Hummingbird Homes (SA) Pty Ltd (ACN 120 932 256) v Light Consultants Pty Ltd (ACN 089 384 387) - [2017] SADC 140

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
HUMMINGBIRD HOMES (SA) PTY LTD (ACN 120 932 256) v LIGHT CONSULTANTS PTY LTD (ACN 089 384 387) AND ORS
[2017] SADC 140
Reasons of Her Honour Judge Schammer
14 December 2017
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS
Action commenced by the plaintiff against the defendants for payments allegedly outstanding pursuant to a building agreement relating to a development at Lot 103, Tynte Street, North Adelaide.
The cellar at the property constructed on the lot leaks. An issue for determination is whether the plaintiff and/or the third party have any liability to the defendants as a result.
Application by the third party seeking an order that it amend its pleading in the terms of a proposed Third Defence to Cross Action against Third Party, together with ancillary orders relating to the provision of expert reports.
Application to amend is opposed in light of forthcoming trial date.
Orders
1. The third party has permission to file and serve, within 7 days, a Third Defence to Cross Action against Third Party containing the following proposed amendments as set forth in the draft amended pleading, Exhibit ‘ZJD1’:
(a) The proposed amendments at paras.4, 5A.1-5A.7, 5A.11, 5A.12, 5A.13.1-5A.13.6, 5A.13.7 (incorrectly referred to as 5A.14 in the draft proposed pleading at Exhibit ‘ZJD1’), 7, 8.1, 10.1-10.3, 10A, 11.1, 11.2, 11.3A, 11.4, 11.5, 11.7, 12.1, 12.3, 12.4, 14.1, 14.2, 14A.1, 14A.3-14A.10, 16A, 16B, 16B.1-16B.4 and 17A.
(b) As to paras.13.2 and 13.2.1-13.2.3, but only insofar as they relate to the acts or omissions of the plaintiff, not to any purported claim relying on apportionment as per s 72 of the DA having regard to any culpability on the part of Mr Ha.
(c) As to proposed para.11.3, only to add the words ‘Admits that the Greenhill cellar drawing 09.425.015 inadvertently omitted provision for, or reference to, a sump to service the cellar floor (as alleged in paragraph 34.3)’.
(d) As to proposed para.14.3, save and except for the reference to paras.5A.8-5A.10.
(e) As to proposed para.15.2A, save and except for the reference to para.10.4 and changing the reference from ‘para.11.5A’ to the correct reference being ‘para.5A.11’.
(f) As to proposed para.15.3, save and except for the reference to paras.5A.8-5A.10.
(g) As to proposed para.15.4, I permit an amendment in the following terms: ‘In relation to paragraph 41.4 of the Cross Claim admits only that a seasonal perched water table exists in some parts of North Adelaide and repeats the matters pleaded at paras.4 and 5A.7 herein in relation to the sump design.’
(h) As to proposed para.17.1, save and except for the reference to paras.5A.8-5A.10, 10.4, 14.3 and 15.6.
2. Extending the relevant time limit as per Rule 160 to enable the third party to obtain the report of Mr Noicos dated 24 November 2017, however excluding the matters outlined at paras.3.3, 3.4 and 3.4.2-3.4.4 of his report, being matters not raised on the pleadings.
3. Extending the relevant time limit as per Rule 160 to enable the defendants and/or the plaintiff to obtain an expert report in response to Mr Noicos’ report dated 24 November 2017, to 25 January 2018.
4. Directing the expert engineers retained by the parties to confer and to produce to the court a document identifying the matters and issues upon which they are in agreement, and those matters and issues upon which they differ, relating to the nature and scope of any recommended remedial work to the cellar, such document to be provided to the court on or before 5 February 2018.
5. Insofar as any party (or parties) seeks to rely upon the evidence of any expert at trial, such party (or parties) must pay the costs incurred by that expert in complying with this order. For the avoidance of any doubt, if more than one party intends to rely on the evidence of an expert witness at trial, then such parties must share such costs in equal proportions.
6. The third party is to pay the defendants’ costs of the application and the attendance on 30 November 2017 on a party/party basis, certified fit for counsel.
Development Act 1993 (SA) s 72; District Court Civil Rules 2006 6 DCR 54(4), 6 DCR 54(6)(a) and 6 DCR 158, referred to.
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; Channel Seven Adelaide Pty Ltd v Manock [2010] SASCFC 59; Cement Australia Pty Ltd v Australian Competition and Consumer Commission (2010) 187 FCR 261, discussed.
PPG Development Pty Ltd v Capitanio [2016] SASC 169; Nbd Bank v South Italy Tiling SA and Anor [1997] SADC 3596; Community Corporation 21561 and Anor v Pier Apartment Hotel Pty Ltd and Ors (No.2) [2014] SADC 130, considered.

HUMMINGBIRD HOMES (SA) PTY LTD (ACN 120 932 256) v LIGHT CONSULTANTS PTY LTD (ACN 089 384 387) AND ORS
[2017] SADC 140
JUDGE SCHAMMER
Procedural Status of this Action

On 15 August 2017 this action was listed for trial for 10 days commencing 12 February 2018.
By application dated 13 November 2017, Greenhill Engineers Pty Ltd (ACN 061 222 964) (the third party) seeks orders including leave to file a Third Defence to Cross Action.
The defendants oppose the majority of the proposed amendments to the third party’s pleading on the basis that if granted, the defendants will necessarily suffer prejudice in that they will be put to the time and expense to conduct various factual investigations, obtain further expert evidence and join another party to the action. The defendants submit that if the amendments are allowed, there will be no alternative other than to adjourn the current trial date.
