Metroplaza P/L v Girvan NSW P/L

[1993] FCA 1052

JUDGMENT No. .... ..... /OS? 93 , ~ un...w,,. ~ J

CATCHWORDS

EVIDENCE - cross-examination - objection to question - whether question goes to issue raised in pleadings.

PRACTICE AND PROCEDURES - pleadings - proposed amendment to defence sought during hearing - new allegations of material fact - prejudice to applicant - Federal Court Rules, Order 11, rules 10, 13 and 18.

Federal Court Rules - Order 11, rules 10, 13 and 18.

METROPLAZA PTY LIMITED v GIRVAN NSW PTY LIMITED (IN LIOUIDATION). C.C. (NEW SOUTH WALES) PTY LIMITED (IN LIOUIDATION) formerlv known as CONCRETE CONSTRUCTIONS (NSWL PTY LIMITED. LEIGHTON CONTRACTORS PTY LIMITED. HOLLAND STOLTE PTY LIMITED. THE MASTER BUILDERS ASSOCIATION OF NSW. AUSTRALIAN FEDERATION OF CONSTRUCTION CONTRACTORS. JOHN CUNNINGHAM. MULTIPLEX CONSTRUCTIONS PTY LIMITED

SYDNEY

No. NG 5 of 1992

FOSTER J

3 AUGUST 1993

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 5 of 1992

)

GENERAL DIVISION )

BETWEEN:  METROPLAZA PTY LIMITED

Applicant

AND :  GIRVAN NSW PTY LIMITED (IN
LIQUIDATION)

First Respondent

C.C. (NEW SOUTH WALES) PTY LIMITED (IN LIQUIDATION) formerly known as CONCRETE CONSTRUCTIONS (NSW) PTY LIMITED

Second Respondent

LEIGHTON CONTRACTORS PTY

LIMITED

Third Respondent

HOLLAND STOLTE PTY LIMITED

Fourth Respondent

THE MASTER BUILDERS

ASSOCIATION OF NSW

Fifth Respondent

AUSTRALIAN FEDERATION OF

CONSTRUCTION CONTRACTORS

Sixth Respondent

JOHN CUNNINGHAM

Seventh Respondent

MULTIPLEX CONSTRUCTIONS PTY

LIMITED

Cross-Respondent

COR*:  .- ;:F.OSTER J

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HIS HONOUR:  Yesterday afternoon Mr Simpkins, counsel for the

fifth, sixth and seventh respondents, whilst cross-examining the wltness David Geoffrey May called by the applicant, asked of him the following question:

"Prior to October 1988 there was a practise, was there not, followed by Girvans of incorporating in its tender analysis and estimating an amount for a contract fee payable to the Master Builders Association?" [Transcript p 3891

That question was objected to by Mr Spender of Queen's Counsel for the applicant. The basis of the objection was that the question could not go to any issue pleaded in these proceedings. In answer to this Mr Simpkins submitted that the reason for the asking of the questlon was to elicit, if possible, evidence that the inclusion of the contract or special fee in the tender was not solely as a result of the meetings that had taken place in October 1988 between the tenderers and the associations but that there was in fact some other purpose for the inclusion of the fee.

This basis for the asking of the question was again objected to by M r Spender on the basis that no issue of that	kind had been the subject of pleading in the case.
Specifically, he submitted that in no part of the pleadings had it been alleged that the inclusion of these fees had been for any purpose other than matters arising from the meetings.
I was taken to specific paragraphs of the pleadings in the discussion which then ensued. In the upshot I expressed the view that the pleadings of the fifth, sixth and seventh respondents directed to this matter were quite inadequate to raise the matters sought to be made-by this line of questioning. I gave M r Simpkins leave to formulate any amendments which he might see flt to bring forward and reserved to Mr Spender the right to object to any such amendments.
The matter was thus left overnight. This morning Mr Simpkins produced a document which constituted an amendment which he sought leave to make to the defences of the fifth, sixth and seventh respondents. I shall mark that document "A" so that it may be readily identified. It consists of a foreshadowed amendment to paragraph 6(a) of the defence of the fifth, sixth and seventh respondents. The amendment consists of the addition of certain particulars. These particulars read as follows:-

"PARTICULARS TO PARAGRAPHS 6 f a l OF THE

DEFENCE OF THE FIFTH. SIXTH AND

SEVENTH RESPONDENTS

Clause 20.2 of the constitution of the Fifth

Respondent empowers the Council to determine fees

(exhibit "F", page 1155). Contract fees set by the Council are subject to the ability of the President to vary (exhibit "F", pages 1257, 1055-1057 and 1063). On the 25th October, 1988 the Fifth Respondent notified the First Respondent that the contract fee had been varied to $1 million in respect of the Metroplaza Project (exhibit "B", page 431). By reason of its membership of the Fifth Respondent, the First Respondent became bound to the varied contract fee upon becoming the successful tenderer."

