Integral Energy Australia v EDS (Australia) Pty Limited

[2006] NSWSC 406

CITATION:	Integral Energy Australia v EDS (Australia) Pty Limited & Ors [2006] NSWSC 406
HEARING DATE(S):	27/4/06
JUDGMENT DATE :	10 May 2006
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Einstein J
DECISION:	Short minutes of order to be brought in.
CATCHWORDS:	Practice and Procedure - Amendment of pleadings - Limitations
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Fair Trading Act 1987 (NSW) Judiciary Act 1903 (Cth) Trade Practices Act 1974 (Cth)
CASES CITED:	Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
PARTIES:	Integral Energy Australia (Plaintiff) EDS (Australia) Pty Limited (First Defendant) ACN 007 443 165 Pty Limited (Second Defendant) Indus International Inc (Third Defendant)
FILE NUMBER(S):	SC 55025/05
COUNSEL:	Mr R Margo SC, Mr S Climpson (Plaintiff) Mr R Brender (First Defendant) Mr S White SC, Mr M O'Meara (Second Defendant) Mr J Sackar QC, Mr R Foreman (Third Defendant)
SOLICITORS:	Holding Redlich (Plaintiff) Baker & McKenzie (First Defendant) Freehills (Second Defendant) Blake Dawson Waldron (Third Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

Einstein J

Wednesday 10 May 2006

ACN 007 443 165 Pty Ltd and Indus International Inc

JUDGMENT

The notice of motion

1 There is before the Court a notice of motion filed on 13 March 2005 by the plaintiff, Integral Energy Australia, seeking orders that the plaintiff be granted leave to file in Court an Amended Summons substantially in the form of Annexure “A” to the affidavit of Sylvia Fernandez sworn 13 March 2006.

The proceedings

2 A short overview of the nature of the proceedings [which is by no means exhaustive] is conveniently to be found by reference to the following paragraphs of the Summons:

(i) [Para A1 Summons] In 1996, Integral Energy Australia (“Integral”) outsourced all of its information technology processes to EDS (Australia) Pty Limited (“EDS”) pursuant to a written agreement (the IT Services Agreement). Thereafter EDS was responsible for servicing Integral’s IT requirements and providing expert advice in relation to those requirements.

(ii) [Para A2 Summons] Integral needed to update its customer information and billing system within a limited time frame to avoid the potential Year 2000 (Y2K) problems with its existing system and so as to be able to compete effectively in energy markets that were being de-regulated as part of the NSW Government’s energy industry reform process and to comply with new regulatory requirements.

(iii) [Para A3] In 1997, Integral decided to replace its existing billing system, known as the Customer Information System (“CIS”) with a new system, called the Customer Service System (“CSS”).

(iv) [Para A5] After the selection process to determine the most suitable software for the CSS was carried out during 1997, BANNER software was selected for implementation.

(v) [Para A5 Summons] SCT Utility Systems, Inc. (“SCT”) was a United States software supplier of BANNER software (“BANNER”). From 1 November 2003, SCT was merged into its new parent company, Indus International, Inc. and ceased to exist as a separate entity.

(vi) [Para A6 Summons] SCT had appointed and authorised the second defendant, then known as MITS Limited (MIS), as its exclusive distributor and implementer of BANNER in the Asia Pacific region.

(vii) [Para A10 Amended Summons] Work on the CSS project commenced in the last quarter of 1997 under an interim contract between Integral, MITS and SCT. On 23 December 1997, Integral entered into an Agreement to Proceed with MITS.

(viii) [Para A11 Summons] On 2 April 1998, MITS entered into an agreement with Integral pursuant to which MITS agreed to modify and implement BANNER software for the CSS project.

(ix) [Para A12 Summons] In the latter part of 1998, the CSS Project was behind schedule and there was a risk it might not be implemented in time. As a result, a fall-back alternative to renovate CIS was agreed upon between Integral and MITS in an amended agreement.

(x) [Para A13 Summons] The renovation of CIS was later discontinued for the reasons listed in paragraph A13.

(xi) The plaintiff's contention is that after CSS went live from 27 October 1999, it became apparent that the system failed to perform essential functions adequately.

Limitation issues

3 Section 65 (2) (c) of the Civil Procedure Act 2005 provides that at any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may with the leave of the Court under s 64 (1) (b), amend the originating process so as to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the Court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. [emphasis added]

4 These are proceedings raising extremely complex questions of fact as well as law. In my view it is undesirable that limitation questions of the kind under consideration [in terms of the respective submissions of the parties opposing the granting of leave to amend], should be decided in interlocutory proceedings in advance of the hearing of the action. Commonly insufficient is known of the material circumstances to permit questions of that nature to be decided prior to the hearing: cf Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533.

5 The efficient approach is to leave the question of the date on and from which the amendments are to be deemed to commence, to be determined by the trial judge during opening addresses. The balance to be struck in the exercise of the relevant discretion involves weighing up:

i. such difficulties as the parties may have in requiring to prepare for the final hearing without knowing until the trial judges early ruling, what are the dates from which the amendments are to be deemed to have been commenced;

ii. the difficulties for the Court in being required at the present early stage, to discern whether or not the causes of action being propounded arise from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief.

