Harkford Pty Ltd v Coventry Square Construction Pty Ltd
[2013] WADC 62
•3 MAY 2013
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: HARKFORD PTY LTD -v- COVENTRY SQUARE CONSTRUCTION PTY LTD [2013] WADC 62
CORAM: DAVIS DCJ
HEARD: 10 APRIL 2013
DELIVERED : 3 MAY 2013
FILE NO/S: CIV 3769 of 2011
BETWEEN: HARKFORD PTY LTD
Plaintiff
AND
COVENTRY SQUARE CONSTRUCTION PTY LTD
Defendant
Catchwords:
Practice and procedure - Appeal from a registrar dismissing plaintiff's application to strike-out parts of the defendant's defence and counterclaim - Application for extension of time - Pleading requirements for loss and damage for breach of contract - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 O 20 r 19
Result:
Appeal allowed
Portion of defendant's defence and counterclaim struck out
Defendant permitted to amend to replead claim
Representation:
Counsel:
Plaintiff: Mr W Vogt
Defendant: Mr G J Douglas
Solicitors:
Plaintiff: Vogt Graham Lawyers
Defendant: Hotchkin Hanly
Case(s) referred to in judgment(s):
Allen v Western Power Corporation [2010] WADC 104
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Banque Commerciale SA, En liquidation v Akhil Holdings Ltd (1990) 169 CLR 279,
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281
Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381
British Westinghouse Electric Co Ltd v Underground Electric Railways Co Ltd [1912] AC 673
Bruce v Odhams Press Ltd [1936] 1 KB 697
Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653
Burton v Shire of Bairnsdale (1908) 7 CLR 76
Cavanagh v Sunners [2000] NTSC 2
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Dare v Pulham (1982) 148 CLR 658
F & G Nominees Pty Ltd v Verdell Pty Ltd [2003] WASCA 290
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Fletcher (as Trustee for the Brian Fletcher Family Trust) v St George Bank Limited [2010] WASC 75
Frank Jasper Pty Ltd v Deloitte Touche Tohmatsu [2004] WASC 54
Hadley v Blaxendale (1854) 156 ER 145
Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986)
Liddelow v Gelavis [No 2] [2008] WASC 64
Maghiar v Trajkovski (Unreported, WASCA, Library No 960757, 4 September 1996)
Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65
Perestrello v United Paint Co Ltd [1969] 1 WLR 570
Peruvian Guano Company v Bockwoldt (1983) 23 CH D 225
Total Waste Management Pty Ltd v The City of Kalgoorlie–Boulder [2010] WASC 234
Wenham v Ella (1972) 127 CLR 454
DAVIS DCJ: On 27 December 2012 the plaintiff made an application for an extension of time within which to apply to strike-out the defence and counterclaim, and an order striking out certain paragraphs of the defence and counterclaim pursuant to Rules of the Supreme Court 1971 (RSC) O 20 r 19(1)(a), (b) and (c). The particular paragraphs sought to be struck out related to the defendant's counterclaim for damages against the plaintiff. This claim for damages was based on the plaintiff's alleged wrongful termination of a contract made between the plaintiff and the defendant.
The plaintiff's application was dismissed by Deputy Registrar Harman on 4 February 2013. This appeal is from that decision.
Pursuant to r 15(6) of the District Court Rules 2005 (DCR) this appeal is by way of a new hearing of the plaintiff's strike-out application.
For the reasons which follow I consider that the defendant's pleading is embarrassing and does not enable the plaintiff to know what case it has to meet at trial. I will, however, give the defendant the opportunity to amend in order to properly plead its damages claim.
The pleadings and what the plaintiff seeks to strike-out
The plaintiff's claim relates to monies owed for painting carried out at the Coventry Square Markets in Morley, Western Australia. The plaintiff contracted to carry out painting works pursuant to a written sub‑contract agreement made 24 February 2011 with the defendant (the contract). The defendant was the principal contractor for construction work at the Coventry Square Markets.
In the statement of claim it is pleaded that there was a variation of the contract made on 6 August 2011 where the defendant requested the plaintiff to carry out extra painting work. The plaintiff rendered invoices for that work which were not paid. The plaintiff claims a total amount of $107,553.10 pursuant to the contract as varied, alternatively on a quantum meruit basis.
The statement of claim also pleads that:
(a)On 21 October 2011 the plaintiff issued to the defendant a default notice pursuant to clause Q.11.1 of the contract.
(b)On 2 November 2011 the plaintiff issued to the defendant a suspension notice pursuant to clause Q.12 of the contract.
(c)On 16 November 2011 the plaintiff issued to the defendant a termination notice pursuant to clause Q.13 of the contract.
(d)The defendant breached the contract by failing to pay the plaintiff's invoices and by reason of those breaches and the termination of the contract by the plaintiff, the plaintiff suffered loss of profits in the sum of $31,006.
The defence and counterclaim was filed on 16 April 2012. In the defence, it is pleaded that no invoices drawn in accordance with the requirements of the contract were delivered to the defendant.
In the counterclaim it is pleaded relevantly that:
(a)On 22 September 2011 the plaintiff suspended the works the subject of the contract without proper cause (par 17) and that constituted a breach of the contract (par 18).
