Mineral Crushing Services (WA) Pty Ltd v Edna May Operations Pty Ltd - [2016] WASC 57

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MINERAL CRUSHING SERVICES (WA) PTY LTD -v- EDNA MAY OPERATIONS PTY LTD [2016] WASC 57

CORAM: MARTINO J

HEARD: 22 FEBRUARY 2016

DELIVERED : 22 FEBRUARY 2016

FILE NO/S: CIV 1958 of 2014

BETWEEN: MINERAL CRUSHING SERVICES (WA) PTY LTD
Plaintiff
AND
EDNA MAY OPERATIONS PTY LTD
Defendant

Catchwords:

Practice and procedure - Application for further discovery and for further and better particulars of defence - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 26 r 6

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff: Ms E C Hensler
Defendant: Mr G S Greer

Solicitors:

Plaintiff: Minter Ellison
Defendant: Gilbert & Tobin Lawyers

Cases referred to in judgment:

Dare v Pulham (1982) 148 CLR 658
Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218
Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60

MARTINO J: On 25 November 2015 I made directions for the filing of a foreshadowed application by the plaintiff for further discovery and particulars of the defence and a foreshadowed application by the defendant for particulars of the statement of claim. The plaintiff applies for orders for discovery and for further and better particulars of the defence. The defendant does not make any application.
In support of its application the plaintiff has filed affidavits of its director Joseph Annunziato Fondacaro sworn 18 December 2015 and its solicitor Michelle Louise Hamlyn affirmed 18 December 2015.
In response the defendant has filed an affidavit of its solicitor Guy Simon Greer affirmed 27 January 2016.
The plaintiff has responded to the affidavit of Mr Greer by a further affidavit of Joseph Annunziato Fondacaro sworn 12 February 2016.
At the time with which this action is concerned the plaintiff carried on business providing mineral processing services, including the crushing of ore. The defendant was the owner and operator of a gold mine known as Edna May.
While the terms of the contract are not agreed between the plaintiff and the defendant it is agreed that in January 2013 the plaintiff and the defendant entered into an agreement under which the plaintiff would supply mineral crushing services to the defendant. The parties also agree that the plaintiff did provide mineral crushing services to the defendant. The parties do not agree the circumstances under which the provision of those services came to an end, but they do agree that the provision of the services did come to an end in November 2013.
The plaintiff claims that the defendant breached the contract and was negligent in the provision of ore to be crushed. It claims damages for breach of contract, alternatively damages in negligence alternatively payment of a quantum meruit.

