Hetherington v ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd)
[2003] WASC 44
HETHERINGTON & ANOR -v- ABB SERVICE PTY LTD (formerly known as ABB ENGINEERING CONSTRUCTION PTY LTD) [2003] WASC 44
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 44 | |
| Case No: | CIV:1226/2000 | 4 DECEMBER 2002 | |
| Coram: | MASTER SANDERSON | 18/03/03 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Leave to amend granted | ||
| B | |||
| PDF Version |
| Parties: | KENNETH SYDNEY HETHERINGTON JULIE ANN HETHERINGTON ABB SERVICE PTY LTD (formerly known as ABB ENGINEERING CONSTRUCTION PTY LTD) (ACN 000 095 250) |
Catchwords: | Practice and procedure Application for leave to amend statement of claim Turns on own facts |
Legislation: | Nil |
Case References: | Nil Kirika v Zurich Australian Insurance Ltd [1002] WASCA 233 Timms v Commonwealth Bank of Aust [2002] NSWCA 298 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- JULIE ANN HETHERINGTON
Plaintiffs
AND
ABB SERVICE PTY LTD (formerly known as ABB ENGINEERING CONSTRUCTION PTY LTD) (ACN 000 095 250)
Defendant
Catchwords:
Practice and procedure - Application for leave to amend statement of claim - Turns on own facts
Legislation:
Nil
Result:
Leave to amend granted
(Page 2)
Category: B
Representation:
Counsel:
Plaintiffs : Mr P P McCann
Defendant : Mr P B O'Neal
Solicitors:
Plaintiffs : Deacons
Defendant : Minter Ellison
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Kirika v Zurich Australian Insurance Ltd [1002] WASCA 233
Timms v Commonwealth Bank of Aust [2002] NSWCA 298
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1 MASTER SANDERSON: This is a pleading summons. It has quite a history and it is necessary to say something of that history to put the present application in context. The plaintiffs filed their statement of claim on 18 February 2002. By amended application to the Case Management Registrar dated 18 June 2002, the defendant applied for leave to make a strike-out application out of time and for an order that the whole or alternatively, certain paragraphs of the statement of claim be struck out. The matter came on for hearing on 24 July 2002. I granted leave to make the application out of time and I struck out the whole of the statement of claim. Leave was given to file and serve a substituted statement of claim.
2 A substituted statement of claim was filed on 29 August 2002. Thereafter the parties corresponded about the form of the statement of claim, but they were unable to reach agreement. The matter was mentioned in chambers on 11 November 2002 and was referred to a special appointment to be heard on 4 December 2002. During the course of his submissions, counsel for the plaintiffs at the hearing conceded that further amendments to the statement of claim were required. Other matters were not conceded and the matter was fully argued. At the conclusion of the hearing I ordered the plaintiffs to file a minute of proposed amended substituted statement of claim embodying amendments that were conceded. That document was filed on 9 January 2002. Upon receipt of the minute the solicitors for the defendant filed submissions dealing with paragraphs of the minute with which they still took issue. Those submissions were filed on 15 January 2003. In response to those submissions, the solicitors for the plaintiffs made certain further amendments to the minute and filed submissions answering the complaints of the defendant which had not been picked up by the amended document. These submissions and a further amended minute forwarded filed on 31 January 2003.
3 The result of that rather convoluted process is that the plaintiffs now seek leave to amend in terms of a Minute of Proposed Amended Substituted Statement of Claim ("the minute") dated (by me) 31 January 2003. The defendant objects to leave being granted. In dealing with the plaintiffs' application I have taken into account the written submissions of the defendant's solicitors of 15 January 2003 and all submissions, both oral and written, made prior to that date. With respect to the plaintiffs, I have taken into account their written submissions of 31 January 2003 and all their written and oral submissions made prior to that date.