At the date listed for argument, the plaintiff, Hummingbird Homes (SA) Pty Ltd (ACN 120 932 256), was expected to go into voluntary administration in a matter of days. In those circumstances the plaintiff took no position with respect to the application. An administrator was appointed on 7 December 2017.
Given the timing of the application there is some urgency in the provision of my Ruling. As such, this Ruling necessarily concentrates on those matters which are in dispute. Further, I have endeavoured to summarise the main arguments as put forward by each party and although I may not have expressly re-stated a particular submission made by either counsel, I have carefully considered all of the oral and written submissions made by the parties and the relevant authorities.
Factual Background
On or about 26 May 2010, Light Consultants Pty Ltd (formerly known as Somerset Avenue Pty Ltd) (ACN 089 384 387), for and on behalf of John and Shirley Heinrich (hereinafter collectively referred to as the defendants) entered into a contract to purchase Lot 103 of a development being undertaken at 79-91 Tynte Street, North Adelaide.
The contract was subject to the defendants (or alternatively, Mr and Mrs Heinrich) executing a Building Agreement with the plaintiff to construct a three level residential property on the lot, which included the provision of a basement cellar (the cellar).
The plaintiff retained an architect, Proskebrown Architects, to prepare architectural drawings with respect to the development. In architect’s drawing HB2009.101.WD15A pertaining to the construction of the cellar, the architect specified, amongst other things, ‘Provide sump to cellar floor slab as per Engineers Details’.
The plaintiff retained the third party to provide engineering services with respect to the development, including the preparation of a cellar plan (‘the cellar plan’).
There appears to be no dispute that:
1.The cellar leaks such that it is uninhabitable and requires rectification;
2.The cellar plan failed to specify the provision of a sump for the cellar floor slab;
3.The cellar plan showed the floor and a significant portion of the walls to be poured in one continuous pour, including a cellar party wall with an adjoining cellar on Lot 104 to be constructed at the same time;
4.The third party specified the use of a 200 micron polythene membrane lining to be applied to the exterior of the cellar retaining walls, which lining is vapour proof, but not waterproof ; and
5.During the cellar’s construction, Mr Thomas Ha, Engineer, a director of MLEI Consulting Engineers (MLEI) engaged by the plaintiff, inspected the reinforcement for the cellar construction and certified its compliance with the cellar plan.
The defendants claim to have suffered loss and damage as a result, and, in an action commenced against them by the plaintiff for payment of part of a sum outstanding pursuant to the Building Agreement, claim damages from both the plaintiff and third party.
Neither the plaintiff nor the third party have admitted liability for any loss or damage suffered by the defendants.
The current pleadings comprise the Claim dated 18 May 2012, the Third Defence and Cross Action filed by the defendants on 2 August 2016, a Reply and Defence to Third Defence and Cross Action dated 2 August 2016 filed by the plaintiff and a Second Defence to Cross Action against Third Party filed by the third party on 9 September 2016.
On the present status of the pleadings, the plaintiff and the third party each claim that the other was responsible for waterproofing the cellar.
The plaintiff maintains that it constructed the cellar in accordance with the cellar plan and that, accordingly, any loss or damage is the responsibility of the third party.
The third party admits its cellar plan included no provision for a sump, and that the membrane lining applied to the cellar does not have any waterproofing function. However, it pleads that its retainer with the plaintiff was limited to the structural significance of the dwelling footings and cellar, and that it expressly advised the plaintiff that waterproofing of the cellar was outside of the scope of its retainer and remained the responsibility of either the plaintiff or its architect.
In addition, the third party adopts matters pleaded by the defendants as against the plaintiff, including allegations that the plaintiff did not construct the cellar in a single continuous concrete pour, resulting in the creation of cold joints, which were not properly waterproofed. The third party pleads that its liability is limited pursuant to s 72 of the Development Act 1993 (SA) (DA) for its proportionate blame relevant to the plaintiff’s liability.
Although the third party’s current pleading at para.13 refers to Mr Ha’s attendance on site during construction, that he failed to observe the cellar construction did not accord with the cellar plan and that he failed to advise the builder there was no apparent provision for waterproofing, the pleading goes no further than that.
As such, leaving aside issues unrelated to the fact the cellar leaks, the primary issues in dispute on the present status of the pleadings are:
1.Who was responsible for waterproofing the cellar;
2.If it was the third party’s responsibility, did the plaintiff construct the cellar in accordance with the cellar plan and if it did not, has the plaintiff’s failure to construct the cellar in accordance with the cellar plan caused or contributed to the fact it leaks. In those circumstances, how is liability to be apportioned as between the plaintiff and the third party in accordance with section 72 of the DA.
3.What, if any, relief should be granted to the defendants.
The parties have each obtained multiple expert reports addressing these issues (some of which are reproduced in Exhibit ‘SKH3’).
The third party has previously obtained two reports from Mr L Noicos, Engineer, dated 28 May 2014 and 11 November 2014. It now seeks to rely on a further report from Mr Noicos dated 24 November 2017, which addresses matters relevant to the proposed amendments to the pleadings.
The Application
The application is supported by the following materials:
1.Affidavit of Zoe Jane Dempster sworn 13 November 2017. The proposed Third Defence to Cross Action against Third Party is Exhibit ‘ZJD1’ to that affidavit.
2.Second affidavit of Zoe Jane Dempster sworn 15 November 2017.
3.Second affidavit of Samantha Kim Hocking sworn on 21 November 2017.
4.Third affidavit of Samantha Kim Hocking sworn on 27 November 2017.
5.Fourth affidavit of Samantha Kim Hocking sworn on 28 November 2017.
The third party also submitted a written Outline of Submissions dated 28 November 2017.
The defendants filed a List of Authorities and relied on an affidavit sworn by Rino Michael Marrone on 24 November 2017.
