Pentridge Village Pty Ltd (in liq) v CFMMEU
[2020] VSC 47
•18 February 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S CI 2016 02556
| PENTRIDGE VILLAGE PTY LTD (IN LIQUIDATION) (ACN 087 151 068) and ORS (according to the attached Schedule) | Plaintiffs |
| v | |
| CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION and ORS (according to the attached Schedule) | Defendants |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 September 2019 |
DATE OF JUDGMENT: | 18 February 2020 |
CASE MAY BE CITED AS: | Pentridge Village Pty Ltd (in liq) v CFMMEU |
MEDIUM NEUTRAL CITATION: | [2020] VSC 47 |
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PRACTICE AND PROCEDURE – Pleadings – Principles on striking out pleadings – Supreme Court (General Civil Procedure) Rules 2015 r 23.03 – Wheelahan v City of Casey (No 12) [2013] VSC 316 – Hoh v Frosthollow Pty Ltd [2014] VSC 77 – Vo Nguyen [2013] VSC 304 – John Holland Constructions & Engineering Pty Ltd v Kvaerner EJ Brown Pty Ltd (1996) 8 VR 681 – Whether particulars are inconsistent with orders made for their filing – Abuse of process – Rozenbilt v Vainer (2018) 262 CLR 478 – Whether there was a proper basis for the loss and damage claimed – Proper basis certification – Civil Procedure Act 2010 ss 7, 18, 42 – Pleadings struck out.
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APPEARANCES: | Counsel | Solicitors |
| For the Second and Third Plaintiffs | Mr D J Williams QC with Mr L R Howard | Howard Bear – Legal Consulting Services |
| For the First to Fourth Defendants, Sixth to Eighth Defendants | Mr J R Gurr | Gordon Legal |
TABLE OF CONTENTS
Summary.............................................................................................................................................. 1
Synopsis of Pleadings................................................................................................................... 2
Plaintiffs’ Case...................................................................................................................... 2
Defendants’ case.................................................................................................................. 3
Background.................................................................................................................................... 4
Applicable Principles on Striking out Pleading....................................................................... 5
Should the July 2019 particulars and parts of the 2FASOC be struck out on the basis that they may prejudice, embarrass or delay the fair trial of the proceeding?.................................... 9
Defendants’ submissions.................................................................................................... 9
Plaintiffs’ submissions...................................................................................................... 13
Analysis............................................................................................................................... 16
Should the July 2019 particulars be struck out as an abuse of process?............................. 25
Defendants’ submissions.................................................................................................. 25
Plaintiff’s submissions...................................................................................................... 26
Analysis............................................................................................................................... 26
Is there a proper basis for the loss and damage claimed?..................................................... 29
Defendants’ submissions.................................................................................................. 29
Plaintiffs’ submissions...................................................................................................... 31
Analysis............................................................................................................................... 32
Conclusion.................................................................................................................................... 36
HER HONOUR:
This proceeding concerns a claim for damages by a builder (the second plaintiff), developer (the first plaintiff) and its director, Mr Chiavaroli (the third plaintiff). It is alleged that the Construction, Forestry, Maritime, Mining and Energy Union (‘CFMMEU’), and named individual officers, agents, representatives and colleagues (the second – eighth defendants) caused loss and damage by making various demands. Further, that individual defendants (the second – ninth defendants) conspired to unlawfully intimidate the builder and developer. The claims relate to the Pentridge construction site, being the land in Coburg that was formerly the site of Pentridge Prison (‘Pentridge Site’).
This ruling concerns an application to strike out parts of the second further amended statement of claim (‘2FASOC’) and the plaintiff’s particulars of their cost and delay claims in respect of subcontractors (‘the July 2019 particulars’).[1]
[1]The Second Further Amended Statement of Claim was filed on 15 February 2019 (‘2FASOC’), and the particulars on 31 July 2019 (‘July 2019 particulars’).
The first plaintiff is in liquidation and the Court was informed that the liquidator did not intend to take an active part in this application.[2] Further, the fifth and ninth defendants indicated that they did not intend to take an active part in the application.[3]
[2]Email to Chambers from Mr Peter Sheppard, Director, BRI Ferrier, received on 24 September 2019.
[3]By email to Chambers from the fifth defendant, received on 25 September 2019; by copy email to Mr Sheppard from Russell Kennedy on behalf of the ninth defendant, received on 24 September 2019.
For convenience, I refer below to the first – fourth and sixth – eighth defendants as ‘the defendants’ and the second plaintiff and third plaintiff as ‘the plaintiffs’.
Summary
The following issues are in dispute.
(a) Should the July 2019 particulars and parts of the 2FASOC be struck out on the basis that they may prejudice, embarrass or delay the fair trial of the proceeding?
(b) Should the July 2019 particulars be struck out as an abuse of process?
(c) Is there a proper basis for the loss and damage claimed?
For the reasons below, I will strike out the July 2019 particulars and parts of the 2FASOC.
Synopsis of Pleadings
Plaintiffs’ Case
On 15 October 2009, a construction worker, Mr Thomas Kelly, died on the Pentridge Site. The plaintiffs say that after that, the CFMMEU[4] made a demand that its people and subcontractors must be utilised and that a CFMMEU representative must be on site (‘the CFMMEU demand’).[5] If not, the site would be subject to an unlawful picket of such magnitude that it would bankrupt the plaintiffs (‘the CFMMEU threat’).[6]
[4]During the course of this proceeding, the name of the first defendant changed from the CFMEU to the CFMMEU. For convenience, in this ruling, any reference in the pleadings to CFMEU is replaced with a reference to CFMMEU.
[5]2FASOC [12(a)].
[6]Ibid [12(b)], [13].
The plaintiffs say that from November 2009 onwards the CFMMEU required all subcontractors on the Pentridge Site enter into its enterprise agreement, or an agreement with another union with appropriate industrial coverage or provide equivalent terms and conditions to the CFMMEU enterprise agreement to their employees.[7] If subcontractors did not do so, it is alleged they were not given access to the Pentridge Site and had to cease performing work there.[8] Subcontractors who left were replaced by those who were prepared to comply with the CFMMEU demand.[9] Subcontractors were required to utilise suppliers deemed satisfactory to the CFMMEU.[10] And in October 2010, the second plaintiff entered into the CFMMEU enterprise agreement in respect of their employees performing work at the Pentridge Site.[11] These matters resulted in the imposition of pattern terms and conditions on the performance of work across the site.[12] It is alleged that this caused loss and damage.[13] It is also alleged that there was increased cost and delay due to the CFMMEU requirement to have its representatives, namely the fourth and sixth defendants, on site.[14] Further, or in the alternative, it is alleged that there was a conspiracy by individual defendants (the second – ninth defendants) to unlawfully intimidate the plaintiffs, and this caused loss and damage.[15]
[7]Ibid [18].
[8]Ibid [20].
[9]Ibid [22].
[10]Ibid [23].
[11]Ibid [27].
[12]Ibid [29]–[30].
[13]Ibid [33].
[14]Ibid [26], [32]–[33].
[15]Ibid [34]-[36], [38].
Defendants’ case
The CFMMEU says that, after Mr Kelly died, WorkSafe Victoria issued at least 31 Improvement Notices and the site was substantially shut down for a period of three months or so.[16] It says a coronial inquiry found that his death was a consequence of an unsatisfactory and pervasive culture at the Pentridge Site by which the second plaintiff permitted the existence of unnecessary risk and unsafe conditions.[17] It says that consequently the plaintiffs decided to implement additional occupational health and safety measures at the Pentridge Site, and engaged a contractor regarding this.[18] The CFMMEU says the delays on site were caused by a range of matters including: delays in financing and failure by the second plaintiff to pay subcontractors from time to time; the discovery and exhumation of the remains of prisoners, including Ned Kelly; inclement weather; poor management; the second plaintiff’s lack of sufficient experience in management of a project of the size and scope of the Pentridge Village project.[19]
[16]First Defendant’s Defence filed 30 April 2019 [11].