(b)On 7 October 2011 the defendant gave notice that the plaintiff's conduct amounted to a repudiation and required it to return to the site, resume work and proceed expeditiously (par 19).
(c)The plaintiff did not comply with the October 7 notice and a further notice was issued by the defendant on 12 October 2011 pursuant to clause Q1 of the contract requiring the plaintiff to remedy its default (par 20).
(d)The defendant advised the plaintiff on 17 October 2011 that the plaintiff had ceased work and required acknowledgement, inter alia, that the plaintiff would complete the whole of the painting works, otherwise another painter would be instructed to do that work (par 21).
(e)The plaintiff's termination of the contract was without proper cause and was in breach of the contract (par 25).
(f)'The Plaintiff's termination of the contract contributed to a delay in completion of the Head Contract, required the Defendant to engage another painter to complete the works the subject of the contract and caused the Defendant to suffer loss and expense particulars whereof shall be provided when they are ascertained' (par 26).
(g)The prayer for relief claimed:
'A.Damages to be assessed;
B.Interest on any award of damages at the rate of 6% per annum pursuant to s 32 of the Supreme Court Act or as such rate as the Court shall determine from the date each item of loss or damage was incurred; and
C.Costs.'
Following the plaintiff's request for further and better particulars of par 26 of the defence and counterclaim, the defendant provided answers dated 7 August 2012. The answers which the defendant provided are important for the purpose of this appeal and I have therefore reproduced the answers in full in the schedule to these reasons.
In its application of 27 December 2012 the plaintiff applied to strike‑out par 26 and the prayer for relief in the counterclaim, on the grounds that they:
(a)disclose no reasonable cause of action: RSC O 20 r 19(1)(a);
(b)will prejudice, embarrass or delay the fair trial of the action: RSC O 20 r 19(1)(c); and
(c)an frivolous or vexatious: RSC O 20 r 19(1)(b).
The application for an extension of time
The application by the plaintiff included an application for an extension of time within which to bring the strike-out application. An extension of time was required because pursuant to the RSC O 20 r 19(3), any application to strike-out the defence and counterclaim had to be brought within 21 days after the date of service of that pleading.
The time for making the strike-out application may be extended pursuant to RSC O 3 r 5. The power to extend time must be exercised with caution with due regard to the overriding purpose of the RSC and the DCR, namely to facilitate the fair and just resolution of real issues in civil proceedings with minimum delay and expense: RSC, O 1 r 4A and r 4B; DCR r 24(1); FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268, 283, 286; Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381, 386, 387, 398 – 399; Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175; 210, [90].
In determining the plaintiff's application for an extension of time within which to make the strike-out application I should take into account all relevant circumstances including the reasons for the delay in bringing the application, the prejudice the plaintiff will suffer if the time limit is not extended, the prejudice that the defendant will suffer if the time limit is extended and the need to facilitate the fair and just resolution of the issues between the parties with minimum delay and expense: Allen v Western Power Corporation [2010] WADC 104 [62] (Derrick DCJ).
In looking at the plaintiff's application for an extension of time, I have had regard to the court file and two affidavits of Willfried Vogt, from the plaintiff's solicitors, sworn 24 July 2012 and 27 December 2012 in support of the application for the extension of time. The relevant chronology is, briefly, as follows.
After the defence and counterclaim was filed on 16 April 2012, there followed interlocutory applications relating to both the pleadings and discovery, with the plaintiff filing two amendments to the statement of claim. The second amended statement of claim was filed on 7 June 2012, following correspondence between the solicitors for the parties about alleged defects in the plaintiff's pleadings.
On 3 July 2012 the plaintiff filed its request for further and better particulars of par 26 of the defence and counterclaim. The defendant did not answer the request within the time specified in the request. By letter dated 18 July 2012 the plaintiff's solicitors wrote to the defendant's solicitors about this and advised that if answers were not served by 20 July 2012, an application would be made seeking an order pursuant to RSC O 20 r 19. In that letter of 18 July 2012 the plaintiff's solicitors set out the contention that par 26 disclosed no reasonable cause of action and would prejudice, embarrass or delay the fair trial of the action, or alternatively was frivolous or vexatious.
On 24 July 2012 the plaintiff applied for orders in the same terms as those applied for in the application the subject of this appeal. The matter was listed to be heard before Deputy Registrar Hewitt on 9 August 2012.
On 31 July 2012 the defendant's solicitors wrote to the plaintiff's solicitors concerning the directions which should be made and agreed that the plaintiff's strike-out application should proceed straight to a special appointment with submissions to be filed. In that letter of 31 July 2012 the defendant's solicitors also:
(a)asserted that there had been no conferral as to the particulars of the plaintiff's solicitor's three assertions that par 26 disclosed no reasonable cause of action, would prejudice, embarrass or delay the fair trial of the action, or was frivolous or vexatious;
(b)requested the plaintiff's solicitors to state clearly in writing why it was said that the pleading disclosed no reasonable cause of action, would prejudice, embarrass or delay the fair trial of the action, or was frivolous or vexatious; and
(c)advised that if the plaintiff's objections were valid, the defendant's solicitor was instructed to file a fresh defence and counterclaim to meet those objections and to do so in any event to change paragraph numbers to meet the latest statement of claim.
