Keene v SJ Weir Pty Ltd - [2017] SASC 59

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
KEENE v SJ WEIR PTY LTD & ANOR
[2017] SASC 59
Judgment of The Honourable Justice Kelly
20 April 2017
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - IN GENERAL - FAILURE TO EXERCISE DISCRETION
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT - WHERE FINDINGS BASED ON DOCUMENTARY EVIDENCE
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - OTHER MATTERS
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - GENERAL
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS
Appeal from a decision of a Master on 28 October 2016 refusing an application by the appellant, Gregory Charles Reeves Keene, to file an amended third party statement of claim. The appellant complains that the Master erred in the exercise of her discretion in refusing the application.
The action arises out of a building dispute between the appellant and the first respondent, SJ Weir Pty Ltd, after Weir built a house for the appellant in the mid-2000s. In 2009, following completion of the house, Weir commenced a claim for damages from the appellant for breach of contract. The appellant denied the claim and filed a counterclaim against Weir for damages for defective work. The appellant also commenced a third party claim for damages against the second respondent, Tridente Architects Pty Ltd, for breach of contract in the eventuality that the appellant is found to be liable to Weir. Tridente then cross-claimed against the appellant for unpaid fees owing to Tridente.
The appellant appeals in relation to the refusal by the Master to allow three distinct proposed amendments he seeks to make to the third party statement of claim, described respectively as the stone tiles defect (ground 3.2), the linished steel defect (ground 3.3) and the glass balustrade defect (ground 3.4).
Held partially allowing the appeal:
1.       The appellant has not demonstrated any error in the exercise of the discretion with respect to the stone tiles defect or the linished steel defect.
2.       As to ground 3.4 permission is granted to the appellant to amend the third party statement of claim in relation to the glass balustrade defect.
3.       The appeal in respect of all other grounds is dismissed.
House v The King (1936) 55 CLR 499; Channel Seven Adelaide Pty Ltd v Manock (2010) 273 LSJS 70, applied.

KEENE v SJ WEIR PTY LTD & ANOR
[2017] SASC 59
Appeal from a Master
KELLY J.
Introduction

This is an appeal against the decision of a Master on 28 October 2016 refusing an application by the appellant, Gregory Charles Reeves Keene (Keene), to file an amended third party statement of claim.
Keene contends that the Master erred in the exercise of her discretion in refusing permission for him to amend his third party statement of claim. Three matters are at issue on this appeal: the pleadings with respect to the linished steel defect; the stone tiles defect and the glass balustrade defect.
The decision being a discretionary one, the appeal must be decided in accordance with the principles in House v R.[1]
[1] (1936) 55 CLR 499.
Background
The action arises out of a building dispute between SJ Weir Pty Ltd (Weir), a builder and the first respondent in these proceedings, and Keene, the owner, after Weir entered into a contract to build a house for Keene in 2005. Practical completion of the construction of the house was deemed to have been achieved in April 2008. Following completion Weir commenced a claim for damages from Keene for breach of contract. Keene denied the claim and filed a counterclaim against Weir claiming damages for, amongst other things, defective work (the counterclaim). Keene also commenced a third party claim against the architect engaged by him, Tridente Architects Pty Ltd (Tridente), the second respondent in these proceedings, claiming damages against Tridente for breach of contract in the eventuality that Keene is found to be liable to Weir. Tridente then cross‑claimed against Keene for unpaid fees owing to Tridente (the third party cross-action).
In order to understand what led to the application by Keene and its subsequent refusal by the Master on 28 October 2016, it is necessary to refer to some aspects of the procedural history of this matter.
Procedural History
The primary claim was commenced by Weir on 9 December 2009. On 22 June 2010 Weir filed an amended statement of claim and on 18 December 2015 Keene filed a second defence to the claim. Keene filed a second counterclaim against Weir on 16 December 2013 followed by Weir’s second defence to the counterclaim on 18 December 2013.
In the third party claim Keene filed a second statement of claim on 12 July 2013 and Tridente filed a defence to the second statement of claim on 14 February 2014.
More than 12 months prior to the filing of the application by Keene to file a third statement of third party claim against Tridente the pleadings in the action had closed, disclosure had been made by all parties and a mediation took place without resolution of the issues.
