Mercieca v SPI Electricity Pty Ltd and Ors(No 2)

[2011] VSC 656

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. S CI 2010 01978

PAUL ANTHONY MERCIECA and AMELIA JANE COOMBES	Plaintiffs
v
SPI ELECTRICITY PTY LTD (ACN 064 651 118) and OTHERS (according to the attached schedule)	Defendants
No.  S CI 2010 01497
LENA BIRTI and JOSEPH BIRTI	Plaintiffs
v
SPI ELECTRICITY PTY LTD (ACN 064 651 118) and OTHERS (according to the attached schedule)	Defendants

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JUDGE:	DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	13 DECEMBER 2011
DATE OF JUDGMENT:	19 DECEMBER 2011
CASE MAY BE CITED AS:	MERCIECA & ANOR v SPI ELECTRICITY PTY LTD & ORS(No 2)
MEDIUM NEUTRAL CITATION:	[2011] VSC 656

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Practice and Procedure – amendment of defence – withdrawal of admission – whether necessary to determine the real issues in controversy between the parties – whether prejudice to plaintiffs – Civil Procedure Act 2010 (Vic) ss 8, 9 – Supreme Court (General Civil Procedure Rules) 2005 (Vic) r 36.01.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Tobin SC with Dr K P Hanscombe SC and Ms K Bowshell of counsel for the plaintiffs in S CI 2010 01978	Nevin, Lenne & Gross, Maddens
Mr G Mellick SC of counsel for the plaintiffs in S CI 2010 01497	Moyle Legal
For the first Defendant	Mr J Beach QC with Mr D Farrands of counsel	Freehills
For the second Defendant	Mr P Riordan SC with Mr C. Winneke of counsel	McCabe Terrill
For the Third & Fourth Defendants	Mr C Caleo SC with Ms H Rofe of counsel	Norton Rose

HIS HONOUR:

1. These two proceedings arise out of the Beechworth fire on black Saturday in February 2009. On 12 September 2011, Zammit AsJ granted leave to the Secretary to the Department of Sustainability and Environment and Parks Victoria (‘the State parties’) in each of proceeding No 1978 of 2010 (‘the group proceeding’) and No 1497 of 2010 (‘the Birti proceeding’), to amend their defences to the claims of the respective plaintiffs and their defences to SPI Electricity Pty Ltd’s counterclaim.

1. The State parties expanded upon their general denial of the plaintiffs’ allegations that the fire was caused when part of a tree failed and fell on to the east-side conductor of a power line by the amendments made. The original defence denied that a tree fell on the power line. By the permitted amendment, the State parties now allege that the tree did not cause the Beechworth fire, and that it was ignited from the electric assets owned and operated by SPI.

1. By its defence, SPI admits that the southern section of the tree failed and fell onto the east-side conductor on the power line and that event led to the ignition of the Beechworth fire. SPI now applies for leave to withdraw that admission by amending its defence. By the amendment proposed, SPI will not admit either that the southern section of the tree failed or that it fell on to the east-side conductor of the power line or that those events led to the ignition of the Beechworth fire.

1. The plaintiffs in each proceeding oppose the amendment.

1. In seeking leave, SPI relied on the affidavit of Ruth Elizabeth Overington. Ms Overington was not cross-examined. Ms Overington explained why the admission was made by SPI. The Victorian Bushfires Royal Commission inquired into the cause of the ignition of the Beechworth fire, finding that a tree had fallen on to a power line on Buckland Gap Road, Beechworth. Ms Overington deposed that SPI’s defence was consistent with the finding made by the Royal Commission. Not having any eyewitnesses to the events surrounding the ignition of the fire, that finding was accepted.

1. SPI has reconsidered the admission that it has made following the amendments made by the State parties to their defence. The State parties, under trial preparation directions made on 20 June 2011, have disclosed their proposed evidence at trial.

1. The disclosures by the State parties show that they intend to call evidence at the trial from several witnesses that, if accepted, might persuade the court of facts relevant to the cause of the ignition of the fire. These witnesses will say that they were present at or near the place on Buckland Gap Road at or around the time the fire started, and observed no fallen tree or other obstruction affecting the power line. The State parties have served expert reports across a range of disciplines including arboreal sciences, electrical engineering, structural engineering, fire spread behaviour, meteorology, and surveying in support of an alternative causation theory for the ignition of the fire. Rather than the falling tree being the cause of the ignition of the fire, arcing within the electrical assets owned by SPI related to causes other than contact from a falling tree, was the cause. It is not in doubt that a tree fell. Why the tree fell has always been in issue and the parties are preparing for trial on that basis. Whether the tree hit the power line has been an issue since the State parties joined the proceeding. The new issue is when the tree fell: whether it did so before the fire started or because of the fire, may need to be resolved. The allegations of the State parties about the time of the fall redirect the inquiry into cause.

