in the manufacture, sale and distribution of chemicals and other products in the building industry, including a hardening agent called Melment F10. The first defendant was a supplier of chemical products and materials to the building industry and, it is pleaded, was the agent or authorised seller of SKW products in Australia.
6 It is pleaded that in about September 1993 the plaintiff was developing a "hard casting" type of plaster for use in the manufacture of plasterglass sheets. It says it sought a recommendation from the first defendant as to a product to add to the plaster mix which would assist in hardening it. The first defendant recommended Melment F10.
7 The plaintiff says that as a result it purchased quantities of Melment F10 and between February 1994 and September 1994 used it in the manufacture of plasterglass sheets, and of hard-casting plaster mixture which it sold to other manufacturers of plasterglass sheets in Western Australia. It says it used Melment F10 in reliance upon and in accordance
(Page 4)
- with a product data sheet prepared by the second defendant, which the plaintiff obtained from the first defendant. The plaintiff says that the product data sheet had been prepared by SKW with the intention or expectation that it would be made available to users and potential users of Melment F10 in Australia and relied upon by them.
8 The plaintiff alleges that it has since received numerous complaints from owners of houses in which plasterglass sheets containing Melment F10 have been installed. It says that the sheets have effloresced, causing delamination of the paint, blisters and eventual peeling. Efflorescence is a chemical reaction caused by the formation of sodium sulphate which in turn is caused by excessive sodium in the plaster.
9 The plaintiff says that it has been contractually required or obliged, in order to preserve its business reputation and standing, to repair or replace the damaged ceilings of approximately 200 dwellings.
10 The plaintiff alleges that SKW knew of the capacity of Melment F10 to cause efflorescence, particularly when used with gypsum plaster. It says that, accordingly, SKW owed to the plaintiff a duty to exercise reasonable care in regard to potential use of the product. In breach of that duty of care, SKW distributed the product data sheet without including any warning that, if used in conjunction with gypsum plaster, Melment F10 had a propensity to cause efflorescence in the plaster product. It is said that SKW also failed to warn of the high sodium content of Melment F10.
11 The plaintiff has filed an affidavit of the plaintiff's general manager - commercial, Gregory John O'Neill, sworn 14 March 2002. In his affidavit Mr O'Neill says that he has carried out a review of the business records of the plaintiff in regard to the costs and expenses caused by efflorescent damage to ceilings as a result of using Melment F10. Annexed to his affidavit is a list of monthly expenditure by the plaintiff from May 1994 to October 2000 totalling $1,463,135. He says that those costs and expenses are continuing.
12 The plaintiff has also filed an affidavit, sworn on 5 March 2003, by its solicitor, Kevin Banks-Smith, in which Mr Banks-Smith deposes to advice from Mr O'Neill that hundreds of separate home owners, in whose homes plasterboard sheets using Melment F10 had been installed, have complained to the plaintiff of efflorescent damage on various dates from 1994 through to the present day. In each case the plaintiff has attended the premises concerned and either repaired the damage or, if repair was
(Page 5)
- impractical, replaced the entire ceiling. The majority of the costs are said to have been paid by the plaintiff in the period January 1997 to December 2000. Mr Banks-Smith has set out a list of the costs that have been incurred by the plaintiff in each calendar year from 1994 to 2000.
13 The second defendant has filed an affidavit of Douglas James Bishop, sworn 31 January 2003, in support of its motion. Annexed to the affidavit is a facsimile dated 30 December 1994 from the plaintiff to the first defendant, on which the second defendant relies in support of this application. The substantive part of the letter is in the following terms:
"We are manufacturers of a range of plaster based building products, one of which is Plasterglass sheeting, which is used for the lining of walls and ceilings.
During the latter part of 1993 and early 1994 we made a formulation change to the plaster used in the manufacture of Plasterglass. This change involved the incorporation of Melment F10, a product supplied to us by MBT. Subsequent to this formulation change we started to experience problems with efflorescence on the surface of the Plasterglass sheets. Investigation revealed that this efflorescence was Sodium Sulphate and that it was caused by excessive levels of free sodium in the sheets.
We recognised that there were a number of potential sources of the sodium and we have systematically investigated each of these. As a consequence we have determined that the source of the excessive free sodium was the Melment F10.
Obviously as soon as we suspected that the Melment F10 was the source of the problem, we removed it from the plaster formulation. Subsequent to the removal of the Melment F10, the efflorescence stopped.
This problem has cost Bradys in the vicinity of $30,000, primarily for the treatment of affected areas and the rectification of problems with peeling paint, and I am of the opinion that MBT has some responsibility for these costs. The manner in which Bradys used the Melment F10 was known to representatives of MBT and on at least one occasion we were advised that it was felt there was no sodium in the Melment.
(Page 6)
- Over the course of the last 6 months we have had a number of discussions with employees of your organisation regarding sodium in the Melment F10. These people include Peter Davis, John Brooks and Bill Magna.
Despite these discussions and assurances that information would be forthcoming, we have received no response.
It is not our intention to try to crucify MBT, or anyone at MBT, but the matter requires more attention than it appears to have been given to this point. Could you please expedite some action and formulate a response for me?"