In the body of the amendment, references are in fact made to particular documents which are included in the bundles of documents which have been marked as exhibits in these proceedings, subject to specific objections which may be taken to individual documents. I note that some of the references are to documents in respect of which the fifth, sixth and seventh respondents have in fact notified objection. I put this matter, however, to one side.

It is to be noted that the amendment is sought only in respect of paragraph 6(a) of the defence. In fact, the wording of paragraph 6(a) is to be found repeated elsewhere in the defences of the fifth, sixth and seventh respondents to the applicant's statement of claim.

I think in the circumstances it is desirable that I refer briefly to the pleadings in the matter. In doing so, I shall refer to the applicant's initiating document as its statement of claim, although it is referred to by another name

in portions of the pleading.

By paragraph 6 of the statement of claim the applicant alleges an agreement in or about October 1988 between the tenderers and the fifth, sixth and seventh respondents as to particular matters in connection with the respective proposed tenders to the applicant for the execution and completion of the applicant's project. These matters are set out in four sub-paragraphs and particulars of them are provided. These read as follows:-

"6. In or about October 1988 it was agreed by and between each of the Tenderers, and further or alternatively between each of the Tenderers and the Fifth, Sixth and Seventh Defendants, that in connection with the respective proposed tenders to the Plaintiff for the execution and completion of the Project:

(a)	the successful tenderer should pay amounts totalling $2,000,000.00 to the four remaining unsuccessful tenderers at the rate of $500,000.00 for each such unsuccessful tenderer;
(b)	the successful tenderers should pay further amounts totalling $1,000,000.00 by way of 'special fees' in amount of $500,000.00 to each of each of A.F.C.C. and M.B.A.
(c)	each Tenderer should make provision in calculation of the total tender price to be submitted by him to the Plaintiff, for the additional costs to him of making the payments referred to in sub-paragraphs (a) and (b) hereof, in the event that his tender should be successful; and
(d)	neither the fact of the said agreement, nor the matters referred to in subparagraphs (a), (b) and (c) hereof should be revealed or disclosed to the Plaintiff.

PARTICULARS

(i)   The agreement was made at meetings at the premises of A.F.C.C. at St Leonards on 18 October 1988 and on 21 October 1988, and at other times and places unknown to the Plaintiff;

(il) the persons present at the time of making the said agreement, by and between whom the same was made were:

Girvan	represented by David May.
Concrete	represented by Peter
Constructions	Wollard.
Leighton Contractors	represented by Leon Dixon.
Holland Stolte	represented by Harry Shead.
Multiplex	represented by Don Smythe.
MBA	represented by John Twyf ord and Wendy Roydhouse.
AFCC	represented by John Cunningham and Geof f Sexton.

(iii) the agreement, so far as it was express, was made orally between the persons referred to in subparagraph (ii).

(iv) inasmuch as the said agreement was implied or to be inferred, such implication is to be derived

inter alia; [ ***** 1

from the invoicing, payment and receipt of the moneys hereinafter refereed to; in addition the First Defendant, the Second Defendant, the Third Defendant and tiie Fourth Defendant mace .provision for the payments in the calculation of their tender prices: from the failure bv the Defendants to make anv ordinarv business record of so

-of the arranaement was such as to re-

e

1 - consequence of the arranaements

U a v the amounts: as to DaraaraDhs 6(dl from -failure bv the Defendants to disclose the matters referred to in DaraaraDhs 61al. (bl or

&bC) to the Plaintiff and from the fact that the

arranqements involved charaes of a kind which were not true costs of buildina the ~roiect and

(

pr could	in the te-
price.

(v) so far as the said agreement is recorded or evidenced in any writing, full particulars thereof will be provided after discovery."