I heard lengthy oral submissions on 30 November 2017.
The proposed amendments to the third party’s pleading can be grouped into five different categories:
1.Amendments that relate only to the factual background and/or only re-state, in a different structure, the previous matters as pleaded.
These are the proposed amendments to paras.4, 5A.1-5A.6, 5A.12, 5A.13.1-5A.13.3, 5A.13.7 (incorrectly referred to as 5A.14 in the draft proposed pleading at Exhibit ‘ZJD1’), 7, 8.1, 10.1-10.3, 10A, 11.1, 11.4, 11.5, 11.7, 12.1, 12.3, 12.4, 14.1, 14A.3-14A.10, 16B and 16B.1.
These amendments are not opposed by the defendants.
Bearing in mind the principles outlined below, I grant permission for the third party to amend its Defence to Cross Action to include the proposed amendments at paras.4, 5A.1-5A.6, 5A.12, 5A.13.1-3, 5A.13.7 (incorrectly referred to as 5A.14 in the draft proposed pleading at Exhibit ‘ZJD 1’), 7, 8.1, 10.1-10.3, 10A, 11.1, 11.4, 11.5, 11.7, 12.1, 12.3, 12.4, 14.1, 14A.3-14A.10, 16B and 16B.1.
2.Amendments said to be necessary as a result of a new event, namely water leakage into the cellar at ground level from an adjoining property, which first became evident in August 2017.
These amendments relate to proposed amendments to paras.5A.13.5, 5A.13.6, 16B.2, 16B.3 and 16B.4.
Despite initially raising some objections to these proposed amendments, the defendants concede that these amendments relate to ‘new events’ and accept that if these amendments are allowed, that will not prejudice the current trial date.
In balancing the relevant factors identified by the High Court in Aon Risk Services Australia Ltd v Australian National University[1] (outlined hereunder), it is in the interests of justice that I grant permission for the third party to amend its Defence to Cross Action to include the proposed amendments at paras.5A.13.5, 5A.13.6, 16B.2, 16B.3 and 16B.4.
[1] (2009) 239 CLR 175.
3.Amendments that relate specifically to the question of which party was responsible for waterproofing the cellar.
The proposed pleading maintains a plea (at para.6.2), that the plaintiff was responsible for ensuring the cellar was adequately waterproofed.
However, by the proposed amendments, the third party seeks to articulate a pleading that its design, being the cellar plan, if followed by the plaintiff, albeit with provision for a sump, was adequate and reasonably fit for its intended purpose, namely as a cellar which was not intended to be used as a habitable space. Although not expressly pleaded as a plea in the alternative, the effect of the pleading is, that insofar as there is a finding that the third party was responsible for ensuring that the cellar was waterproof, the third party has done all that it was required to do in the circumstances.
The third party seeks to plead that the intended design outcome was never to achieve a ‘100% waterproof’ cellar, that this was known to the parties (and the architect) by reference to the architect’s drawings providing for the provision of a sump and that the plaintiff’s failure to comply with the cellar plan (eg, by allowing for the creation of a cold joint) is the cause of the defendants’ loss and damage.
While it was submitted the proposed amendments have as their genesis matters which became apparent during discovery, the third party acknowledges that the application to amend in this respect is only being made now as a result of the briefing of counsel and counsel’s review of the pleadings.
These are the proposed amendments to paras.5A.7-5A.11, 5A.13.4, 6.1, 8.2, 10.4, 11.2, 11.3, 11.3A, 12.2, 14.2, 14.3, 14A.1, 14A.2, 15.2A-15.6, 16A (in part) and 17.1 (in part).
The defendants oppose these proposed amendments. The defendants submit that this represents a significant departure from the defence as currently pleaded and introduces, for the first time, an issue as to the defendants’ proposed intended use of the cellar, whether this was communicated by the plaintiff to the third party and if so, whether the third party’s cellar plan was reasonable in that it adequately addressed the waterproofing requirements for a cellar which was not intended to be used as a habitable space. It also raises an allegation that as the architect’s drawing included provision for a sump, this necessarily meant the cellar was not intended to be ‘100% waterproof’.
The defendants maintain that a requirement that the cellar be waterproof is just that and that there are no ‘degrees’ of waterproofing. The cellar is either waterproof, or it is not. Counsel for the defendants submitted that had the third party specified a waterproof membrane be used to line the exterior of the cellar, rather than the vapour proof membrane used, the cellar would be waterproof.
To answer such a pleading the defendants submit that they will be required to conduct extensive investigations including with current and former employees of the plaintiff (in terms of what was communicated to the third party, when and by whom as to the intended use of the cellar), enquires with the architect as to the basis for the inclusion on their drawings of the notation relating to the sump and the provision of further expert evidence from the defendants’ engineer, Mr Kokkinakis.
Conversely the third party submits that these proposed amendments merely better particularise the third party’s position, are matters which would have arisen in any event at trial pertaining to the question of the relative culpabilities of either the third party and/or the plaintiff and insofar as the defendants may need to conduct further enquiries with potential witnesses and/or their expert engineer, these can be done without impacting on the trial date. Further the third party submits that in documentation and their own pleading, the defendants have made reference to ‘adequate’ or ‘suitable’ waterproofing, being inconsistent with the defendants’ submission now that there can be no ‘degrees of waterproofing’. It is submitted the proposed amendment is also necessary having regard to the issue of what may be reasonable by way of remediation works.
The third party contends that this is a critical aspect of their case which is not new in the sense that despite Mr Marrone’s submission at para.40 of his affidavit, it had been addressed previously by the plaintiff’s expert engineer, Mr Goldfinch in 2011. It was submitted that in outlining a two-tier approach by way of remedial works to the cellar, Mr Goldfinch had therefore acknowledged that different ‘degrees’ of waterproofing were possible, with differentiating features being cost and the technology utilised.
