Hallett Concrete Pty Ltd v Adelaide Brighton Cement Ltd
[2024] SASCA 80
•27 June 2024
SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
HALLETT CONCRETE PTY LTD v ADELAIDE BRIGHTON CEMENT LTD & ORS
[2024] SASCA 80
Judgment of the Court of Appeal
(The Honourable Acting Chief Justice Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)
27 June 2024
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - GENERALLY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COURT SUPERVISION - AMENDMENT - ORIGINATING PROCESS, PLEADINGS ETC
This matter is listed for trial in mid-August 2024 with eight weeks set aside. The applicant, Hallett, seeks leave to appeal orders refusing it leave to amend its pleading to introduce allegations of breach of contract arising from supplies of cement made by the respondent, Adelaide Brighton, to another entity Boral, pursuant to a “swap arrangement”.
The effect of the orders under appeal is that Hallett is shut out of prosecuting a claim which it asserts exceeds $11 million in addition to interest. Hallett fears that should it later attempt to ventilate these issues in separate proceedings, Adelaide Brighton will likely attempt to meet these with a defence based on Anshun estoppel.
Adelaide Brighton opposes the application for leave to appeal and the appeal. It questions whether there is any real basis for concern about Anshun estoppel. It filed a notice of alternative contention seeking to uphold the primary judge’s refusal to permit the amendments on discretionary grounds. It says that the proposed claim is untenable and grossly overstated.
Hallett filed an interlocutory application to adduce fresh evidence obtained from Adelaide Brighton on 27 May 2024. Hallett claims that this evidence supports an inference that there was a swap arrangement between Adelaide Brighton and Boral, in breach of the 2008 Cement Supply Agreement between Hallett and Adelaide Brighton. Adelaide Brighton contends that Hallett has misinterpreted the evidence and it does not support the inference which it seeks to draw.
HELD (the Court), setting aside the orders made by the primary judge; leave to appeal should be granted and, based upon the fresh evidence, the appeal should be allowed, the notice of alternative contention dismissed, and Hallett given leave to amend in substantially the terms sought:
1.The Notice of Appeal dated 19 April 2024 and the Notice of Alternative Contention dated 2 May 2024 have been overtaken by Hallett’s application dated 30 May 2024 to lead fresh evidence in support of its revised plea.
2.The fresh evidence is capable of providing some support for an inference that there was a swap arrangement between Adelaide Brighton and Boral before 2016. Though the contrary answer of Adelaide Brighton may prove correct, it is not appropriate for this Court to engage in the fact-finding necessary to determine the meaning and effect of the documents relied on by Hallett as part of this appeal. That is properly a matter for the trial.
3.In some cases it may be appropriate, if not preferable, for the issue of leave concerning a revised plea based on newly discovered documents to be remitted to the primary judge for consideration. In this case, the imminent trial date and the preparations presently being made for that trial combine to support the conclusion that this Court should address the issue.
4.The question for this Court is whether leave to amend should be granted in the form of the revised plea. Whether a proposed pleading which relies on inference is tenable or arguable will often involve questions of degree. The question is whether the pleading is tenable or arguable in the sense that it complies with the rules; it discloses a reasonable cause of action and it is not frivolous, vexatious, or otherwise an abuse of process.
5.Whether a proposed pleading (or any other contemplated step in litigation) comprises an abuse is, like the question whether a proposed pleading is tenable, one which requires “an evaluative but not a discretionary decision”. A pleading is usually either tenable or it is not. However, whether leave to amend should be granted raises broader considerations which involve the exercise of a discretion.
6.Having regard to the case already pleaded under the 2008 CSA and the 2014 CSA, together with the newly discovered material, the proper conclusion is that the proposed pleading is tenable in the sense that there is an arguable basis for the case concerning the swap arrangement alleged before 2016 and during the period of the 2008 CSA.
7.On the material made available to this Court, it is far from clear that the teams working on both sides of this case will be unable to accommodate whatever additional burden is associated with allowing the amendment. That additional burden does not warrant refusing the amendment even if the trial is disrupted in some way, or it is otherwise not completed within the scheduled eight weeks.
Limitation of Actions Act 1936 (SA) s 48; Supreme Court Act 1935 (SA) s 27; Uniform Civil Rules 2020 (SA) r 70.3(1), referred to.
Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (No. 4) [2024] SASC 51; Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors [2023] SASCA 101; Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (No. 2) [2021] SASC 56; Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (2020) 137 SASR 117; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; Caason Investments Pty Ltd v Cao (2015) 236 FCR 322; CDJ v VAJ (No 1) (1998) 197 CLR 172; Clough & Rogers v Frog (1974) 48 ALJR 481; Day v William Hill (Park Lane) Ld. [1949] 1 KB 632; Fairfield Pastoral Holdings Pty Ltd as trustee of the Piney Ridge Trust v Van Niekerk [2023] FCA 1185; GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 97 ALJR 857; House v The King (1936) 55 CLR 499; Karbowiak v Mitolo [2024] SASCA 31; KTC v David [2022] FCAFC 60; P J Nash Pty Ltd v Food and Beverage Australia Limited [2021] SASCA 86; Pope v Orchard [2010] SASC 354; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; PPG Development Pty Ltd v Capitanio (2016) 126 SASR 307; Return To Work Corporation of South Australia v BI (Contracting) Pty Ltd (2022) 141 SASR 171; Richani v Martins Plaza Shopping Centre Pty Ltd (No 2) [2022] SASCA 98; Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; Viscariello v Legal Profession Conduct Commissioner [2021] SASCFC 24; Walton v Gardiner (1993) 177 CLR 378; Warren v Coombes (1979) 142 CLR 531; Williams v Spautz (1992) 174 CLR 509; Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10, considered.
HALLETT CONCRETE PTY LTD v ADELAIDE BRIGHTON CEMENT LTD & ORS
[2024] SASCA 80Court of Appeal – Civil: Livesey A/CJ, Doyle and Bleby JJA
THE COURT:
Introduction
After a number of years of interlocutory hearings, this matter has now been listed for trial commencing before the primary judge on 12 August 2024, with eight weeks set aside.
The appellant, Hallett Concrete Pty Ltd (Hallett), seeks leave to appeal orders refusing it leave to amend its pleading to introduce allegations concerning breach of contract by the respondent, Adelaide Brighton Cement Limited (Adelaide Brighton), arising from supplies of cement made by Adelaide Brighton to another entity, Boral.
The effect of the orders under appeal is that Hallett is shut out of prosecuting a claim which it asserts exceeds $11 million in addition to interest. In addition, whilst Hallett accepts that the refusal to grant leave to amend does not create a res judicata, it fears that should it later attempt to ventilate these issues in separate proceedings then Adelaide Brighton will likely attempt to meet these with a defence based on Anshun estoppel, or estoppel by omission.[1]
[1] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 598, 602; Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212, [27]; Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 146 FCR 10, [37].
Hallett also points to the “practical reality” that these allegations might efficiently be dealt with in the present proceedings without the unnecessary delay and cost, together with the risk of inconsistent findings, associated with multiple proceedings.
The application for leave to appeal and the appeal are opposed by Adelaide Brighton. Adelaide Brighton questions whether there is any real basis for concern about Anshun estoppel. Adelaide Brighton filed a notice of alternative contention, seeking to uphold the primary judge’s refusal to permit the amendments on discretionary grounds.
As explained below, the application for leave to appeal, the appeal and the notice of alternative contention have, in a sense, been overtaken by Hallett’s application to adduce fresh evidence.
For the following reasons, leave to appeal should be granted and, based upon the fresh evidence, the appeal should be allowed, the notice of alternative contention dismissed, and Hallett given leave to amend in substantially the terms sought.
Background – the proceedings
Hallett is a manufacturer of pre-mixed concrete. Adelaide Brighton is a manufacturer of cementitious products. In April 2008 they entered into a Cement Supply Agreement (the 2008 CSA) which was subsequently varied on 1 July 2014 (the 2014 CSA).
The 2014 CSA required Adelaide Brighton to supply specified cementitious products to Hallett at a lower price than it supplied those products to other customers of Adelaide Brighton. This has been described as “the most favoured customer term”. In addition, Hallett was required to purchase the “bulk cementitious material” required for its business exclusively from Adelaide Brighton. This has been described as “the exclusivity obligation”.
In September 2019 Adelaide Brighton commenced proceedings against Hallett for alleged breach of the exclusivity obligation. Its case is that from early 2018 Hallett did not purchase its cement exclusively from Adelaide Brighton and, together with named respondents, entered into arrangements designed to circumvent the exclusivity obligation by procuring cementitious material in large shipments of two tonne bags. That claim is denied on grounds which include that the bagged cement was not bulk cement the subject of the 2014 CSA.
On 14 February 2020, Hallett filed a cross‑claim against Adelaide Brighton. By that claim it alleged breach of the most favoured customer term.
An early attempt to plead that claim was refused because the pleaded allegations were inadequate to support the inference that there were unspecified, widespread breaches of the 2014 CSA.[2] In that first decision Doyle J (as he was) rejected an attempt to invoke the processes of the court where a plaintiff had no evidence to support a case but sought discovery in order to find if it had one. That was described as an example of a form of abuse of process. That was contrasted with a permissible plea by which an applicant asserted the existence of a reasonable inferential basis for its claim, though it could not fully articulate that claim without the benefit of discovery.[3]
[2] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (2020) 137 SASR 117, [143] (Doyle J).
[3] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (2020) 137 SASR 117, [26]-[28] (Doyle J).