The gravamen of the allegations was, of course, the allegation of an agreement between the various parties that certain steps would be taken in respect of the proposed tenders. In its defence to this aspect of the applicant's statement of claim the fifth, sixth and seventh respondents said that they admitted:

"that the Fifth Respondent in or about October 1988 required that the successful tenderer for the project pay a special fee for $1 million to the Fifth Respondent."

It is to this aspect of the defence that the fifth, sixth and seventh respondents currently wish to append the particulars that form the substance of the amendment sought.

Paragraph 10 of the statement of claim alleges the making of certain payments by the first respondent Girvan. Two of those payments are alleged to have been made to the fifth and sixth respondents. The payments are alleged to have been made pursuant to the agreement in respect of which the claim is made. The defence of the fifth, sixth and seventh respondents to these allegations in the statement of claim is as follows:

"...the Fifth, Sixth and Seventh Respondents:

(a) admit that the First Respondent paid $450,000.00 to the Fifth Respondent in respect of the Project;

(b)	admit that of that amount, $225,000.00 was paid by the Fifth Respondent to the Sixth Respondent;
(c)	deny that the amounts referred to in (a) and (b) above were paid pursuant to the alleged agreement;
(d)	otherwise do not admit the allegations therein contained."

By paragraph 23 of the statement of claim, in furtherance of general claims made that the respondents entered into a conspiracy to damage it, the applicant alleges that the respondents engaged in certain overt acts. These are set out in the sub-paragraphs of paragraph 23. Sub-paragraph (c) alleges that:

"on 25 October 1988, the Fifth Defendant (M.B.A.) directed the First, Second, Third and Fourth Defendants or certain of them, to the effect that members of the M.B.A. who enter into any contract for building works with respect to the Project were obliged to pay to M.B.A. a 'contract fee' of $1,000,000.00."

Various other allegations were made but are not necessary to set out. In paragraph 24 of the statement of claim, the allegation is made that each of the acts specified, being the overt acts to which I have made reference:

"...was done by the person or persons therein alleged by each such person or persons on behalf of himself or themselves, and on behalf of his or their CO-conspirators, in furtherance of the said conspiracy."

The fifth, sixth and seventh respondents' defence to these allegations is as follows:

"[Tlhe Fifth, Sixth and Seventh Respondents:
(a)	admit that the Fifth Respondent in or about October 1988 required that the successful tendered for the Project pay a special fee of $1 million to the Fifth Respondent;
(b)	admit that the Seventh Respondent received a commission in respect of the agreement made between the Fifth Respondent and Sixth Respondent to share such special fee;
(c)	otherwise deny the allegations therein contained." It is apparent from this brief survey of the

pleadings that, as I mentioned previously, the particular phraseology which has been adopted in paragraph 6(a) of the defence is repeated in similar circumstances in other portions of the pleading. Although the matter has not been specifically raised in argument before me this morning, I have concluded upon reading the pleadings and considering them over the adjournment that I should approach the matter on the basis that similar amendments may well be sought to the other paragraphs to supply the particulars now sought to be added in respect of paragraph 6(a) of the defence.

Mr Spender has submitted to me that the addition of the particulars, if allowed by way of amendment, would severely prejudice the applicant in these proceedings. He points to the fact that the proceedings are now in their sixth day and that no application has been made since the commencement of the proceedings, nor indeed during the quite numerous interlocutory steps and hearings that occurred prior

to the commencement of the hearing, for the making of any of

these amendments. He submits that to allow these amendments

would be to introduce into the proceedings issues which have not previously been isolated by the pleadings as they now exist.

I think I should make brief reference to the Rules
of Court which would appear to bear upon these matters.
Reference has been made to some of them in argument. Order 11

rule 10 deals with, as it says, "Matters for specific
pleading". It states as follows:

"In a pleading subsequent to a statement of claim a party shall plead specifically any matter of fact or point of law ..."

and examples are given -

"that -

(a)	he alleges makes a claim or defence of the opposite party not maintainable,
(b)	if not specifically pleaded might take the other party by surprise, or
(c)	raises issues of fact not arising on the preceding pleading."

Rule 13 of the same order deals with admissions and

traverse. It provides that:

"(1) ... an allegation of fact by a party in his pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue operates as a denial of it.

(2) A traverse may be made either by a specific

denial or by a statement of specific non-
admission."

Subject to a matter that does not concern this application:-

(3) ... every allegation of fact made in a statement of claim or counterclaim on which the party on whom it is served does not intend to admit must be specifically traversed by him in his defence or defence to counterclaim, as the case may be; and a general denial of such allegations, or a general statement of non- admission of them is not a sufficient traverse of them."