[17]Ibid [11(a)].
[18]Ibid [11].
[19]Ibid [17].
The CFMMEU says there was a meeting with the third plaintiff, Mr Chiavaroli. During the meeting, the death of Mr Kelly was discussed. So too the need for a suitably experienced occupational health and safety representative for the Pentridge Site. It otherwise denies the allegations concerning its alleged threat and demand.[20] Further, some of the subcontractors were in fact already parties to enterprise agreements prior to November 2009. It names 16 such subcontractors[21] and another two who had already commenced negotiations to enter into enterprise agreements prior to November 2009.[22] It denies causing subcontractors to leave the Pentridge Site and says that some left for reasons not connected to it, and particularises four such subcontractors,[23] and some who left were already parties to enterprise agreements.[24] It denies the fourth and sixth defendants caused loss and damage.[25] It denies causing restrictive pattern terms and conditions leading to increased cost and delay.[26] The conspiracy allegations are denied.[27]
[20]Ibid [12].
[21]Ibid [18].
[22]Ibid [20].
[23]Ibid [20].
[24]Ibid [22].
[25]Ibid [26], [32]. For convenience I have referred here to the first defendant’s defence. The fourth defendant and the sixth defendant each filed defences on 30 April 2019 which mirror the first defendant’s defence.
[26]First Defendant’s Defence filed 30 April 2019 [29]–[30].
[27]See for instance, the sixth defendant’s defence filed 30 April 2019 [34]-[39]. There are mirror response by other alleged conspirators named as defendants.
Background
The proceeding commenced by writ filed on 30 June 2016. At the time of this hearing, more than three years later, the proceeding had not moved beyond the point of pleadings. Consent orders made on 12 February 2019 (‘February 2019 orders’) required the second and third plaintiffs to pay almost $900,000 into Court as security for the defendants’ costs.
The 2FASOC is the third iteration of the statement of claim. In addition, three further and better particulars of claim have been filed.
This is not the first time that the defendants have brought a strike out summons. On 12 February 2019 (‘the February 2019 ruling’), I ruled that the plaintiffs should pay the costs of the defendants’ strike out summons, such costs to be taxed immediately in default of agreement. In the course of the ruling, I stated the following:[28]
14 There has been unreasonable delay by the plaintiffs. This delay is not confined to the last few months, but rather the history of the proceeding…
…
16 Unfortunately, there is likely to be a long delay before this proceeding is listed for trial. Although the plaintiffs commenced this proceeding in 2016, it has not progressed beyond the filing of the various iterations of its statements of claim…
[28]Pentridge Village Pty Ltd (in liq) v Construction, Forestry, Maritime, Mining and Energy Union (Supreme Court of Victoria, Ierodiaconou AsJ, 12 February 2019) [14], [16].
Turning to the current application. By summons filed on 9 September 2019 (‘the summons’), the defendants seek to strike out part of the 2FASOC:
Pursuant to rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2015, further or alternatively the inherent power of the Court, paragraphs 17, 19, 21, 24, 26, 28, 30, 32, 33 and 38 of the Second Further Amended Statement of Claim dated 15 February 2019 (2FASOC) be struck out on the grounds that those paragraphs may prejudice, embarrass or delay the fair trial of the proceedings.
Paragraphs 17, 19, 21, 24, 26, 28, 30 and 32 of the 2FASOC allege increased cost and delay arising from the CFMMEU’s actions, and the application of pattern enterprise agreement arrangements at the Pentridge Site.
Paragraphs 33 and 38 of the 2FASOC allege loss and damage arising from compliance with an alleged CFMMEU demand that the first and second plaintiffs utilise CFMMEU people and contractors, and employ or engage a CFMMEU representative on site.
The summons also seeks that the July 2019 particulars be struck out.
Pursuant to rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2015, further or alternatively the inherent power of the Court, the Second and Third Plaintiffs’ ‘Particulars in Relation to Subcontractors’ dated 31 July 2019 (July 2019 Particulars) be struck out on the grounds that the July 2019 Particulars:
(a) constitute an abuse of the process of the Court; further or alternatively
(b) may prejudice, embarrass or delay the fair trial of the proceeding.
Applicable Principles on Striking out Pleading
Rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 provides:
Striking out pleading
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
The following principles outlined by Dixon J in Wheelahan v City of Casey (No 12) are adopted.[29]
[29][2013] VSC 316 [25(a)-(q)] (citations omitted).
…
(a)Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
(b)the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
(c)the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
(d)as a corollary, the pleading must be presented in an intelligible form – it must not be vague or ambiguous or inconsistent. Thus a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
(e)the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;
(f)pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
(g)a pleading which contains unnecessary or irrelevant allegations may be embarrassing – for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;
(h)it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;
(i)every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
(j)the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03);
(k)particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement – namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;
(l)a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it;
(m)extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;
(n)in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;
(o)the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown; and
(p)if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.
In Hoh v Frosthollow Pty Ltd, Derham AsJ stated, after referring to the principles above:[30]
[30][2014] VSC 77 [14]–[20] (emphasis added) (citations omitted).
A number of the authorities referred to above support the proposition that a statement of claim must contain material facts, being the facts necessary for the purpose of formulating a complete cause of action, and that it is not sufficient simply to plead a conclusion drawn from unstated facts...
The material facts are those necessary for the purposes of formulating a complete cause of action… In practice it is often difficult to distinguish between a ‘material fact’ and a ‘particular’. Antecedent to that distinction however, is the definition of the level of generality at which the material facts should be pleaded. It is an ancient and established rule of pleading that the question of generality of pleading must depend upon the general subject-matter..
In Charlie Carter Pty Ltd v The Shop, Distributive and Allied Employees’ Association of Western Australia, French J (as he then was) said:
Whatever level of generality is adopted in a statement of claim it must, in my opinion, be consistent with the purpose of pleadings, namely to define the issues and thereby inform the parties in advance of the case they have to meet and so enable them to take steps to deal with it… There are certain levels of generality of pleading which, while they may bring in all facts necessary to establish a cause of action, are insufficient for the purpose of properly informing the defendant of the case it has to meet…. The sufficiency of the pleading may be judged first by reference to the necessary condition that it disclose a reasonable cause of action and secondly, by reference to the requirement for sufficient particularity that the respondents know in advance the case they have to meet.
A statement of a conclusion drawn from facts, which are not in the statement of claim may not, depending on the subject matter and nature of the claim, be an allegation of a material fact. There are cases where a conclusion is a material fact, and it will conform to the requirements of the Rules if there are sufficient facts that lead up to it, or which are given as particulars to it.
Whether it is appropriate that the conclusion is supported merely by particulars, rather than be preceded by separate allegations of the facts leading to the conclusion, depends on the case at hand. Thus, it is common, and usually unobjectionable, to plead as a conclusion that on a certain date a contract was entered into or an agreement was reached between certain identified parties and having a certain subject matter. That allegation is then supported by particulars, which may allege the contract or agreement to be, for example, partly written, partly oral and partly to be implied, setting out the facts from which each of those elements is supported, but not the evidence. This is sufficient to enable the opposite party to know what is alleged against it, to plead to the allegation, to avoid surprise and define the questions for trial: See the requirements of r.13.10(2).
As Harper J (as he then was) pointed out in Downer Connect Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd, pleadings have another important audience: the Judge or Magistrate. In most cases, the opposite party will have the assistance of some knowledge of the factual background—some knowledge, in other words, of the facts against which the pleadings can be assessed. The tribunal of fact will never be in that position. The pleadings must therefore be drawn so as to allow the impartial and uninformed reader to know what the case is about. This end cannot be achieved unless the pleadings form a coherent narrative, of material fact, with the necessary detail included as particulars. They must be drawn with a careful eye to the evidence that will necessarily be called if the case is to be made out. If the party pleading does not have that evidence, then the case ought not go to trial. Indeed, it is generally true to say that it ought not to proceed beyond the point at which the party pleading appreciates, perhaps because the very act of pleading reveals it, that there is and will remain a gap in the evidence upon which the cause of action or defence is based and without which that cause of action or defence will fail.
