Ipex ITG Pty Ltd v Melbourne Water Corporation (No 2)
[2005] VSC 258
•22 July 2005
changes
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
LONG CASES LIST
No. 5249 of 2003
| IPEX ITG PTY LTD (ACN 007 433 623) | Plaintiff |
| V | |
| MELBOURNE WATER CORPORATION | Defendant |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 June 2005 | |
DATE OF JUDGMENT: | 22 July 2005 | |
CASE MAY BE CITED AS: | Ipex ITG Pty Ltd v Melbourne Water Corporation (No 2) | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 258 | |
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Practice and procedure – pleading – whether sufficient in form – whether sufficient particulars.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P. J. O’Callaghan QC with Mr A W Sandbach | AJH Lawyers |
| For the Defendant | Mr G. H. Garde QC with Mr M. G. Roberts | Allens Arthur Robinson |
HIS HONOUR:
The attempts of the plaintiff, Ipex ITG Pty Ltd (“Ipex”), to deliver a satisfactory statement of claim in this proceeding continue. This is the second draft[1] of a proposed fourth amended pleading; on 24 March 2005 I refused leave to amend in terms of the earlier draft. I refer to my reasons published on that occasion.[2] I see my task as the judge appointed to manage this case in much the same terms as I expressed in John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd[3]:
“The fundamental concern of the court is that the dispute between the parties should be determined expeditiously and economically and, above all, fairly. Where the proceeding is being managed in a specialist list, the judge, whose task it is to steer the case through its interlocutory stages, might, and perhaps should, explore the claim to determine whether the form it takes is driven by its nature and complexity, or by a desire to conceal its bogus nature by presenting it in a snowstorm of unrelated and insufficiently particularised allegations, or by a desire to disadvantage the defendant in some way”.[4]
[1]In fact it is the third draft, as to which see [51] below. It is, however, the second draft which has been before the Court.
[2][2005] VSC 78
[3](1996) 8 VR 681 at 691 [18] – [22].
[4]Ibid. at 693 [22].
I will continue to pursue the objective expressed in my March judgment[5] of refusing leave where I am not satisfied that the allegations are set out in a logically and legally comprehensible and proper form. In determining whether these requirements have been met with respect to any particular plea, I focus particularly upon those allegations which, I apprehend, will be seriously in issue and which will be of importance in the proceeding. In short, I will not accept a plea upon an important matter where the material allegations of fact are expressed in terms of great generality and where the particulars provided are simply a reference to a mass of evidentiary material which the reader is expected to pick over in the hope that some parts of it may be supportive of the allegation in the plea. It will be recalled that a pleading must be in a form and with particulars such that the defendant can responsibly plead to it and, further, such that, for interlocutory purposes and at trial, decisions may be made as to the evidence required to be led and that rulings may be made as to relevance. And, bearing in mind that this proposed pleading is the latest of very many failed attempts, I am mindful of the words of the Privy Council in Wharf Properties Ltd v Eric Cumine Associates (No.2)[6], a case where leave to replead was denied:
“It is for the plaintiff in an action to formulate his claim in an intelligible form and it does not lie in his mouth to assert that it is impossible for him to formulate it and that it should, therefore, be allowed to continue unspecified in the hope that, when it comes to trial, he may be able to reconstitute his case and make good what he then feels able to plead and substantiate.”
Where, as here, the plaintiff does not assert such an impossibility, there should be no legitimate excuse for a continuing inability to express its claim in a proper form.
[5]See [2005] VSC 78 at [2], [24]
[6](1991) 52 BLR 1 at 23.
As before, a matter which underlies the claims is the services which Ipex was required to provide under the Services Agreement entered between it and Melbourne Water on 27 July 2000. The drafting of this contract is such that these services, which are referred to in the document as “the Services”, are defined in cl. 1.1 of the Services Agreement in very wide terms as follows:
“Services means the work to be carried out by the Personnel on behalf of the Service Provider [Ipex] as described in Item 1 of Schedule 2.”
Schedule 2 Item 1, which is entitled Description of Services contains a description of the Services in two sections, A and B:
“Section A
The Services more particularly described in the document titled Information Technology - Infrastructure Services - Requirements Specification, attached to this Agreement and signed by the parties for the purposes of identification forms part of this Agreement.”
Section B simply provides that certain listed items of correspondence are attached to the Schedule. The documents which are, in this way, made part of this contractual schedule total no less than 553 pages and contain a vast mass of material, much of which has nothing to do with a description of the services which Ipex is contractually bound to perform. This untidy specification has been the cause of much of the pleading difficulties in this case and will, I fear, continue to bedevil the litigation throughout its interlocutory stages and at trial. On behalf of Ipex it is contended that the inclusion of any particular document in the Section B list means that the document is a contractual document and, further, that its content provides a description of the services to be provided by Ipex under the Services Agreement. The documents in the Schedule 2 Section B list include the Ipex tender documents.
