Ipex ITG Pty Ltd v State of Victoria (Ruling No 1)
[2010] VSC 379
•18 August 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL & EQUITY DIVISION
No. 7182 of 2002
BETWEEN
| IPEX ITG PTY LTD (IN LIQUIDATION) | Plaintiff |
| And | |
| STATE OF VICTORIA | Defendant |
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JUDGE: | SIFRIS J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 16 and 18 August 2010 | |
DATE OF RULING: | 18 August 2010 | |
CASE MAY BE CITED AS: | IPEX ITG Pty Ltd v State of Victoria (Ruling No 1) | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 379 | |
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PRACTICE AND PROCEDURE – Application to further amend statement of claim on first day of trial – Application for security for the costs of the trial made on the first day of trial.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R W McGarvie SC with Mr A W Sandbach | A J H Lawyers Pty Ltd |
| For the Defendant | Mr J D Elliott SC with Ms G Schoff | Victorian Government Solicitor |
HIS HONOUR:
This is an old case. The proceeding commenced on 9 September 2002 and there have been a number of amendments to the statement of claim. On 30 May 2008 there were very substantial amendments made to the statement of claim.
On 16 December 2009 the matter was fixed for trial with the usual pre-trial directions, including the filing of witness statements. There had been an earlier fixing of the trial date but the matter did not get on.
The plaintiff was four weeks late in providing witness statements and there was no indication at any stage that a witness statement would be filed on behalf of Mr Roger Warr. Despite requests made by the defendant as to when the witness statements would be delivered, given that they were late, there was, I am told, no indication given by the plaintiff.
When the matter was called on for trial there were two applications. One was by the plaintiff seeking to amend the further amended statement of claim. The application was made by an oral application without any supporting material. The second application was by the defendant by summons filed 10 August seeking further security for costs. An affidavit was filed in support of such an application.
Each application is late and unfortunately it has detracted from the case proceeding according to the scheduled timetable and the allocated date. I have some sympathy for the position adopted by the other side in relation to each of the applications but we need to deal with each of the applications on their own merit.
The court does not have the luxury of a detailed opening or a consideration of the evidence or documentation in detail in order to determine the extent to which the application to amend raises new matters. Indeed, with many interlocutory applications, the court is obliged to deal with the matter as best it can, given the submissions made and the reading that the judge is able to do before the case formally opens.
The application to amend
I will deal first with the proposed amended statement of claim. The proposed amendments are set out and identified in a single page document. The document is dated 13 August 2010. The document refers to 10 items comprising the proposed amendments. The amendments are opposed.
In the main, Mr Elliott of Senior Counsel who appears with Ms Schoff of Counsel for the defendant, submits that his client has a new case to meet, and that given the history of the case, the lateness of the application, the likely vacation of the trial date and the prejudice which would be suffered if the amendments were permitted, the court should refuse the amendments. There was also an attack on the form of the proposed amendments. In detailed written submissions and oral argument, I was urged to exercise my discretion to refuse the amendments.
Mr McGarvie of Senior Counsel who appears with Mr Sandbach of Counsel for the plaintiff, submitted that the amendments merely sharpen the focus of the case and do not represent a new case. In effect, he submits that, to use the words of the joint judgment of Gummow, Hayne, Crennan, Keifel and Bell JJ of the High Court (at paragraph 104 of the joint judgment in the Aon case),[1] the amendments do not introduce new and substantial claims, so substantial in effect so as to require the State of Victoria to defend the case from the beginning.
[1]Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (“Aon”).
What was submitted was that the substance of the case was to a great extent the same as the case set out in the further amended statement of claim and a number of paragraphs were referred to in the written submissions.
Rule 36.01(1) gives the court a discretion in relation to the amendment of any pleading. There is, since Aon, no entitlement to amend a pleading on the basis that all the costs will be paid. This was the earlier predisposition, encouraged no doubt by the High Court decision in JL Holdings[2] and cases of this Court. There is no such predisposition and the court is required to weigh all the factors, often competing factors, and take them into account in the exercise of its discretion.
[2]The State of Queensland & Anor v JL Holdings Pty Ltd [1997] 189 CLR 146.
Delay is a very important factor or more precisely, the vacation of any trial date. Wasted costs is a factor. Case management considerations are factors. The importance of the amendment is a factor. The stage of the litigation is a factor, and so is whether or not there is an explanation for the delay.
There is no satisfactory explanation for the delay. The proposed amendments are late. The trial was due to commence on Monday of this week. As to the importance of the amendments, according to the plaintiff they are not all that important in that the existing case does embrace the issues that are the subject of the proposed amendments in any event, but nonetheless, the plaintiff is desirous of amending in the manner identified.