A directions hearing was held on 2 August 2012. During the course of that hearing there was discussion between the deputy registrar and Mr Vogt concerning the clarity of the plaintiff's request for further and better particulars. On 6 August 2012 the plaintiff's solicitors wrote to the defendant's solicitors setting out a redrafted version of the request for further and better particulars.
On 7 August 2012 the defendant's solicitors provided the answers to the plaintiff's redrafted request for further and better particulars. From the information on the file the answers are dated 7 August 2012 but were not filed until 8 August 2012.
The hearing of the plaintiff's strike-out application dated 24 July 2012 took place on 9 August 2012 before Deputy Registrar Hewitt. Mr Vogt's affidavit sworn 27 December 2012 sets out what occurred at that hearing. There is no transcript of the proceedings of 9 August 2012 provided. What is set out in Mr Vogt's affidavit has not been disputed by the defendant's solicitors. It should be noted, however, that the defendant's current solicitors are not the same solicitors who were acting for the defendant on 9 August 2012.
I accept Mr Vogt's summary of what occurred at the hearing on 9 August 2012. In essence, the defendant relied upon the defendant's answers to the plaintiff's request for further and better particulars to oppose the strike-out application. Deputy Registrar Hewitt said that the defendant's answers were adequate. It was then submitted by counsel for the defendant that the plaintiff's application to strike-out the defence was misconceived, a submission that Deputy Registrar Hewitt did not accept. Deputy Registrar Hewitt noted that it was appropriate for the plaintiff to bring the application and par 26 of the defence and counterclaim did not plead many necessary things, including how the plaintiff was said to have contributed to the alleged delay, who the other contractor was and what was the alleged loss and expense. Mr Vogt also deposed to other observations made by Deputy Registrar Hewitt concerning par 26 of the counterclaim including that it was bereft of necessary particulars, lacking in material facts and would not stand up to examination.
The result of the hearing before Deputy Registrar Hewitt on 9 August 2012 was that although he dismissed the application to strike-out because the orders sought were thought no longer necessary, he made an order that the defendant pay the plaintiff's costs of the application, including reserved costs, in any event.
A general directions hearing in this matter was held on 12 September 2012 at which time the defendant was ordered to provide discovery on oath within 21 days and inspection of the documents within 10 days. The defendant was ordered to pay the plaintiff's costs of that directions hearing.
On 12 September 2012 the plaintiff filed a reply and defence to counterclaim, in which par 26 of the defence and counterclaim was denied.
The defendant did not comply with the orders to provide discovery on oath made on 12 September 2012. A further order for the defendant to file and serve that discovery was made at the next directions hearing held on 3 October 2012.
A further directions hearing was held on 7 November 2012. At that hearing the plaintiff applied for inspection of certain documents from the defendant's discovery list which had twice been requested by the defendant's solicitors by letters dated 24 and 31 October 2012, but not yet provided. Orders were made, inter alia, that by 8 November 2012 the defendant serve on the plaintiff a copy of each document referred to in the letter from the plaintiff's solicitors to the defendant's solicitors dated 24 October 2012.
On 12 November 2012 the plaintiff's solicitors filed an application for a springing order for the defendant's compliance with the order made on 7 November 2012. It appears from an affidavit sworn by the defendant's solicitor on 12 November 2012 that the discovered documents were provided to the plaintiff's solicitors on the afternoon of the same day.
The plaintiff's application for springing order was listed to be heard on 22 November 2012. On that day Mr Vogt swore an affidavit in support of an application for specific discovery from the defendant. The specific discovery was sought on the basis that it was relevant to the pleading in par 26 in the defence and counterclaim and the loss and expense arising from the alleged delay in the completion of the head contract. It was said that the defendant had failed to discover any documents relating to this or the matters set out in the defendant's answers to the plaintiff's request for further and better particulars dated 7 August 2012. A copy of a letter that Mr Vogt had written to the defendant's solicitors dated 14 November 2012 was annexed to the affidavit.
At the hearing on 22 November 2012 orders were made allowing the plaintiff to amend its chamber summons for a springing order to include an order seeking further and better discovery from the defendant. That application as amended was adjourned to a special appointment hearing on 12 December 2012.
Further correspondence took place between the parties' solicitors in relation to the further and better discovery sought, which correspondence was annexed to a further affidavit of Mr Vogt sworn on 12 December 2012 in support of the plaintiff's application for further and better discovery. In a letter from the defendant's solicitors dated 22 November 2012, the head contract was enclosed and the defendant's solicitors also addressed the matters set out in the letter from the plaintiff's solicitors dated 14 November 2012. The defendant's solicitors specifically stated in relation to the rental agreements referred to in answer 1.5 of the defendant's answers to the plaintiff's request for further and better particulars that 'I am instructed that the defendant has no 'rental agreements' with any party or parties. It is a building company, not a landlord.'
On 12 December 2012 Deputy Registrar Hewitt made an order that the defendant give specific discovery on oath of the following:
(a)any contract between the defendant and a principal in relation to the construction of the building described in par 2 of the defence and counterclaim as Coventry Square Markets (the building);
(b)that part of the contract between the defendant and MU Painting which is referred as the writing in answer 1.3.3A of the further and better particulars of the defence and counterclaim dated 7 August 2012; and
(c)all rental, tenancy or lease agreements between the defendant and any tenant which existed prior to and at the date upon which the building was opened.