I shall refer to the services which Ipex is required by the Services Agreement to provides, simply as “the Services”. Ipex contends that the greater part of the Services[7], but not all of them, are services to be provided by Ipex in response to Helpdesk calls. Accordingly, the pleaders have sought in paragraph 5 of the proposed statement of claim to identify this part by reference to the provisions of the Services Agreement which describe them. I shall refer to this part of the Services as “the Helpdesk Services“.
[7]They are identified in paragraph 4 of the proposed pleading.
The litigation arises from the Ipex allegation that it tendered for and entered into the Services Agreement in the expectation that the number of Helpdesk calls, to which it would be obliged under the contract to respond, would be about 433 per month. It says that its tender was priced on the basis that this response would require it to provide labour for the purpose which is expressed as 10.16 FTEs[8] per annum for the Helpdesk Services and, for the Services as a whole, 12.06 FTEs per annum. These figures were agreed to by Melbourne Water and were included in its tender which, in turn was included in the contract documents. So much appears from the proposed pleading.
[8]FTE is the abbreviation for “Full Time Equivalent employees”
I now summarise the Ipex causes of action.
(1)A claim for damages for a breach of the term of the Services Agreement that the likely number of Helpdesk calls to be received by the plaintiff during the period of the Services Agreement would be of the order of 433 per calendar month.[9] The term[10] which is in identical terms to that previously pleaded, is said to be partly in writing and partly to be implied. As a breach of this term, paragraph 12 asserts that the number of Helpdesk calls actually received by Ipex per month between August 2000 and July 2003, that is during the contract period, was very much more than that warranted. The consequence[11] is that this required a response which required 21.69 FTEs per annum; that is, 11.53 FTEs over and above the 10.16 FTEs per annum which were agreed to be necessary to deal with the warranted rate of calls.[12] Then follow particulars which convert these extra FTEs over the contract period into an additional cost of $9,545,543.70, which represents the loss and damage of Ipex.[13]
(2)Further and alternatively to certain paragraphs,[14] a claim for damages for a breach of a term in the Services Agreement that Ipex would have to apply 10.16 FTEs per annum in order to provide the Helpdesk Services.[15] The term is said to be in writing and contained in Schedule C to the Services Agreement.[16] The breach alleged in paragraph 16 is that it was in fact necessary for Ipex to apply 21.69 FTEs per annum to provide the Helpdesk Services, with the consequence that it incurred loss and damage, namely, the same sum of $9,545,543.70.[17]
(3)Further and alternatively, a claim for an adjustment of the Services Fee pursuant to a term of the Services Agreement which provides for this where there is a significant change in the workload required to provide the Services.[18] This term is pleaded as an express written term in paragraph 19(a) and as an implied term in paragraph 19(b). The significant change in the workload is alleged to be the extra Helpdesk calls over 433 per month and the necessity to provide extra services as a consequence.[19] The contractual consequence is that Ipex is entitled to a fair and reasonable price adjustment [20] in the same sum of $9,545,543.70[21] representing the cost of providing an extra 11.53 FTEs.
(4)Further and alternatively, a claim for an adjustment of the Services Fee pursuant to a term of the Services Agreement which provides for this where there is a change in the scope of the Services Agreement.[22] This term is pleaded as an express written term in paragraph 23(a) and as an implied term in paragraph 23(b). Again, the excess of Helpdesk calls and the consequent necessity to provide extra services are said to have changed the scope of the Services Agreement.[23] As a consequence, extra labour was required to be provided and the Services Fee is to be increased by a fair and reasonable sum, namely, the same amount of $9,545,543,70.[24]
(5)A claim for payment of the unpaid monthly instalment for November 2002 in the sum of $151,382,19.[25] This is unchanged from the earlier draft.
(6)Further and alternatively, a claim for an adjustment of the Services Fee pursuant to cl 15 of the Services Agreement which provides for this where there is a variation.[26] The variation was directed by letter dated 28 February 2002 which is said to contain an advice to Ipex of changes to the network environment in which it was to provide the Services.[27] A claim for this variation is for a fair and reasonable increase in the Services Fee which is given as $4,101,249.90.[28]
(7)Further and alternatively, a claim for damages for misleading and deceptive conduct.[29] The conduct alleged is a representation that the average number of service calls would be 433 per month. In reliance upon this, Ipex entered into the Services Agreement.[30] The representation was false[31] and made without reasonable grounds[32] and Ipex suffered its loss by entering into a contract which required an extra 11.53 FTEs per annum to perform[33]. The loss and damage alleged is the cost of providing this extra labour, namely, $9,545,543,70.[34]
[9]Paras 9 - 14
[10]Para 9
[11]Para 13
[12]Para 10
[13]Para 13, Schedule 6
[14]Paras 9,12 and 13 only.