It is in the interests of all parties and the court that the trial commence as soon as possible. A date was fixed well in advance and in preference to other cases in the court and this is, in my opinion, the most important consideration. Given the history of the case, the substantial amendment to the statement of claim made over two years ago, I will not vacate the trial date or make any orders that would have the effect of delaying the commencement of the trial beyond the delay that has been occasioned by these applications.
It follows that I will not allow the amendments if this would have the effect of vacating or adjourning the trial. If the amendments constitute a new case, or a sufficiently new case, an adjournment would be inevitable and the amendments would be refused. If they do not constitute a new case, then I will permit them.
Before I relieve everyone of the suspense, I should say that I will not permit reliance on the witness statement of Roger Warr for a number of reasons. It is very late and that alone is a sufficient basis given the history of the matter, for not permitting the plaintiff to rely on the late witness statement of Mr Warr. The instructions given to Mr Warr and the questions asked of him go well beyond the spreadsheets that were referred to.
Further, Mr Warr was originally engaged, in 2005, according to an affidavit made by Jessamine Lumley on 15 June 2005. I refer specifically to Exhibit JCL 28 to that affidavit.
Further, it may be observed that there are other qualitative difficulties with the evidence proposed to be given by Mr Warr. Although the matter was not raised it is relevant to note by way of an observation that it is questionable whether the expert statement is truly expert evidence.
The many questions asked and answered are or could be matters for the court to decide. Many are factual matters. Much depends on the terms contained in the request for tender and other associated documents. From a brief reading of the statement, I am not satisfied that it truly represents an area of expertise sufficient to make it expert evidence. Further, the format is more like a special referee’s report in the nature of the questions that are asked and the opinion given by Mr Warr in relation to the questions.
If the amendments merely sharpen the focus, they may not be necessary and indeed, as they were opposed for reasons that were articulated in writing and in oral argument we should simply get on with the case. The court is in a difficult position. At present, without the benefit of a detailed opening and detailed consideration of the issues and the evidence, it is difficult to form any concluded view as to whether the amendments merely sharpen the focus or indeed comprise new causes of action.
I am inclined to the view that the amendments may not be as extensive or far-reaching as the defendant contends and that they may well if properly pleaded be embraced by the existing case to a sufficient extent so as to perhaps permit them.
There are three groups of amendments, the first identified in items 1-5 of the single sheet handed up on 16 August, and dated 13 August are the amendments that commence with paragraph 6A(f)(i), (ii) and (iii). Although that group of amendments relate to different causes of action, contract, Fair Trading Act and estoppel, they are all in similar form in that they plead in the alternative that the defendant would, in conducting the tender, and this is subparagraph (i):
“Assess the tenders by scoring them fairly and competently against appropriate evaluation criteria”.
It is true that what is pleaded in the statement of claim as it currently exists without amendment, is that there are contractual terms to act fairly and competently – certainly fairly, and what is also pleaded is that there were flawed or wrong evaluation criteria.
The proposed amendment seems to put more emphasis on the scoring, or focus on the scoring but the case is to some extent about the consideration and evaluation of the competing tenders and there is evidence in the court book about the competing tenders and Mr Street in his evidence does deal with the evaluation and assessment, and indeed the scoring of the various tenders.
However, the proposed amendment dealing with paragraph 6A(f)(i) is not sufficiently particularised. I am not satisfied that its basis is sufficiently identified and not satisfied that the amendment should be permitted at this stage. The same goes with subparagraphs (ii) and (iii). It may well be after a consideration of the evidence that paragraphs (ii) and (iii), and indeed (i), may not be new, they may well be embraced by all of the evidence, including evidence that may be obtained by cross-examination.
However, there is a difference between making an application to amend now and, as often happens at the conclusion of a case, making application to amend based on evidence that has been given and permitted. Of course, to what extent evidence will be permitted in turn depends on what is pleaded.
In all of the circumstances, I am not satisfied that the group of amendments comprising amendments 1-5 should be permitted at this stage. However, I am not in a position, regretfully, to rule them out completely and I would propose to defer any application to amend as contained in those provisions until a later date. In other words, I am not shutting out the plaintiff from making an application that may well be based on the evidence as it unfolds, but in their current form, I should say that the amendments would not be permitted.