Following that decision, Hallett repleaded its cross‑claim. The application for leave to amend was again opposed. However, leave to amend was granted on the basis that the pleading was in a different form, necessarily relying on an inferential basis for the claims of breach of contract. It was acknowledged that, absent discovery, Hallett could not plead the actual prices Adelaide Brighton charged to Hallett’s competitors.
In the case of Boral, the cross-claim pleaded that there were “swap arrangements” in place between Adelaide Brighton and Boral. The existence of these was inferred from Boral’s commercial conduct.[4] The primary judge observed that there was a paradox associated with this pleading because it would inevitably need to be amended so as to incorporate particular instances of breach by reference to particular supplies of cement by Adelaide Brighton at prices which could only be addressed on the basis of discovery yet to be made by Adelaide Brighton.[5]
[4] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd& Ors(No 2) [2021] SASC 56, [57]-[62] (Kourakis CJ).
[5] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd& Ors(No 2) [2021] SASC 56, [30] (Kourakis CJ).
The parties remained in dispute about a number of procedural issues, including a confidentiality regime which applied to the disclosure of documents from 2020. The result was that, until recently, senior officers of the parties have not had access to the documents discovered pursuant to that confidentiality regime.[6] Those confidentiality restrictions applied until September 2023.
[6] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors [2023] SASCA 101 (Livesey P, Doyle JA and Stanley AJA).
The cross‑claim presently alleges that Adelaide Brighton had in place swap arrangements with Boral from 2016. The effect of these was that Boral supplied to Adelaide Brighton a specification of cement described as “shrinkage limited” (or SL cement) from Boral’s plant in Berrima, New South Wales. Correspondingly, Adelaide Brighton supplied to Boral an equivalent tonnage of general purpose cement (or GP cement) from its plant in Birkenhead, South Australia. That is to say, Adelaide Brighton took product from Boral in New South Wales in exchange for Boral taking product from Adelaide Brighton in South Australia.
The effect of the swaps was that Boral received product in South Australia at a cost equivalent to the cost of its own production of SL cement. The consequence, claimed Hallett, was that Boral received GP cement from Adelaide Brighton at a price very significantly lower than the price available to Hallett. This alleged breach of the most favoured customer term exposed Hallett commercially, it claimed, because one of its competitors was supplied cement at a cheaper price.
Hallett says that since the lifting of the confidentiality restrictions, its executives have been able to review the cross‑claim and consider all discovered documents with the result that they have identified a basis for pleading further allegations of breach concerning a prior iteration of the 2014 CSA, being the 2008 CSA. The 2008 CSA operated between 1 February 2008 and 30 June 2014. It too contained a most favoured customer term. The difference in wording is not material for the purposes of this appeal.
By an application for leave to amend, Hallett sought to introduce allegations concerning breaches of the 2008 CSA and 2014 CSA concerning cement supplies made by Adelaide Brighton to three of its customers, being Boral, Hanson and Exact Mix. The primary judge permitted the amendments concerning Hanson and Exact Mix but refused those concerning Boral.
Whilst not mentioned, one of the amendments which appears to have been refused is a proposed paragraph 39.4A, whereby the swap arrangements were alleged to precede 2016, operating during the first two years of the 2014 CSA as well as during the earlier 2008 CSA:
39.4AFurther, the arrangements documented by the Swap Agreements to the effect pleaded in paragraph 39.4 above had been in place throughout the term of the 2014 CSA and as pleaded in paragraph 64 to 70 below, pre-dated the 2014 CSA.
The parties proceeded on the basis that this plea would stand or fall with the allegations concerning the 2008 CSA. Hallett’s allegations about the swap arrangements between Adelaide Brighton and Boral during the period of the 2008 CSA were set out in a proposed paragraph 64, which was initially in the following terms:
64 During the 2008 CSA Period, Boral purchased substantial volumes of Type GP Cement from ABCL, which were not paid for in cash but by way of swap, whereby ABCL would supply Boral with Type GP cement in South Australia and in return Boral would supply ABCL with an equivalent amount of Type SL cement from its plant in Berrima, New South Wales (2008 period swaps).
Particulars
Pending further discovery by ABCL of the contractual arrangements between ABCL and Boral during the 2008 CSA Period, the existence of the swap arrangement is to be inferred from:
64.1 records discovered by ABCL in the form of a spreadsheet referenced ABL.1525, which record the purported supply by ABCL of Type SL Cement in the period from July 2012 to July 2014, referred to as “SL Ex Berrima Bulk” which is a reference not to any facility owned by ABCL or its parent ABL, but to a cement manufacturing plant owned by Boral in Berrima NSW;
64.2 records discovered by ABCL in the form of a spreadsheet referenced ABL.1525, which record the purported supply by ABCL of Type SL Cement in the period from July 2012 to July 2014, referred to as “SL Ex Berrima Bulk” which is a reference not to any facility owned by ABCL or its parent ABL, but to a cement manufacturing plant owned by Boral in Berrima NSW;
64.3 the existence of a swap agreement between ABCL and Boral involving the swap of GP cement supplied in South Australia for SL cement supplied by Boral from its Berrima plant in later years, as pleaded in paragraph 39.3 above.