4.Amendments to plead that the third party’s liability to the defendants is limited pursuant to s 72 of the DA for its proportionate blame relevant to both the liability of the plaintiff and Mr Ha.
The relevant proposed amendments are those to paras.13.2, 13.2.1-13.2.3, 13.3, 17 and 17.2.
As previously outlined, while the third party’s current pleading raises at para.13 various omissions said to have been made by Mr Ha, the pleading takes it no further.
The third party submits that the proposed amendments are required to simply plead, as a matter of law, the impact of the factual matters as currently pleaded with respect to Mr Ha. It contends the defendants must have been on notice of the third party’s intentions in this respect, as otherwise para.13 of its current pleading had no work to do. Further it was submitted that if the defendants were embarrassed by the earlier plea they could have taken steps to apply for para.13 to be struck out as irrelevant, but did not.
The defendants oppose the proposed amendments (albeit their primary objection is with respect to the proposed amendments to paras.17 and 17.2). They submit that the amendments raise new issues as to the extent of any culpability of Mr Ha and whether Mr Ha’s actions somehow constitute a novus actus interviens, breaking the chain of causation vis-a-vis the third party.
The defendants submit that if the amendments are allowed, this must result in an adjournment of the trial. It is submitted that the defendants will be required to grapple with a number of legal aspects pertaining to the application of s72 of the DA and to investigate joining either Mr Ha (or his employer) as a third party to the action. As Mr Ha’s involvement was more than six years ago, this then raises limitation issues.
5.An amendment to include para.17A so as to specifically plead a positive alternative case as to quantum, namely that an appropriate remedy is to undertake works to the cellar utilising the same methodology (and therefore cost) as recommended and designed by TMK Engineers with respect to the rectification of a leaking cellar at Lot 106 of the development (‘the Oberdan cellar’).
The defendants’ expert, Mr Kokkinakis is a principal at TMK Engineers. His colleague at TMK Engineers, Mr Martin, was involved in investigating water ingress issues at the Oberdan cellar and rectification works were undertaken to that cellar in accordance with Mr Martin’s recommendations.
The third party submits that any waterproofing defects in the cellar can be rectified by similar works which are considerably less expensive and less invasive than alternative works proposed by Mr Kokkinakis.
The third party submits that documents pertaining to the rectification works for the Oberdan cellar have been discovered in related action no. 1176 of 2015 (the plaintiff’s claim against the third party). The defendants are not a party to that action.
The amendment is opposed by the defendants. The defendants submit that although Mr Kokkinakis may practice at the same firm as Mr Martin, Mr Kokkinakis has had no involvement with matters pertaining to the Oberdan cellar, has never inspected that cellar and there may be material differences in the Oberdan cellar and the cellar which may impact on the suitability of using the same methodology in any rectification of the cellar.
The defendants contend that if the amendment is allowed, the trial date will be jeopardised as the defendants will need to conduct enquiries with the current owners of Lot 106 and brief Mr Kokkinakis, who may need to inspect the Oberdan cellar and produce a further report. They may also need to obtain a report from Mr Martin and seek discovery of documentation specifically relevant to the Oberdan cellar.

In addition the third party seeks leave to obtain a further report from Mr L Noicos in the terms of that in Exhibit ‘SKH5’ and directions as to a conclave of experts. I will deal with these ancillary matters at the conclusion of this Ruling.
Relevant Principles
Given the timing of the proposed amendments, the third party requires this Court to exercise its discretion and permit the filing of the Third Defence to Cross Action against Third Party.[2]
[2] See rule 54(4) of the District Court Civil Rules 2006 (DCR 6R).
Although it was initially submitted that the proposed amendments to paras.11.2 and 11.3 constituted the withdrawal of admissions (thus invoking rules 54(6)(a) and 158 of DCR 6R), that position is no longer maintained by the defendants.
There have been several recent decisions which outline the principles governing applications to amend, commencing with the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University.[3]
[3] (2009) 239 CLR 175.
The effect of that decision is extensively summarised by Doyle J in PPG Development Pty Ltd v Capitanio.[4]
[4] [2016] SASC 169.
The High Court in Aon was very critical of what had been a general approach of courts to routinely allow late amendments to pleadings, with any issues of prejudice to other parties dealt with by way of costs orders. The High Court emphasised the fact that the prejudice caused by late amendments was not confined to prejudice that could be cured by a costs order and went much further, including the emotional strain on the other parties, the burden and delay on the court and the impact on other litigants awaiting a trial date.
The decision in Aon and the authorities that have applied it, make it clear that when considering an application to amend, the court must take into account the following factors: (see PPG at [39] and Channel Seven Adelaide Pty Ltd v Manock).[5]
[5] [2010] SASCFC 59 at [46].
·The nature and importance of the proposed amendment, including the extent to which it raises new issues of fact or law.
·The merits of the proposed amendment, at least in the sense that the proposed amendment is arguable or tenable.
·The stage of the litigation at which the application to amend is made, and the likely impact upon, or disruption to, the progress of the proceedings (and in particular the trial).
·The explanation for the application to amend and its timing, and the fact and extent of any undue delay in this regard.
·Whether the party has had a sufficient opportunity to plead their case earlier.
·The time, cost and inconvenience associated with any delay or disruption of the proceedings.
·The uncertainty and strain of litigation on the parties and their witnesses as a result of any disruption or delay likely to be occasioned by the amendment.
·The impact of any delay and disruption upon judicial and court resources, and the access of other litigants to those public resources.