1. The theory of fire ignition to be put by the State parties is different from that put by the plaintiffs. The plaintiffs will contend that the insulators atop the power poles cracked or failed consequent upon the dynamic load on the conductor from the falling tree. The failure of the insulators freed the conductor to fall, which also increased the load on insulators. The plaintiffs’ assert that, in part, they rely on the admission of the fall of the tree in advancing this causation theory. However, the plaintiffs’ experts appear to advance their causation theory based on their examination of the site and the electricity assets that were removed from the site to the Coroner’s office by police. Plainly enough, SPI’s admission assists that causation theory, but it is by no means central to it.

1. The causation theory of the State parties attributes a different reason for the failure of the conductors. Absent dynamic load on the conductor from the tree, the failure of an insulator is said to be caused by concentrated heat that resulted from arcing. The insulator was thermally cracked. The failure of the insulator released the conductor and that event increased the dynamic load on other insulators. This theory raises the issue of why that arcing occurred if there was no contribution from the tree. The State parties postulate that a bird, a possum, or flying debris caused the initial arcing that thermally cracked the insulator.

1. This application is not the time to investigate complex matters of causation. That is the purpose of the trial.

1. The second defendant, Eagle, also seeks leave to amend its defences in a form consistent with the amendments made by the State parties.

1. The principles to be applied when considering withdrawal of an admission were summarised by Gillard J in Jeanes v Commonwealth,[1] drawing on his earlier analysis in McKenzie v Commonwealth:[2]

   [1][2005] VSC 488 (16 December 2005).

   [2][2001] VSC 361 (28 September 2001).

The general rule is that all amendments should be permitted and that includes an amendment to a defence, unless the amendment will cause prejudice to the other party which cannot be overcome in some way.

No amendment would be allowed if it raised a false issue or did not raise an arguable defence.

The issue is one of justice between the parties ensuring that the real matters in controversy are decided.

The trial is the proper place to determine all claims and defences and it is not appropriate, except in a clear case on a summary application to amend, to exhaustively investigate the facts and the law.

The burden of proof or persuasion may be crucial on an application where there are disputed facts. 

It is not the law that a defendant is not permitted to resile from an admission unless it was shown the admission was made inadvertently or through error; justice is the determinant.

It is unnecessary to show that there was some error or mistake which led to the form of the pleading and that there is a reasonable explanation for having made the admission, before a party may seek to withdraw the admission. A court usually requires some explanation for the change in approach, but the absence of same or whether it was an adequate or inadequate explanation can hardly determine the outcome of the application in the face of compelling reasons of justice.

1. The principles that apply are not controversial. An amendment to withdraw an admission is, in essence, no different to any other pleading amendment. The function of the court is to determine the real controversy between the parties. Provided the amendment is so directed, whether it be permitted depends upon whether the plaintiffs will suffer irremediable prejudice, an issue that I shall consider in due course.

1. There are two developments of note since the decision in Jeanes. In Aon Risk Services Australia Ltd v Australian National University,[3] the High Court identified the priority of doing justice between the parties while recognising the increased contemporary importance of active case management. The High Court also affirms the need to exercise a discretion on a proper basis. The factors to be weighed in exercising a discretion need to be appropriately identified in context. The plurality observed:

Generally speaking, when a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court’s attention, so that they may be weighed against the effects of any delay and the objectives of the rules.

[3][2009] 239 CLR 175.

1. This observation is apposite in relation to the exercise of the discretion to permit withdrawal of an admission by an amendment under order 36.

1. I will also take into account the overarching purpose of the Civil Procedure Act 2010 (Vic) in civil proceedings, which is to facilitate the just, efficient, timely, and cost effective resolution of the real issues in dispute. As I have earlier stated,[4] the evident tension in this statement of purpose requires the court to strike a balance between case management considerations and the dictates of a fair trial. The court cannot lose sight of the fundamental requirement that a trial must be conducted fairly and in accordance with the principles of natural justice and procedural fairness. I will take into account the direction that I seek to give effect to the overarching purpose under the Act in exercising the power to grant leave to amend a defence and, in so doing, I will have regard to the objects set out in s 9.

   [4]Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 2) [2011] VSC 518 (20 October 2011).