As will be seen, this plea has been revised. It is the revised plea which is the subject of the applications for leave to appeal and to amend.
The reasons of the primary judge
In the course of his reasons, the primary judge described the foundation for Hallett’s claims concerning the Boral swap arrangements which it wished to allege under the 2008 CSA in the following way:[7]
·Boral and ABCL had swap arrangements in the period of the 2008 CSA, the effect of which was that ABCL was supplied with SL cement by Boral from its plant in Berrima New South Wales. In return for which ABCL supplied equivalent tonnages of cement to Boral in South Australia.
·Discovered document ABL 1525 on its face lists all invoices by ABCL to its customers in the period 2012 to 2014 and records numerous supplies to ABCL related entities in New South Wales from ABCL’s Birkenhead plant but with the description that the supply made SL cement ‘Ex-Berrima bulk’. The existence of a swap arrangement between 2012 and 2014 can be inferred from those invoices, in that, ABCL was recording in its own records as its own sales delivery, product from Borals plant in Berrima.
·It is likely that the 2016 swap arrangement for cement had its origins in pre-existing arrangements made under the 2008 CSA.
·ABL’s business documents in the nature of board papers refer to a national suite of agreements between ABL and Boral encompassing all the main land states and the Northern Territory.
·The arrangement breached the Price Warranty and the Price Relativity Warranty of the 2008 CSA.
(Citations omitted.)
[7] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (No 4) [2024] SASC 51 (Reasons), [24] (Kourakis CJ).
As the primary judge described it, there was no issue about the supply of cement to Adelaide Brighton from Boral’s plant in Berrima during the period, nor about the subsequent existence of a swap agreement during the term of the 2014 CSA. What was in issue, however, was the “indispensable intermediate fact” that supply was made pursuant to an earlier “swap arrangement”:[8]
It can be seen from the proposed pleading, and the submissions made in support of the amendment, that the indispensable intermediate fact on which Hallett’s claim is founded is the existence of a swap arrangement, the effect of which is the supply of cement at the cost of production. However, the only base facts pleaded in support of that conclusion is the physical supply of cement from Boral’s plant in Berrima and the subsequent existence of a swap agreement.
[8] Reasons, [26].
The primary judge described Adelaide Brighton’s opposition to the proposed amendments, including its claimed prejudice, in the following way:[9]
·The allegations pleaded are factually hopeless and/or are bound to fail.
·The claims are factually distinct from the claims pursued for breach of the 2014 CSA.
·The pleaded claims are statute barred and there is no prospect of an extension of time being granted.
·[Adelaide Brighton] would be prejudiced if permission were granted, because discovery going back over 10 years would be burdensome; documents prior to August 2019 are available in hard copy only; and many of the corporate officers who may be able to give relevant evidence have left and two of them are now deceased.
·Responding to the new pleas would disrupt [Adelaide Brighton’s] trial preparation for the trial for eight weeks on the 2014 CSA which is listed to appear on 12 August 2024.
[9] Reasons, [6].
The primary judge reviewed the filed materials before him and which addressed the substantive defences likely to be made by Adelaide Brighton, observing that these were properly matters for trial rather than whether leave to amend should be granted.[10] His Honour’s dispositive reasoning may be found in the following passages:[11]
33Be that as it may, the claim against Boral for breach of the 2008 CSA critically rests on the existence of a swap arrangement. No more can be inferred from the fact that Hallett purchased or procured, in some way, cement from Boral in New South Wales for on-supply to its own customers. That bare fact says nothing as to whether the purchase was by way of barter or swap on the one hand, or for monetary consideration on the other. No inference can be drawn, from the existence of a swap arrangement in 2016, that there was the same or a similar swap arrangement in 2012, or at any time after 2008. There is no inherent quality or nature in commercial arrangements generally, or in arrangements of the particular kind alleged by Hallett that, if found to exist at one point in time, are likely to have existed throughout the entire period in which the parties were engaged in commerce, or are likely to continue to exist for so long as the entities continue to trade with each other. Whether or not such commercial arrangements are entered into, their timing and duration, necessarily depends on a wide range of disparate considerations which fluctuate greatly over time, including the nature of the market, competitive tensions, and taxation considerations.
34 If I make use of the metaphor, taken from the judgment of Doyle J referred to in paragraph [15] above, the plea is a fishing expedition in a rather arid sea with no sign of marine life to excite the angler. To speak more directly, in legal terms, the foundation of the claim is speculative. The pleaded facts could not make out a reasonable cause of action. There is no reasonable basis to the claim. It is an abuse of process.
[10] Reasons, [27]-[32].