The power to summarily strikeout or dismiss the whole or a part of a claim under rule 23.02, on the grounds that it does not disclose a cause of action, is to be exercised with caution, especially where it appears to the Court that there is a real question to be tried. Particular caution is warranted where the objections taken are technical and the boundaries of the area of law relied upon to support the pleading are still developing. The Court will not make an order under rule 23.02 where the pleading raises a debatable point of law. The power should only be exercised where, assuming the facts pleaded are established, the claim is so manifestly hopeless that a trial will be a futility. Where a pleading is struck out under rule 23.02, the affected party will generally be given leave to amend the pleading, or where the whole pleading is struck out, to serve another pleading.
In Vo Nguyen, Derham AsJ referred to the phrase ‘prejudice, embarrass or delay’ in r 23.02, and stated:[31]
Under this Rule, the objection is to the manner of expression of the claim or defence in the indorsement of claim or pleading. That is, the indorsement or pleading does not disclose the cause of action or defence or its contents are such that it is scandalous, frivolous or vexatious, or may prejudice, embarrass or delay the fair trial of the proceeding, or is otherwise an abuse of process. Under this Rule, the defendants do not ask that the proceeding be brought to an end. They seek an order that the offending indorsement be struck out or amended, and that the plaintiff present the claim in the proper way: Brinson v Rocla Concrete Pipes Ltd.
…
Prejudice, embarrass or delay: In general, a pleading or indorsement is embarrassing when it places the opposite party in the position that he or she does not know what is alleged against him or her. Thus, a pleading which is unintelligible, or is vague or ambiguous, or is too general is embarrassing.
[31][2013] VSC 304 [31], [36] (citations omitted).
Turning now to the first issue.
Should the July 2019 particulars and parts of the 2FASOC be struck out on the basis that they may prejudice, embarrass or delay the fair trial of the proceeding?
Defendants’ submissions
The plaintiffs have failed to articulate a causal nexus between the alleged unlawful conduct and the loss and damage claimed by the plaintiffs. The 2FASOC pleads loss as a result of increased cost and delay and says that further particulars will be provided after discovery and the return of subpoenas. The subpoenas were issued and did not return documents.
The July 2019 particulars do not particularise the loss. Rather, in paragraphs 2 and 3 it is stated:
At the time the Court made that order [for particulars of cost and delay], it was intended that subpoenas would yield information which would be utilised in the preparation of particulars. The subpoenas did not yield any such information. Accordingly, the particulars which follow are the best particulars the plaintiffs are able to provide derived from other information available to them.
Precise particularisation of cost and delay is not possible until all documentation is reviewed by experts, and opinions are obtained by those experts as to the quantum of cost and delay. Further and better particulars will be provided upon the delivery of expert reports. (citations omitted)
The July 2019 particulars make a global total cost claim instead. They do this in Part A by providing the ‘actual’ costs compared to the approved quantum (the ‘estimate’). The plaintiffs then claim that the difference between the two is their loss. This is said to be approximately $16.5 million. It is effectively asserted in the July 2019 particulars that all of the extra costs are caused by the defendants and there was no other cause. They say the plaintiffs effectively say ‘these are all our losses and you work out which is caused by you’.
Conventional pleading practice requires the plaintiff to articulate the express causal link between each breach and each item of loss and damage claimed. The pleading of composite loss is only permitted where it would be impractical to disentangle the loss and where that has not been caused by delay or other conduct by the claimant. The onus of proving that impracticality rests upon the claimant. A total costs claim places a burden on the defendant. In a specialist list such as this, it is for the judge to explore whether the plaintiff is causing a ‘snowstorm’. The pleading is deficient if it ‘rolls up’ a large number of contraventions as giving rise to a large number of consequences.
There are a number of examples relating to the breadth of loss claimed that highlight deficiencies. The July 2019 particulars plead that the CFMMEU is now responsible for cost overruns on the project which may have commenced in February 2008 – some 18 months before they first arrived on site (and now more than 11 years ago).
The July 2019 particulars purport to put in issue the conduct of the entire project and the causes of any delay and cost overruns for a period of four years. They have not said when the project would have been completed. This is enormously prejudicial and the prejudice is magnified by the ongoing delays of the plaintiffs in prosecuting the proceeding.
The case put in oral submissions is different from that pleaded. It is now put that the loss is from July 2010 and that it flows from the imposition of pattern bargaining. There is a tension between verbal submissions and the pleading. It is submitted that loss flows from July 2010, but in paragraph 16 of 2FASOC it is alleged that the CFMMEU required certain things to be done from November 2009, and it is pleaded in paragraph 17 that because of that, there was loss, cost and delay. In paragraph 18 it is pleaded that from November 2009, the CFMMEU required subcontractors to do certain things. The allegation of pattern bargaining in paragraph 29 is ‘from November 2009’ and that is said to cause delay and increased costs. The loss and damage pleaded is said to be from November 2009.[32]
[32]See for instance 2FASOC [18]–[19].
Further, the pleadings and particulars are inconsistent. Part A of the July 2019 particulars indicates some costs decreased,[33] which is inconsistent with the 2FASOC which alleges that there was pattern terms and conditions across the site, and an increase in costs.
[33]Table A of the July 2019 particulars states that variance between ‘estimated’ and ‘actual’ costs in respect of subcontractors.
It is not enough to prove you suffered loss on a particular site because the plaintiffs are claiming costs and delay and holding across the whole project. Sometimes they say that but mostly there are said to be delays on individual lots. So if a 20-day delay is suffered on site 6 in 2010 as alleged in the July 2019 particulars, unless that results in the overall project being delayed, then there is no increase of overall costs. Further, there is no ‘start’ point to calculate the loss as it is not pleaded when the whole project would have finished.
There are further examples which demonstrate the failure to articulate the causal nexus between conduct and loss.
Firstly, the period of interest claimed. The plaintiffs are trying to make the CFMMEU responsible for interest prior to them being on site.
Secondly, it is pleaded that the sixth defendant, was required by the CFMMEU to be engaged on the Pentridge Site as its representative from December 2009 until October 2010. Yet it is pleaded that the CFMMEU required the fourth defendant, to replace the sixth defendant as its Pentridge Site representative from October 2009 until October 2010.[34] It is then alleged the conduct of each caused the same loss and delay. It is illogical and implausible to plead that the sixth defendant both engaged in certain conduct and was replaced during his time there, and that both he and the fourth defendant are responsible for the same global loss.
[34] 2FASOC [25], [31].
Thirdly, the global total loss in the particulars proceeds on the necessary assumption that the defendants’ wrongful conduct is the only material cause of the plaintiffs’ loss. That is antithetical to the cost and delay claims in the 2FASOC and the plaintiffs’ particulars filed on 17 September 2018 (‘September 2018 particulars’). The September 2018 particulars say the loss and delay is “multifactorial”. For instance, they say that there were delays after October 2010 because of the weather. If there were multifactorial reasons for the delay, then the claim cannot be advanced on a global total loss basis.
Fourthly, the July 2019 particulars do not grapple with the fundamental question of why it is said the costs with individual subcontractors increased, and what conduct caused the alleged increase. The July 2019 particulars expand the number of subcontractors initially particularised from 76 to 348, that is, an additional 272 subcontractors. The dates and works are not identified. Subcontractor quotes are not identified. Only payments allegedly made to the subcontractors are identified. There is no comparison between the quoted, or planned costs, compared with the overall actual costs. The reason for the increase (or decrease) in costs is not stated. Nor are the particular subcontractors who were allegedly required by the CFMMEU to enter into the enterprise agreement identified.
In response to the plaintiffs’ submission that all suppliers and subcontractors put up their rates, the defendants query why the plaintiffs have particularised suppliers such as AGL Sales Pty Ltd and St Johns Ambulance Australia unless they put up their rates as a consequence of the defendants’ alleged conduct. They wish to know who allegedly put up their rates. The defendants have already identified 16 contractors who had already entered into enterprise agreements as at November 2009.