[15]Paras 15 - 17
[16]Para 15 Particulars
[17]Para 17, Schedule 6
[18]Paras 18 - 21
[19]Para 20
[20]Para 21
[21]Schedule 6
[22]Paras 22 - 25
[23]Para 24
[24]Para 25, Schedule 6
[25]Paras 26 -27
[26]Paras 28 - 42
[27]Paras 34 - 35
[28]Para 42, Schedule 9
[29]Paras 43 - 48
[30]Para 46
[31]Para 47
[32]Para 45
[33]Para 48
[34]Para 48 Particular (b)(iv), Schedule 6
I turn now to the criticisms of the pleading. I approach them, as I did those which are the subject of my March judgment and having regard to the principles set out above.
I mention by way of general observation, that I doubt whether the pleaders intend that all but one of these claims are correctly introduced by the word “further”. It appears clear that all of the seven claims, other than the fifth, and possibly the sixth, are true alternatives. In the prayer for relief the relief sought in respect of the first, second, third and fourth claims is said to be alternative.
Paragraph 3
This is the allegation of the making of the Services Agreement on 27 July 2000. The pleading is criticised because in particular (b) Ipex refers to a miscellany of terms which were set out in Schedule 1 to the pleading. I reject this criticism. In a complex contract such as this, it is often convenient, and not at all embarrassing, to schedule the terms. Melbourne Water can plead to them in its own Schedule 1.
Paragraphs 5 and 6
As I have mentioned, the contention of Ipex is that most, but not all, of the Services are to be provided in response to Helpdesk calls. Most of its claims involve its unpleaded contentions that, as the number of calls increases, so too does the quantity of Helpdesk Services and the cost of providing them and, further, that the increase in FTEs and the consequent cost increase are directly proportional to the increase in the number of Helpdesk calls.[35] It is, as I have mentioned, a theoretical claim in the sense that no actual loss is alleged.[36] It is of first importance that the line between the Services and the Helpdesk Services be clearly drawn, for only the Helpdesk Services are said to have been affected by the excess of Helpdesk calls and it is the quantity of FTEs required for only those services which is adopted in the quantification of the Ipex losses. In the earlier draft Ipex was criticised for not specifying these services which were provided in response to Helpdesk calls. This criticism is sought to be addressed in paragraphs 5 and 6.
[35]See [2005] VSC 78 at [23]
[36]Although it is not a true global claim, the methodology of the causation and quantification in this case bears resemblances to those claims. The pleaders must, therefore, at every step expect to have to confront the judicial caution, even distrust, with which the methodology of those claims is received. See John Holland Construction & Engineering Pty Ltd v Kvaerner R J Brown Pty Ltd (1996) 8 VR 681 at 691 [18]; Laing Management (Scotland) Ltd v John Doyle Construction Ltd [2004] BLR 295, and the cases referred to therein.
The Services, that is, all of the services to be provided under the Services Agreement, are listed in paragraph 4. Paragraph 5 sets out those Services required to be provided by Ipex which are consequent upon the making of a Helpdesk call; those identified in paragraph 6 represent the balance of the Services required to be provided. The word “required” in these paragraphs contains a latent ambiguity which may have been the cause of difficulty. Does it mean that the services referred to in the plea are to be provided as a matter of contractual obligation or merely as a matter of fact? If the former, then the pleaders must in the plea or the particulars set out the source of this obligation as well as the precise nature of the services in question. If it is the latter, then they must identify the services in question. Having regard to the fact that the pleaders go to some trouble in the plea to identify a number of provisions of the Services Agreement, I read paragraph 5 as an allegation that the Services Agreement provides that certain services are to be provided by Ipex in response to Helpdesk calls – it is an allegation of a contractual obligation.
The first difficulty with paragraphs 4, 5 and 6 is one that arises from the very untidy way in which the Services are described in the contract. I have mentioned that the definition of Services takes the reader to Schedule 2 Item 1. It is to this item that the pleaders have gone to identify the Services in paragraph 4, but they have done so by reference to all of the 553 pages of documents referred to in Sections A and B of this item without attempting to identify what those Services are or in what part or parts of these documents they are described. It is regrettable that they have not undertaken this task, for this case is likely to be very much concerned with an identification of the Services in contradistinction to those which I have called the Helpdesk Services. In paragraph 5 they address the difficulty of identifying the Helpdesk Services by providing a list of 19 general headings of services. The services there referred to are identified as being those described in the pages 57 to 82 of the Requirements Specification and pages 7 to 27 of the Final SLA and Rebate Schedule. Given that the purpose of paragraph 5 and paragraph 6 is to draw the line between two mutually exclusive groups of services, it is surprising that the pleaders have identified each of these groups by reference to the same pages of the same documents. Counsel for Melbourne Water complain that this is, at best, unhelpful and, at worst, a nonsense. They ask that I refuse to accept these paragraphs.