[11] Reasons, [33]-[34].
The reference to the judgment of Doyle J is a reference to his Honour’s reasons in Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd.[12] The primary judge also addressed the question whether there was a sufficient basis for the plea seeking an extension of time pursuant to s 48 of the Limitations of Actions Act 1936 (SA) and found that there was.[13]
[12] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd & Ors (2020) 137 SASR 117, [25]-[29].
[13] Reasons, [51]-[56].
It is important to observe that whilst Adelaide Brighton maintained that allowing the new pleas would disrupt its trial preparation, the primary judge dismissed that concern in the case of the pleas concerning Hanson and Exact Mix. Whilst acknowledging that there was a “greater burden” associated with preparing a defence to the claims concerning the Boral swap arrangements, his Honour did not rule on the extent of any prejudice concerning the Boral swap arrangements, for he put those “to one side”.[14]
[14] Reasons, [57].
The Notice of Appeal dated 19 April 2024 and the Notice of Alternative Contention dated 2 May 2024 have, in a sense, been overtaken by Hallett’s application dated 30 May 2024 to lead what is described as fresh evidence. That application is also opposed by Adelaide Brighton.
The application to lead fresh evidence
Hallett says that on 27 May 2024, in connection with further discovery produced for inspection, Adelaide Brighton produced for the first time a bundle of spreadsheets comprising working documents prepared in connection with internal management reporting. They have been exhibited to the affidavit of Hallett’s solicitor.
Whilst many details recorded in these documents have been redacted, the unredacted portions show that in the years 2010 to 2014 Adelaide Brighton engaged in transactions described as “Borrow & Loan” concerning the supply of “Bulk SL Ex Berrima”, which Hallett takes to be a reference to the supply of SL cement to Adelaide Brighton by Boral from its plant at Berrima in New South Wales.
The submission of Hallett is that this material supports the inference that there was a supply of cement between Boral and Adelaide Brighton pursuant to a form of “borrowing” or “lending” which did not involve purchases and sales in an ordinary commercial manner. In short, Hallett asserts that this provides a proper basis to infer the existence of a form of swap arrangements, or some other non-arm’s length arrangements, during the period of the 2008 CSA.
Accordingly, Hallett contends that it is in the interests of justice that this evidence be received on appeal in the exercise of the discretion of the Court of Appeal pursuant to r 215.1(2)(i) of the Uniform Civil Rules 2020 (SA).[15]
[15] CDJ v VAJ (No 1) (1998) 197 CLR 172, [109]-[111]; Viscariello v Legal Profession Conduct Commissioner [2021] SASCFC 24, [93]-[97] (Tilmouth AJ, with whom Lovell and Hughes JJ agreed); P J Nash Pty Ltd v Food and Beverage Australia Limited [2021] SASCA 86, [66]; Return To Work Corporation of South Australia v BI (Contracting) Pty Ltd (2022) 141 SASR 171, [72]-[93].
Adelaide Brighton does not suggest that the evidence should not be received. Rather, it contends that the evidence does not support the inferences that Hallett seeks to draw from the evidence and that a form of these documents has been available to Hallett for well over twelve months because they were relied on by an expert it retained. In addition, the affidavit of Adelaide Brighton’s solicitor explains that Hallett has misinterpreted these documents and they do not support the inference which it seeks to draw. The term relied on by Hallett has nothing to do with Boral:[16]
For the reasons that I set out below, [Hallett’s] critical proposition is incorrect. Instead, the term “Borrow & Loan” is used by ABCL in respect of transactions with its related entities that are, relevantly, subsequent to the purchase by ABCL of SL cement from Boral. That is, the term “Borrow & Loan” is entirely unrelated to ABCL’s transactions with Boral (save that, in this instance, it concerns cement that had been purchased from Boral).
[16] Affidavit of Leo Gerard Walsh sworn 6 June 2024, [6].
Hallett objected to this affidavit being received. Whilst that objection should be over-ruled and the affidavit received for the purposes of this hearing, it must be acknowledged that the facts and documents adduced in this affidavit, like the affidavit evidence relied on by Hallett, are adduced in what amounts to an interlocutory context. The affidavits have been sworn on information and belief and have not been tested.
Indeed, though the answer furnished by Adelaide Brighton may well prove to be correct, it is not appropriate for this Court to engage in the fact-finding necessary to determine the meaning and effect of the documents relied on by Hallett as part of this appeal. For example, it would be inappropriate for this Court to hear oral evidence from the relevant Adelaide Brighton witnesses and allow them to be cross-examined so as to facilitate findings by this Court on the balance of probability before the trial. That is properly a matter for the trial.
Having said that, whether the documents addressed in the affidavit evidence should be considered at the trial in connection with these issues is necessarily subject to whether leave to amend should be granted.