Deputy Registrar Hewitt gave oral reasons for making the orders, which reasons are recorded in a transcript of the proceedings of 12 December 2012. In his reasons he made the following observations:
As I understand it, no documents whatsoever which support the claim for damages have been discovered. Certain documents have now been provided but there is no affidavit of discovery. That is a matter which is inadequate.
Furthermore, in answer to a request for further and better particulars, various allegations of the loss and expense were provided, which included a claim for a loss of rent from tenancies. No tenancy agreements have been discovered and that seems to me to be an enormous gap in the case which is advanced by the defendant in its counterclaim. In fact it is the very pivot of the defence which is advanced.
The allegation is that there was certain delays, leading to a total delay of 56 [sic] days, of which through some process which is not explained, 21 days of delay are to be attributed to the plaintiff. Absent any rental agreements, it seems to me that on the case which is pleaded by the defendant, there is no entitlement to damages. As a consequence I regard it as essential that this defendant provide discovery of the documents which must exist if its case, in fact, has any prospects of success.
Following the hearing on 12 December 2012 there was further correspondence between the solicitors for the parties regarding par 26 of the defence and counterclaim. Mr Vogt had a discussion with Mr Duckham of the defendant's solicitors on 12 December 2012 about the deficiencies in that pleading, which Mr Vogt confirmed in a letter to the defendant's solicitors dated 13 December 2012. The defendant's solicitors wrote in response on 14 December 2012 stating they had requested instructions. After hearing nothing further from the defendant's solicitors, the plaintiff's solicitors wrote again on 20 December 2012 seeking a response and advising that unless an amended defence and counterclaim with par 26 removed was served by Friday 21 December 2012, the plaintiff would make an application to strike-out the pleadings and apply for an order that the defendant's solicitor personally pay the plaintiff's costs of the application on an indemnity basis.
The defendant's solicitors then wrote by letter of 21 December 2012 setting out the defendant's position concerning the claim for damages, which was:
(a)the plaintiff's breach of contract delayed the defendant's completion of its contract with the owner of the markets;
(b)the owner of the markets alleges that it suffered loss of rental and loss of tenants by the consequent delay in opening for business;
(c)the owner of the markets has lodged a claim against the defendant for its alleged losses arising from that delay;
(d)the claim is for part of the lost rent and lost tenancies;
(e)the owner has told the defendants that its lost rent was $750,000 per month; and
(f)that statement by the owner was the basis of the calculation in the defendant's further and better particulars.
The defendant's solicitor's letter of 21 December 2012 also advised that a strike-out application would be opposed.
That strike-out application was, of course, the present application brought by chamber summons dated 27 December 2012, the subject of this appeal.
In my view the delay in making the strike-out application has been explained. Although not put in exactly this way by counsel for the plaintiff, when the plaintiff's first strike‑out application was dismissed on 9 August 2012, it was assumed that the defendant's answers to the plaintiff's request for further and better particulars of par 26 of the defence and counterclaim would enable the plaintiff to know what case it had to meet at trial. It was only after the process of discovery that it was realised that there was still a problem with par 26 – as Deputy Registrar Hewitt described it, 'an enormous gap in the case advanced by the defendant in its counterclaim.'
As identified by Deputy Registrar Hewitt and for the reasons which follow, I consider there is merit in the plaintiff's application and the plaintiff will suffer prejudice if the time for bringing this application is not extended. There is no demonstrable prejudice to the defendant in the strike-out application now being heard. As I have already observed, the defendant has now appointed new solicitors and counsel appearing for the defendant at the hearing of this appeal conceded that there was no prejudice to his client. This action has not yet been listed for trial. In my view an extension of time to the plaintiff will not offend the case management principles of ensuring a fair and just resolution of the issues in these proceedings with minimum delay and expense.
In all of the circumstances I consider it is in the interests of justice to grant the plaintiff an extension of time within which to bring its application.
Principles relating to pleadings and pleadings as to loss and damage
The purpose of pleadings is to define with clarity the issues which are in dispute and to require each party to give fair and proper notice to each other of the case to be met: Dare v Pulham (1982) 148 CLR 658, 664; Banque Commerciale SA, En liquidation v Akhil HoldingsLtd (1990) 169 CLR 279, 286; Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281 (Martin CJ).
In relation to a claim for damages for breach of contract, the general principle is that damages should place the party who sustained the loss in the position that he would have been but for the breach, ie the position that the party would have been in if the contract had been performed: Wenham v Ella (1972) 127 CLR 454, 471.
Loss or damage for breach of contract will not be recoverable if it is too remote, the tests for remoteness being those stated in what are described as the two limbs of Hadley v Blaxendale (1854) 156 ER 145. The first limb is damage naturally resulting from the breach. The second limb is damage which might reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach. The rule in Hadley v Baxendale has in more recent times been restated as a single principle requiring that, on the information available to the defendant when the contract was made, the defendant should, or a reasonable person in the defendant's position would, have realised that such a loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or loss of that kind should have been within the defendant's contemplation: Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65 [72] (Newnes JA); Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653, 666; Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 92, 99.