1. SPI does not suggest that its admission was made by error or mistake. It explains that the admission was made because of the finding published by the Royal Commission. There did not appear at the time to SPI to be any basis to assert otherwise. I accept that explanation as a reasonable basis for the admission to have been made. Ms Overington explained that SPI has now considered the evidence foreshadowed and the reports that have been served, and concluded that the State parties are able to credibly advance an alternative causation theory. I also accept that the circumstances founding SPI’s admission have changed. I was informed from the bar table that the witnesses the State parties propose to call, as to their observations on the day, did not give evidence to the Royal Commission. The position of the fallen tree that is implicated in the ignition of the fire was, and remains, a matter of considerable relevance. What remained of the tree was preserved and tested. Dendrochronologists will give evidence at trial about their investigations of the tree. It is this evidence that questions assumptions that the tree fell before the fire ignited. I was informed that these expert hypotheses were also not explored before the Royal Commission.

1. SPI and its advisers are entitled to review the assumptions that resulted in the admission. Experts for SPI have not evaluated the performance of the electricity assets on the power poles against the factual assumptions that are now postulated as findings that the court may make. Although SPI has been aware, in general terms, of the allegations of an alternative cause for the ignition of the fire, the detail for the inquiry that the Court will undertake has now emerged, and it is clear that it will be substantively different from the evidence that was made available to the Royal Commission.

1. There are issues that arise between SPI and the State parties that may require assessment of the comparative responsibility of each of them for the ignition of the fire. That process will involve a broad discretionary analysis of the matrix of causation and culpability in and about the ignition of the fire. For the plaintiffs it was contended that their real claim is against SPI alone and they have only joined the other defendants to the action as a consequence of SPI claims against them. Whatever the history of the proceeding, or perhaps the plaintiffs are yearning for the days of solidary liability for property damage arising from a failure to take reasonable care, the pleadings show that the central issue of causation affects not only the claims as between the plaintiffs and SPI. The plaintiff also sues the State parties and must meet their defence. That claim is not being withdrawn. Equally, SPI counterclaims against the State parties and it too must meet the defence raised. Whether the tree fell and hit the conductor was always in issue in the proceeding irrespective of the admission, for it was put in issue by the State parties in their original defence. That issue cannot be avoided by the submission that the plaintiffs’ real target in the proceedings is SPI. Even if I accepted that to be the case, a narrow view of the manner in which the cause of the fire  is central to the proceedings is not open.

1. Plainly, the cause of the ignition of the Beechworth fire is a critical question in these proceedings. SPI contends that it is appropriate that it has leave to withdraw its admission to facilitate determining the real question in controversy between the parties. I accept this submission. I consider that the assessment by the Court of the causation theories being advanced is not assisted by an admission based upon a prior inquiry that was conducted on different evidence. The findings of the Royal Commission may drive policy consideration by government, and serve many other valuable purposes, but can play no effective role in this proceeding. The court must determine for itself the matters that caused the ignition of the fire. The court will be best assisted in a just resolution of the dispute by an open exploration of all competing theories, unconstrained by the admission that SPI has made and which was based, it would seem, on different evidence and expert theories to that which will be presented at the trial.

1. The plaintiffs contend they will suffer irremediable prejudice if the admission is withdrawn. The admission has stood for a long time, having been made when the defence was first filed. Moreover, it is an admission on a central factual issue in the proceeding, but, as I have noted, the present utility of the admission must be evaluated in the context that other relevant evidence has emerged since the Royal Commission. The admission has been convenient for the plaintiffs. I am not persuaded that its withdrawal is more than an inconvenience and would in fact cause prejudice. No affidavit was filed on behalf of the plaintiffs in either proceeding. It was suggested that the application may have been short served, but no adjournment of it was sought. Rather, I was invited to accept submissions from counsel on the issue of prejudice.

1. Counsel for the plaintiffs in the group proceeding, whose submissions were adopted by counsel for Birti, contended that the plaintiffs would be prejudiced by not having extensively investigated alternative causes for the ignition of the fire because of the admission. Three matters were put. First, the plaintiffs will seek to identify whether there are further eye witnesses who were present at or about the time and place of the ignition of the fire. Counsel for the plaintiffs contended that the trail to any further evidence has run cold.  Second, the expert report of Dr Sweeting that has been served by the State parties must be referred to the plaintiffs’ experts, and further, different experts may be needed. It is expected that this referral will warrant further inquiries and investigations, analyses and reports. In particular, access may be required to the relevant electricity assets, notably the insulators from poles 169 and 170. Third, the plaintiffs wish to consider the implications of the alternative causation theories now being advanced by the State parties. The court was informed that this will involve reconsideration of the plaintiffs’ pleadings, following advice from its experts, and further instructions.

