M and G Hoschke Pty Ltd v Ray Fry Investments Pty Ltd

[2016] FCCA 3190

FEDERAL CIRCUIT COURT OF AUSTRALIA

M & G HOSCHKE PTY LTD v RAY FRY INVESTMENTS PTY LTD [2016] FCCA 3190

Catchwords:
PRACTICE & PROCEDURE – Application to amend defence – whether s.31 of the Civil Liability Act 2003 (QLD) applies – whether the involvement of an additional expert would have significant time delays on the proceedings – relevant considerations in connection to the size of the claim – amendment refused.

Legislation:

Civil Liability Act 2003 (QLD), ss.28(1)(a), 30(1), 31, sch.2

Cases cited:

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 213 [98]; [2009] HCA 27
M & G Hoschke Pty Ltd v Cairns Sims [2016] FCCA 3191

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

Defendant: RAY FRY INVESTMENTS PTY LTD (ACN 010 555 549) T/AS NORSHIP MARINE

File Number: SYG 3228 of 2015

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 A Flecknoe-Brown

Solicitors for the Defendant: Williams Graham Carman

ORDERS

1. The application in a case (“application”) filed by the defendant on 17 November 2016 be dismissed.

2. The defendant pay the plaintiff’s costs of the application.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3228 of 2015

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

Plaintiff

And

RAY FRY INVESTMENTS PTY LTD (ACN 010 555 549)
T/AS NORSHIP MARINE

Defendant

REASONS FOR JUDGMENT

1. The plaintiff was at all relevant times the owner of the fishing vessel, the South Passage. The vessel’s gearbox failed and was replaced by a firm in North Queensland. However, soon after, while the vessel was at sea it was discovered that there was water 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.

2. The ship was taken to the defendant’s repair shop in Cairns where the defendant undertook work to repair the damage to the propeller shaft.

3. The agreement entered into by the plaintiff and defendant for the purposes of that work (“Agreement”) included the following terms:

   4.1    We [the defendant] warrant:

   (a)That the works described in Schedule 4 (Form SY012) to this Agreement (“the Works”) will be carried out in a proper and tradesman like manner and with reasonable care and skill.

   …

   (f)To make good any defects or omissions in the Works which become apparent within six (6) months of the Completion Date.

4. The plaintiff alleges that defects or omissions in the Works did become apparent within 6 months of the Completion date and asked the defendant to make them good under cl.4.1(f) of the Agreement. The defendant refused to do so and the plaintiff brought proceedings seeking damages for breach of cl.4.1(f). It is important to note that those damages are quantified as $35,027.32.

5. The defendant denies that its work was defective and that any defect later discovered by the plaintiff was not caused by, or contributed to, by the defendant’s work or the defendant. However, the defendant now seeks leave to amend its defence to the effect that, if there were any defects in the work it undertook on the vessel, the damage to the vessel was also caused by the breach of duty by the ship’s surveyor, Mr Graeme Normington and so, by operation of s.31 of the Civil Liability Act 2003 (Qld) (“CLA”), the defendant is only liable for a proportion of the damages suffered by the plaintiff.

6. The plaintiff argues that the proposed amendment is bound to fail because s.31 of the CLA does not apply. In simple terms, it argues that there is no apportionable claim within the meaning of s.28 of the CLA because, under the Agreement, the plaintiff released the defendant from any claim against it (including for the defendant’s negligence) for any damage to the vessel or injury or loss it suffered. I do not agree that the claim is hopeless even though, ultimately, if an amendment were allowed, the plaintiff’s argument might prevail.