The amendment contemplated by paragraph 38 or the provision of particulars to paragraph 38 I am disposed to allow, despite the lateness of the particulars. In paragraph 38 there is, in the present particulars (which have presumably been there since 2008) a reference to the chance or opportunity that the plaintiff would have had for the provision of further services. What the particulars now seek to do is quantify that. Although it is late, I am inclined to permit the amendments, subject to dealing with any prejudice that the defendant may suffer during the course of the trial. It was always contemplated that further particulars would be given.
Of course, I express no view on whether the evidence is sufficient to make out such a claim, given that this is not a split hearing on liability and quantum, but I say nothing more about that. However, I will permit the amendment or the provision of these further particulars and enable the defendant to deal with any prejudice as and when the matter arises.
The group of amendments comprising 7-10 of the single sheet dated 13 August deal with the matters referred to therein namely the failure to comply with detailed evaluation criteria. Again the pleading refers to, in paragraph 53A, a breach of what is called the additional terms by reference to clause 3.1 of the evaluation plan. This is new, even though the framework or underlying facts are in the existing pleading.
The existing pleading does refer to, in paragraph 52, “a scoring sheet, solution evaluation, financial”, and when one reads through the section of the further amended statement of claim dealing with the tender, the section commencing at page 49, paragraph 39, there is reference to the process and the evaluation plan. Further, if one reads the various sections referred to therein, it may well be that the method of scoring and collation is something that is embraced by or raised by the existing paragraphs in the further amended statement of claim.
The difficulty is, as I said, without an opening I have, despite reading it several times, not fully understood the statement of claim so far as it deals with the evaluation of the Ipex tender and what specific causes of action are embraced by that section of the statement of claim and what factual matters underpin that. So for similar reasons to the proposed amendments set out in 1-5 of the single sheet, I am not prepared to allow the amendments at this stage and I am not in a position to determine whether the amendments merely sharpen the focus or introduce new causes of action.
However, the view I take of the matter is that given the history of the case and the substantial amendments made in 2008, the matter must go on and we have to progress the matter by reference to the evidence. There were orders made for the provision of evidence by way of witness statements. In the running of a case, one knows that sometimes witness statements are supplemented by questions in-chief, depending on what they are, and of course there is cross-examination, and of course, as counsel at the Bar table well know, at the end of a case it is not uncommon, and indeed even on appeal, for pleadings to be amended to be brought in line with the evidence as it unfolded, but it is not the other way around.
We are not going to have a position where there are amendments made and then further evidence permitted, clearly matters not contemplated by the earlier orders made which required the parties to address the case (and the evidence) on the basis of the pleadings.
Given this is an ex tempore judgement I might not have been clear on a few points, but I did want to sufficiently inform the parties of the view that I have taken and I will revise the judgment in due course. Subject to anything that counsel may say, I would be inclined to make the following orders on the application to amend:
(1)The plaintiff has leave to amend its further amended statement of claim by adding particulars to paragraph 38 in the form handed to the court on 16 August 2010.
(2)The application to amend the further amended statement of claim in the manner identified on 16 August 2010 is otherwise adjourned sine die.
I pause to say that I am not dismissing the application at this stage but I am not agreeing to the amendments for the reasons given. At a suitable stage, if the plaintiff wishes to revisit the amendments, and provided there is no new evidence, consideration will be given to amending the further amended statement of claim.
I do propose, given the judgment and the observations that I make, and the fact that I am not in a position to definitively rule out the amendments, I would be inclined at this stage to make an order 3, that the defendant’s costs of the application to amend be reserved, but I will hear the parties on costs after I have dealt with the security for costs application.
It goes without saying that the costs thrown away by reason of the amendment that has been permitted, that is, the particulars to paragraph 38, will be covered by the rules.
Security for costs
On 10 October 2008 Master Daly made orders providing for security for costs in the sum of $102,800. Although the estimates given included an eight day trial, security was given for a much lesser amount and liberty to apply was reserved. The application seems to have been predicated on the basis that security was to be until the trial, or the first day of the trial, it is not entirely clear.
However, submissions filed by counsel for the defendant being Exhibit ADM 5 to the affidavit of Antonio Dominico Mazzone sworn 11 August does refer in paragraph 18 to the defendant contemplating that:
“If necessary, a further application could be made to the trial judge with respect to the costs of the trial”.
In Mr Mazzone’s affidavit sworn 11 August, in paragraph 15 Mr Mazzone refers to the application before Master Daly, as she then was, saying this:
“The application sought security for costs up to and including the first day of trial”.
Liberty to apply was reserved and although estimates were given for the duration of the trial, I am prepared to find at this stage that what the parties contemplated and the basis of the limited security of $102,800 was until the first day of the trial.