4 For the purposes of this application it is necessary only to deal briefly with the facts. At all material times the plaintiffs were the
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- directors and only shareholders of a company styled Monaveen Pty Ltd ("Monaveen"). By contract entered into prior to July 1996 the defendant agreed to construct for BHP Direct Reduced Iron Pty Ltd ("BHPDRI") certain material handling facilities and overland conveyers, which formed part of the construction of a hot briquetted iron-ore plant near Port Hedland. By notice in writing dated 22 July 1996 the defendant advised Monaveen of its intention to enter into a subcontract with Monaveen, pursuant to which Monaveen would construct part of the plant. The statement of claim (par 3) refers to these works as "the sub-contract works". Monaveen duly commenced work in July 1996. It is pleaded by the plaintiffs that Monaveen continued to perform the subcontract works until about 24 February 1997 when Monaveen accepted a purported termination of the subcontract by the defendant (see par 67A). It is pleaded that in February 1997 the National Australia Bank ("the bank") appointed a receiver/manager to Monaveen (par 71), on 23 October 1997 Monaveen appointed an administrator and thereafter entered into a Deed of Company Arrangement with its creditors (par 72). None of these facts is controversial.
5 It is the plaintiffs' case that as a consequence of misleading and deceptive conduct on the part of the defendant, they have suffered loss and damage. In broad terms, the plaintiffs say that relying upon the defendant's misleading conduct they provided guarantees to the bank and subsequently increased their level of exposure. They say they would not have taken this step were it not for representations made to them by the defendant. With the subsequent failure of Monaveen the bank has called up the guarantees and the plaintiffs say they have suffered loss and damage. As I say, that is a broad overview of the nature of the claim made by the plaintiffs. It will emerge in more detail on further examination of the parts of the statement of claim with which the defendant takes issue.
6 Turning then to the minute, the defendants take issue with par 12, 30 and 46. These three paragraphs refer to alleged conduct by the defendant occurring at different dates - the statement of claim refers to The July 1996 Conduct (par 7 to 12), The September 1996 Conduct (par 13 to 30) and The October 1996 Conduct (par 31 to 46). The point made by the defendant can be illustrated by reference to par 12. By par 7, the plaintiffs plead a representation made to them by the defendant. They plead that it was foreseeable that they may suffer loss if the representation was false, inaccurate or misleading. They plead a duty of care to take reasonable care to ensure that the representation was not false, inaccurate or misleading, and they then plead falsity. Paragraph 12 then pleads
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- reliance. It is in the following form (marking up and deletions have been omitted):
"12. In reliance upon the progress payment representation and induced thereby, the Plaintiffs on 13 August 1996 executed personal guarantees and indemnities and mortgages of real estate owned by them ('the bank securities') in favour of the National Australia Bank, in order to secure Monaveen's actual and contingent indebtedness to that bank to a maximum sum of $1,334,000 in respect of:
12.1 an overdraft facility with an effective limit of $375,000 to provide working capital to Monaveen ('the effective overdraft limit') being account no 67-082-4260;
12.2 bank guarantees issued by the National Australia Bank in favour of the Defendant in the sum of $485,000;
12.3 a loan account no 67-352-1548 in respect of a property owned by Monaveen and located at 5 Padbury Terrace, Midland, Western Australia;
12.4 a loan account no 66-858-0201 in respect of a farming property owned by Monaveen at Harvey, Western Australia."
8 In my view there is no substance in the defendant's complaint. True it is that the plaintiffs' action can only succeed if the misleading and deceptive conduct or the breach of duty is productive of loss. The plaintiffs plead their loss in par 68 and subsequently. What is said by the plaintiffs is that their loss is the increased liability they assumed to the bank consequent upon the increased borrowing limits. At least so far as
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- the pleading is concerned, the cause of action is complete. The defendant is able to ascertain from the pleading the full extent of their alleged liability. Paragraphs 12, 30 and 46 can stand.
9 The defendant complains of par 31 through to 46. As I understand the nature of the defendant's complaint, it is that matters pleaded in par 31 through to 36 could not be the basis of reliance pleaded in par 46.1. These six paragraphs deal with what is referred to as "The October 1996 Conduct". In particular, it deals with a number of meetings which took place between the first-named plaintiff and an agent or employees of the defendant between 25 October 1996 and 31 October 1996. Further, par 35 and 36 refer to correspondence passing between the parties. Paragraph 46.1 pleads that in reliance upon matters pleaded in par 31 to 36, and induced thereby, the plaintiffs extended their liability to the bank. As a matter of pleading I can see nothing wrong with these paragraphs. Whether the plaintiffs are able to make out their case is a matter for trial. But the pleading as it stands is entirely proper.