·The impact upon the public’s confidence in the just and efficient administration of justice.
Despite the decision of the High Court in Aon, it does not follow that an amendment sought to be made shortly prior to trial, even one that may raise new issues of fact, will never be permitted. Each case depends on its specific circumstances. However, it is necessary for the court to consider the factors identified in Aon, and the weight to be given to them, both individually and collectively, in exercising its discretion as to whether or not to allow the amendments sought.
The defendants submitted that the proposed amendments sought to introduce no less than 17 new mixed issues of both fact and law and offended each of the nine factors specified in Aon.
In determining whether to grant the permission sought by the third party, I will address each of the remaining three categories of proposed amendments in order.
Category 3 – the ‘not 100% waterproof’ amendments
Despite the third party’s submissions to the contrary, these proposed amendments do raise new issues of fact.
The third party’s current pleading puts forward a defence that its retainer with the plaintiff did not include any obligation to provide recommendations as to waterproofing, or to design waterproofing, that being the responsibility of the plaintiff (at para.8.2). The pleading extends to explaining that the purpose of the third party’s soil and groundwater investigations was solely to prepare a footings report (at para.4.4), that it was retained only with respect to the ‘structural significance of the dwelling footings and cellar’ (at para.8.25) and that at a meeting on 2 June 2010 it advised the plaintiff and/or its architect that waterproofing of the cellar was outside of its retainer and remained the responsibility of one or either of them (at para.10.4). Further the third party pleads that the ‘single pour’ was recommended for structural purposes ‘and was in no way intended to relate to the waterproofing’ (at para.11.4).
The proposed amendments seek to delete all of those allegations, albeit maintaining the allegation at para.6.2, that at all material times the plaintiff had the responsibility of ensuring the cellar was adequately waterproofed.
In lieu, the third party seeks to plead a case which, albeit not expressly pleaded as such, must be, by inference, that insofar as its retainer with the plaintiff included an obligation that it provide recommendations for and design the cellar such that it was ‘suitably waterproof’, it fulfilled such obligations having regard to the cellar’s intended use as a non-habitable space.
While the current pleading puts in issue the terms of the retainer between the plaintiff and the third party, the proposed pleading goes further than simply requiring a determination as to who was responsible for waterproofing the cellar. It raises new factual issues, being what was it that the defendants bargained for with the plaintiff, what was communicated by the plaintiff (and/or the architect) to the third party in this respect and does the cellar plan, in any event, if followed by the plaintiff, allow for the design of a ‘suitably waterproof’ non-habitable space.
This specific issue was not addressed in the expert reports obtained by the third party from Mr Noicos dated 28 May 2014 and 11 November 2014, which reports were focussed on the culpability of the plaintiff and a consideration of proposals relating to remedial works. The issue is raised in the further report of Mr Noicos dated 24 November 2017, sought to be relied upon by the third party.
The proposed amendments are of obvious importance to the third party – not only on the issue of liability but as to quantum and specifically the issue as to what is reasonable in terms of the steps to be undertaken to remedy the damage, having regard to the terms of the Building Agreement.
It was not submitted by the defendants that the proposed amendment was untenable (or indeed that any of the proposed amendments were untenable), that being a matter incapable of determination at this interlocutory stage and therefore being a ‘neutral factor’.
The application to amend was filed on 13 November 2017. The trial is listed for hearing for 10 days commencing 12 February 2018. The third party contends that these amendments on their own (or in conjunction with the other proposed amendments) will not necessitate the abandonment of the existing trial date.
The practical reality is that it is well-recognised and understood that mid to late December to at least mid-January is a period when a large number of persons who are engaged in the building industry choose to take their leave.
Although obtaining the instructions of the defendants as to these proposed amendments may be a relatively simple exercise, the same cannot be said in terms of the defendants’ ability to locate and interview relevant personnel engaged by the plaintiff (and the architect) to obtain their account as to these issues, prior to trial. As the plaintiff is currently in voluntary administration, this may pose further difficulties in terms of accessibility and traceability of witnesses.
The issue as to whether the cellar plan was adequate in terms of providing for the waterproofing of a non-habitable space will also need to be considered by the defendants’ expert, Mr Kokkinakis and a further report prepared by him.
Having regard to these matters, if the proposed amendments are allowed, I consider it extremely unlikely that the trial will be able to proceed on the date(s) as presently listed.
However if I am wrong about that, the fact remains that to answer these proposed pleadings, the defendants will need to make enquiries as to matters which occurred over seven years ago. This necessarily raises general issues as to the defendants’ solicitors’ ability to locate relevant witnesses and the reliability of any independent memory those witnesses may have as to what was verbally discussed, by whom and when.
The matters sought to be pleaded are matters that must have been in the third party’s knowledge at the time the cross action against them was commenced in December 2012.
The explanation for the delay in these matters being pleaded is outlined in the affidavits sworn by Zoe Jane Dempster in support of the application, namely that upon the action being listed for trial, counsel for the third party conducted a comprehensive review of the pleadings and having done so determined the amendments were necessary to give greater notice and to add particularity to the third party’s case. It was also submitted that the authorities made it clear that the foundation for a pleading pursuant to s 72 of the DA was required to be pleaded with some particularity (see Nbd Bank v South Italy Tiling SA and Anor[6] per Kitchen DCJ and Community Corporation 21561 and Anor v Pier Apartment Hotel Pty Ltd and Ors (No.2)[7] per Slattery DCJ).
[6] [1997] SADC 3596 at [47].
[7] [2014] SADC 130 at [39].