I turn, therefore, to examine the documents referred to in the plea. The Requirements Specification has the appearance of being a specification prepared by Melbourne Water for tenderers. In Part A Section 3 it sets out the services to be provided under ten headings. Section 2 sets out the responsibilities which Ipex must accept for many Information Technology Management tasks.[37] Section 6 is concerned with Service levels which Ipex must achieve. The headings adopted in paragraph 5 are taken from this Section 6, in particular, from cll A.6.5, A.6.6 and A.6.7. An examination of the pages of the Requirements Specification referred to, however, discloses two things: first, that the services listed in Section 6 continue beyond page 82, to page 86 and include cl A.6.8. Counsel were unable to say whether this omission was intentional or by way of oversight. I suspect the latter for the reference to the Services in paragraph 29 of the proposed pleading includes these pages to page 86. Second, the list of 18[38] services in the body of paragraph 5 represents only part of the 26 services mentioned in pages 57 to 82 (or the 29 services mentioned in pages 57 to 86). It must then be that the remaining eight (or eleven) services fall under paragraph 6.
[37]Par A.2.2
[38]“Security Services” is a heading at p. 80 of the Requirements Specification, not a description of a service.
It will be recalled that the plea in paragraph 5 identifies the Helpdesk Services also by reference to pages 7 to 27 of the Final SLA and Rebate Schedule. Similar criticism may be directed to this part of the plea. First the pages there set out appear to be incomplete in the same way as are the pages of the Requirements Specification: in fact they continue to page 30. Second, the services so described duplicate the services found in cll A.6.5, A.6.6 and A.6.7 of the Requirements Specification.[39] The reference to these pages is, therefore, superfluous or a mere duplication. I add, too, that the words in this part of paragraph 5, ”being the Service Level Agreement or SLA in the Services agreement” are not readily comprehensible and should be revisited.
[39]As well as cl A.6.8 if the reference extends to p. 30
Furthermore, the particulars given under paragraph 5 are themselves embarrassing. It will be recalled that these are particulars of an allegation that the Services Agreement requires Ipex to provide certain services in response to Helpdesk calls. It appears that the particulars are directed to identifying these Helpdesk Services. Particular (a) speaks of the nature and operation of the Helpdesk system. It refers the reader to Schedule 2 of the pleading. This is a document 44 pages long which contains a mishmash of information including self-congratulatory statements by Ipex included in its tender submission. It may be that the careful reader could glean from them some idea of the Helpdesk system which Ipex was offering in its tender, but it is not proper for the pleaders to put its case in this way. Particulars (b), (c) and (d) contain information relating to the total number of Helpdesk calls received over the three year contract period. They are said to total 28,631 calls which are summarised in Schedule 3 over 495 pages. It is said, too, that there exists a log of each of these calls and three such logs are, by way of example, set out in Schedule 4. Each of these logs comprises five pages and they refer to Helpdesk calls received on 10 October 2000, 10 October 2001 and 10 October 2002 respectively. I have, myself looked at the sample logs with which I have been provided. Their form is such that, without further instruction, I am unable to understand what is involved in the services which they are said to particularise. It will be noted, too, that in the list of the information which is said in particular (b) to be contained in each log, no mention is made of precisely what it is that the Ipex personnel actually did.
Particular (e) asserts that the detail of the logs were known to Melbourne Water because they were referred to in monthly reports and at monthly meetings between representatives of Ipex and Melbourne Water.
This information may be very interesting but it cannot be accepted as particulars of the allegation made in paragraph 5 of the statement of claim. This allegation is that certain specified services were to be provided in response to Helpdesks calls. The fact that 28,631 calls were in fact received says nothing about these Helpdesk Services. Nor does this appear on the face of the sample call logs. Presumably the defendant and the Court are to go through all 143,155 pages of these logs in the hope of finding what services it is alleged are to be or were in fact provided in response to the 28,631 Helpdesk calls. I have been critical in the past of the drafting techniques adopted by Ipex in this pleading – of simply throwing at the reader a vast mass of material with little if any effort to relate any part of it to the allegation made. I remain critical: it is essential that the particulars contain assertions of fact which are related to the plea. It is not sufficient that the pleader merely seek to justify them by saying that somewhere in this snowstorm of detail an informed reader may be able to find something which may be useful. It is no more satisfactory for Ipex to add that, anyway, Melbourne Water knows all about the matter.
I will not accept paragraph 5 or paragraph 6.
Paragraph 8
This paragraph alleges in essence that there was included in Schedule C to the Ipex tender, entitled Fees and Charges, a statement of the total project average FTE resources for the performance of the Services, showing that there would be required to be applied 12.06 FTEs per annum on average.
Schedule C comprises 14 pages of schedules of tender pricing and what appears to be the basis for the pricing. According to the particulars, the information alleged is to be found at page 4 of this Schedule C. In fact the information is contained, not on page 4, but on page 8 and again at page 10. On pages 8 and 10, there appears a statement showing the Total Project Average FTE Resource to be 12.06 per annum.