10 Objection is taken to par 52 of the minute. This paragraph relates to what is referred to in the pleading as "The December 1996 Contract". By par 47 the plaintiffs plead that between 6 and 13 December 1996 a representative of the defendant and the first-named plaintiff had discussions regarding payments under and possible termination of the subcontract. By par 48 it is pleaded that the parties executed an amendment to the subcontract, pursuant to which the defendant agreed to pay progress payments to Monaveen on a weekly basis commencing on 16 December 1996 and continuing until 24 February 1996 (sic). By par 49 it is pleaded that entry into the subcontract amendment was a representation by the defendant that the defendant would make the progress payments provided the conditions of the subcontract were fulfilled. By par 50 it is pleaded that it was foreseeable that if the representation made by the defendant to the plaintiffs was false, inaccurate or misleading, the plaintiffs could suffer loss and damage. It is further pleaded in par 51 that in making the representation the defendant owed the plaintiffs a duty to exercise reasonable care to ensure the representation was not false, inaccurate or misleading. There then follows par 52 which is in the following form (marking up and deletions have been omitted):
"52. The December 1996 representation was false, deceptive, inaccurate or misleading in that:
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- 52.1 It was misleading in so far as it was a representation as to a future matter within the meaning of s51A of the TPA and s9(1) of the FTA.
52.2 Further or in the alternative, the December 1996 representation was false, deceptive, misleading or inaccurate in that the Defendant intended to withhold all payments under the subcontract amendment if the progress of the works was delayed for any reason at any time when pursuant to condition 1 of the sub-contract amendment the Defendant was only entitled to revise the payment schedules having regard to the actual progress of the sub-contract works.
Particulars
(1) Pursuant to condition 1 of the sub-contract amendment, on its true construction, the Defendant was entitled to revise the payment schedules provided for in the sub-contract amendment on a weekly basis if the actual progress achieved by Monaveen in each week was different from the planned progress provided for that week in the programme attached to the sub-contract amendment.
(2) As at 13 December 1996 there was an ongoing industrial dispute at the BHPDRI project regarding the payment of site allowances to union members including the employees of the Defendant and Monaveen ('the site allowance issue'). The Defendant was a member of a committee of contractors dealing with the site allowance issue.
(3) On or about 6 January 1997 the Defendant suspended all payments under the sub-contract amendment because of a site-wide strike at the BHPDRI project in
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- respect of the site allowance issue, which strike included Monaveen's workers.
- (4) It is to be inferred from the Defendant's conduct referred to in paragraph 52.2(3) hereof that as at 13 December 1996 the Defendant intended to suspend payments to Monaveen if Monaveen's workers went on strike, irrespective of the actual progress achieved by Monaveen at the time."
11 The defendant raises a number of objections to this paragraph. It is said that even if it were the case that the defendant silently "intended to withhold all payments under the subcontract amendment, if the progress of the work was delayed for any reason at any time", it is not to the point unless payment was withheld when the scheduled progress was actually made. The defendant says that there is no plea that the defendant withheld payments, despite progress in accordance with the subcontract amendment. It is said that unless the plaintiffs are able to plead that the defendant withheld payments when they were not contractually entitled to do so, the cause of action cannot be sustained. Further, the defendant says that in accordance with the subcontract agreement, a strike on site means no actual progress of the subcontract works. Therefore no cause of action is disclosed. Finally, the defendant says that the "particulars" in par 52.2 are material facts and should be pleaded as such.
12 The plaintiffs say that the defendant has misunderstood its case. The plaintiffs say their case is that the defendant expressed an intention to assess progress payments by relating them to the progress of works whilst actually intending to adopt a materially different construction of the subcontract. The plaintiffs says that properly construed, its pleading is to the effect that the defendant intended to adopt the course that if progress of the works was delayed (for example by a strike), Monaveen would not be paid, irrespective of whether actual progress had been made notwithstanding the strike. The issue, the plaintiffs say, is whether the defendant misled the plaintiffs when the subcontract amendment was entered into of December 1996. Further, in relation to causation, the plaintiffs say that they extended their support for Monaveen's credit facilities when these facilities were due for renewal in late December 1996 and early January 1997. They did so on the basis that they shared with the defendant the same understanding of the contractual intent as set out in the subcontract amendment. The plaintiffs say that their case is that
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- they would not have continued to support Monaveen's facilities had they known of the defendant's different intention. In these circumstances, the plaintiffs say, it is irrelevant whether Monaveen was obliged to continue with the contract or indeed would, or could, have done so in the absence of the plaintiffs' support.