I accept that the reason the application has been issued now relates to counsel’s review of the pleadings and the brief and that there is no tactical basis for the timing of the application, meaning the application is brought in good faith. In this respect, the Federal Court of Australia in Cement Australia Pty Ltd v Australian Competition and Consumer Commission[8] at [52] accepted that the responsibility as to how a party’s case is pleaded, having regard to the available evidence and the applicable law, ultimately rests with counsel for that party.
[8] (2010) 187 FCR 261.
An aspect of this proposed pleading is the third party’s claim that as the architect’s drawing included the provision of a sump, this was documentary evidence from which it could be inferred that the cellar was never intended to be 100% waterproof. However what is sought to be put in issue is the nature of the defendants’ instructions to the plaintiff, and the plaintiff’s instructions to the third party, as to the intended use of the cellar and whether the cellar plan was in fact reasonably adequate in terms of its ability to waterproof a non-habitable space. These are matters which will require investigation beyond what may possibly be inferred simply from considering the architect’s drawing.
There will necessarily be further expense incurred by the defendants to answer these allegations, some of which would have been avoided had these issues been raised earlier.
If the trial date is vacated, I am informed by the Civil Registry that the next available date for the listing of a 10 day trial in this court is from 6 August 2018. It is likely that at least some of the 10 days set aside in February will be wasted, noting the proximity of that date and the unlikelihood that other matters of substance will be ready and available for determination at that time.
The cellar has been leaking since 2011 and as is evident from the photographs remains an effectively empty space. The Heinrichs are an elderly retired couple and paid a considerable sum for the property. A further six month delay will cause additional inconvenience and emotional strain upon them, in addition to further costs.
Balancing the relevant factors, I consider the prejudice that will be suffered outweighs the factors in favour of permission being granted for most of the amendments which fall in this category.
I refuse to grant permission for the third party to plead the proposed amendments at paras.5A.8, 5A.9, 5A.10, 6.1, 8.2, 10.4, 12.2, 14A.2 and 15.6.
I allow the proposed amendments at paras.5A.7, 5A.11 and 5A.13.4 (being amendments which only further particularise matters previously in issue relating to the sump and the liability of the plaintiff) and the proposed amendments at paras.11.2, 11.3A, 14.2, 14A.1 and 16A (being matters already in issue relating to the ‘cold joint’ and/or the effect of which does not cause prejudice to the defendants).
As to proposed para.11.3, I permit only the addition of the words ‘Admits that the Greenhill cellar drawing 09.425.015 inadvertently omitted provision for, or reference to, a sump to service the cellar floor (as alleged in paragraph 34.3)’.
As to proposed para.14.3, I permit the proposed amendment, save and except for the reference to paras.5A.8-5A.10.
As to proposed para.15.2A, I permit the proposed amendment, save and except for the reference to para.10.4 and changing the reference from ‘para.11.5A’ to the correct reference being ‘para.5A.11’.
As to proposed para.15.3, I permit the proposed amendment, save and except for the reference to paras.5A.8-5A.10.
As to proposed para.15.4, I permit an amendment in the following terms: ‘In relation to paragraph 41.4 of the Cross Claim admits only that a seasonal perched water table exists in some parts of North Adelaide and repeats the matters pleaded at paras.4 and 5A.7 herein in relation to the sump design.’
As to proposed para.17.1, I permit the proposed amendment, save and except for the reference to paras.5A.8-5A.10, 10.4, 14.3 and 15.6.
Category 4 – the Mr Ha amendments
At para.13 in its Second Defence to Cross Action against Third Party, the third party refers to Mr Ha’s attendance on site during construction and pleads that he failed to observe the cellar construction did not accord with the cellar plan and that he failed to advise the builder there was no apparent provision for waterproofing.
However, the current pleading takes those allegations no further.
At para.17 of the current pleading, the third party pleads, ‘…that if it is liable to the defendants, its liability is limited pursuant to s 72 of the Development Act 1993 (SA) for its proportionate blame relevant to the plaintiff’s liability’ (my emphasis).
This pleading is to be contrasted with that in the third party’s original pleading, the Defence to Cross Action against Third Party filed on 20 March 2013 (‘the initial third party pleading’). In that pleading the third party made the same allegations with respect to Mr Ha and pleaded in more general terms at para.26:
The third party further says that if it is found to be liable to the Defendants which is denied, then that liability ought to be apportioned in accordance with section 72 of the Development Act 1993.
The proposed amendments to paras.17 and 17.2 seek to specifically plead that the third party’s liability is limited pursuant to s 72 of the DA to its proportionate blame relevant to Mr Ha’s culpability.
The proposed amendments to paras.13.2 and 13.2.1-13.2.3 better particularise the factual basis for such a pleading, by reference to the acts or omissions of the plaintiff, which ought to have been apparent to Mr Ha.
As to the general nature of the wording of para.26 of the initial third party pleading, I note what Kitchen J said in Nbd Bank (at [47]) namely:
Upon reflection I have come to the view that it is not a precondition to the operation of s 72 in a particular case that the persons whose act or default is claimed to have contributed to use a short hand expression, must be joined in one way or another as parties. Section 72 does not specifically require that and the language of the section does not imply that such a joinder is necessary. Any perceived or possible injustice to a plaintiff can be met by insisting that a defendant specifically raise the issue of s 72, that he identify the others whose fault he alleges, that he give sufficient particulars of the material facts upon which he relies and he gives or adduces credible evidence which, if accepted, would enable the court to give effect to s 72.
As such, if the third party had intended to rely on para.26 of its initial pleading as against both the plaintiff and Mr Ha, that pleading may have offended these requirements as to particularity, given its failure to specifically name either party in para.26.