Paragraph 8 is divided into two sub-paragraphs. Sub-paragraph 8(a) asserts that the parties prior to contract “negotiated with respect to the level of FTEs necessary to be applied to provide” all of the services required under the Services Agreement. This part is embarrassing. It is not a material allegation; it goes nowhere in the pleading.
Sub-paragraph 8(b) is in these terms:
“(b)Such negotiations resulted in there being included in Schedule C Fees and Charges and which was made part of the Services Agreement the total project average FTE resource showing there would be required to be applied on average 12.06 FTEs per annum.”
It is not at all clear what role this sub-paragraph plays in the pleading or, indeed, what it means. Is it intended to be an allegation of a term of the Services agreement? If it is, the reference to the negotiations is unnecessary and embarrassing, and further the allegation goes nowhere in the pleading. Is it intended to be an allegation that the parties agreed that Ipex would provide an average of 12.06 FTEs per annum in the provision of the Services? Is this an agreement that 12.06 FTEs was a minimum, a maximum or a precise contractual obligation? Where does such an allegation go in the pleading? It is correct that the tender documents which are incorporated in the Services Agreement contain the statement an average of 12.06 FTEs will be provided in the provision of the Services. Is paragraph 8(b), therefore, asserting that this was part of the Services Agreement. What is intended by the statement that the negotiation resulted in the statement being inserted in the Services Agreement?
Furthermore it is not clear what is meant in paragraph 8 by the reference to the negotiations. The Services Agreement, as pleaded in paragraph 3, has no oral component. I will not accept paragraph 8.
Paragraph 9
In this paragraph, Ipex alleges that it was a term of the Services Agreement that the likely number of Helpdesk calls to be received by the plaintiff during the period of Services Agreement would be of the order of 433 per calendar month. This term is said to be partly in writing and partly to be implied. Parts (i) and (ii) of the particulars set out information which appeared in the earlier draft. Part (iii) raises again the negotiations and discussions which took place between the representatives of Ipex and Melbourne Water in order to agree the number of FTEs required to be applied. Criticism is addressed to this particular on the basis that the negotiations and discussions are not particularised and, in any event, the contract is said to contain no oral component. I accept the first, but not the second, criticism. The term has an implied component. In such a case the pleaders must set out with sufficient detail each act, fact matter and thing giving rise to such implication. Where the matter is a conversation or conduct full details, including dates places and persons involved, must be provided. I will accept the plea provided it is properly particularised.
Paragraph 10
In paragraph 10, Ipex alleges that it was a term of the Services Agreement that, on the basis that the number of Helpdesk calls would be of the order of 433 per month, the number of FTEs to be applied in respect of the Helpdesk Services was 10.16 per annum. The particulars indicate that the term is in writing and is contained in parts of the Services Agreement.
The principal criticism addressed to this paragraph is the inclusion of the introductory words which speak of the negotiations which led to the agreement. It is put that, since the suggested term is wholly in writing then the reference to unparticularised, or indeed to any, pre-contractual negotiations is irrelevant and embarrassing. I agree.
Next, it is said the plea in paragraph 10 as well as that in paragraph 11 go nowhere. It is true that the second claim is predicated upon this term, but for this purpose the term is pleaded again at paragraph 15 and the breach alleged in paragraph 16 relates back to paragraph 15, not to paragraph 10. I have wondered whether this agreement might have a role to play in establishing the quantum in Schedule 6. It is certainly not mentioned there. In the circumstances I will not accept paragraph 10.
Paragraph 11
This must fall with paragraph 10. Nevertheless I am conscious that it is included in response to an earlier criticism that the provenance of the allegation that 10.16 FTEs were required for the performance of the Helpdesk Services. Accordingly it is likely to re-appear in the next draft, perhaps in support of the agreement presently alleged in paragraph 15. I will therefore raise some aspects of it which may cause concern.
The calculation is said to arise from the figures set out in the particulars for each of the three years of the contract. These annual figures are indeed to be found at page 4 of Schedule C to the Services Agreement and, as a matter of arithmetic they are correct. But the calculation for each of the three years is not to be found there. For this it is necessary to turn to page 10 of the Schedule and the two pages which precede it. The difficulty that now arises is that the source material from these pages produces an average of 10.18 FTEs per annum for the Service Delivery Group and the Desktop Support Group. The difference between this and the figure pleaded is not great but it may produce a significant result when included in the calculations which Ipex would make depending upon it. Moreover it is by no means clear that the activities which have been estimated under these headings are identical with the Helpdesk Services.
Paragraph 14
In their submissions counsel for Melbourne Water point out that this paragraph is found as part of the first claim, that for damage for breach a term of the Services Agreement that Helpdesk calls would be at the rate of 433 per month. In the March judgment I pointed out that Ipex must allege and prove that the increased number of Helpdesk calls was a reflection of some change in the requirements of Melbourne Water rather then the result of some deficiency on the part of its own performance; Ipex should not be permitted in this way to shift the burden of proof to the defendant.[40] This plea is evidently an attempt to address this matter.