1. The second of those matters can readily be dealt with. Counsel for SPI indicated that, subject to the usual constraints, SPI will endeavour to facilitate access for further investigations expeditiously. It was suggested that this process may delay a conclave between the electrical engineering experts. I am not prepared to assume that this is a necessary consequence. The court expects that the parties, and their experts, will use their best endeavours to complete the trial within the existing time frame. There is no material before the court that warrants the conclusion that this objective cannot be achieved. I can see no reason why the overall objective of a trial commencing on 20 February 2012 might be thought to be threatened. Moreover, the Court will be available to assist in the event that the parties cannot find ready expression of their obligation under s 20 of the Civil Procedure Act. 

1. While I accept that the plaintiffs need an opportunity for further inquiry whether there are other eye witnesses to the events or state of affairs on black Saturday along, or beside, Buckland Gap Road, the commencement of the trial is two months away. Further, it is estimated that the court will be occupied for a further month taking factual evidence. There is ample opportunity for further inquiries to be made and the court will permit further witnesses to be notified on this issue although the time for service of witness lists and outlines has passed. There is no affidavit or other material that suggests any prejudice in conducting further inquiries arising from the admission having stood since August 2010 in respect of events in February 2009.

1. In addition, because of the response to black Saturday by the State, regulatory authorities, and the community, including the Royal Commission, there was an extensive, thorough, documented inquiry that provides a base for any further investigations. Further, it is reasonable to anticipate an enhanced awareness of the issues within the community where further witnesses to events might be identified. The physical evidence has been secured and is available. Rather than being cold, the trail to any further relevant evidence appears well trodden and sign-posted. For these reasons, I consider that the plaintiffs will not be prejudiced from being delayed in making such inquiries as they may now choose to conduct by the admission that will be withdrawn.  Such inquiries can now reasonably be made.

1. The plaintiffs have already engaged experts who can conduct any further investigations and express any further opinions that may become appropriate. In this respect, I have in contemplation the engineers and materials failure experts whose reports have been filed. The plaintiffs referred to the need for further experts from other disciplines. The example that was given was animal behaviour, in the context of speculation by an electrical engineer about the possible involvement of animals in causing the ignition of the fire. It is not entirely clear to me at this point why that is so, and I remind the parties of the observations of the plurality in Dasreef Pty Limited v Hawchar:[5]

Section 76(1) expresses the opinion rule in a way which assumes that evidence of an opinion is tendered "to prove the existence of a fact". That manner of casting the rule does not, as might be supposed, elide whatever distinction can be drawn between "opinion" and "fact" or invoke the very difficult distinction which sometimes is drawn between questions of law and questions of fact. It does not confine an expert witness to expressing opinions about matters of "fact". Rather, the opinion rule is expressed as it is in order to direct attention to why the party tendering the evidence says it is relevant. More particularly, it directs attention to the finding which the tendering party will ask the tribunal of fact to make. In considering the operation of s 79(1) it is thus necessary to identify why the evidence is relevant: why it is "evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding". That requires identification of the fact in issue that the party tendering the evidence asserts the opinion proves or assists in proving.

In any event, there is ample opportunity for the plaintiffs to obtain and serve such opinion evidence as is considered appropriate in response to the amendments to the defence. I am satisfied that the plaintiffs will not be prejudiced by the withdrawal of the admission in this respect.

[5][2011] HCA 21 (22 June 2011).

1. Consistently with what I have already said, I consider that the plaintiffs will have adequate opportunity to reconsider their pleadings following advice from experts and further instructions. This matter ought to have been under active consideration in any event, as the position of the State parties has been in the open for some time. The basis of it was exposed in the materials and argument before Zammit AsJ in September 2011, and is evident from her Honour’s reasons. It seems to me that all parties, including the plaintiffs, ought to have had the implications of acceptance of the contentions of the State parties under consideration for some time.

1. It is possible that any amendment by the plaintiffs, following the withdrawal of the admission or a careful consideration of the evidence of the State parties may flow on into consequential amendments of other pleadings. Such matters can only be considered as and when they arise. Accordingly, I require the plaintiffs to decide expeditiously whether they will seek any further pleading amendments. If further amendments are proposed, the form of such amendments should be exchanged no later than 27 January 2012.

1. For these reasons, I granted leave on 13 December 2011 for SPI to file and serve the amended defences.

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