Keene then sought to amend the third party statement of claim in respect of three matters described respectively as the stone tiles defect, the linished steel defect, and the glass balustrade defect.
The Master considered the application in respect of each defect individually. In doing so, she traversed the procedural history in relation to each proposed amendment, having identified the matters relevant to the exercise of her discretion by reference to the observations of Bleby J in Channel Seven Adelaide Pty Ltd v Manock.[2]
[2] (2010) 273 LSJS 70.
Ultimately the Master concluded in respect of each proposed amendment that it was now too late, there had been no adequate explanation for the delay, the proposed amendments were based on matters known to Keene for many years, and each and every one of the amendments would have significant consequences in terms of further delay and cost. Her Honour then refused the application.
At the outset I record that one of the matters relied on by Keene to justify making such a late application was said to be Weir’s proposed application to amend its defence to Keene’s counterclaim and the Scott Schedule allegedly in light of the receipt of two expert reports in early 2016. As at the date of the hearing before the Master the necessary documents had not been filed, but it is obvious from the Master’s reasons and the transcript that all parties were aware of them.
There is an air of unreality in this Court now being asked to adjudicate upon the correctness of a decision upon an application which logically should have been determined either after, or at the very least at the same time as, Weir’s application to amend its pleadings. It is unsatisfactory to say the least that the parties elected to pursue this application before the Master in the full knowledge that Weir’s application to amend was about to follow. In my view this should never have been permitted to happen. The potential conundrum acknowledged by both parties before me could have been avoided had any of the relevant parties taken the necessary step to ensure that the applications were heard together or proceeded in a logical fashion.
Nevertheless, I have reached the conclusion that with the exception of the third proposed amendment (the glass balustrade defect) the appeal should be dismissed. It will now be for the parties to take whatever action they may be advised to take consequent upon any determination adverse to either party in respect of this or the subsequent application, which I was informed had been argued before the Master on the day before the appeal in this Court proceeded.
My reasons for dismissing this appeal follow.
Discussion
The stone tiles defect
In support of this proposed amendment Keene submitted that two expert reports of Mr Mann and Mr Jankovic, dated 28 February 2016 and 4 April 2016 respectively, raised for the first time an issue as to the suitability of the tiles as opposed to the treatments necessary to seal them.
Keene identified what he maintains are three new issues which arise out of those two reports and which justify the proposed amendment to the third party statement of claim. First, the choice of limestone tiles was an inappropriate choice for the wet areas and the specification of the specific tiles used was inappropriate because of their composition; second, that the sealing of the stone tiles may have caused the salt attack; and third, that the unbonded screed used should not have been greater than 40 millimetres thick. Counsel for Keene submitted that prior to the Mann and Jankovic reports in early 2016 the suitability of the tiles as such had never been in issue. Counsel submitted that the Master’s misunderstanding of the pleadings insofar as they concern this defect and her mischaracterisation of the defect in her reasons caused the discretion to miscarry.
In my view it is Keene who has mischaracterised the pleadings, not the Master.
In the first place her Honour correctly observed that although the particulars in the pleading asserting that Tridente was responsible through its specification of the tiles and the sealer remained at a level of generality, the issues raised in the two expert reports relied on by Keene were identified many years earlier in other reports and correspondence going back to 2008.
In my view the Master correctly summarised the position in [23] of her reasons when she stated:
In summary, these reports and correspondence show that from as early as 2008, there was a dispute between SJ Weir and Tridente as to the responsibility for the stone tiles defect. The position of SJ Weir throughout has been that they used the products specified by Tridente and thus, any liability rests with Tridente (see, for example, Exhibit “SH4” page 1 and page 5 to FDN 46). Tridente’s position appears to be that there may have been issues with installation of the tiles and application of the sealer with [sic] led to the failure of the floor (see letter of 3 September 2008 to SJ Weir and email of 22 January 2009 to SJ Weir). By December 2008, Dry-Treat suggested that the tiles themselves had “such pre-existing structural problems” that could not be remedied by the application of a sealer and they would “continue to deteriorate over time” (see page 6 of Exhibit “SH4” of FDN 46). By 13 August 2012, Mr Goldfinch suggested that either the materials themselves were not suitable for the purpose, or the work was unsuitable, or a combination of the two caused the deterioration (see page 13 of Exhibit “MJH8” to FDN 45). Much, if not all of this material, was copied to Keene.