Application for further discovery

The plaintiff seeks discovery of
documents recording the instructions given to, and reports, advice and recommendations provided by, Ausdrill Limited (or any other drill blasting consultant) in relation to:
i.carrying out rock blasting; and
ii.the required ore output specifications and rock blasting patterns to be employed,
for the purpose of generating ore to be supplied to the plaintiff for crushing during the term of the contract.
The principles which I apply on the application for further discovery are those explained by Master Newnes, as his Honour then was, in Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd[1] and by Murphy JA in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd[2]:
[1] Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2005] WASC 60 [3] - [6] (Master Newnes (as his Honour then was)).
[2] Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 [3] - [8] (Murphy JA).
1.This court has, in its inherent jurisdiction, the power to order further and better discovery.
2.The court's inherent jurisdiction is exercised according to the former practice of the Court of Chancery. That practice was that an affidavit of documents by a party was conclusive as to the relevant documents in the possession, custody or power of that party unless the insufficiency of the discovery appeared from an admission in the pleadings by the party from whom discovery was sought, or from the affidavit of documents itself, or from the documents referred to in the affidavit, or from any source that constituted an admission by that party of a discoverable document, or where the party had excluded documents under a misconception of the case. Insufficiency could not be demonstrated by a contentious affidavit from the party seeking to challenge the discovery.
3.Order 26 r 6 and its predecessors were introduced to relax the Chancery rule, and to allow a challenge to discovery based on a contentious affidavit seeking discovery of particular documents, or a particular class of documents.
4.The introduction of O 26 r 6 enlarged the court's inherent jurisdiction, but that inherent jurisdiction remains.
5.Under the inherent jurisdiction, where the insufficiency of a party's discovery appears from the party's pleadings, or its affidavit of documents, or the documents referred to therein, or any source constituting an admission by that party of a discoverable document, the test is whether the court has reasonable grounds for being fairly certain that there are other relevant documents which ought to have been disclosed. That is also the test that is to be applied under O 26 r 6.
6.Under the inherent jurisdiction, it is not necessary to infer the existence of a particular document to ground an order for further and better discovery, where it appears that a party has excluded documents under a misconception of the case.
7.Although the misconception of the discovering party is relevant to the exercise of the court's inherent jurisdiction, it is also a factor which may assist in the drawing of inferences for the purposes of determining an application under O 26 r 6.
8.The matters in issue are to be determined by reference to the pleadings.
9.Every document relates to matters in question in the action which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may either directly or indirectly enable the other party to advance its own case or to damage the case of the other party.
10.There is not a strict entitlement to an order for discovery, including an order for further discovery. Moreover, amendments to the Rules, including the introduction of O 1 r 4B and O 26 r 7, emphasise the need to have regard to the timely and cost effective disposal of the action in the exercise of the discretion to order discovery.
One of the issues in the action relates to the size of the ore that was supplied by the defendant to the plaintiff to crush. While the parties do not agree as to the precise term and its meaning the parties agree that there was an express term of the contract that the defendant would supply ore to be crushed which was not larger than 700 mm in any direction.
The parties also appear to agree that the defendant did supply ore that was greater than that size. The plaintiff claims that it is entitled, as a consequence, to claim damages. The defendant contends that under the contract between them the plaintiff was entitled only to claim $240 per hour for the cost of a rock breaker.
While the defendant does appear to admit that it supplied some ore greater than 700 mm in any direction, it does not appear to admit that the oversized ore supplied was as much as the plaintiff contends or of the size that the plaintiff contends. There is no express admission of those matters in the further amended defence.
In the plaintiff's further and better particulars of its statement of claim and of its reply dated 11 December 2015 the plaintiff quotes from the defendant's request for particulars made in the defendant's letter dated 18 November 2015. Request 5 relates to the plaintiff's claim that the defendant supplied ore that was larger than 700 mm. I quote the request:
5Request
As to paragraph 21 of the ASOC, and the allegation that the defendant supplied ore to the plaintiff that exceeded 700mm in any direction and was up to 2 metres in any direction, provide particulars of:
(a)the specific shifts and dates on which the plaintiff alleges the oversize ore was provided;
(b)the time on each of those shifts when the plaintiff alleges the alleged oversize ore was provided and;
(c)the size of the alleged oversize ore for each of the times during the shifts when the plaintiff alleges oversize ore was provided by the defendant.
The references to 'the allegation that the defendant supplied ore … that exceeded 700 mm in any direction and was up to 2 metres in any direction' and to 'the alleged oversize ore' seem to me to make clear that the defendant puts in issue the extent to which it supplied oversized ore.
In his affidavit made on 18 December 2015 Mr Fondacaro deposes that the Edna May mine is an open pit mine that uses conventional drill and blast, load and haul methods. The size of the ore pieces generated using this method depends on a combination of the geology of the rock face and the blasting patterns adopted. The blasting patterns comprise the number, positioning and depth of the holes drilled into the rock face. Prior to conducting a blast on a particular rock face it is usual practice to survey the rock face, consider any output requirements, such as the size of the ore to be generated, based on the survey prepare a blasting pattern and implement the blasting pattern. The defendant engaged Ausdrill Limited to carry out blasting at the Edna May mine. By reasons of the usual practice to which he deposes Mr Fondacaro believes that the defendant has in its possession, custody or power records relating to the rock face surveys conducted, consideration of desired ore output requirements, blasting patterns proposed by Ausdrill Limited and other contractors to yield ore of the desired size and the blasting patterns actually implemented. This evidence is not contested by the defendant on this application.
In my view the plaintiff has established that the documents that it seeks are discoverable. An issue in this action is the extent to which the defendant supplied ore greater than 700 mm in any direction. Mr Fondacaro has deposed that the size of the ore generated at the mine depends on the blasting patterns adopted and that prior to conducting a blast the usual practice is to survey the rock face and prepare a blasting pattern bearing in mind the size of the ore that is sought to be generated. Nothing has been put forward by the defendant to challenge Mr Fondacaro's evidence. The defendant does not dispute that the documents sought by the plaintiff exist.
On the basis of Mr Fondacaro's affidavit I conclude that I have reasonable grounds for being fairly certain that there are documents which the defendant has not discovered which contain information which may directly or indirectly enable the plaintiff to advance its case as to the amount of ore greater than 700 mm in any direction supplied by the defendant to the plaintiff and the size of that ore.
There is not a strict entitlement to an order for further discovery. I have regard to the timely and cost effective disposal of the action in the exercise of the discretion to order the further discovery for which the plaintiff applies. I have regard to the principle of proportionality referred to in Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd.[3] The plaintiff claims that it is entitled to damages of over $2,900,000. The documents the plaintiff seeks relate to the issue to which I have referred in these reasons. It is a matter in dispute in this action. The defendant has not provided evidence that the discovery of documents will be onerous. I am satisfied that in the exercise of my discretion I should order that the defendant provides the further and better discovery which the plaintiff seeks.
[3] Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14.