In Perestrello v United Paint Co Ltd [1969] 1 WLR 570, 579 – 580, a case of alleged wrongful repudiation of a contract, Lord Donovan considered what a plaintiff is required to plead for a claim in damages.
… if a plaintiff has suffered damage of a kind which is not the necessary and immediate consequence of the wrongful act, he must warn the defendant in the pleadings that the compensation claim will extend to this damage, thus showing the defendant the case he has to meet and assisting him in computing a payment into court.
The limits of this requirement are not dictated by any preconceived notions of what is general or special damage but by the circumstances of the particular case. 'The question to be decided does not depend on words, but is one of substance' (per Bowen LJ in Ratcliffe v Evans [1892] 2 QB 524 at p 529).
The same principle gives rise to a plaintiff's undoubted obligation to plead and particularise any item of damage which represents out-of-pocket expenses, or loss of earnings, incurred prior to the trial, and which is capable of substantially exact calculation. Such damage is commonly referred to as special damage or special damages but is no more than an example of damage which is 'special' in the sense that fairness to the defendant requires that it be pleaded.
The obligation to particularise in this latter case arises not because the nature of the loss is necessarily unusual, but because a plaintiff who has the advantage of being able to base his claim on a precise calculation must give the defendant access to the facts which make such calculation possible.
… if the claim is one which cannot with justice be sprung on the defendants at the trial it requires to be pleaded so that the nature of that claim is disclosed. As Lord Dunedin said in Susquehanna [1926] AC 655 at p 661 'if the damage be general, then it must be averred that such damage has been suffered, but the quantification of such damage is a jury question.'
What amounts to a sufficient averment for this purpose will depend on the facts of the particular case, but a mere statement that the plaintiffs claim 'damages' is not sufficient to let in evidence of a particular kind of loss which is not a necessary consequence of the wrongful act and of which the defendants are entitled to fair warning.
The principles in Perestrello v United Paint Co Ltd have been applied in a number of cases, including in Western Australia Total Waste Management Pty Ltd v The City of Kalgoorlie–Boulder [2010] WASC 234; Frank Jasper Pty Ltd v Deloitte Touche Tohmatsu [2004] WASC 54 and Maghiar v Trajkovski (Unreported, WASCA, Library No 960757, 4 September 1996).
Further, in relation to what must be pleaded generally in terms of loss and damage, in F & G Nominees Pty Ltd v Verdell Pty Ltd [2003] WASCA 290 [135] the Full Court of the Supreme Court adopted observations by the trial judge (Wheeler J) to the effect that as a general rule, a party need not plead causation of its damage, however, it was necessary to plead the material facts which entitled that party to the relief claimed and to plead 'every matter which might take an opposing party by surprise'. This can be important in a case where there may be issues of causation or remoteness of damages: 3meg.com Pty Ltd v TM & SM Pike Pty Ltd [2012] WASCA 128 [70] – [73].
Applying these principles, a party (whether a plaintiff in a statement of claim or a defendant in a counterclaim) claiming damages as a result of an alleged breach of contract is required to give the other party proper notice of all matters which may take the other party by surprise and set out all the heads of loss being claimed. Where the claim is for loss of a kind which is not the necessary and immediate consequence of the breach, (in other words the loss does not flow naturally from the breach, applying the test in Hadley v Blaxendale as restated in Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [72]), full particulars must be pleaded to show the nature and extent of the damages and the amount which is claimed so as to fairly inform the other party of the case which must be met.
Where there are items capable of substantially exact calculation, the other party must be given access to the facts which make such calculation possible and thus show the party the case it has to meet and so that any necessary expert evidence can be obtained: Cavanagh v Sunners [2000] NTSC 2 [6] (Martin CJ).
In practice it is often difficult to distinguish between a material fact which would appear in the statement of claim and a particular, which is a piece of information which it is reasonable to give the defendant in order to tell him the case that he has to meet. There is often overlapping. The distinction between material facts and particulars and their function were explained in Bruce v Odhams Press Ltd [1936] 1 KB 697, 712 – 713; see also Dow Corning Australia Pty Ltd v Girys [2001] WASCA 361 [7] ‑ [9].
As stated in Bruce v Odhams Press Ltd, however, particulars cannot cure a bad statement of claim. Further, the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards, either voluntarily or upon request or order, without any reflection as to the true legal ground upon which they are to be given, has become so common that it has tended to obscure the distinction between them.
Principles on applications to strike-out pleadings
The principles to be applied in applications to strike-out a pleading on the basis that it discloses no reasonable cause of action pursuant to RSC O 20 r 19(1)(a) are clear: Kimberley Downs Pty Ltd v Western Australia (Unreported, WASC, Library No 6414, 25 August 1986); Neilson v City of Swan [2006] WASCA 94 [18]. Briefly, a statement of claim should be struck out only where the case is really not arguable. All the facts alleged in the statement of claim must be accepted as true. Great care must be exercised to ensure the plaintiff is not improperly deprived of the opportunity for trial. As a general rule the plaintiff is entitled as of right to have his case heard, the facts found and then argue questions of law. It is only in cases in which it can be seen from the outset that, however the facts be found, there is no basis for the legal conclusion contended for by the plaintiff that the pleading should be struck out.