Further, it is alleged that some subcontractors passed on increased costs and some subcontractors caused delay.[35] These are separate and distinct consequences. They are quintessentially factual questions. The plaintiffs have not identified which subcontractors increased costs and what works were delayed and for how long.
[35]See, for instance 2FASOC [19]; September 2019 particulars [27]–[29].
The global total cost claim is likely to prejudice, embarrass or delay the fair trial of the proceeding and should be struck out.
Plaintiffs’ submissions
The defendants know the plaintiffs’ case. The causal link between liability and loss is pleaded in the 2FASOC. There are two torts pleaded and only one wrong is alleged for each tort pleaded. They do not allege a series of breaches. They say that the wrong is alleged in paragraph 12 of the 2FASOC, namely the CFMMEU demand coupled with a threat. Everything flows from the threat. The making of the threat and demand is a singular wrong. There is a singular path from the threat and demand to the loss. This may be distinguished from John Holland Constructions & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (‘John Holland’)[36] (discussed below) where there were multiple contractual breaches.
[36](1996) 8 VR 681 (‘John Holland’).
This is a relatively straight forward factual dispute. Their claim is that because of the CFMMEU threat and demand, there became a pattern of terms and conditions in the enterprise agreement. They complied with the demands of the CFMMEU. But for the CFMMEU demand requiring contractors and employees on site to enter into the enterprise agreement or have equivalent terms and conditions, the loss would not have arisen.
The alleged intimidation and conspiracy caused the events resulting in a pattern of terms and conditions being applied site wide, and this resulted in the loss and damage. Their case is to be proven on the basis of pattern bargaining arrangements. They are not calling evidence of every single contractor to establish a pattern. To do so would be contrary to the Civil Procedure Act 2010 (‘CPA’).
They reject the contention that their claim is a global total cost one that includes costs not attributable to the CFMMEU conduct. Prior to the death of Mr Kelly, the Pentridge Site was not a unionised one. The difference between what they were required to pay in line with the CFMMEU compared to what they paid before is the total cost. The logical next step is discovery and then obtaining expert material.
They concede that there are examples, in the July 2019 particulars, where the timing does not seem to work. They concede a flaw may well have been identified in the particulars. They say that this does not mean the particulars should be struck out.
It is conceded that they cannot show, pointing to the Napier & Blakely Report (upon which they rely in the July 2019 particulars), that the project would have finished by a particular date.
It is conceded that there were delays before the CFMMEU came on site. They could not hold the CFMMEU liable for anything that occurred before November 2009 and have not attempted to do so. There is no claim of loss arising from that. Their case is that the CFMMEU caused further delay after they came on site. The project took longer because of the CFMMEU delay. Part B of the July 2019 particulars says there were eight to ten delays caused by the CFMMEU.
As to their interest claim, they concede they were paying interest before the CFMMEU came on site but say they do not claim it for that period. They claim a pro rata period based on the number of days of delay that were allegedly caused by CFMMEU conduct.
As to the pleading concerning the sixth defendant being replaced by the fourth defendant: there is an allegation of conspiracy and that the sixth defendant and the fourth defendant were parties to it. The allegation does not depend on them being on site. They do not allege that the actions on site were wrongful. Rather, that they engaged in conspiracy as CFMMEU agents. It is alleged that they are liable for the whole loss as tortfeasors to a single tort.
In response to the defendants’ submissions concerning the inconsistency between the September 2018 particulars referring to multifactorial causes for loss and delay, and the 2FASOC and July 19 particulars: there is no causal nexus articulated in the particulars. Nor is that asserted by the defendants.
In response to the defendants’ submission concerning the subcontractor rates and loss: the issue is what were the labour costs across the entire site, but for the unionisation of the site and pattern arrangements which followed. After site wide unionisation everyone on site was working at a higher rate.[37] The site wide cost is due to more beneficial conditions [as a consequence of the application of the enterprise agreement]. Some subcontractors who were paid less did not remain on site. Perhaps that was because they were not providing services as a result of the enterprise agreement. The mere fact a subcontractor was paid less does not mean the case concept is wrong.
[37]Transcript, 26 September 2019, 73.
The plaintiffs need to demonstrate that from July 2010, when the second plaintiff entered into the enterprise agreement, labour costs increased across the entire site. If they ‘can prove that, [they] will win’ the case.[38]
[38]Ibid 72.
After the July 2019 particulars, the defendants wrote to them regarding identification of the causal link in their claim. At that point, the plaintiffs considered the causal nexus had been identified but said they were willing to do an additional set of particulars articulating it.[39] Notwithstanding this, the defendants filed their summons. The proper conduct of the proceeding requires the defendants to engage with what had been proposed.
[39]Letter from the plaintiffs’ solicitor to the defendants’ solicitor dated 6 September 2019, 34-35 of Exhibit ‘JN-9’ to the affidavit of James Naughton, solicitor, affirmed on 9 September 2019 (‘the fifth Naughton affidavit’).
It is inconsistent for the defendants to say the particulars allege loss and delay caused by other means [multifactorial] yet seek particulars of the causal link between conduct and delay.
The July 2019 particulars should not be judged against the standard of perfection. They do identify how the plaintiffs quantify their claim. All claims occur post CFMMEU involvement on the Pentridge Site. The link is identified in Part B of the particulars. Only a modest number of delays are identified. There is some overlap.
Analysis
This proceeding is in a specialist list. Consequential to an earlier summons filed by the defendants, consent orders precisely defined matters and provided for specific steps to progress the proceeding.
Paragraphs A – E of the February 2019 orders recorded the following.
A.By consent, the following is recorded in other matters.
B.On 6 February 2019 the plaintiffs served a proposed second further amended statement of claim and proposed amendments to their Particulars dated 17 September 2018 (proposed amended September 2018 Particulars). The plaintiffs sought, by the substitution and amendment summons dated 4 February 2019, a grant of leave to amend the further amended statement of claim dated 31 May 2018, and an order substituting or adding Mr Chiavaroli as first plaintiff. Following correspondence between the parties, the plaintiffs proposed further amendments, which are set out in the proposed second further amended statement of claim attached to these orders (2FASOC).
C.In the proposed 2FASOC, the plaintiffs deleted the allegations which previously appeared in paragraph [33] of the further amended statement of claim dated 31 May 2018 that the conduct of the 1st – 4th and 6th – 8th defendants (CFMMEU defendants) caused or contributed to loss and damage referable to: (i) delays in completing construction works by dates stipulated in construction contracts for the purchase of dwellings and land in the Pentridge Village Project; (ii) the rescission of customer contracts for the purchase of dwellings and land in the Project; (iii) the inability to service the loan facility for the Project; (iv) the cessation of the loan facility for the Project; (v) the ultimate cessation of construction works; and (vi) the failure of the Project (abandoned loss allegations). In removing the abandoned loss allegations, the plaintiffs are not to be taken to detract from the cost and delay claims (as defined below).
D.The CFMMEU defendants reserve the right to object should the plaintiffs in future seek to revive the abandoned loss allegations or otherwise seek to add to or propose amendments to the pleadings, or to adduce evidence at trial which would have the effect of raising or reviving the abandoned loss allegations as claims or heads of loss and damage in this proceeding.
E.The CFMMEU defendants reserve the right to object should the plaintiffs in future make claims for alleged loss and damage against the CFMMEU defendants beyond the following heads of loss, as pleaded and particularised:
i.the alleged increased costs and delays to the performance of the works during the Project, as alleged in paragraphs 17, 19, 21, 24, 26, 28, 30 and 32 of the proposed 2FASOC (cost and delay claims); and
ii.infrastructure, plant and equipment remaining on site for longer than programmed, which caused delay to the work scheduled (consequential costs claims).
F.The CFMMEU defendants reserve the right to object should the plaintiffs in future, in relation to the cost and delay claims, make any claim, seek to recover any loss or adduce any evidence in relation to subcontractors not already named in the proposed 2FASOC or in the proposed amended September 2018 particulars.