Whilst the affidavit of the solicitor for Adelaide Brighton demonstrates that a form of this material could have been requested some time ago, the documents were produced in response to questions asked by Hallett’s expert. The window for service of Hallett’s expert evidence has not yet closed. Hallett has acted quickly since it first saw the documents in late May.
In the circumstances of this case, bearing in mind the effect of the confidentiality regime, it is appropriate to admit the evidence contained in the affidavits of the solicitors for the parties for the purposes of resolving this appeal.
The revised pleading of paragraph 64 of the cross-claim
Following its inspection of the recently discovered documents, Hallett revised its proposed pleading of paragraph 64 in the following way:
64.During the 2008 CSA Period, Boral purchased substantial volumes of Type GP Cement from ABCL, which were not paid for in cash but by way of a swap or other like arrangement amounting to the respective borrowing and/or lending of stock settled by way of a countervailing supply of cement with any differential settled in cash, whereby ABCL would supply Boral with Type GP cement in South Australia and in return Boral would supply ABCL with an equivalent amount of Type SL cement from its plant in Berrima, New South Wales (2008 period swaps).
Particulars
Pending further discovery by ABCL of the contractual arrangements between ABCL and Boral during the 2008 CSA Period, the existence of the swap arrangement is to be inferred from:
64.1 records discovered by ABCL in the form of a spreadsheet referenced ABL.1525, which record the purported supply by ABCL of Type SL Cement in the period from July 2012 to July 2014, referred to as “SL Ex Berrima Bulk” which is a reference not to any facility owned by ABCL, but to a cement manufacturing plant owned by Boral in Berrima NSW;
64.2 the absence in ABL.1525 of records of the supply of Type GP cement to Boral in South Australia, notwithstanding that ABCL supplied substantial volumes of GP cement to Boral in South Australia during the period July 2012 to July 2014;64.2 records discovered by ABCL in the form of spreadsheets referenced ABL.3966 to ABL.3970 (inclusive) that refer to ABCL having in place arrangements described as “Borrow & Loan” in relation to the supply of cement described as “Bulk SL Ex Berrima”; and
64.3 the existence of a swap agreement between ABCL and Boral involving the swap of GP cement supplied in South Australia for SL cement supplied by Boral from its Berrima plant in later years, as pleaded in paragraphs 39.3 and 39.4 above.
It is this revised version of paragraph 64 of the cross-claim which is now the focus of Hallett’s application for leave to appeal and its underlying application for leave to amend.
The application for leave to appeal; the determination of the appeal
The question for this Court is really whether leave to amend should be granted in the form of the revised plea.
Whatever might be said about the approach taken by the primary judge to the case considered by him, whether leave to amend should be granted must be determined by reference to the new version of the proposed pleading, albeit in the context of the decision made by the primary judge.
It may be debated whether this is a matter to be approached afresh by this Court or whether, by contrast, it is an example of a case where a material consideration, the asserted effect of the newly discovered evidence, was not taken into consideration with the result that the matter must be considered afresh.[17] In some cases it may be appropriate, if not preferable, for the issue of leave concerning the revised plea based on newly discovered documents to be remitted to the primary judge for consideration. In this case, the imminent trial date and the preparations presently being made for that trial combine to support the conclusion that this Court should address the issue, both for practical reasons and because the questions of leave to appeal and leave to amend are so closely connected.
[17] House v The King (1936) 55 CLR 499, 504-505 (Dixon, Evatt and McTiernan JJ); Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, [111]; Pope v Orchard [2010] SASC 354, [24] (White J).
In consequence, it is strictly unnecessary to determine whether the primary judge was correct to find that the earlier proposed pleading comprised an abuse of process because the foundation for the claim was speculative in the sense that the facts pleaded could not make out a reasonable cause of action.[18]
[18] Reasons, [34].
The use of the term “abuse” in this context has a meaning which differs a little from the way in which an abuse of process might usually be understood. Unlike many cases where an abuse of process is asserted, it may be difficult to suggest or conclude that a party seeking to amend is doing so for an improper or collateral purpose, or that the process will necessarily and unavoidably result in unfairness or oppression.[19] Rather, abuse in the context of application to amend a pleading is better regarded as a conclusion reached only after the court has evaluated the extent to which the plea is not tenable and the extent to which the case to be propounded is speculative or dependent on documents which the pleader does not have, and may never get, from discovery. Questions of degree are inevitable. The nature of the allegations and the context in which they are made are important. Few cases involving a breach of contract are likely to have been clearly documented by the party in breach. Many will depend on inference once the contractual obligation has been identified and the court is in a position to evaluate whether the facts relied on by the pleader have, or have not, been established.
[19] Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd (2020) 137 SASR 117, [25]-[29], [63]-[65] (Doyle J); but also, by of example, Williams v Spautz (1992) 174 CLR 509, 521-522; Walton v Gardiner (1993) 177 CLR 378, 392-393.