The third party then revised its pleading on 9 September 2016, such that the Second Defence to Cross Action against Third Party specifically stated that the third party relied on s 72 of the DA only insofar as the plaintiff’s culpability was concerned, albeit maintaining the pleading as to Mr Ha’s alleged omissions at para.13. Given the nature of that amendment, which changed a general pleading to a specific pleading mentioning only the plaintiff’s culpability, thereafter the defendants were entitled to proceed on the basis that the third party did not rely on Mr Ha’s conduct pursuant to s 72 of the DA.
As such, I agree with the defendants’ contention that the proposed amendments to paras.17 and 17.2 raise new issues of law. However, I consider the proposed amendments to paras.13.2, 13.2.1-13.2.3 simply better articulate factual matters pertaining to the plaintiff’s conduct, albeit expressed in a way relating to Mr Ha, being something that would be necessary having regard to Kitchen DCJ’s comments in Nbd Bank (as previously outlined).
The conduct complained of is, in summary, a failure by Mr Ha to identify that the plaintiff had not constructed the cellar in accordance with the cellar plan. Mr Ha (and/or MLEI Consulting Engineers) were retained by the plaintiff, however it is the third party, not the plaintiff, agitating this issue. If, as the third party claims, the plaintiff’s failure to construct the cellar in accordance with its cellar plan is the cause of the defendants’ loss, then Mr Ha’s potential involvement is, despite s 72 of the DA, primarily an issue for the plaintiff.
As the initial third party pleading made specific reference to Mr Ha, the potential application of s 72 of the DA in terms of his culpability was known to the third party since (at least) March 2013. The absence of a specific pleading to this effect was one of the matters discovered by counsel for the third party when he conducted his review of the pleadings, hence the reason it is only being addressed now.
In response to a submission that by this amendment the third party was seeking to argue that Mr Ha’s involvement broke any chain of causation as between the third party’s conduct and the defendants’ loss and damage, the third party submitted that all the amendment intended to do was to clarify the third party’s intention to rely on Mr Ha’s culpability as per s 72 of the DA.
If the proposed amendments to paras.17 and 17.2 are permitted, the defendants are likely to apply to join either Mr Ha (and/or MLEI Consulting Engineers) as a further party to the action so as to protect their position. Any such application will necessarily result in the adjournment of the trial, to enable the application for joinder to be made and argued and if granted, to enable Mr Ha (and/or MLEI) to undertake necessary procedural steps and investigations so as to be ready for trial.
The conduct complained about occurred in February 2011 and therefore more than six years ago, raising the possibility of limitation issues. Given the passage of time, Mr Ha’s availability and his ability to participate as a reliable witness at trial may be compromised. It may be that further relevant documentation relating to Mr Ha’s retainer will need to be disclosed.

Exhibit ‘SKH3’ is a bundle containing some of the expert reports obtained by the parties (but not all).
I have been unable to find any mention of Mr Ha’s involvement in any of those reports and in particular, no expression of expert opinion as to factual matters which may form the basis for a finding that Mr Ha (or MLEI) was negligent (and/or in breach of contract).
Mr Noicos has addressed this issue in his recent report dated 24 November 2017.
If the proposed amendments are allowed, it is likely additional expert evidence will be required by Mr Ha (and/or MLEI) and possibly the defendants.
I have already referred to the consequences and impact on the defendants, the court and other litigants in the event the trial date is vacated.
Balancing the relevant factors, I consider the prejudice that will be suffered outweighs the factors in favour of permission being granted for the amendments to paras.17 and 17.2 and I refuse to grant permission for these proposed amendments.
I consider it appropriate to allow the proposed amendments to paras.13.2 and 13.2.1 -13.2.3 but only insofar as they relate to acts or omissions of the plaintiff and not to any purported claim relying on apportionment as per s 72 of the DA having regard to any culpability on the part of Mr Ha.
Category 5 – the Oberdan amendments
There is a significant dispute as what is reasonable in terms of any remedial works pertaining to the cellar and this has always been a live issue on the pleadings.
The issue of remedial works has been canvassed extensively in the expert reports already produced by all parties, particularly in reports prepared by the defendants’ expert, Mr Kokkinakis.
The proposed amendment to para.17A seeks to specifically plead that the methodology utilised in the remediation of the leaking cellar at Lot 106 (three doors down from the Heinrich’s property) can also be utilised with respect to the cellar. Mr Noicos’ report dated 24 November 2017 addresses this issue, albeit in expressing his opinion Mr Noicos was asked to assume that the repairs undertaken to the Oberdan cellar ‘have been effective to date’.
The Oberdan cellar was the subject of other litigation and is relevant to the related action (no.1176 of 2015). As such the matters forming the basis for this proposed pleading have been known to the third party for some time, albeit not addressed in terms of the pleadings (or by way of expert evidence) until the recent review by counsel.
There is a volume of documentation in existence pertaining to the Oberdan cellar and insofar as any such documentation has not been provided to the defendants, it is available to be provided forthwith.
Much of that material has been addressed (or authored) by Mr Kokkinakis’ colleague at TMK Engineers, Mr Martin.
If the amendment is allowed, that documentation will need to be reviewed by the defendants’ solicitors and provided to Mr Kokkinakis, who may then need to inspect the Oberdan cellar before preparing a report to respond to the matters raised by Mr Noicos. This may necessarily involve Mr Kokkinakis (and/or the defendants’ solicitors) obtaining statements from the Oberdans and/or the subsequent owners of Lot 106, to ascertain the effectiveness of the remedial works undertaken at that property.
Having said that, unless the assumption relied upon by Mr Noicos is accurate, namely that the ‘repairs (to the Oberdan cellar) have been effective to date’, the evidence sought to be relied upon by the third party in support of this proposed pleading will lack its necessary foundation.
In my view these are matters that can be addressed prior to the current trial date and if the amendment is allowed, it will not necessarily follow that the trial date will be vacated.