Paragraphs 3 – 7 of the February 2019 orders provided the following.
3.The plaintiffs have leave to file and serve by 4.00 pm on Friday, 15 February 2019 the second further amended statement of claim in the form annexed to these orders (proposed 2FASOC).
4.The plaintiffs have leave to file and serve by 4.00 pm on Friday, 15 February 2019 the amended particulars in the form delivered to the defendants on 6 February 2019 (amended particulars).
5. The defendants file and serve their defence by 4.00pm on 30 April 2019.
6.By 4.00 pm on 8 March 2019 the plaintiffs shall file and serve further and better particulars of (i) paragraph 31 of the amended particulars, so as to provide particulars of the dates on which the subcontractors referred to therein are alleged to have ceased work on the site and (ii) paragraph 57 of the amended particulars, which will identify, in respect of each of the 10 items of preliminary infrastructure, plant and equipment referred to therein:
(a)the period of time (date range and duration) for which each item of preliminary infrastructure, plant and equipment remained on the site;
(b)the period of time in (a) above which was longer than or in excess of the time originally contracted for or programmed for that item of preliminary infrastructure, plant and equipment (i.e. the extended duration which, the plaintiffs allege, was caused by the alleged tortious conduct of the CFMMEU defendants); and
(c)the alleged cost to the plaintiffs of that ‘extra’ time (in terms of leasing or hiring fees charged to and paid by the plaintiffs).
7.By 4.00 pm on 29 March 2019 the plaintiffs shall serve on any subcontractors allegedly affected by the events the subject of this proceeding any subpoenas seeking the production of documents upon which the plaintiffs might wish to rely in support of the claims pleaded in this proceeding.
…
Turning now to the issue of whether or not the plaintiffs have pleaded a global total cost claim and if so, whether it should be struck out.
On the question of whether a pleading based on a global total cost claim is likely to prejudice, embarrass or delay the fair trial of a proceeding and should be struck out, Byrne J outlined the following principles in John Holland, which I adopt:[40]
The claim… is a global claim, that is, the claimant does not seek to attribute any specific loss to a specific breach of contract, but is content to allege a composite loss as a result of all of the breaches alleged, or presumably as a result of such breaches as are ultimately proved. Such claim has been held to be permissible in the case where it is impractical to disentangle that part of the loss which is attributable to each head of claim, and this situation has not been brought about by delay or other conduct of the claimant.
…
Three things should be underlined at this stage. First, it is for the parties and not the court, even in a judge-managed list, to determine how their case should be framed. It is not for the court to impose upon them a manner or form of pleading which it thinks better than their own. Secondly, the power of the court to strike out a claim is very limited. So far as is here relevant, it may be exercised where the claim is so evidently untenable that it would be a waste of the resources of the court or the parties for the court to permit this to be demonstrated only after a trial; or where the pleading is likely to prejudice, embarrass or delay the fair trial of the action. The former imposes a very heavy burden on the applicant as is demonstrated by the refusal of the Privy Council to uphold an order striking out a global claim on that basis in Wharf Properties Ltd v Eric Cumine Associates (No 2). In that case, however, the strike-out order was upheld on the alternative basis. It is this alternative basis which is relied upon in support of the attack on this part of the Holland statement of claim. Finally, this case is being managed in a specialist list and is still in its interlocutory stages. One of the advantages of such a list is that the judge, being familiar with the case, can encourage the parties to identify and formulate the issues so that the trial might be conducted in as economical and expeditious a manner as may be consistent with the just disposition of the dispute.
…
The question whether in a given case a pleading based on a global claim, or even a total cost claim or some variant of this, is likely to or may prejudice, embarrass or delay the fair trial of a proceeding, must depend upon an examination of the pleading itself and the claim which it makes. The fundamental concern of the court is that the dispute between the parties should be determined expeditiously and economically and, above all, fairly. Where the proceeding is being managed in a specialist list, the judge, whose task it is to steer the case through its interlocutory stages, might, and perhaps should, explore the claim to determine whether the form it takes is driven by its nature and complexity, or by a desire to conceal its bogus nature by presenting it in a snowstorm of unrelated and insufficiently particularised allegations, or by a desire to disadvantage the defendant in some way. Relevant to this is an acknowledgment that a total cost claim puts a burden on the defendant. This burden may involve the defendant in extensive discovery of documents relating to the performance of the project; it may mean that at trial the defendant must cross-examine the plaintiff’s witnesses to expose the flaws in a claim which assumes that the defendant is, itself, responsible for every item of the plaintiff’s cost overrun; it may mean that the defendant must lead evidence to explain what, in fact, was the impact of each of the acts complained of on the project, as was done in McAlpine Humberoak Ltd v McDermott International Inc (No 1). Litigation inevitably imposes burdens on the parties; the court must exercise its powers to ensure that, as far as possible, these burdens are not unreasonable and are not unnecessarily imposed.
In my opinion, the court should approach a total cost claim with a great deal of caution, even distrust. I would not, however, elevate this suspicion to the level of concluding that such a claim should be treated as prima facie bad. Nevertheless, the point of logical weakness inherent in such claims, the causal nexus between the wrongful acts or omissions of the defendant and the loss of the plaintiff, must be addressed. I put to one side the straightforward case where each aspect of the nexus is apparent from the nature of the breach and loss as alleged. In such a case the objectives of the pleading may be achieved by a short statement of the facts giving rise to the causal nexus. If it is necessary for the given case for this to be supported by particulars, this should be done. But, in other cases, each aspect of the nexus must be fully set out in the pleading unless its probable existence is demonstrated by evidence or argument and further, it is demonstrated that it is impossible or impractical for it to be spelt out further in the pleading. Moreover, the court should be assiduous in pressing the plaintiff to set out this nexus with sufficient particularity to enable the defendant to know exactly what is the case it is required to meet and to enable the defendant to direct its discovery and its attention generally to that case. And it should not be overlooked that an important means of achieving the result that, once it starts, the trial should be conducted without undue prejudice, embarrassment and delay, is by ensuring that, when it begins, the issues between the parties including this nexus are defined with sufficient particularity to enable the trial judge to address the issues, to rule on relevance and generally to contain the parties to those issues. An order to this effect in a global claim was made by the Official Referee in Imperial Chemical Industries Plc v Bovis Construction Ltd, and by Moynihan J in Ralph M Lee Pty Ltd v Gardiner & Naylor Industries Pty Ltd. And if, in such a case, the plaintiff fails to demonstrate this causal nexus in sufficient detail because it is unable or unwilling to do so, then this may provide the occasion for the court to relieve the defendant of the unreasonable burden which the plaintiff would impose on it.
[40]John Holland 689 [14], 691 [18], 693-4 [22]–[23] (emphasis added) (citations omitted).
The plaintiffs have pleaded a global total cost claim. The 2FASOC pleads global loss for cost and delay for the Pentridge Site project.[41] It is alleged this caused loss and damage to the first and second plaintiffs.[42] The July 2019 particulars reflect the plaintiffs’ global total cost claim.
[41]2FASOC [17], [19], [21], [24], [26], [28], [30], [32].
[42]Ibid [33].
The plaintiffs have not established why it would be impractical to plead the specific losses said to be caused by the alleged unlawful conduct. The following words of Moshinsky J are apt here:[43]
…It is appropriate that the alleged causal consequences of each set of contraventions be pleaded separately so that the discrete allegations can be responded to separately…
[43]Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (2017) 123 ACSR 223, 228 [14(a)], 251 [81].
The global total cost claim is likely to prejudice, embarrass or delay the fair trial of a proceeding for reasons outlined below.
Turning first to the 2FASOC. The causal nexus between claim and loss is unarticulated.
Firstly, the plaintiffs’ submission that there is a singular path from the alleged unlawful threat and demand to the alleged loss is not reflected in the 2FASOC. As the defendants say, there is a difference between oral submissions and the pleading. The 2FASOC pleads loss from November 2009 onwards.[44] The oral submission is that there was loss from July 2010, when the second plaintiff entered into the enterprise agreement.