[40][2005] VSC 78 at [23]
It is convenient now to examine this a little more closely. The first claim proceeds on the basis that Melbourne Water warranted that the number of Helpdesk calls would be of the order of 433 per month. If it should appear that the number was greater than that warranted the breach is established. If Melbourne Water wishes to confess and avoid by asserting that the breach of warranty was due to some default on the part of Ipex, it must raise this in its defence. Accordingly, the criticism of this paragraph is misconceived; it may be, however that the plea in this part of the leading should be struck out as an unnecessary allegation of fact.
The criticism may, however, have validity if, and to the extent, that the plea is included on one or other of the remaining claims, other than the fifth claim or perhaps the seventh claim. In the remaining four claims Ipex alleges that there has been a qualitative or a quantitative change in the services which it has been required to provide. Accepting that such a change is alleged and proved, it is for Ipex to show that this was not the product of its own deficient performance.
At a further level, the allegation may have a role to play, given the manner in which Ipex puts its quantification. In paragraph [23] of the March judgment I point to the unstated assumptions in this aspect of the previous draft. Where it does not seek to prove any actual, as opposed to a theoretical, loss, Ipex must allege and prove each of the theoretical steps which lead to its conclusion. In Schedule 6 and Schedule 9 the starting point is the assertion that the provision of the Helpdesk Services would reasonably require the application of 10.16 FTEs per annum and that they in fact required 21.69 FTEs per annum. These facts, assuming they are established, must then be related to one or other of the wrongs alleged against Melbourne Water, and not to some inefficiency or deficiency on the part of Ipex. In this context it is for Ipex to allege and, ultimately to prove, that the suggested cause is the only significant cause of the excess FTEs.[41]
[41]See Laing Management (Scotland) Ltd v John Doyle Construction Ltd [2004] BLR 295 at 300 [10], [14] ff where this aspect of a theoretical claim, and consequence of the plaintiff not proving each step, are discussed.
This it seeks to achieve in paragraph 14 in two ways; first it asserts positively in sub-paragraph 14(a) that the excess of Helpdesk calls was due to a substantially greater demand by Melbourne Water for services. If, by this, the pleaders are simply saying that the greater number of Helpdesk calls represents a greater demand for Ipex responses, it does not do much to advance the case. Second, it asserts in sub-paragraph 14(b) the negative proposition that the excess of calls was not due to its own deficiency or inefficiency. It is difficult to complain about an insufficiency of particulars of such a negative assertion.
I will accept this plea, while suggesting that it be removed to a more appropriate location in the pleading.
Paragraph 16
The criticism directed to this paragraph is that it is not clear what is meant by the words, “the Plaintiff had to apply an average of 21.69 FTEs” to provide the Helpdesk Services. It is said that the words “had to” imply some unparticularised compulsion. I do not agree. I read the plea as a statement of fact that Ipex needed to apply that quantity of labour in order to perform those services.
Paragraphs 18 and 20
These paragraphs are a part of the third claim, that depending upon a significant change in the workload. Again, I remind myself that Helpdesk calls are not the equivalent of work; they may require the performance of work. Nor is a change in the quantity of such calls the equivalent of a change in the work required to satisfy them. The two concepts must be tied together by some intervening step or steps.
Paragraph 18 seeks to establish the base amount of the workload required to provide the Services. It seeks to achieve this in an elliptical way by asserting that the amount of this workload is the amount of the workload required to provide the Helpdesk Services on the assumption that the number of Helpdesk calls ran at 433 per month and that they required the application of only 10.16 FTEs per annum. What is missing is a statement of what is in reality this workload. On reflection it may be that workload could be correctly understood in this context as being the amount of work which is required to be performed in a given situation.[42] Accepting for present purposes the underlying proposition of Ipex that the amount of work to be performed is related to the number of calls which demand the performance of the work, I would not refuse to accept this plea; this demand may be seen as the load imposed on Ipex for the performance of its work.
[42]Cf Macquarie Dictionary p. 2003: “the amount of work done or to be done in a specified time”
In paragraph 20 two things are said to constitute a significant change in this workload. They are the excess of Helpdesk calls and the necessity to provide additional services. I can understand what the pleaders here intend to say. I will accept this paragraph.
Paragraphs 22 and 24
Similar criticisms are directed to these paragraphs which are part of the fourth claim, that predicated upon a change in the scope of the Services Agreement. In paragraph 22 it is asserted that the scope of the Services Agreement is “relevantly the level and volume of the [Helpdesk Services] required to be provided” on the basis of 433 Helpdesk calls per month. The entitlement to an increase in the Services Fee then arises when there is a change in this level or volume of required services. Having regard to the fact that I am addressing a pleading summons, I am content to accept that this is not logically flawed.
