M and G Hoschke Pty Ltd v Cairns Sim Trans Pty Ltd

[2016] FCCA 3191

FEDERAL CIRCUIT COURT OF AUSTRALIA

M & G HOSCHKE PTY LTD v CAIRNS SIM TRANS PTY LTD [2016] FCCA 3191

Catchwords:
PRACTICE & PROCEDURE – Application to amend statement of claim – whether the plaintiff requires leave of the Court to amend – whether there is prejudice to the defendant to allow the amendment – relevant considerations – amendment allowed in part.

Legislation:

Federal Circuit Court of Australia Act 1999 (Cth), s.43
Federal Circuit Court Rules 2001 (Cth), rr.1.03(1), 7.01
Federal Court Rules 2001 (Cth), rr.16.12, 16.32, 16.51(1), 26.12

Cases cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Packer v Meagher [1984] 3 NSWLR 486

Plaintiff: M & G HOSCHKE PTY LTD (ACN 058 917 623)

Defendant: CAIRNS SIMS TRANS PTY LTD (ACN 044 055 667) T/AS CAIRNS SIM TRANS

File Number: SYG 52 of 2016

Judgment of: Judge Smith

Hearing date: 7 December 2016

Date of Last Submission: 7 December 2016

Delivered at: Sydney

Delivered on: 9 December 2016

REPRESENTATION

Counsel for the Plaintiff: Mr Q A Rares

Solicitors for the Plaintiff: Aus Ship Lawyers

Counsel for the Defendant: Mr M L Rose

Solicitors for the Defendant: HWL Ebsworth Lawyers

ORDERS

1. The plaintiff have leave to file the amended statement of claim in the form annexed and marked “A” to the affidavit of Drew James Scott sworn on 12 November 2016 except for those amendments in the following paragraphs: [20], [22], [22A], [24], [25], [26], [27] and [28].

2. The plaintiff pay the defendant’s costs of the application in a case filed on 14 November 2016.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 52 of 2016

M & G HOSCHKE PTY LTD (ACN 058 917 623)

Plaintiff

And

CAIRNS SIMS PTY LTD (ACN 044 055 667)
T/AS CAIRNS SIM TRANS

Defendant

REASONS FOR JUDGMENT

1. The plaintiff was the owner of a Class 3B fishing vessel, the South Passage, when her gear box failed while the vessel was prawn fishing in the Gulf of Carpentaria in May 2014. The vessel was towed to Karumba, on the north-west coast of Queensland and the defendant was engaged to remove the damaged gearbox and to insert a replacement gearbox.

2. The defendant removed the damaged gearbox and replaced it with a gearbox that had been sourced by the plaintiff. The plaintiff claims that, on 20 July 2014, the vessel left Karumba for sea trials and water was discovered leaking from the stern tube gland follower. The stern tube encases the propeller shaft which transfers power from a vessel’s main engine to the propeller. The gland follower is intended to prevent the ingress of water and the egress of the oil lubricating the shaft.

3. On 30 July 2014 the vessel was hauled out of the water in Cairns. The plaintiff claims that an investigation of the ship revealed that the gearbox and its related parts had sustained damage. The plaintiff commenced proceedings against the defendant in January 2016 claiming that its installation of the replacement gear box into the vessel was not performed with due skill and care and, as a result, the plaintiff suffered loss and damage.

4. The plaintiff now wishes to amend its statement of claim to contend that both the removal of the damaged gear box and the installation of the replacement gear box were not performed by the defendant with due skill and care. It argues that it does not require leave to make this amendment and, in the alternative, if leave is required, it ought to be granted as it would be open to commence fresh proceedings raising the claim. The plaintiff argues in any event there is no prejudice to the defendant and the expansion of the issues will allow the Court to get to the truth of what caused the damage to the South Passage.

5. The defendant opposes the application. It argued that leave was required and should be refused on three bases;

   i)  the plaintiff gave no satisfactory explanation for the lateness of the amendment;

   ii) the amendment would necessitate significant further work, delay and expense; and

   iii)    costs would not overcome the prejudice to it.

First issue: is leave required to amend the statement of claim?

1. Rule 7.01(1) of the Federal Circuit Court Rules 2001 (Cth) (“FCCR”) provides for amendments to documents “[a]t any stage in a proceeding.” On the other hand, r.16.51(1) of the Federal Court Rules 2001 (Cth) (“FCR”) allows a party to “amend a pleading once, at any time before the pleadings close, without the leave of the Court”.

2. The plaintiff argues that the FCCR are insufficient and, by operation of s.43 of the Federal Circuit Court of Australia Act 1999 (Cth), the FCR apply. Here, the pleadings were not closed at the time the plaintiff sought to amend its statement of claim because the Court had granted leave to the defendant to amend its defence and that amendment had not yet been made.