While these principles are couched by reference to a plaintiff's statement of claim, they apply to a defendant's counterclaim.
As to the situation where a pleading is sought to be struck out pursuant to RSC O 20 r 19(1)(b) on the grounds that it is frivolous or vexatious, the principles are that an action is frivolous if it is obviously unsustainable and an abuse of the process of the court. It may for the same reason, be categorised as vexatious: Peruvian Guano Company v Bockwoldt (1983) 23 CH D 225, 230. The pleading should only be struck out if the claim is so obviously untenable that it cannot possibly succeed: Burton v Shire of Bairnsdale (1908) 7 CLR 76, 92.
When the basis of a strike-out application is that a pleading is likely to prejudice, embarrass or delay the fair trial of the action pursuant to RSC O 20 r 19(1)(c), it is necessary to look again at the objectives of a pleading. A pleading may be struck out where it is vague, ambiguous or pleaded at too great a level of generality so as to embarrass the opposite party who does not know what is alleged against him, or to leave that other party in doubt as to how to respond to the pleading: Banque Commerciale SA, En liquidation v Akhil Holdings Ltd (286) and Frank Jasper Pty Ltd v Deloitte Touche Tohmastus (a firm) [2006] WASC 24 [11] (Master Newnes as his Honour then was) (Frank Jasper 2006).
The question of whether a pleading is likely to prejudice, embarrass or delay the fair trial of the action in any particular case invariably involves matters of judgment and degree. The question of whether a pleading is so defective that it should be struck out is generally to be answered by whether or not the pleading serves the fundamental objective of pleadings and whether any significant deficiencies in it can adequately be overcome by the provision of particulars or by some other means. While it is necessary that a pleading set out with reasonable clarity and detail the case that the other party must meet, the focus must be on whether the pleading is sufficient for the fair and proper disposition of the case, not whether it complies meticulously with rules of pleading: Frank Jasper 2006 [12], [13].
When applying these principles the comments of his Honour the Chief Justice in Barclay Mowlem Construction v Dampier Port Authority [7], [8] need to be remembered.
... it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and appraising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment.
Most pleadings in complex cases, and this is a complex case, can be criticised from the perspective of technical pleading rules that evolved in a very different case management environment. In my view, the advent of contemporary case management techniques and the pre-trial directions, to which I have referred, should result in the Court adopting an approach to pleading disputes to the effect that only where the criticisms of a pleading significantly impact upon the proper preparation of the case and its presentation at trial should those criticisms be seriously entertained.
Evidence adduced on the application
No evidence is admissible on an application under O 20 r 19(1)(a) ie on the grounds that the pleading discloses no reasonable cause of action: see O 20 r 19(2). Evidence, is however, admissible on a strike-out application on the remaining grounds under O 20 r 19(1).
The parties in this appeal have agreed that when I am considering whether or not par 26 and the prayer for relief will prejudice, embarrass or delay the fair trial of the action or is frivolous or vexatious, I should have regard to the court file and the two affidavits of Mr Vogt sworn 24 July and 27 December 2012, together with a further affidavit sworn in opposition to the strike-out application by Michael Brooksby Holtham sworn 25 January 2013.
The affidavit of Mr Holtham annexes two documents. The first is a letter from the owner of the markets to the defendant dated 14 February 2012 setting out a claim for delays in completion of the contract for the Coventry Square Markets. Those delays are in respect of completion of the internal painting of the building and of the carpark and road works. It is stated in the letter that the two items were major causes of the delayed opening of the markets – the first because until the internal painting of each tenancy was complete, possession could not be given to the tenants and the second because the public could not be permitted onto the property until the carparking was complete. The letter stated the delayed opening caused the owner to suffer losses, both lost rent and lost tenancies from those tenants who were sick of waiting and refused to take up their tenancies. The letter states that there is an intention to claim the losses from the defendant 'when we have ascertained the quantum.'
The second annexure to Mr Holtham's affidavit is a copy of the writ of summons and statement of claim in proceedings commenced by the defendant against the company which contracted to build the carpark.
Consideration of the application to strike-out
In relation to the first ground of the application to strike-out, namely that there is disclosed no reasonable cause of action, applying the principles in Kimberley Downs Pty Ltd v Western Australia and Neilson v City of Swan, I am not prepared to strike-out either par 26 or the prayer for relief.
In my view, the pleadings in the counterclaim, if accepted as true, plead in essence that the plaintiff wrongfully terminated the contract. If so, that would constitute a breach of contract which would entitle the defendant to damages. This is, in my view, not a case which is so clearly untenable that it cannot possibly succeed. In other words, the defendant does have an arguable case that it suffered loss and damage recoverable at law.
For the same reasons I would not strike-out the paragraphs of the defence and counterclaim on the ground that the claim is frivolous or vexatious. The claim for damages by reason of the plaintiff's breach of contract is not so obviously untenable that it cannot possibly succeed.
I do, however, consider that the pleading in par 26 may embarrass and delay the fair trial of the action. In my view, there is considerable ambiguity in the way the claimed loss and damage is pleaded. As par 26 is presently pleaded it is not clear whether the loss and expense which the defendant suffered was caused by the delay in the completion of the head contract, or caused by the engagement of another painter to complete the works, or both.