Paragraph 24 identifies the matters which constitute the change in this scope. They are, as in paragraph 20, the excess of Helpdesk calls and the necessity to provide additional services. I will accept this plea.
Paragraphs 38 and 39
These paragraphs are part of the fifth claim, that based on a variation. Under cl 15(c) of the Services Agreement the Services Fee may be increased by a reasonable amount if the “nature, extent or content of the Services” is increased in accordance with a variation directed pursuant to sub-cl 15(a). The allegation is that, by letter dated 28 February 2002, Melbourne Water advised Ipex of certain matters which changed the technology environment in which the Services were to be provided and that this was a direction within the meaning of cl 15(a). Accepting, for present purposes, that this is properly pleaded, counsel for Melbourne Water directed criticisms to the pleas as to the quantification of the claimed adjustment to the Services Fee. Again, Ipex, has not attempted to demonstrate any actual cost impact as a consequence of this change; it presents its claim as a theoretical one.
In paragraph 38 it is said that Ipex complied with the variation direction and accommodated the changed environment in providing the Services. The pleaders have followed the same format as in paragraph 5. Passing over the typographical error in particular (a)[43], I repeat my criticisms of the pleading technique. There is, however, one significant difference: what is the subject matter of this plea is the Services which were in fact provided in the changed environment. The particulars address, not the Services, but what I have called the Helpdesk Services. This may not be of importance in the circumstances, but the plea and the particulars should be consonant. The particulars, then identify the services performed by reference to the logs. In the context of this claim I doubt whether there will be an issue that Ipex did what is recorded in the logs. I will, therefore, accept this plea.
[43]The reference should be to Schedule 2 of the pleading.
Turning, then to paragraph 39, what is to be particularised here is some statement as to how the changed environment increased the extent of the Services, thereby triggering the entitlement of Ipex to the adjustment of the Services Fee. This, I suppose, is the likely area of contest in this claim. The particulars provided do not address this matter and I will not accept them. They suffer from the further infirmity that they are directed, not to the impact of the changed environment referred to in the 28 February letter, but to the excess of Helpdesk calls which has, it is said, always existed both before and after the variation. I have already remarked that, in the prayer for relief this claim is expressed to be further or alternatively to the Schedule 6 claims. Accepting, as is probably intended, that this claim is a true alternative, the impact of the variation must be assessed by reference to the extent of the Services which existed otherwise than as a consequence of the variation. This logical flaw in the claim also carries through into the quantification in Schedule 9, which will also require some attention.
In the course of argument, counsel for Melbourne Water also raised the point that the statement of claim does not allege compliance with cl 22 of the Services Agreement. This provision, they said, sets out an elaborate dispute resolution procedure as a pre-condition to the right to litigate a claim under cl 16. Be that as it may, I reject the submission that this is for Ipex to plead.[44] If the point is taken in the defence, Ipex may respond in its reply as it may be advised.
[44]See Rule 13.05
Paragraph 44
The final claim is that based on misleading and deceptive conduct. The representation which is relied on is one “that the level of Helpdesk calls which the Plaintiff could expect during the period of the Services Agreement was of the order of 433 per month”. As might be supposed, the pleaders have alleged that the statement is partly in writing and partly to be implied as they did for the same statement in paragraph 9. With respect to the written component of the statement, the particulars simply refer to “Part B Section 6 of the Services Agreement and being Schedule 3 hereto”. The reference should perhaps be to some other Schedule 2 of the pleading as Schedule 3 is the summary of the call logs. Nor is the remainder of the reference of much assistance; what is intended I suppose is a reference to the Requirements Specification Part B Section 6 where statements appear as to the average number of Helpdesk calls for the six months to March 2000. These may be calculated to be 433 per month on p. 105 and 394 per month on p. 106.
To the extent that the representation is to be implied Melbourne Water is entitled to proper particulars. In such a case the pleaders must set out with sufficient detail each act, fact matter and thing giving rise to such implication. Where the matter is a conversation or conduct full details, including dates places and persons involved, must be provided. I will accept the plea provided it is properly particularised.
The allegations of falsity will also require some attention. The pleaders allege in paragraph 45 that, insofar as the representation was as to a future matter, Melbourne Water did not have reasonable grounds for making it. Reference is made to the Trade Practices Act s 51A and the Fair Trading Act s 4. Perhaps there is no need for this allegation, having regard to those provisions, but, if they wish to make this allegation, the pleaders must provide particulars. In paragraph 47 they allege falsity. It is not clear what is to be the role of this plea for reference is again made to the Trade Practices Act s 51A and the Fair Trading Act s 4 as well as to ss 52 and 9 of those statutes respectively. Then follow the particulars of falsity. These appear to be directed to the allegation of want of reasonable grounds contained in paragraph 45 rather than to the allegations in paragraph 47. Even so, particular (a) cannot stand. Insofar as it asserts the post-contract Helpdesk calls history, it cannot be a particular of want of grounds. Insofar as it alleges the pre-contract experience, it must be particularised.