The question whether a proposed pleading (or any other contemplated step in litigation) comprises an abuse is, like the question whether a proposed pleading is tenable, one which requires “an evaluative but not a discretionary decision”:[20]
Proceedings either are or are not capable of being the subject of a fair trial or are or are not so unfairly and unjustifiably oppressive as to constitute an abuse of process. Accordingly, the applicable standard of appellate review is not that specified in House v The King,[21] but the “correctness standard” as explained in Warren v Coombes.[22]
[20] GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 97 ALJR 857, [15] (Kiefel CJ, Gageler and Jagot JJ), [95]-[96] (Steward J) and [161]-[162] (Gleeson J).
[21] House v The King (1936) 55 CLR 499, 504‑505.
[22] Warren v Coombes (1979) 142 CLR 531, 551‑552.
A pleading is usually either tenable or it is not. However, whether leave to amend should be granted raises broader considerations. These may include whether there has been undue delay in seeking leave to amend and, if it is allowed, the effect of the amendment on the litigation, including the obligation to make discovery and whether any trial date is likely to be put in jeopardy. The court will also consider the extent of any other prejudice associated with the amendment, depending on whether it is allowed or refused. These broader considerations involve an exercise of discretion by the court.
In this case it is preferable to approach the problem by first considering whether the proposed plea is tenable, in the sense that it articulates an arguable cause of action. That must be done recognising that the pleader is here relying to a significant extent on inference, being a conclusion which it will invite the court to draw from a number of identified circumstances. It must also be recognised that the pleader has acknowledged that the articulation of the pleaded case might not be thought complete, still less established, without discovery from the party it alleges has acted in breach of contract as a result of its dealings with an identified third party during an identified period.
Whether a proposed pleading which relies on inference is tenable or arguable will often involve questions of degree, and the evaluation must be approached from the perspective that the pleaded case is to be taken at its highest. The question is not whether the proposed plea will succeed at trial, or even whether it is likely to do so. The question is whether it is tenable or arguable in the sense that it complies with the rules, it discloses a reasonable cause of action and it is not frivolous, vexatious or otherwise an abuse of process.[23]
[23] And is therefore not liable to be struck out. See r 70.3(1) of the Uniform Civil Rules 2020 (SA) and PPG Development Pty Ltd v Capitanio (2016) 126 SASR 307, [39] (Doyle J).
The material available to the primary judge and to this Court demonstrates that Adelaide Brighton contends that there are a number of answers to the proposed pleading. On its case, the pleading is doomed to fail. As Mr Whitington KC put it in argument before this Court:
The starting point in the appellant's appeal and submissions is really ground 3 and the essential proposition there is that the Court should not embark upon an assessment of the strength of the inferential foundation of [the] pleaded allegations, but … pass over an essential step. Where the inference relied on is a deductive or syllogistic inference and there is simply no logical basis for it the question is not one of the strength of the inference but one of the validity of the reasoning process.
To a significant extent these contentions were supported by the evidence adduced in the affidavits of Adelaide Brighton’s solicitors which, as mentioned, were sworn on information and belief (although some aspects were supported by evidence from Adelaide Brighton witnesses) and remain untested. That is not to deprecate the answers, but merely to emphasise the limitations associated with evaluating evidence sworn on information and belief when determining whether a plea is tenable.
In addition, Adelaide Brighton maintains that the suggested quantum of the new claim under the 2008 CSA is grossly overstated and could never be sustained.
For present purposes, it may be accepted that the proposed pleading is contentious. The question is whether it is tenable.
The allegations which were permitted concerning Hanson and Exact Mix mean that the operation of the 2008 CSA will be put into issue at trial.
The existence of mutual supplies of cement between Adelaide Brighton and Boral pursuant to a documented swap arrangement from 2016 might be thought unusual. Whether they were in fact unusual – or a breach of the most favoured customer term – must await the evidence and findings at trial. That there appear to be tenable grounds for alleging swap arrangements during the period of the 2014 CSA naturally invites the question as to when they commenced.
The fact that there were mutual supplies of cement between Adelaide Brighton and Boral before 2016, from Boral’s Berrima plant to Adelaide Brighton, or from Adelaide Brighton’s Birkenhead plant to Boral, might be thought to suggest some basis for an inference that what was documented in 2016 did not first start in 2016. That assertion does not rely on rank speculation, nor is it illogical, where the supply of cement commenced before 2016 and, on the discovery made to date, can be traced back to 2012.[24]
[24] There is no discovery on the issue before 2012. See CJR-224 and CJR-225 in the 22nd affidavit of Chloe Joanne Robinson dated 5 February 2024.
The question posed by the pleading is whether it is tenable to suggest that the supply which occurred before 2016 was not undertaken pursuant to a typical commercial arrangement in which arm’s length mutual supply was categorised by purchases and sales at ordinary pricing. That question is not answered by pointing to the absence of an earlier documented “swap arrangement”.[25] Whether there was such an arrangement is unlikely to have been documented, at least not in any formal way. Whether it existed is more likely to be a conclusion reached once the pricing at which cement was supplied has been discovered and evaluated.