[44]See, for instance, 2FASOC [20]–[21].
Importantly, the 2FASOC does not reflect a single cause of loss. The plaintiffs’ submission that there is only one wrong alleged and that they do not allege a series of breaches must be rejected. Rather, the 2FASOC pleads loss and delay as a result of multiple alleged CFMMEU requirements. Loss and delay is claimed from November 2009 onwards on multiple grounds including: requiring subcontractors and workers on site to attend an induction and prohibiting those who did not from working on site,[45] requiring subcontractors enter into the CFMMEU enterprise agreement or equivalent terms and conditions,[46] requiring subcontractors who did not do so to leave site,[47] replacing those subcontractors who left with alternative subcontractors satisfactory to the CFMEU,[48] by the second plaintiff entering into an enterprise agreement,[49] by the application of restrictive pattern terms and conditions,[50] and by requiring the second plaintiff to engage two different CFMMEU representatives on site.[51] The 2FASOC does not reflect the plaintiffs’ submission that there is a singular path from the alleged CFMMEU demand and threat to loss because of pattern terms and conditions.[52] As just discussed, multiple grounds are pleaded. The pleading of a restrictive pattern of terms and conditions is said to arise from some, but not all of these grounds.[53] It is not alleged, for instance, that it arises from the alleged CFMMEU requirement to attend induction, or from the alleged CFMMEU requirement to have the fourth defendant and the sixth defendant on site.[54]
[45]2FASOC [16]–[17].
[46]Ibid [18]–[19].
[47]Ibid [20]–[21].
[48]Ibid [22], [24].
[49]Ibid [27]–[28].
[50]Ibid [29]–[30].
[51]Ibid [25]–[26], [31]–[32].
[52]It is unnecessary to address here whether such a claim would be a conclusion given my findings.
[53]2FASOC [29] pleads a restrictive pattern of terms and conditions arising from the conduct in 2FASOC [18], [20], [27].
[54]2FASOC [29] does not refer to 2FASOC [16], [25], [31].
The plaintiffs’ September 2018 particulars, state:[55]
As to the specific delays, periods and increased costs resulting from each action of the CFMEU alleged, loss and delay at the Pentridge Site was multifactorial, and was in part caused or contributed to by other factors throughout the project (e.g. inclement weather). Precise particularisation will not be possible until all the documentation is reviewed and expert reports are obtained in order to quantify loss and delay.
[55]Plaintiffs’ particulars, filed on 17 September 2018 [18], [27], [35], [38], [45], [47], [49], [55]–[56].
Given the plaintiffs’ pleadings reflect multiple grounds of loss and damage and multifactorial causes for delay, their case cannot be advanced as a global total cost claim. For the same reason, their contention that causation is straight forward – but for the CFMMEU demand requiring contractors and employees on site to enter into the enterprise agreement or have equivalent terms and conditions, the loss would not have arisen – must be rejected.
Secondly, the 2FASOC alleges that from November 2009, subcontractors who left the site were replaced by new subcontractors who provided their work at a higher rate and a slower rate.[56] The plaintiffs’ blanket submission that all the subcontractors were on higher rates after the alleged unlawful conduct is at odds with the plaintiffs’ own submissions that the loss is to be calculated from July 2010. The causal nexus should be identified and the loss particularised. It is also inconsistent with the July 2019 particulars which provide that, in some cases, costs decreased.[57]
[56]2FASOC [22], [24].
[57]July 2019 particulars part A, 5 – see for instance excavation costs were estimated at approximately $1 million and were actually approximately $900,000.
Thirdly, the failure to articulate the causal nexus between the alleged conduct and loss in the 2FASOC is not remedied by the July 2019 particulars which plead (in Part A) that the variance in the estimated and actual costs is the result of the alleged unlawful conduct. This is especially problematic when it is suggested that there has been delay but it is conceded there were delays even before the alleged unlawful action, and the project end date is not pleaded. Particularising specific alleged delay caused by the alleged unlawful action is nonsensical when the project end date is not pleaded. It begs the question of how any loss can be identified. The bundling together of cost and delay in the 2FASOC – two separate matters – does not provide necessary clarification of the link between alleged conduct and loss.
Fourthly, the 2FASOC pleads that the fourth defendant replaced the sixth defendant on site yet they caused the same loss: for the Pentridge project.[58] I reject the plaintiff’s suggestion that this issue is answered by the allegation that they are joint tortfeasors. The causal nexus between loss and delay is not pleaded in a manner that enables the fourth defendant and the sixth defendant to properly respond to the allegations made against them.[59] I also accept the defendants’ submission about the illogicality of this pleading in circumstances where the 2FASOC pleads that the fourth defendant replaced the sixth defendant yet also pleads they are each the CFMMEU representative for an overlapping period.[60] The plaintiffs’ submission that it is not suggesting both the fourth defendant and sixth defendant needed to be on site to be tortfeasors is at odds with their own pleading that the CFMMEU required each to be engaged ‘on the Pentridge Site as its representative’.[61]
[58]2FASOC [25], [32].
[59]As reflected in paragraph B of their respective defences filed 30 April 2019.
[60]2FASOC [25], [31].
[61]Ibid [25]–[26], [32].
I accept the defendants’ submission that the causal nexus in the 2FASOC remains unarticulated. Parts of the 2FASOC will be struck out on the ground they are likely to prejudice, embarrass or delay the fair trial of a proceeding: paragraphs 17, 19, 21, 24, 26, 28, 30 and 32 which allege increased cost and delay arising from the CFMMEU’s actions, and paragraphs 33 and 38, which allege loss and damage arising from compliance with an alleged CFMMEU demand.
Turning now to the July 2019 particulars. They are likely to prejudice, embarrass or delay the fair trial of a proceeding for reasons outlined below.
The July 2019 particulars state:[62]
At the time the Court made that order, it was intended that subpoenas would yield information which would be utilised in the preparation of particulars. The subpoenas did not yield any such information. Accordingly, the particulars which follow are the best particulars the plaintiffs are able to provide derived from other information available to them.
Precise particularisation of cost and delay is not possible until all documentation is reviewed by experts, and opinions are obtained by those experts as to the quantum of cost and delay. Further and better particulars will be provided upon the delivery of expert reports.
[62]July 2019 particulars [2]–[3].
Firstly, the particularisation of the global total cost claim case in the July 2019 particulars is inconsistent with the plaintiffs’ prior particulars. As discussed above, the September 2018 particulars refer to multifactorial reasons for loss and delay (such as weather). It is no proper answer to this inconsistency to assert the causal nexus is not pleaded in particulars. That is not the issue. The issue is the inconsistency. The July 2019 particulars proceed on the basis that the loss and delay arises from the alleged unlawful conduct. The global loss they plead in Part A is calculated by comparing the difference between estimated and actual costs of subcontractors.
Secondly, the timing in the July 2019 particulars contains flaws, as conceded by the plaintiff. They are embarrassing. Costs are claimed in respect to overruns on the project which commenced before they arrived on site. Costs are claimed in respect of delay in circumstances where the plaintiffs’ own expert reports forecast project completion before the alleged unlawful action. For instance, in respect of Lot 254A, the completion date is forecast to be September 2009.[63] As at 16 September 2008, excavation works on that lot are said to be complete.[64] However, in the July 2019 particulars, there is a claim for increased subcontractor costs for excavation in respect of that lot.[65] Similarly, as at September 2008, the forecast completion date for Lot S8 is November 2009.[66] Yet the July 2019 particulars claim delay for that lot in 2010 and 2011.[67]
[63]Napier & Blakeley report dated 16 September 2008 (‘Napier & Blakeley report’), 1, table 1.1 contained in Exhibit ‘JN-15’ to the fifth Naughton affidavit.
[64]Napier & Blakely report 3.
[65]July 2019 particulars, table A, 7.
[66]Napier & Blakeley report 1.
[67]July 2019 particulars, part B, 82–3.