The pleading in par 26 also does not make it clear that the loss which is being claimed is actual loss and damage that the defendant has suffered. The defendant's answers to the plaintiff's request for further and better particulars and the late provision, by way of Mr Holtham's affidavit, of a copy of the letter from the owner of the markets and the writ commenced against the other contractor, do not in my view clarify what claim it is the plaintiff must meet at trial. In fact, the information that has since been provided really only highlights the inadequacy of the material facts upon which the claim in par 26 is made.
For example, it is now apparent that the defendant has not suffered any loss and expense directly as a consequence of engaging another painter – indeed the information from the pleadings compared to the contractual document itself, as the plaintiff's counsel has pointed out, shows that the painter engaged to replace the plaintiff carried out the work at a cheaper rate.
Further, par 26 as presently pleaded together with the defendant's answers to the plaintiff's request for further and better particulars suggest that it was the defendant who was responsible for the tenants. In light of the correspondence of 14 November and 21 December 2012 from the defendant's solicitors, that is apparently not the case.
In light of the information that I have, par 26 even when combined with the particulars separately provided, does not fulfill the essential requirements of informing the plaintiff of the case it must meet at trial. The defendant has had ample opportunity by way of pre-trial procedures to provide the plaintiff with relevant information and define its claim for loss and damage with particularity, and it has not done so. It should not be left to the plaintiff to try and work out exactly what it is the defendant is claiming.
Counsel for the defendant accepted during the hearing of this appeal that more could be said and it would be useful for the plaintiff to know more. The suggestion was made, however, that the plaintiff's solicitors could write to the defendant's new solicitors and make a further request for particulars.
The submission from counsel for the defendant overlooks the objective of pleadings and the authorities which state that the pleadings are required to set out sufficient details of the loss and damage claimed. I do not consider it is acceptable for counsel for the defendant to say that any uncertainty in the claim for damages can be cured by another request for particulars, either formal or informal, particularly in light of the history of this matter. At this stage of the proceedings, it is incumbent upon the defendant to provide as part of its pleading all the necessary material facts and appropriate particulars so as to clearly identify the case for damages which it seeks to put at trial: Fletcher (as Trustee for the Brian Fletcher Family Trust) v St George Bank Limited [2010] WASC 75 [30] (Martin CJ).
In my view, it is necessary for the defendant to plead the material facts which it says entitles it to the relief claimed and to plead every matter which might take the plaintiff by surprise. If the loss and damage said to have been suffered by the defendant is by reason of a claim by the owner based upon a delay in completion of the head contract (as the indications now are that it is) then this is not damage which, in my view, could be said to have flowed naturally from the breach. This is a case where issues of causation and remoteness of the defendant's loss and damage may arise and thus it is important that the claim is properly pleaded.
To enable the plaintiff to know what case it has to meet at trial and define the issues at trial relating to losses said to have arisen from the alleged delay in completion of the head contract, the defendant should:
(a)Plead material facts relating to the head contract and the defendant's obligations pursuant to the head contract including, as the plaintiff's counsel submitted at the hearing of this appeal, times for performance for key works, the date for practical completion and any variations or extensions of time for completion.
(b)Identify exactly the basis upon which it is said the plaintiff's breach of contract caused the delay in completion of the head contract. That will include details of when, after the plaintiff ceased painting under the contract, painting then recommenced, when it was completed and the extent to which the plaintiff's breach delayed practical completion of the head contract. As previously particularised in the defendant's answers to the plaintiff's request for further and better particulars, the delay attributable to the plaintiff is said to be 21 days. The process by which that 21 day delay is calculated is not explained, nor is it explained how that 21 day delay separately contributed to the overall delay when, according to the owner's letter dated 14 February 2012 annexed to the affidavit of Mr Holtham, work on the carpark also delayed the opening of the markets. The defendant needs to plead and particularise how the delay in painting is connected (if in fact it is) with work on the carpark and thus affected the sequencing of those carpark works and any other works under the head contract.
(c)Identify what loss and damage has in fact been suffered by the defendant itself by reason of the plaintiff's breach of contract. Proper notice must be given of all heads of damage. To the extent that a head of damage is capable of calculation, the calculations must also be provided. If a head of damage is the defendant's liability to the owner of the markets, the defendant must make clear not only what the claim by the owner was or is, but also the loss and damage which has been suffered by the defendant itself which is causally linked to the plaintiff's termination of the contract. It will be essential for the defendant to plead material facts in relation to the defendant's liability to the owner pursuant to the terms of the head contract, what the defendant's liability is under the head contract (pursuant to a liquidated damages or other clause) or what the defendant has paid or agreed to pay to the owner (whether pursuant to a judgment or settlement). The calculations of what is claimed to be attributable to the plaintiff's breach of contract should be pleaded. The defendant should also bring to account any savings it achieved in the hourly rate paid to the painter engaged after the plaintiff's termination of the contract: British Westinghouse Electric Co Ltd v Underground Electric Railways Co Ltd [1912] AC 673; Liddelow v Gelavis [No 2] [2008] WASC 64 especially [17] – [18] (Martin CJ).