13 I am satisfied that the plea in par 52 is proper and it can stand, largely for the reasons articulated by the plaintiffs in their submission. With respect I do think the defendant's objection to par 52 is based on a misunderstanding of the plaintiffs' position. At the heart of this aspect of the claim (and indeed most other aspects of the claim) is the allegation by the plaintiffs that they would not have taken steps with respect to the provision of further financial support for Monaveen had they not been misled. Whether the plaintiffs are able to prove reliance at trial is another matter and not relevant to this application. But in my view the nature of the plaintiffs' case is clearly articulated by par 52.
14 I am not satisfied that the matters raised in par 52(2) and referred to as "particulars" are material facts. The material fact is found in par 52 - that is, the allegation by the plaintiffs that the defendant intended to withhold all progress payments under the subcontract amendment if the progress of the work was delayed. What follows is properly categorised as particulars.
15 Objection is taken to par 54, 60 and 67. These paragraphs relate to The December 1996 Contract ("the December 1996 representation"), The January 1997 Conduct ("the January 1997 representation") and The February 1997 Conduct ("the February 1997 representation"). The position with respect to all three paragraphs can be illustrated by reference to par 54. That paragraph is in the following terms (again omitting marking up and deletions):
"54. In reliance upon the December 1996 representation, and induced thereby, the Plaintiffs in their capacity as directors and officers of Monaveen caused Monaveen to continue to perform the subcontract and, further, on or about 31 December 1996 obtained extensions from the National Australia Bank of the date for repayment of the loan facilities being account no 67-450-6163, which was repayable on 31 December 1996, and account no 67-082-4260, which was partially repayable on or about 1 January 1997, and the plaintiffs thereby increased their contingent liability to the National Australia Bank
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- pursuant to the personal guarantees executed by the Plaintiffs."
16 The defendant says that this plea of reliance misses a step. It is said that Monaveen was already bound to perform the subcontract works. How then, the defendant asks, can the extension of credit facilities relate back to the representation - the work had to be performed under the terms of the contract and therefore the extension of the facilities was a necessary concomitant of that fact. The plaintiff says that it is only necessary to plead the extension of the guarantees based upon the representation and the fact that as a consequence of the extension, the plaintiff suffered a contingent detriment. That detriment crystallised and became quantifiable on 27 February 1997.
17 I am satisfied that the plea is proper. In my view the defendant's argument confuses the position of Monaveen on the one hand and the plaintiffs on the other. Monaveen may have been obliged to perform the subcontract works but there was no obligation on the plaintiffs to extend their accommodation to the bank for the benefit of Monaveen. The consequence of their not doing so may have been that Monaveen did not perform the subcontract. But that is not the point. It is the relationship between the representation on the one hand and the actions of the plaintiffs on the other which is important. That is properly set out in the pleading.
18 In relation to par 54 and 67, the defendant further complains that extensions to the date for repayment of loan facilities does not constitute any detriment to the plaintiffs. With respect, that is a matter for trial. It may be that the detriment was incurring further interest; there may have been some other detriment. In any event, it is a matter for trial.
19 The defendant complains of par 58.2. The objections raised to this paragraph mirror objections raised to par 54. In my view, the same reasoning applies and par 58.2 can stand.
20 Complaint is made of par 61. This paragraph relates to an agreement entered into between Monaveen and the Australian Deputy Commissioner of Taxation. It is said that the paragraph does not relate to any liability undertaken by the plaintiffs. The answer to that complaint is to be found in par 70. It would seem that the failure of Monaveen to honour its agreement with the Deputy Commissioner of Taxation has led to proceedings being taken against the plaintiffs for tax outstanding, plus interest and penalties. The plaintiffs plea in this respect is proper.
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21 Finally, complaint is made of par 67A. This is a plea that Monaveen continued to perform the subcontract works until February 1997 when it accepted a purported termination of the subcontract by the defendant. While the plea itself has no real relevance to the cause of action brought by the plaintiffs against the defendant, it does put events in context. I would not be prepared to strike out par 67A.
22 For these reasons the plaintiffs should have leave to amend their statement of claim in terms of the Minute of Proposed Amended Substituted Statement of Claim of 31 January 2003. I will hear the parties as to the precise form of orders and as to costs.
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