7. My reasons can be briefly stated. In any proceedings involving an apportionable claim, s.31 of the CLA limits the amount in respect of which judgment may be given against a defendant who is a concurrent wrongdoer. A concurrent wrongdoer, as defined in s.30(1) of the CLA is a “person who is 1 of 2 or more persons whose acts or omissions caused, independently of each other, the loss or damage that is the subject of the claim”. An apportionable claim, is defined in sub-s.28(1)(a) of the CLA to include:

   a claim for economic loss or damage to property in an action for damages arising from a breach of a duty of care;

8. A duty is defined in sch.2 to the CLA to include a “duty of care under contract that is concurrent and coextensive with a duty of care in tort”. A duty of care is defined to mean a “duty to take reasonable care or to exercise reasonable skill (or both duties)”.

9. Mr Normington agreed with the plaintiff that, in the performance of his services, he would use reasonable care and skill.

10. The defendant’s argument is that, in light of that agreement, Mr Normington owed a duty of care that was concurrent and coextensive with a duty of care in tort. Further, the plaintiff argues that Mr Normington was a “concurrent wrongdoer” within the meaning of the CLA because he failed to observe any defect in the defendant’s work, and that failure caused the loss or damage the subject of the claim. Finally, the plaintiff’s claim was an apportionable claim even though it was, on the face of it, a claim for breach of warranty, because the claim was one “arising from” a breach of the obligation to exercise reasonable care (in cl.4.1(a) of the Agreement).

11. That argument is tenable. The words “arising from” are broad words clearly intended to capture claims that are framed in different ways. Further, on the terms of the warranty in cl.4.1(f) of the Agreement, the obligation on the defendant to make good arguably only arises if it failed to comply with its obligation to take reasonable care. Thus, at least arguably, the claim on the warranty arises from a breach of duty of care (bearing in mind the definition of that term in the CLA).

12. That said, I do not think that the amendment ought to be allowed.

13. I explained the relevant principles in a judgment handed down at the same time as this matter M & G Hoschke Pty Ltd v Cairns Sims [2016] FCCA 3191:

    [10]The power of the Court under r.7.01 of the FCCR[1] 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.

    [11]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.

    [1] Federal Circuit Court Rules 2001 (Cth).

14. There is no question that any claim involving Mr Normington will add considerable expense and delay to these proceedings. First, the proceedings are otherwise ready for hearing. Secondly, Mr Normington is the expert whose opinion is relied on by the plaintiff to establish liability against the defendant. The fact that he was involved in some way in the repair of the vessel (or, at the very least, in surveying it after completion of the repairs) suggests that the plaintiff may need to qualify another expert if the amendment is allowed (if not also join Mr Normington to the proceedings). While the defendant is quite correct to say that this is a real possibility in any event, the probability becomes much higher if the amendment is allowed. Another expert will require an additional expert report and a further expert report in reply. It will require additional time at the hearing for cross-examination. Thirdly, there will need to be further examination of the work carried out by Mr Normington and whether or not he did in fact comply with his duty of care.

15. All of that might be acceptable if it were not for the very simple problem that the claim is only for $35,027.32. Experience tells that it is very expensive to qualify experts and to obtain expert reports sufficient to rely on in court proceedings. I have little doubt that the parties have already incurred legal expenses well in excess of the value of the claim. The question is whether the Court ought to allow even further considerable expense to enable the defendant, in these proceedings, to limit its potential liability by an amount that will be far less than those further expenses. In my view, the clear answer is no.

16. I accept that the defendant has given a reasonable excuse for not having brought this defence earlier, and that the defendant may later bring proceedings against Mr Normington for contribution. I also accept that, to some extent, the plaintiff has brought Mr Normington’s potential conflict upon itself. Finally, I accept the proposition that these proceedings might have a greater importance to the defendant than the amount of the claim suggests.

17. Matters of commercial reputation are often incapable of precise quantification and, together with other commercial imperatives, are often proper bases for the defence of proceedings. However, in this case it is unlikely that the defendant’s reputation will be saved simply by the addition of a defence that someone else also did an inadequate job.

18. In spite of all those things, the costs of the amendment, having regard to the size of the claim, means that the amendment would not bring about a just resolution of the proceedings having regard to the principles explained in Aon. The application to amend is dismissed with costs.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Judge Smith

Date: 9 December 2016