Later in her reasons her Honour identified three reports in particular: one report from Dry-Treat dated 18 December 2008 to the effect that no sealer will fix the tiles’ pre-existing structural problems and deterioration will continue, giving rise to the question of the suitability of the tiles for use in wet areas; a report from Dr Hensel dated 26 July 2012 as to the contribution of the thick screed to the failure of the flooring; and a report from Mr Goldfinch dated 13 August 2012 as to the issue of the sealer being a likely source of the salt and either the building material or the work (or both) were not suitable for the purpose.
Her Honour then carefully traversed the pleadings, noting in particular that Weir, by its original pleading, had asserted that any defect was not the fault of it but the fault of Tridente in its preparation of the specifications and design. She also noted that by his second defence Keene has maintained that the defects were caused by defective work of Weir but he did not directly address the pleading that the alleged defective works were caused by design ambiguities, errors or omissions by Tridente.
Her Honour noted that while the pleadings remained at a level of generality, nevertheless Weir has always squarely attributed liability for the defects in the stone tiles to Tridente through its specification of the tiles and sealer and did so at the outset.
Keene’s contention contained in the fifth affidavit of Matthew Hawke sworn on 23 June 2016, namely that Weir had claimed that it simply carried out work in accordance with Tridente’s specifications but did not identify any other facts on which it relied, conveniently overlooks the material in the form of correspondence, emails and reports referred to by the Master, which Keene had in his possession for many years. It is plain from those documents what Weir’s position was with respect to the stone tiles issue.
Notwithstanding the warnings contained in those reports, including the Dry‑Treat report as early as 2008 and the later reports culminating in Mr Goldfinch’s report of August 2012, Keene did nothing until 2016.
I accept Tridente’s submission that all of the “new” issues relied on by Keene in respect of this proposed amendment were clearly identified and known to Keene and his advisors no later than August 2012.
Against that background it can be seen that the two latest reports from Mr Mann and Mr Jankovic in early 2016 provide some further support for opinions previously expressed by others.
In these circumstances and contrary to Keene’s submission, the Master’s summary of the broad effect of the original pleadings did not mischaracterise those pleadings. Further, given the history of the communications between the parties, Keene should have been on notice no later than August 2012 of each of the matters in the reports of Mr Mann and Mr Jankovic which he now relies upon.
In my view, it is for these reasons that the Master’s conclusion was correct. Keene’s application was too late, there has been no adequate explanation for the delay, the application is based on matters known to Keene for many years and will most certainly have significant consequences in terms of further delay and costs by the joining of other parties.
The linished steel defect
The foundational facts relied upon by Keene to amend his pleading are found in the fifth affidavit of Mr Hawke. In that affidavit it is asserted that the Keene’s solicitors were not aware of the fact that an Ameron coating was applied to the linished steel until sometime in 2015, although later during argument Keene’s counsel conceded it was in fact in 2014. In any event, as the Master noted, Tridente made formal disclosure in April 2014. Accordingly Keene asked the Master to accept that this was sufficient reason for the delay in bringing the application to amend the pleadings.
However, that assertion is simply incorrect. An analysis of the relevant correspondence and documentation between the parties since 2006 demonstrates that Tridente and Weir were in disputation as to the method of application and the appropriateness in general of the coating to be applied to the linished steel from about 2006. Most of the disputation is documentation which Keene was either copied into or became aware of well before 2014.
As with the stone tiles defect, part of Keene’s justification for his delay in applying to amend the statement of claim is based on the fact that Weir had given notice to Keene that it too proposed to apply to amend its statement of claim and Scott Schedule to specifically plead that the Ameron coating specification was the responsibility of Tridente. Keene contends that because Weir is, for the first time, asserting that that the Ameron coating specification of “no primer” was not suitable, he ought to be allowed to amend his statement of claim to reflect the same complaint.
This submission overlooks the fact that Keene has known since 2006 that Weir maintains that it was Tridente’s responsibility by reason of the fact that Weir has only ever followed and applied the specifications of Tridente, whether in relation to the original product specified, namely Evergard, or the product subsequently used, namely Ameron.