Thirdly, the interest claim in the July 2019 particulars is opaque. Paragraph 10(b) of the July 2019 particulars, to be read with the second table in Part B of the particulars, bundles ‘interest and bank service fees’ as ‘finance costs’. The interest is calculated from a period prior to the alleged loss and damage in the 2FASOC.[68] There was no proper explanation of how interest was calculated at the hearing. The calculation of interest is, in turn, based on an opaque calculation of delay, as I discuss next. The assertion is that there is a total of 982 project days and interest should be calculated on total days lost (said to be 202), so 20.57% of 982 days of delay. This leads to the next issue.
[68]It is calculated from October 2009: July 2019 particulars [11], part B.
Fourthly, it is asserted that there are 202 days of delay in table 1 of Part B of the July 2019 particulars. It lists various events. However, only two of those events, which amount to a total of 55 days, affect the ‘whole site’. The remainder are said to relate to specific lots. Without adequate particularisation, the defendants cannot answer how a delay on one lot of the site can result in entire project days lost. In addition, the number of days for delay for concurrent periods is calculated separately. For instance, a delay of 10 days is claimed in respect of Lot S8 for the period October to December 2010, plus a delay of 5 days is claimed for the whole site for December 2010.[69]
[69]July 2019 particulars, part B.
The defendants are subject to the forensic disadvantage of being unable to properly investigate the claims of loss and damage in order to adequately respond to them.
Given the above, the July 2019 particulars are likely to prejudice, embarrass or delay the fair trial of a proceeding and will be struck out.
Should the July 2019 particulars be struck out as an abuse of process?
Defendants’ submissions
The July 2019 particulars do not comply with the February 2019 orders. The addition of 272 subcontractors in the July 2019 particulars goes well beyond paragraph 8 of the February 2019 orders.
The proceeding has been on foot for more than 3 years and concerns events which allegedly occurred up to 10 years ago. The defences were prepared on the basis that the case was confined to the subcontractors previously identified in pleadings.[70] There is no explanation for the belated addition of the 272 subcontractors. The defendants say the particulars were prepared from documents in the plaintiffs’ possession at the commencement of the proceeding, namely MYOB reports (referred to in paragraph 12 of the July 2019 particulars) and Napier & Blakeley reports (referred to in paragraph 5 of the July 2019 particulars; and those produced are from July 2005 until June 2012).[71]
[70]September 2018 particulars [16], [31].
[71]Fifth Naughton affidavit; Exhibit ‘JN-14’ to that affidavit.
The defendants submit they would suffer significant and irremediable prejudice if the plaintiffs were permitted to recast their case in this manner. They seek to have the particulars struck on the basis of, amongst other things, an abuse of process.
Plaintiff’s submissions
The plaintiffs say that there was never a limit of 76 subcontractors. Paragraph 16 of their particulars filed on 15 February 2019 states there was ‘[a]t least the following subcontractors’.
The case is to be proven on a pattern, not by calling each of the 348 subcontractors. To do so would be contrary to the CPA.
The plaintiffs concede that there is general prejudice by the delay in identifying the additional subcontractors but say there is no specific prejudice.
Analysis
The February 2019 orders included the following.
8.By 4 July 2019, the plaintiffs shall file and serve further and better particulars of their cost and delay claims and consequential cost claims (as defined above) to the extent that those further particulars are capable of being supplied following return of documents under subpoenas served on subcontractors, being particulars of the allegations in:
(a)the 2FASOC at paragraphs 17, 19, 21, 24, 26, 28, 30, 32 and 33; and
(b)the proposed amended September 2018 Particulars at paragraphs 15, 18, 27, 29, 35, 38, 45, 47, 49, 55, 56 and 57.
(emphasis added)
I accept that the plaintiffs’ pleadings do not limit the number of subcontractors. However, the addition of 272 contractors in the particulars is inconsistent with paragraph 8 of the February 2019 orders which provided limited leave to file further particulars. That order envisaged the particulars of loss and damage in respect of the subcontractors referred to in the earlier iterations of the particulars. It specifically referred to those particulars being completed after the return of subpoenas on those subcontractors. The orders did not give leave to provide particulars of loss and damage in respect of additional subcontractors.
Further, the plaintiffs were on notice that the defendants would object to any attempt to recover loss and damage from subcontractors not already named. The February 2019 orders included the following in Other Matters.
F.The CFMMEU defendants reserve the right to object should the plaintiffs in future, in relation to the cost and delay claims, make any claim, seek to recover any loss or adduce any evidence in relation to subcontractors not already named in the proposed 2FASOC or in the proposed amended September 2018 particulars.
As the plaintiffs’ counsel acknowledged during the February 2019 hearing ‘that gives a significant degree of protection to [the defendants] because they put that on the record’.[72]
[72]Transcript, 12 February 2019, 78.
For completeness, I accept that the plaintiffs say that they do not intend to prove their case by calling every subcontractor to give evidence. However, the issue here is compliance with orders, not how the plaintiffs wish to prove their claims at trial.
Turning now to the question of whether the July 2019 particulars constitute an abuse of process. In Tomlinson v Ramsey Food Processing Pty Ltd, the High Court stated that ‘abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute’.[73]
[73](2015) 256 CLR 507, 518–9 [25].
In Rozenblit v Vainer,[74] the High Court outlined principles on abuse of process in the context of a proceeding that had been stayed. Gordon and Edelman JJ stated:[75]
The overarching obligations do not displace the need for the court to safeguard the administration of justice in the context of ordering a stay for abuse of process. Rather, the obligations recognise that passive participation in litigation is no longer an option. There has been a “culture shift”. It is therefore not surprising that in the conduct of modern litigation, there may well be circumstances where the granting of a stay is the only practical way to ensure justice between the parties even though the conduct was not intended to be oppressive. This does not displace or alter the primary consideration of the courts to safeguard the administration of justice. Rather, it underscores that considerations of efficiency and cost are relevant aspects of the inquiry. …
[74](2018) 262 CLR 478 (‘Rozenblit’).
[75]Rozenblit 501 [76] (citations omitted).
Here, no stay is sought. Rather, the striking out of the July 2019 particulars is sought. I find that the addition of the 272 subcontractors is an alternative ground for striking out the July 2019 particulars. It is an abuse of process for the plaintiffs to impermissibly expand their case in this manner, that is, contrary to the February 2019 orders.[76] It is conduct that brings the administration of justice into disrepute and ought be condemned given the breach of precisely framed orders, the length of time this proceeding had been on foot at the time the July 2019 particulars were filed (more than three years), and the multiple attempts by the plaintiffs to frame their case. It is likely to cause further delay and increase costs. The plaintiffs concede there is general prejudice to the defendants given the length of time (approximately 10 years) since the alleged unlawful acts. I accept that there is no evidence of specific prejudice. Nor is such evidence required to establish that the administration of justice is brought into disrepute.
[76]See also, Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 217 [111]–[115].
If the plaintiffs wished to expand their case to include the 272 subcontractors, the proper course would have been to either obtain the consent of the defendants, and/or obtain the leave of the Court to file additional particulars. To obtain leave, a proper explanation for the delay in the plaintiffs’ attempt to expand the case in this manner is required. No proper explanation has been provided. There is no information which the plaintiffs were able to provide to explain the delay in seeking to significantly expand their case. It is not, for instance, said to be due to new evidence obtained. The July 2019 particulars rely upon material which the plaintiffs had prior to the proceeding.[77]
[77]July 2019 particulars, [5] referring to Napier & Blakely reports and [12] referring to MYOB accounting records and bank statements for loans and overdrafts. See also Exhibit ‘JN-14’ to the fifth Naughton affidavit.
Any attempt by the plaintiffs to expand their case must demonstrate compliance with sections 7 and 42 of the CPA. Section 7(1) sets out the overarching principles of civil proceedings. It means that the expansion of the case must be consistent with the ‘just, efficient, timely and cost-effective resolution of the real issues in dispute’. Section 42 requires there be a proper basis for claims, including additional claims. Turning now to whether there is a proper basis for the loss and damage claimed.