It follows from what I have set out above that I consider the defendant's pleadings in respect to its claimed loss and damage to be inadequate. This is a situation referred to by the Honourable Chief Justice in Barclay v Mowlem [8] where the inadequacies in the defendant's pleading of its loss and damage does significantly impact upon the proper preparation of the case and its presentation at trial. To put it another way, following Frank Jasper 2006, the pleading in par 26 is not sufficient for the fair and proper disposition of the case.
In my view par 26 of the counterclaim ought to be struck out as it has not been pleaded and particularised with sufficient detail and clarity for the plaintiff to know what case it has to meet and so that it can prepare for trial including obtaining expert evidence ( if necessary).
In the circumstances, however, I consider that opportunity should be given to the defendant to replead its case. This is a matter for my discretion. As the action has not been entered for trial, pursuant to DCR r 48A, leave to amend is not necessary. In my view, the appropriate way to deal with this matter is to make a case management order for the filing of an amended defence and counterclaim.
Orders
Subject to hearing from the parties I propose to make orders allowing the appeal, setting aside the orders of the deputy registrar made 4 February 2013, and in substitution thereof making the following orders:
(a)the time within which the plaintiff have to apply to strike‑out the defence and counterclaim be extended to 27 December 2012;
(b)paragraph 26 of the defence and counterclaim be struck out; and
(c)within 14 days the defendant file and serve an amended defence and counterclaim reflecting the order in par (b) and to address the amended statement of claim filed by the plaintiff on 7 June 2012.
There is also the issue of costs. In the notice of the appeal, the usual order that the defendant pay the plaintiff's costs of the appeal to be taxed is sought. However, in relation to the costs of the initial application before the deputy registrar, there is an order sought that the defendant's former solicitor pay the plaintiff's costs of the application on an indemnity basis to be taxed and paid forthwith.
So far as the plaintiff pursues costs against the defendant's former solicitor personally, argument should not take place in the absence of that former solicitor: see RSC O 66 r 5(2).
Accordingly, if the plaintiff's application for indemnity costs is to be pursued, directions will need to be made as to the hearing of the plaintiff's indemnity costs application.
Schedule
Defendant's answers to plaintiff's amended request for further and better particulars of defence dated 6 August 2012
1.
As to paragraph 26:
1.1
Q.
Provide the date on which the work the subject of the Head Contract should have been completed;
A.
October 26, 2011;
1.2
Q.
Provide full particulars of the alleged delay in the completion of the work the subject of the Head Contract, stating:
1.2.1
Q.
The date for practical completion of the Head Contract;
A.
See answer 1.1 above;
1.2.2
Q.
The actual date of practical completion of the Head Contract;
A.
December 15, 2011;
1.2.3
Q.
The number of days of delay beyond the contracted date for practical completion of the Head Contract caused by or attributable to the Plaintiff;
A
Twenty-one days;
1.2(sic)
Q.
Provide full particulars of how the Plaintiff allegedly contributed to the delay in the Head Contractor achieving practical completion of the work the subject of the Head Contract
A.
The Plaintiff slowed its work on the project by doing work selectively. The Plaintiff then suspended work and declined to resume during which time painting on the project was suspended. The failure of the painting work to proceed expeditiously and then not to proceed at all affected the sequencing of all other work on the project which caused delays in the performance of other work and delays in the fitting out of individual tenancies resulting in them not being able to open for trading;
1.3
Q.
Provide full particulars of the Defendant's engagement of another painter to complete the works the subject of the Contract stating details of:
1.3.1
Q.
Who is the other painter;
A.
MU Painting;
1.3.2
Q.
Whom of the Defendant contacted whom of the other painter;
A.
Jamie Darcy on behalf of the Defendant contacted Rob McDonald of MU Painting;
Q.
Was the contract oral or in writing or partly oral and partly written;
A.
The contract was partly oral and partly in writing;
1.3.4
Q.
What work was the other painter requested to carry out;
A.
MU Painting was requested to carry out painting of all plasterboard walls with two coats of low sheen acrylic and all cornice and decorative panels with two coats of satin semi‑gloss;
1.3.5
Q.
What were the terms (including rates) of the agreement between the Defendant and the other painter;
A.
All work was to be charged at $6.50 per metre plus GST;
1.3.6
Q.
When did the other painter commence work;
A.
On or about October 1, 2011;
1.3.7
Q.
When did the other painter complete the work;
A.
December 15, 2011;
1.4
Q.
Provide full particulars of how the Plaintiff allegedly caused the Defendant to suffer the loss and expense referred to;
A.
The delay in completing the painting work and the consequent delay in completing the project meant that the opening of the Coventry Square Markets for trading was delayed by fifty one days. The delay caused many tenants to suffer losses and – as a result of representations from multiple tenants – caused charging of rent not to be commenced until January 1, 2012;
1.5
Q.
Provide full particulars of the loss and expense referred to;
A.
(i)
Rent from tenancies - $750,000 per calendar month;
(ii)
Rent per day - $24,657.53;
(iii)
Delay attributed to Plaintiff – 21 days;
(iv)
Loss attributable to Plaintiff - $517,808.21.
1
22
1