Paragraph 48
This paragraph is concerned with the loss and damage suffered by Ipex as a consequence of the conduct complained of. At this level I am not concerned whether the loss will be made out or whether the quantification methodology will be accepted; I am concerned with the form of the pleading. As it is now put, I can understand what is said and how the figure is arrived at. I will accept it.
Costs
The pleading is not in acceptable form. Ipex must therefore pay the costs of its unsuccessful application. Melbourne Water, however, seeks an order for the costs of the failed attempt to file the third statement of claim and certain costs of the fourth statement of claim that these be taxed on a solicitor and client basis.
The relevant chronology is as follows:
29 November 2004 Ipex filed its third statement of Claim purportedly pursuant to the leave granted on 8 October 2004. In fact this was filed out of time so that the pleading was ineffective.[45] It was nevertheless accepted as valid. 10 December 2004 Melbourne Water’s application by letter dated 7 December 2004 to strike out the third statement of claim was adjourned with directions and with costs reserved. 14 December 2004 The Court directed that a fourth statement of claim be filed by 28 January 2005. Costs were reserved 28 January 2005 Fourth statement of claim filed 23 February 2005 As a result of discussions a second draft of the fourth statement of claim was delivered.` 7 March 2005 Application to deliver fourth statement of claim (draft 2) heard. Judgment was reserved. 24 March 2005 Leave to amend refused. Costs were reserved. 3 June 2005 Third draft of fourth statement of claim filed. This is the draft presently under consideration [45]Rule 36.02
In its letter to the Court of 7 April 2005, the solicitors for Melbourne Water identify the costs which their client seeks as follows:
(1) Costs of the Melbourne Water application to strike out the third statement of claim including the costs of the hearings on 10 and 14 December 2004; (2) Costs thrown away in relation to the delivery of the first and second drafts of the fourth statement of claim; (3) Costs of the Ipex application to file the second draft of the fourth statement of claim, including the costs of the hearings on 7 and 24 March 2005; (4) Costs of this application to file the third draft of the fourth statement of claim, including the costs of the hearing on 17 June 2005.
The debate before me as to costs concerned, first, those of 10 and 14 December 2004 which were said to be costs concerned with procedural aspects of the amendment then under consideration. An order for costs under parts (2), (3) and (4) was accepted by Ipex. I will order that the costs under part (i) be paid by Ipex as part of the costs of the amendment which it must expect to bear in the ordinary course. I will therefore order that Ipex bear each of the four sets of costs mentioned in the preceding paragraph.
The principal area of contest here was whether the costs should be awarded on the usual basis or on a solicitor and client basis. It was put on behalf of Ipex that the cases show that it is only where the Court wishes to show its disapproval of the conduct of a party that such a punitive order is made. I do not see the discretion of the Court as limited by any such principle. It is, of course correct that such costs may be ordered against a party if some delinquency is demonstrated. This is a case where no delinquency is suggested; it is rather a case where Ipex has chosen to present its case in a particular way - a way which has led it into difficulties. The consequence is that the defendant has had to incur substantial costs in an effort to ensure that the case against it is presented in a way which will enable it to be properly understood and, eventually, tried. An order for party and party costs will leave it out of pocket. In the normal case this is a risk which a defendant must expect to bear, for it is a fact of litigation that pleadings are amended from time to time. But here the burden far exceeds the norm. I will, therefore, order in the case of each of the four sets of costs that the costs be taxed on a solicitor and client, and I do so as a compensatory rather than as a punitive measure.
I mention, finally, the submission put on behalf of Ipex that such an order raises the question of whether Rule 63.23 should be applied. This is, of course, the rule which permits the Court, in certain circumstances, to make an order for costs against a practitioner. I have not been asked to make any such order and I do not do so. The order for costs is against the plaintiff as the party before the Court. Whether all or part of such an order is or ought to be met by some other person, a matter about which I express no view. It is not relevant to any issue before me.
Conclusion
I will not accept this draft of the proposed fourth statement of claim. I have identified serious formal flaws in paragraphs 5, 6, 8, 10 and 11 and insufficient particulars are provided under paragraphs 5, 9, 39, 44 and 47. As before, it may be that upon a reconsideration of the pleading, generally, other improvements may be seen to be desirable. That is a matter for the pleaders.
I will give leave to replead. The next draft will be the third, or perhaps the fourth, attempt to formulate the fourth pleading and at least the seventh attempt over the past two years by Ipex to formulate a claim which satisfies the basic formal requirements that the allegations be cast in a form which is logically and procedurally satisfactory. This is a history which may attract a comment such as that of the Privy Council which I have quoted at the outset. With each unsuccessful attempt I become increasingly concerned as to whether a claim which is incapable of meeting these basic requirements should be permitted to occupy further Court time.
I will make the costs orders which I have mentioned in paragraph [54] above.
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