Application for further and better particulars of the defence

The plaintiff seeks the following further and better particulars of the further amended defence:
a.As to paragraph 4(f) of the Amended Defence, provide particulars of the portions of the 'pdf document', or conduct of the parties, that are I said to give rise to the alleged term asserted at paragraph 7 of the Amended Defence, and how those terms are said to 'give business efficacy to the Agreement';
b.As to paragraph 9(cb), particularise how 'all of the matters pleaded at paragraphs 9(a) to (ca) are said lead to the plea at 9(cb) that the defendant was not obliged to pay the plaintiff pursuant to clause 15.1 of Part 4, General Conditions;
c.As to paragraph 11(b) of the Amended Defence, provide particulars of what the defendant means by 'sufficient ore', including by way of identification of the:
i.amount of ore by volume;
ii.specifications of the ore;
iii.date when it was delivered; and
iv.'finger' on the ROM pad to which it was delivered.
d. Those further particulars and responses which the defendant states in its Amended Defence will be given following discovery and inspection.
The defendant consents to an order that it provide the particulars and responses sought in paragraph 2(d) of the application within 21 days.
As I have said the precise terms of the contract between the plaintiff and the defendant are not agreed but it is agreed that in January 2013 the plaintiff and the defendant entered into an agreement under which the plaintiff would supply mineral crushing services to the defendant. In paragraph 4 of the further amended defence the defendant pleads:
1.In the approximate period from August 2012 to January 2013 the parties negotiated the terms of an agreement for the supply of crushing services by the plaintiff to the defendant [4(b)];
2.The agreement is partly in writing and partly implied [4(c)];
3.To the extent that the agreement is in writing it is contained in a pdf document labelled 'EMO149_Contract.pdf' and in the email chain ending with an email dated 10 January 2013 from Kent Grey of Minter Ellison on behalf of the plaintiff to Kym Seidel on behalf of the defendant [4(d)]; and
4.To the extent that a term of the agreement is implied it is implied:
i.From the contents of the pdf document pleaded in paragraph 4(d);
ii.From the conduct of the parties;
iii.In order to give business efficacy to the agreement; and
iv.Alternatively by operation of law [4(f)].
In paragraph 7 the defendant pleads that it was 'an implied term' of the agreement that:
1.The plaintiff would, in the performance of services under the agreement, exercise the degree of skill, expertise, diligence and foresight which would from time to time be expected of reasonably skilled and competent contractors or suppliers engaged in similar undertakings in the mining industry [7(a)]; and
2.The plaintiff would crush ore during the term of the agreement at a reasonable daily rate of not less than an average 2,740 tonnes, in order to meet the production target of 1 million tonnes for the 12‑month term [7(b)].
Nowhere in the further amended defence does the defendant identify what part of the pdf document nor what conduct of the parties give rise to the terms which the defendant pleads are to be implied. A party is entitled to a statement of the opponent's case that is sufficiently clear to enable that party to meet that case.[4] In my view in failing to identify the part of the document or the conduct of the parties which the defendant contends give rise to the implied terms pleaded in paragraph 7 the defendant has failed to identify its case on why those terms are to be implied sufficiently clearly to enable the plaintiff to meet that case. I conclude that the plaintiff is entitled to the particulars of paragraph 4(f) of the further amended defence that it seeks.
[4] Dare v Pulham (1982) 148 CLR 658, 664.
In paragraph 6 of the further amended statement of claim the plaintiff pleads that it:
1.performed its obligations under the agreement in accordance with the terms of the agreement; and
2.entered into and agreed to perform its obligations under the agreement on the condition that the defendant would supply a minimum of 1,000,000 tonnes ore to be crushed at the rate of $5.50 per tonne.
Paragraph 9 of the further amended defence is the defendant's response to paragraph 6 of the further amended statement of claim. It pleads that the plaintiff failed to perform its obligations under the agreement in respects that are particularised. It then pleads, in paragraph 9(cb) that:
no obligation on the defendant to pay the plaintiff arose pursuant to clause 15.1 of Part 4, General Conditions by reason of the plaintiff's failure to carry out the Services in accordance with the Agreement.
This plea is said to be a response to paragraph 6 of the further amended statement of claim, but in truth it seems to be a response to paragraphs 10 and 16 of the further amended statement of claim in which the plaintiff pleads that moneys are due by the defendant to the plaintiff. The plaintiff does not plead in paragraph 6 of the further amended statement of claim that the performance of the obligations entitled it to payment. Paragraphs 10 and 16 of the further amended statement of claim plead an entitlement to payment. In paragraphs 13 and 19 of its further amended defence, which respond to paragraphs 10 and 16 of the further amended statement of claim the defendant repeats paragraph 9 of the further amended defence.
On 11 November 2015 the defendant provided an answer to the plaintiff's request for particulars of the matters pleaded in paragraph 9(a) to (ca) of the further amended defence which lead to the conclusion pleaded in 9(cb) that the defendant was not obliged to pay the plaintiff. The particulars provided were: 'All of the matters pleaded in paragraphs 9(a) to (ca).'
To enable it to meet the defendant's case that the breaches of the agreement pleaded in paragraph 9 disentitled the plaintiff from receiving the payments pleaded in paragraphs 10 and 16 of the further amended statement of claim the plaintiff needs to know the defendant's case as to why that consequence follows. That case cannot be found in the further amended defence nor in the particulars of that defence that have been provided. In its outline of written submissions filed in response to the plaintiff's application the defendant appears to contend in, paragraphs 37 to 41 of those submissions, that on a proper construction of the clause of the agreement pleaded in paragraph 9(cb) of the further amended defence, the consequence of any breach of the agreement by the plaintiff was that the plaintiff was not entitled to any payment under the agreement. That case does not appear from the further amended defence nor from the particulars. The plaintiff is entitled to the particulars of paragraph 9(cb) of the further amended defence that it seeks.
The plaintiff filed a further amended statement of claim on 11 December 2015. It was able to do that pursuant to orders I made on 29 April 2015. Under those orders the defendant had seven days within which to make consequential amendments to its defence. It has not done so. The existing further amended defence does not respond to paragraphs added to the further amended statement of claim by the further amended statement of claim on 11 December 2015. It follows that the defendant admits those new paragraphs. However it is clear from the submissions filed for this hearing that is not the defendant's position.