14 The plaintiff’s claim against the second defendant is in negligence. The second defendant says it is clear from the letter that by 30 December 1994 the plaintiff had suffered damage, by way of rectification work, as a result of the alleged negligence of the second defendant. It contends that the plaintiff's claim against it is therefore statute barred under s 38(1) the Limitation Act 1935, the cause of action having accrued more than six years prior to the joinder of the second defendant in the action on 25 March 2002. It submits that the notice of writ should be set aside under O 12 r 7, or the plaintiff's claim struck out under O 20 r 19 or the inherent jurisdiction of the Court, no useful purpose being served by the continuation of proceedings which must inevitably fail.
15 Where the jurisdiction of the Court is regularly invoked, the test to be applied on an interlocutory application for judgment is the same whether the defendant was served within the geographical limitation of the Court's jurisdiction, or outside it pursuant to the Rules of Court and seeks to have that service set aside: Agar v Hyde (2000) 201 CLR 552 at 575 - 576. In that case the Court pointed out (at 576) that there are at least two reasons why that is so. First, what other proper criterion could be applied at an interlocutory stage? Secondly, the application of some different, and lower, test in favour of overseas defendants would lead to unacceptable results. It would mean that proceedings must continue to trial against those defendants who happen to have been served with the originating process within the jurisdiction, but can be brought to a summary end by those who are served overseas even where the claims against the local and overseas defendants are identical.
16 The test to be applied on an interlocutory application for judgment is well established. In Dey v Victorian Railways Commissioners (1949) 78 CLR 62, Dixon J put it in this way:
(Page 7)
- "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact of law and that the rights of the party depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process."
17 In Agar v Hyde(supra), Gaudron, McHugh, Gummow and Hayne JJ described it as “a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the usual way.”
18 The need for exceptional caution in exercising the power to dismiss an action is the same whether it be under the inherent jurisdiction or under the Rules of Court: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129.
19 The question then is whether the plaintiff's claim against the second defendant is so obviously devoid of merit that it should be brought to an end at this stage.
20 As I have said, the only basis upon which the second defendant's application is put is that the plaintiff's claim against it is statute barred. The second defendant says that the plaintiff's cause of action against it in negligence was complete when the plaintiff first suffered damage as a result of its use of Melment F10. It contends that the plaintiff first suffered damage when the first claim was made against it by a home owner who had suffered damage by reason of the efflorescence or, at the latest, on the first occasion on which the plaintiff effected repairs to any home owner's damaged ceiling. It says the plaintiff does not acquire a new cause of action every time a fresh loss results; there is only one cause of action and that is complete when damage is first suffered.
21 The second defendant says that on the basis of the letter from the plaintiff to the first defendant on 30 December 1994, it is clear that repairs to a number of ceilings had been effected before that date. The limitation period therefore expired, at the latest, in December 2000.
22 The plaintiff, on the other hand, denies that it has a single cause of action that arises once and for all on the first occasion on which it suffers
(Page 8)
- damage by reason of having to rectify a defective ceiling. The plaintiff's counsel submitted that the plaintiff suffers fresh damage on each occasion on which a new claim is made against it. He argued that it therefore has a new cause of action against the second defendant on each occasion on which such a claim is made, albeit he conceded in the course of argument that that was not pleaded in the statement of claim as clearly as it could be. He submitted that if the second defendant's argument were right it would lead to the manifestly unjust result that, in circumstances where a product containing a latent defect had been distributed, the limitation period for any claim by the distributor against the manufacturer would begin to run from the first occasion on which the defective product caused damage to a consumer and a claim was made against the distributor. The distributor would therefore be denied a remedy against the manufacturer in respect of damage to consumers, and therefore claims, which did not emerge until more than six years after the first claim was made.
23 The central question, therefore, was whether in the circumstances of this case the plaintiff's cause of action against the second defendant arose once and for all when the plaintiff was first required to rectify damage caused by the alleged negligence of the second defendant, or whether each separate claim against the plaintiff by a different consumer gave it a fresh cause of action against the second defendant. Neither counsel was able to refer me to a case that has considered the same or a similar point.
24 The second defendant's burden on this application is a very high one. Moreover, it is clearly established that interlocutory proceedings are normally inappropriate for the determination of limitation questions. In Wardley Australia Ltd & Anor v State of Western Australia (1992) 175 CLR 514 Mason CJ, Dawson, Gaudron and McHugh JJ said (at 533):
"We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question."
25 In the same case (at 558 – 559) Toohey J referred to the difficulty and undesirability of trying to determine a limitation point in interlocutory proceedings, "unless the position is clear beyond peradventure".
(Page 9)
26 I am not satisfied that this is such a case. I do not consider it can be said that the second defendant's contention is so plainly right that the plaintiff should be denied the opportunity to argue its case fully a trial. Moreover, I do not consider it can be said at this stage that the circumstances in which the plaintiff incurred liability to consumers and the circumstances and nature of the claims made against it, in respect of which it now claims against the second defendant, will necessarily be irrelevant to the determination of the limitation point taken by the second defendant. Those are matters that can only properly be explored at trial.
27 In my view the limitation point taken by the second defendant is an issue that should be determined at trial and, accordingly, I would dismiss the application.
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