Rule 18 is perhaps also worthy of note. It

provides :

"When a party in any pleading denles an allegation of fact in the previous pleading of the opposite party, he must not do so evasively or generally, but must answer the polnt of substance, in accordance with rule 13 of this Order."

I mention these rules because to a not insignificant extent I feel that there have been breaches of them in the formulation of the pleadings which I have been considering. It may be noted, however, that the pleadings have been in existence for some time and no steps have been taken at interlocutory stages in these proceedings to take objection to the form of the pleadings. However, it is quite clear that they fall short of raising specifically matters of fact sought to be adduced in answer to the applicant's claim. They rest, for the large part, on mere denials of the alleged agreement. They certainly do not aver any matters of substance upon which the respondents seek to rely by way of answer.

The real question that I have to consider here is whether the amendment sought to be made raises a significant new matter such that to allow it to be raised would severely prejudice the appl~cant in the proceedings in the way submitted by Mr Spender. The use of the word "required" in paragraph 6(a) of the defence is the source, in my view, of problems which have arisen. In itself it is a neutral term. It says nothing whatever of the status of the request for requirement referred to. In particular, it says nothing as to the legitimacy or propriety of the requirement in the context of these proceedings.

In furtherance of submissions concerning possible prejudice should the amendment be allowed, I have been shown without objection, a portion of the findings of Mr Holland of Queen's Counsel who sat as Royal Commissioner in relation to certain aspects of the inquiry into the building industry. What I have been shown confirms a view that I have came to independently, that if an amendment was allowed which raised the question of the legitimacy of the imposition of the fees In question by the fifth respondent upon the tenderers, a whole host of collateral factual issues not only could but would arise as to which the pleadings are silent and in respect of which considerable evidentiary problems could occur.

Although the proposed amendment does not in specific

terms allege the innocence or legitimacy of the imposition of

the fees or the requirement that they be paid, there is	sufficient in the words that have been used to indicate to me
that that issue certainly is to be found there beneath the surface of the statements therein contained. I have given very anxious consideration as to whether I should permit the amendments. It is desirable, of course, that all matters in issue between parties should be raised and determined in the proceedings currently before the Court. That matter, however, cannot in all circumstances dispose of the question whether an amendment should be allowed. All other considerations in the interest of justice must be taken into account.
I have come to the conclusion quite firmly, that the pleadings as originally framed did not, in any way, shape or form, raise the issues which appear to be of the sort to be raised in the proposed amendment, and which appeared to be sought to be raised in the question which was objected to and which provided the genesis of the discussion and submissions which have been made to me in this regard.
I propose for the reasons that I have given to refuse the amendment and I do so. The document containing the proposed amendment I have marked "A" and it will be left with the papers.
I will reserve the question of costs in the circumstances, if there is to be some argument about it.

pages are a true copy of the reasons for	I certify that the preceding twelve (12)
judgment herein of the Honourable M r Justice M. L. Foster.
Associate:
Date:  3 AUGUST 1993

A P P E A R A N C E S

COUNSEL FOR THE APPLICANT:  MR J.M. SPENDER, QC

with MR D.J. HAMMERSCHLAG

INSTRUCTED BY:  ROSENBLUM & PARTNERS

COUNSEL FOR THE SECOND RESPONDENT: THE HON. T.E.F. HUGHES, QC

with MR R.E. DUBLER

INSTRUCTED BY:  CORRS CHAMBERS WESTGARTH

COUNSEL FOR THE THIRD RESPONDENT: MR J.D. HEYDON, QC

with MR C.P. C O M S

INSTRUCTED BY:  ROBIN MAXAM

COUNSEL FOR THE FOURTH RESPONDENT: MR M.R. ELLICOTT

INSTRUCTED BY:  ADDISONS

COUNSEL FOR THE FIFTH, SIXTH AND SEVENTH RESPONDENTS:

MR J.B. SIMPKINS

INSTRUCTED BY:  COLIN BIGGERS PAISLEY

COUNSEL FOR THE CROSS-RESPONDENT: MR B.W. WALKER

INSTRUCTED BY:	DUNHILL MADDEN BUTLER
DATE OF HEARING:	2, 3 AUGUST 1993
DATE OF JUDGMENT:	3 AUGUST 1993