In paragraph 7A of the further amended statement of claim the plaintiff pleads that at the time that the agreement was terminated the defendant had supplied the plaintiff with 652,573.20 tonnes of ore to its temporary plant prior to 13 January 2013 or to the 'A Finger' on the ROM pad designated by the defendant to the plaintiff on and from 14 January 2013.
In paragraph 7B it pleads that during the term of the agreement ore delivered by the defendant to fingers on the ROM Pad other than 'A Finger' was not available to the plaintiff.
In paragraph 8 it pleads that the 652,573.20 tonnes of ore delivered to the plaintiff by the defendant was 347,426.80 tonnes short of the ore that the defendant had agreed to provide to the plaintiff.
Paragraphs 7A and 7B of the further amended statement of claim were added by the further amended statement of claim filed on 11 December 2015. Although they are presently admitted by the defendant, counsel for the defendant today informed me that it is likely that the defendant will amend its defence to deny at least part of those paragraphs.
The defendant denies the pleading in paragraph 6 of the further amended statement of claim that the plaintiff entered into and agreed to perform its obligations under the agreement on the condition that the defendant would supply a minimum of 1,000,000 tonnes of ore to be crushed at the rate of $5.50 per tonne. However it does plead, in paragraph 5(d)(i) of the further amended defence that it guaranteed a minimum of 1 million tonnes of ore to be crushed.
In paragraph 11 of the further amended defence the defendant pleads that it delivered sufficient ore to the plaintiff for the plaintiff to crush in accordance with the guarantee pleaded in paragraph 5(d)(i) of the defence. It gives particulars of the defendant's daily supplied ore on the ROM pad which show the broken ore provided on the ROM pad by the defendant for crushing by the plaintiff for each day the agreement was in operation. However those particulars do not specify to which finger on the ROM pad that ore was delivered or how much was delivered to each location.
In the circumstances where, on the likely pleadings at trial, the defendant will not admit the plea in paragraph 7A of the further amended statement of claim that during the term of the agreement ore delivered by the defendant to fingers on the ROM Pad other than 'A Finger' was not available to the plaintiff the defendant's plea in paragraph 11 that it delivered sufficient ore and its particulars of that plea, in which it fails to specify to where the ore was delivered and the amounts of ore delivered to those places, fails to provide the plaintiff with sufficient particulars of the defendant's case to enable the plaintiff to meet that case. The plaintiff is entitled to the particulars of paragraph 11(b) of the further amended defence that it seeks.