6 The nature of the proceedings, the complexity of the proceedings, the nature of the issues and the scale of the proceedings are such that the principled exercise of the discretion is to leave the above described matters for determination of the trial judge during address in opening submissions. There is no question of the parties being required to commence presentation of their respective cases during the hearing prior to that decision being announced.

The position taken by the second defendant

7 The second defendant not longer takes issue with the pleading of C 24A of the proposed Amended Summons. Leave to make that amendment is to be granted.

8 The only issues which remain alive and in respect of which the second defendant has addressed concern the leave which is sought to plead certain of the claims for repayments of bonus payments in paragraphs C65 to C74 and C78 (b).

9 The second defendant contends that the Court should:

(i) decline the application for leave to amend to include the claim for the first bonus payment;

(ii) decline the application for leave to amend to include the claim for the second bonus payment in so far as it relies on the Fair Trading Act ;

(iii) permit the application to amend to include the balance of the claim for the second bonus payment only on the basis that it is deemed to commence from the date of the amendment.

10 The principled the exercise of the Court's discretion is to allow each of the amendments sought in paragraphs C65 to C74 and C78 (b) and to reserve for the decision of the trial judge, the issue as to the date on and from which the amendments are to be deemed to have commenced.

The position taken by the first defendant

11 During the exchange of submissions between the parties the plaintiff indicated a slightly amended form of the amendment being propounded as C31 (c) (iA) grounding a cause of action under the Trade Practices Act, which would now read:

"by implication from the matter pleaded in C31 (c) (i), further or in the alternative from that matter and from or by the matters particularised in respect of 31 (c), represented to Integral as a continuing representation that the Aug 98 Integrated Schedule was realistic and likely to be met (the EDS Schedule Representation; and"

12 The other amendment being proposed was to be found in C 57 where it was alleged that EDS’s conduct, being the alleged representations which had been previously pleaded and the proposed EDS Schedule Representation, constituted a contravention of s 42 of the Fair Trading Act 1987: the cause of action pleaded under this section of the Fair Trading Act not having previously been pleaded by the plaintiff.

13 Subject only to one matter, it would have seemed to me that the principled exercise of the Court's discretion would be to allow each of the amendments as against the first defendant and to reserve for the decision of the trial judge, the issue as to the date on and from which the amendments are to be deemed to have commenced.

14 The proviso concerns the first defendant's communicated intent to raise a question of suggested inconsistency of laws as between the Civil Procedure Act and the Trade Practices Act limitations section. The contention sought to be raised by the first defendant is that the Civil Procedure Act cannot permit an amendment to the Trade Practices Act or cannot permit an amendment to add a cause of action which is barred by the Trade Practices Act for the reason that the latter Act itself has a limitation provision.

15 I had understood from the plaintiffs submissions that it was not necessary to determine this inconsistency issue presently. In those submissions [28] the plaintiff had stated that "EDS 's right to argue [the inconsistency issue] on trial can be preserved by an order to that effect and Integral will frame such an order for the Court's and EDS's consideration if leave to amend is otherwise granted".

16 The resolution of precisely what order might be made requires further attention by the plaintiff and the first defendant. The plaintiff has not formulated the formal order proposed. Unless the parties can agree upon the proposed form of order which can achieve both:

i. the allowing each of the amendments as against the first defendant and the reserving for the decision of the trial judge, the issue as to the date on and from which the amendments are to be deemed to have commenced;

ii. The reservation to the first defendant of the above described entitlement to raise the inconsistency issue as a matter for the trial judge,

the matter will have to be relisted for examination.

17 In a further submission from the plaintiff of 4 May 2006 reference is made to the possibility that a question may arise under s 109 of the Constitution and that s 78 B of the Judiciary Act 1903 may therefore be engaged, hence requiring notices to the Attorneys General. These matters require further attention by EDS.

18 Presently it is appropriate to do no more than to stand over the application to amend in the form of C 57 for further consideration and to invite the response of EDS to the plaintiff’s recent submission.

The position taken by the third defendant

19 The third defendant opposes the grant of leave in relation to the amendment proposed to C 59 of the proposed amended Summons. The principled exercise of the Court's discretion in that regard is to allow the amendment and to reserve for the decision of the trial judge, the issue as to be the date on and from which the amendment is to be deemed to have commenced.

20 The third defendant additionally opposes the grant of leave in relation to the addition of deceit as a new cause of action as pleaded in paragraphs C59A and C59B. The third defendant contends that the pleading as framed does not address each of the elements of deceit and has inter alia failed to address knowledge and intention as two such critical elements.

21 It is possible to deal with that matter very shortly for the reason that during the address of Mr Margo SC leading counsel for the plaintiff, it became apparent that the plaintiff sought to stand over that part of the notice of motion which sought leave to amend in terms of paragraph C59A.

22 It is common ground that the notice of motion is to be stood over generally with liberty to either party to apply following yet a further attempt by the plaintiff to plead and/or particularise the deceit course of action.

23 For more abundant precaution the proceedings are to be mentioned before me on 19 May 2006 for the purposes of ascertaining the then position.

Costs

24 Costs of the vacated hearing of the notice of motion are reserved.

Short minutes

25 Short minutes should be brought in dealing with each of the matters clarified in the above reasons.