Nevertheless Keene asserts that in her reasons the Master failed to grasp that it was for the first time in the Weston report in November 2015 that the specific reason for the failure of the linished steel coating was identified as the absence of a primer coat.
In my view, although her Honour did not descend into that detail, her conclusion that the issue is not new is correct.
Keene was copied into all of the relevant exchanges between Weir and Tridente between 2006 and 2013 in which Weir repeatedly asserted that any of the problems that arose with regard to the linished steel were attributed to Tridente’s specifications.
In this context it is significant that a letter authored by Weir to Keene himself asserted:
2.12.Insofar as the coating to the linished steel has failed it has failed by reason of the architect specification and instructions in relation to:
2.12.1.Preparation of the steel surface by mechanical linishing.
2.12.2.The specified coating product to be used.
2.12.3.The method of application specified by the architect.
2.12.4.The contractor has prepared the steel in the manner specified by the architect and applied the coating specified by the architect in the manner specified by the architect.
In my view it is plain that Keene and his advisors were aware of the precise details of the coating used and the method of its application well before the production of Mr Weston’s report in November 2015. In this context it is immaterial that the Weston report identified the absence of a primer coat as the specific problem with respect to the coating actually applied to the linished steel.
It is also inconsequential that Keene and his solicitors, in requesting a report from Mr Hart earlier in 2013, continued to labour under the misapprehension that the original product specified, namely Evergard, had been used.
In my view the original pleadings, together with the exchange of correspondence, make it crystal clear that Weir has always sheeted home responsibility for the defects in the linished steel to the nature of the product used and the method of its application.
I therefore conclude that the Master was correct in her reasoning that the proposed linished steel amendment raises no new issue in the sense contended by Keene, that it is now too late, that Keene has not provided any adequate explanation for the delay and that there would be more costs and delay if the amendment were to be allowed.
The glass balustrade
This issue can be addressed in brief. There has been a dispute about the words used in the specification by Tridente as to the glass to be installed for the glass balustrade.
The meaning of that specification was queried with a man named Mr Wombwell in late 2007. Mr Wombwell expressed the opinion that the term “clear glass” referred to float glass and that the specifications did not specify low-iron glass for the balustrade.
It is evident from correspondence that Weir and Tridente have been in dispute about this issue since late 2006 and that Keene has also been aware of this since that time. Keene’s counsel frankly conceded that there was no good reason for the delay in seeking to amend the statement of claim at this late stage.
Notwithstanding that concession, I consider that the issue of this proposed amendment can be distinguished from the previous two proposed amendments.

It is correct that the outcome of the dispute will be decided on the basis of a determination in due course as to the proper construction of the contract. It is also true, as Tridente have asserted, that until now Keene has chosen to conduct his case on the basis that full responsibility for this alleged defect lies with Weir, even after Weir made it plain before proceedings were commenced that the contract on its proper construction specified the glass which it had installed.
However it does appear that her Honour was influenced by exactly the same considerations as she outlined in respect of the proposed amendments concerning the stone tiles and linished steel defects. Although some of those factors are plainly common to the determination with respect to this pleading, a material difference is that it is difficult to understand how the proposed amendment will cause further substantial delay and expense, as this matter is essentially a legal issue and Mr Boyce will have to give evidence in any event.
Therefore I have concluded that with respect to ground 3.4 the exercise of the Master’s discretion has miscarried and I will need to make a fresh decision.
Applying the same considerations as did the Master, I have, with respect to the learned Master, reached a different conclusion about this proposed amendment. At the same time I make it clear that insofar as it has been necessary to exercise the discretion afresh in relation to the first two proposed amendments, I reach exactly the same conclusion as the Master did. It follows in my view that the appellant’s appeal insofar as grounds 3.2, 3.3 and 3.5 must be dismissed.
On the assurance of Keene that it will not lead to any further substantial delay or to the need to join any other parties, and in this sense the impact in terms of the timing and length of the trial should be minimal, then, subject to an appropriate order for costs to protect the interests of the other affected parties, I consider an order permitting the proposed amendment with regard to the glass balustrade should be made.
I will hear the parties as to the exact term of that order.