3. I do not accept that the FCCR are “insufficient” within the meaning of s.43 of the Act. There is an express provision for amendment of pleadings and other documents. The fact that there are other provisions in the FCR does not mean that the FCCR provisions are insufficient. In any event, I do not accept that the pleadings were not closed within the meaning of the FCR. Rule 16.12 of the FCR provides:

   (1)As between an applicant and a respondent, the pleadings close at the end of the latest of the times fixed by these Rules for filing a defence or reply, or other pleading between those parties.

4. In my view, this rule means that that pleadings close at the time fixed for filing of defence or reply (or other pleading) regardless of whether those documents are in fact filed. That is consistent with the different roles that the close of pleading plays in the FCR (see, for example, r.26.12 of the FCR) and with the construction placed on cognate provisions in other courts: see for example Packer v Meagher [1984] 3 NSWLR 486 at 490 (Hunt J). A defence must be filed within 28 days after service of the statement of claim: r.16.32 of the FCR. That time has passed in early 2016 in these proceedings and so, when the plaintiff sought to amend its statement of claim in October 2016, it no longer had the option of making the amendment without leave.

Second issue: should the plaintiff be given leave to amend its statement of claim?

1. The power of the Court under r.7.01 of the FCCR must be exercised in accordance with objects set out in r.1.03(1) of the FCCR, namely, to assist the just, efficient and economical resolution of proceedings. This fact imports the objectives of case management into the exercise of the power to amend: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 213 [98]; [2009] HCA 27 (“Aon”). As the plurality said there, a “just resolution of proceedings remains the paramount purpose” of the Rules, but, they continued:

   [98]… what is a “just resolution” is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.

2. Thus, while it is true that the power to amend may be used to avoid the multiplicity of proceedings, the exercise of that power requires consideration of other matters. Such considerations include the nature of the amendment sought, the degree of delay that it will entail and the other prejudice that might flow to the other parties, the court and other litigants.

3. The first point to be made is that, apart from the question of amendment, these proceedings are ready for hearing. There has been discovery and the issue of subpoenas, expert witnesses have been identified and reports prepared. In those circumstances, the matter could be listed for hearing in early May 2017.

4. The evidence of the solicitor for the defendant, which was not challenged, is that the amendment will require further investigations and a further expert’s report. This work is estimated to require between 2 and 3 months to complete. Of course, it is likely that the plaintiff will want an opportunity to respond to any further evidence put forward by the defendant. My best estimate is that the matter would not be ready for hearing until May 2017. With the current state of matters in my docket, it is possible that the matter would not then be able to be heard until the end of 2017. That is a considerable delay.

5. The next point is that, generally speaking, “where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for”: Aon at [103].

6. Here, counsel for the plaintiff explained that, at the time of drafting the statement of claim, the plaintiff had been informed by its expert in words to the following effect that “during the installation of the gearbox on 19 July 2014 the thrust ring was installed incorrectly … the propeller shaft was incorrectly positioned … the propeller shaft [was] positioned too far aft …”. However, counsel submitted, it “is now understood by the plaintiff, after receiving further expert advice from its expert, that the removal segment of the installation works also caused part of the damage the subject of the present complaint.” There is no evidence to support that submission or to explain why it took the expert so long to change his view. As the defendant submitted, the only development that could explain this change was the service of the defendant’s expert report on liability.

7. In my view, the combination of the further delay and expense that will be required by the proposed amendment, and the lack of any reasonable explanation for the delay in seeking the amendment, outweighs the interests of the plaintiff in being able to prosecute its claim that the defendant caused damage to the shaft in the process of removing the damaged gearbox.

8. In arriving at that view I have taken into account the plaintiff’s submission that this case is far removed from the facts of Aon: the hearing has not commenced and there was no tactical decision taken not to bring the claim earlier. The facts of that case were, one would hope, unusual. That does not mean that amendments ought only to be refused in unusual cases.

9. I have also assumed, for the purposes of my decision, that the amendments sought were reasonably arguable and based on evidence that reasonably supports the facts pleaded.

10. The application to amend the statement of claim to include a claim that the defendant failed to exercise due care and skill in removing the damaged gearbox is dismissed. However, the defendant did not oppose a number of other amendments sought to be made to the statement of claim. For that reason, the plaintiff will be given leave to file an amended statement in the form annexed and marked “A” to the affidavit of Drew Scott James sworn on 12 November 2016 except for those amendments contained in paragraphs [20], [22], [22A], [24], [25], [26], [27] and [28].The plaintiff is to pay the defendant’s costs of the application.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Smith

Date: 9 December 2016