On 14 August 2009 Efthim AsJ accepted an undertaking secured by an amount of $200,000, and that was expressed to be until trial. The order is Exhibit ADM 7 to the affidavit of Antonio Dominico Mazzone, sworn 11 August and the order in “Other matters” does refer to the following:
“’The plaintiff has not satisfied the court’ – the plaintiff being Takapana Investments Pty Ltd – ‘has not satisfied the court that it has the means to support the undertaking. It is the trustee of a discretionary trust with a paid up capital of $3’.”
In those circumstances, after referring to that company as the possible beneficiary of any favourable award after trial, it was held that the company should be required to indemnify or provide an undertaking as to adverse costs orders if the litigation is unsuccessful.
In those circumstances, undertakings were given and orders were made, including the provision of the sum of $200,000 to support the undertaking. Although the undertaking, as Mr Sandbach points out, was to indemnify the State of Victoria in respect of all costs including the trial, what was uppermost in the mind of Efthim AsJ clearly was that there be adequate security and support for the indemnification. Again, the framework of the application before Efthim AsJ was until trial and reference can be made to Exhibit ADM 4 to Mr Mazzone’s affidavit of 11 August which exhibits an affidavit which he swore on 6 August 2009 in support of the application before Efthim AsJ. In paragraph 7 of that affidavit sworn on 6 August 2009, the following appears:
“Accordingly, the security order covers only the costs incurred by the SoV in the main proceeding from 6 August 2008. Apart form those costs (which are the subject of the security order) I conservatively estimate the SoV’s party/party costs pursuant to the Supreme Court scale from the commencement of the proceeding until trial to be in the vicinity of $150,000 to $200,000 including disbursements. (Costs not subject to the security order).”
The estimate of $150,000 to $200,000 was clearly up until trial and after taking into account the order of Master Daly, as Her Honour then was. Accordingly, it seems clear that reading the orders together, the order of Master Daly and Efthim AsJ, the defendant has made application for security for costs in effect up to the first day of trial and I would not revisit the amount ordered merely because the actual costs incurred (assessed as between party and party) have exceeded the amount of security. However, this was not pressed by the defendant, with respect sensibly, and all the defendant seeks is security for the costs of the trial, including the first day of the trial, and wasted costs and other costs set out in the submissions provided by the defendant.
In my opinion there is no bar to any further application by the defendant for costs that will be incurred in the conduct of the trial. Although the defendant may be criticised for the lateness of the application, such is the nature of these applications when costs orders have been made, until trial or until the first day of the trial. It is always preferable to give lots of notice informing the other side that an application will be made to top up the security to deal with the trial costs, but often this is not done.
In my opinion, the request should have been made before 4 August, but it was not and we have to deal with that matter accordingly, but it does not shut out the defendant from making a further application. The costs consultant retained by the defendant has estimated the costs of the trial, and that appears in Exhibit MMV 5 to the affidavit of Margaret Mary Vine sworn 9 August 2010.
Dealing with the costs of the trial, page 3, item 4 of the exhibit deals with the actual costs of the trial per day and deals with the first day only. Item 5 deals with the costs of the subsequent days of the trial up to 10 days and concludes with a figure of $63,684.66. Item 6 deals with judgment and item 7 deals with costs recovery.
I am not prepared to order any security for the costs of the first day of the trial on the basis that at least the very first order of Master Daly appears to have been up to and including the first day of the trial. I am prepared to order security for the costs of the subsequent days as identified in item 5 being the figure of $63,684, which I will round up to $63,685. I am not prepared to award any security for costs in relation to items 6 or 7 dealing with judgment or costs recovery and I am not prepared at this stage to deal with any further security in respect of the other matters identified by the defendant namely any costs that may have been wasted as a result of these two applications or the need to get any further expert evidence given the view that I have taken in relation to excluding the purported expert witness statement of Mr Warr.
So in the circumstances, on the plaintiff’s summons filed 10 August 2010 I propose to order that on or before 25 August 2010, the plaintiff give further security for the costs of the defendant in the sum of $63,685, such security to be provided in a manner and form as is satisfactory to Mahony AsJ. I will order that, subject to argument of the parties, costs of the application are to be costs in the proceeding, given the lateness of the application and the, with respect, sensible approach taken this morning to reduce the requested security to cover only the costs of the trial.
I am not prepared at this stage to make any order staying the proceeding if the security is not provided. We will deal with that if and when the matter arises. So the only two orders I would be prepared to make is the provision of security in the sum identified by 25 August and the costs of the application to be costs in the proceeding.
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