While of itself this is not determinative of any finding with respect to the application pertaining to this proposed amendment, it is a matter which is relevant in the exercise of my discretion. Although the defendants will necessarily incur more expense associated with investigating this specific issue, given the divergent opinions expressed to date as to what may be reasonable remedial works, this is an important issue which should be able to be ventilated at trial.
Balancing all relevant considerations, I grant permission to the third party to amend its pleading to include proposed para.17A.
Ancillary Orders
The Application seeks further orders relevant to the obtaining of the report of Mr Noicos dated 24 November 2017 and a proposed conclave of experts.
The defendants do not oppose the order sought at para.3 of the Application being made, except insofar as Mr Noicos’ report relates to matters sought to be pleaded in those paragraphs of the proposed Third Defence to Cross Action against Third Party as opposed by the defendants.
Having regard to my findings with respect to the proposed amendments, I extend the relevant time limit as per rule 160 of DCR 6R to enable the third party to obtain the report of Mr Noicos dated 24 November 2017, however excluding the matters outlined at paras.3.3, 3.4 and 3.4.2-3.4.4 of his report, being matters not raised on the pleadings. I also extend the relevant time to enable the defendants and/or the plaintiff to obtain an expert report in response to Mr Noicos’ report dated 24 November 2017, to 25 January 2018.
As to the order with respect to a conclave of experts sought at para.4 of the Application, the defendants do not oppose such an order being made, but raised the issue as to the attendance of Mr Goldfinch (the plaintiff’s expert) at any such meeting and who should meet payment of his fees, given the current uncertainty as to the plaintiff’s status.
The court has the power to make specific orders as to expert evidence as per rule 213 of DCR 6R.
Considerable time and expense will be saved if expert witnesses identify prior to trial the matters and issues upon which they are in agreement and those where there is genuine disagreement.
Given the nature of this dispute, it is appropriate for an order to be made directing that the expert witnesses whose evidence is sought to be relied upon by a party or parties at trial confer and produce to the court a document identifying the matters and issues upon which they are in agreement and those matters and issues upon which they differ, relating to the nature and scope of any recommended remedial work to the cellar, such document to be provided to the court and the parties on or before 5 February 2018.
Insofar as any party (or parties) seeks to rely upon the evidence of any expert at trial, such party (or parties) must pay the costs incurred by that expert in complying with this order. For the avoidance of any doubt, if more than one party intends to rely on the evidence of an expert witness at trial, then such parties must share such costs in equal proportions.
Orders
1.The third party has permission to file and serve, within 7 days, a Third Defence to Cross Action against Third Party containing the following proposed amendments as set forth in the draft amended pleading, Exhibit ‘ZJD1’:
(a)The proposed amendments at paras.4, 5A.1-5A.7, 5A.11, 5A.12, 5A.13.1-5A.13.6, 5A.13.7 (incorrectly referred to as 5A.14 in the draft proposed pleading at Exhibit ‘ZJD1’), 7, 8.1, 10.1-10.3, 10A, 11.1, 11.2, 11.3A, 11.4, 11.5, 11.7, 12.1, 12.3, 12.4, 14.1, 14.2, 14A.1, 14A.3-14A.10, 16A, 16B, 16B.1-16B.4 and 17A.
(b)As to paras.13.2 and 13.2.1-13.2.3, but only insofar as they relate to the acts or omissions of the plaintiff, not to any purported claim relying on apportionment as per s 72 of the DA having regard to any culpability on the part of Mr Ha.
(c)As to proposed para.11.3, only to add the words ‘Admits that the Greenhill cellar drawing 09.425.015 inadvertently omitted provision for, or reference to, a sump to service the cellar floor (as alleged in paragraph 34.3)’.
(d)As to proposed para.14.3, save and except for the reference to paras.5A.8-5A.10.
(e)As to proposed para.15.2A, save and except for the reference to para.10.4 and changing the reference from ‘para.11.5A’ to the correct reference being ‘para.5A.11’.
(f)As to proposed para.15.3, save and except for the reference to paras.5A.8-5A.10.
(g)As to proposed para.15.4, I permit an amendment in the following terms: ‘In relation to paragraph 41.4 of the Cross Claim admits only that a seasonal perched water table exists in some parts of North Adelaide and repeats the matters pleaded at paras.4 and 5A.7 herein in relation to the sump design.’
(h)As to proposed para.17.1, save and except for the reference to paras.5A.8-5A.10, 10.4, 14.3 and 15.6.
2.Extending the relevant time limit as per Rule 160 to enable the third party to obtain the report of Mr Noicos dated 24 November 2017, however excluding the matters outlined at paras.3.3, 3.4 and 3.4.2-3.4.4 of his report, being matters not raised on the pleadings.
3.Extending the relevant time limit as per Rule 160 to enable the defendants and/or the plaintiff to obtain an expert report in response to Mr Noicos’ report dated 24 November 2017, to 25 January 2018.
4.Directing the expert engineers retained by the parties to confer and to produce to the court a document identifying the matters and issues upon which they are in agreement, and those matters and issues upon which they differ, relating to the nature and scope of any recommended remedial work to the cellar, such document to be provided to the court on or before 5 February 2018.
5.Insofar as any party (or parties) seeks to rely upon the evidence of any expert at trial, such party (or parties) must pay the costs incurred by that expert in complying with this order. For the avoidance of any doubt, if more than one party intends to rely on the evidence of an expert witness at trial, then such parties must share such costs in equal proportions.
6.The third party is to pay the defendants’ costs of the application and the attendance on 30 November 2017 on a party/party basis, certified fit for counsel.
I will hear the parties as to any further orders sought.