[25] Reasons, [26].
The newly discovered material is, on one view, capable of providing some support for an inference that the swap arrangements may have commenced before 2016, and under the 2008 CSA. Having been pleaded, that material may be treated as part of the pleading when determining whether a cause of action is disclosed.[26] Although Adelaide Brighton has proffered an explanation for the references to “Borrow & Loan” which, if accepted, means that those references do not provide a basis for inferring non-arm’s length arrangements between Adelaide Brighton and Boral, that explanation is not straightforward. The validity of that explanation, and the proper characterisation of the arrangements between Adelaide Brighton and Boral, can only be properly determined at a trial. Whether Hallett’s new case will ultimately be established, or whether the answers given by Adelaide Brighton conclude the issue, must await the trial.
[26] Day v William Hill (Park Lane) Ld. [1949] 1 KB 632, 639 (Singleton LJ, with whom Bucknill LJ agreed).
Having regard to the case already pleaded under the 2008 CSA and the 2014 CSA, together with the newly discovered material, the proper conclusion is that the proposed pleading is tenable in the sense that there is an arguable basis for the case concerning the swap arrangements alleged before 2016 and during the period of the 2008 CSA. There is therefore a proper basis for the revised proposed pleading.
As earlier explained, whether leave to amend should be granted raises additional, broader considerations involving the exercise of a discretion.
Hallett has explained the lateness of the amendment by reference to the combination of the effect of the confidentiality regime and the relatively late discovery made by Adelaide Brighton. That is not to suggest fault by any party. It is simply to recognise that there is a proper explanation for the delay associated with proffering the proposed pleading.
Whilst it is relevant to consider whether allowing the amendment will disrupt the orderly progress of the trial, this must be evaluated having regard to the considerations just mentioned, as well as the fact that the proposed pleading is tenable. That necessarily entails a balancing exercise, one which was, understandably, not undertaken by the primary judge.
The parties are, unsurprisingly, in dispute about whether allowing the latest iteration of the proposed pleading will disrupt their preparations for the trial listed to commence in mid-August. The reasons of the primary judge went no further than acknowledging that the burden associated with the proposed pleading was greater than the burden associated with the pleadings which he allowed.
On the material made available to this Court, and after taking into account the evidence and submissions of the parties, it is far from clear that the teams working on both sides of this case will be unable to accommodate whatever additional burden is associated with allowing the amendment. That additional burden does not warrant refusing the amendment even if there is some risk that the trial may be disrupted in some way, or it is otherwise not completed within the scheduled eight weeks.
Finally, it is proper to take into account that it is generally desirable that the Court ought facilitate the litigation of all disputes between the parties,[27] ensuring efficiency in the conduct of litigation, so as to avoid a multiplicity of proceedings.[28] Were the amendment to be disallowed and new proceedings commenced, there is some scope for dispute about the operation of Anshun estoppel.[29]
[27] Clough & Rogers v Frog (1974) 48 ALJR 481, 482; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, [24]-[27] (French CJ); Caason Investments Pty Ltd v Cao (2015) 236 FCR 322, [20] (Gilmour and Foster JJ); KTC v David [2022] FCAFC 60, [110] (Wigney J).
[28] Supreme Court Act 1935 (SA), s 27.
[29] Fairfield Pastoral Holdings Pty Ltd as trustee of the Piney Ridge Trust v Van Niekerk [2023] FCA 1185, [42]-[50] (Kennett J); Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
This is a proper case in which to grant leave to appeal.[30] Based on the fresh evidence, the appeal should be allowed, leave to amend granted, and the notice of alternative contention dismissed.
[30] Richani v Martins Plaza Shopping Centre Pty Ltd (No 2) [2022] SASCA 98, [4]-[6] (Livesey P and Doyle JA); Adelaide Brighton Cement Ltd v Hallett Concrete Pty Ltd [2023] SASCA 101, [123] (Livesey P, Doyle & Bleby JJA); Karbowiak v Mitolo [2024] SASCA 31, [7]-[8] (Livesey P, Doyle JA and Stanley AJA).
However, subject to hearing from the parties, our preliminary view is that the question of costs (before the primary judge and this Court) should be reserved to the primary judge, to be resolved when the issues in dispute have been determined, including the question whether the suggested inference arising on the amendment should in fact be drawn.
Conclusion
The orders of the primary judge must be set aside and the following orders made:
1.Leave to appeal is granted.
2.The appeal is allowed.
3.The notice of alternative contention is dismissed.
4.Leave to amend paragraphs 39.4A and 64 of the cross-claim is granted in substantially the terms set out in paragraph 7 of the fourth affidavit of Michael James O’Donnell affirmed 30 May 2024.
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