Is there a proper basis for the loss and damage claimed?
This issue includes consideration of the application of the CPA and a flotilla of subpoenas that the plaintiffs caused to issue.
Defendants’ submissions
Critical aspects of the plaintiffs’ case lack, by their own admission, a proper factual basis contrary to section 18 of the CPA. If they say the defendants’ conduct caused the subcontractors to increase their price, this is a matter that ought to be in their knowledge.
They query whether the plaintiffs’ persistent failure to adequately particularise causation was due to the fact they lacked the requisite proper basis for the 2FASOC allegations.
The plaintiffs appear to accept that certain critical allegations did lack the requisite factual basis.[78]
[78]Plaintiff’s outline of submissions for hearing on 12 February 2019, dated 1 February 2019, 9 [22(a)] (‘Plaintiff’s written submissions dated 1 February 2019’), contained in Exhibit JN-10 to the fifth Naughton affidavit.
This is the fifth attempt by the plaintiffs to articulate a coherent case regarding loss and causation and they have failed to do so. On the last occasion they capitulated.
At the previous hearing (February 2019), the plaintiffs’ previous submissions said that information regarding the effect of the CFMMEU conduct on contractors was ‘not presently in the plaintiffs [sic] control, and subpoenas and like processes will be necessary’.[79]
[79]Ibid; Fifth Naughton affidavit, Exhibit JN-10.
Following the plaintiffs’ assurance that particulars of ‘key components’ of their claims would be substantiated by documents to be obtained on subpoena the Court made the orders for subpoenas and particulars in paragraph 8 of the February orders.
However, the subpoenas did not seek production of documents which might support the plaintiffs’ case on loss and causation as had been foreshadowed by the defendants.[80] Instead, the documents related to were directed to the question of liability. That is, whether the CFMMEU in fact made any of the demands to subcontractors which the plaintiffs contend they made.
[80]2FASOC [17], [19], [21], [24], [26], [28], [30], [32]–[33]; Plaintiff’s written submissions 1 February 2019, 9 [22(a)].
No documents were returned in response to the 52 subpoenas issued.
The plaintiffs have not briefed experts. They have had since December 2017 to do so. The particulars rely on information that the plaintiffs already had prior to issuing the subpoenas, as discussed above.
The plaintiffs as builder / developer have invoices and should know what subcontractors charged them. These are factual matters that do not require discovery.
Discovery is not relevant to the preparation of expert evidence because that should address cost and delay.
Plaintiffs’ submissions
There is a proper basis for the claim and that they are entitled to commence proceedings with a reasonable belief that losses have accrued to them. To do so otherwise is inconsistent with the principles as to the assessment of damages.
The plaintiffs acknowledge they had previously said that were using subpoenas as a step to be able to do particulars. There is no reason to think that if subpoenas had been drawn differently they would have yielded different results.
The plaintiffs say they are required to give the best particulars they can. This obligation exists regardless of the subpoenas. Particulars need not be exhaustive and can be amended.
Further particulars will be provided once expert evidence and discovery is complete. They are looking to see whether there is anything in discovery that can assist them regarding the CFMMEU’s decision-making process.[81] Their position is that precise particularisation cannot occur until discovery is complete. If further particulars are required, then orders should be made programming them.
[81]Transcript, 26 September 2019, 78.
They accept, and paragraphs 1 and 2 of the July 2019 particulars clarify, that they are not the particulars that they wish to go to trial with. They still propose to pursue discovery and expert reports. Ultimately expert evidence may be required to be precise.
The CPA requires parties to act expeditiously and the plaintiffs have sought to move the proceeding forward. They have paid security into Court. They have revised the 2FASOC to reduce complexity and limit the issues in dispute. That included abandoning some claims that crossed over with the related proceeding.
Analysis
Section 42 of the CPA provides:
42 Proper basis certification
(1)A legal practitioner acting for or on behalf of a party to the proceeding must file a proper basis certification which complies with this section in the following circumstances—
(a)on the filing of a party's first substantive document in a civil proceeding;
(b)on the filing of any subsequent substantive document in a civil proceeding which—
(i)adds or substitutes a party; or
(ii)makes, adds or substitutes a claim or cause of action; or
(iii)makes, adds or substitutes a substantive defence or substantive matter by way of response or reply; or
(iv)makes, adds or substitutes a material allegation denial or non-admission of fact or law; or
(v)makes any significant amendment to a first substantive document or a subsequent substantive document;
(c) as provided for by rules of court;
(d) as directed by the court in any civil proceeding.
(1A)In the case of a civil proceeding which involves allegations of fact, a legal practitioner making a proper basis certification must certify that on the factual and legal material available—
(a)each allegation of fact in the document has a proper basis;
(b)each denial in the document has a proper basis;
(c)there is a proper basis for each non-admission in the document.
(1B) …
(1C)Despite subsections (1) to (1B), a legal practitioner is not required to make a proper basis certification if rules of court provide that a process or document is exempt from the proper basis certification requirement because it is administrative in nature.
(2)A proper basis certification must be in accordance with the rules of court.
(3)For the purposes of this section, a determination by a legal practitioner—
(a)as to whether any allegation or denial of fact has a proper basis, on the factual and legal material available, must be based on a reasonable belief as to the truth or untruth of the allegation or denial; or
(b)as to the proper basis of any non-admission is that the legal practitioner does not know, and therefore cannot say, whether a fact alleged or denial is true or untrue; or
(c)as to whether any claim, response to a claim, question posed or response to a question posed has a proper basis, on the factual and legal material available, must be based on a reasonable belief that the claim, response to a claim, question or response to a question has a proper basis.
…
Contrary to section 42, no proper basis certificate was filed with the 2FASOC. In fact, no proper basis certificate has been filed by the plaintiffs’ legal practitioners since 2 February 2018.
The February 2019 orders included the following.
7.By 4.00pm on 29 March 2019 the plaintiffs shall serve on any subcontractors allegedly affected by the events the subject of this proceeding any subpoenas seeking the production of documents upon which the plaintiffs might wish to rely in support of the claims pleaded in this proceeding. (emphasis added)
The July 2019 particulars state:[82]
At the time that Court made that that order, it was intended that subpoenas would yield information which would be utilised in the preparation of particulars. The subpoenas did not yield any such information. Accordingly, the particulars which follow are the best particulars the plaintiffs are able to [sic] provide derived from other information available to them.
Precise particularisation of cost and delay is not possible until all documentation is reviewed by experts, and opinions are obtained by those experts as to the quantum of cost and delay. Further and better particulars will be provided upon the delivery of expert reports.
[82]July 2019 particulars [2]–[3].
I reject the plaintiffs’ suggestion that discovery, expert reports or [further] subpoenas will remedy the 2FASOC. The causation nexus should be evident from the 2FASOC. In the February 2019 ruling I stated the following:
21The appropriate order is for the defence to be filed as the next step after the plaintiffs file the proposed 2FASOC and amended particulars. The proposed 2FASOC will now be filed by agreement and therefore it is appropriate that the defence be filed next.
22If the defence waits until after the expert reports are filed then unnecessary costs may be incurred because the parameters of the dispute between the parties is not known. That is, some issues may be agreed. It might also be through the process of discovery and subpoenas that some expert is not needed, and for instance can be established by documentary evidence and lay witnesses. The orders for expert and lay evidence will be made in the usual course – after pleadings.
Further, this ruling was made after submissions by the plaintiffs’ counsel that: [83]
…we say let’s just get over the pleading stage, work out what discovery is required at a further directions hearing. By then we will have seen the responses to subcontractors’ subpoenas…
[t]here’s certainly no need for any expert reports to be provided at this stage.
[83]Transcript 12 February 2019, 15.
At the February 2019 hearing, the plaintiffs’ counsel submitted:[84]
…the plaintiff has stated that it requires responses to subpoenas in order to provide further information, and that is a correct statement, and the plaintiff is now proposing to serve those subpoenas, obtain the particulars – obtain the documents through the provision of subpoenas and then provide the particulars.
[84]Ibid 77.
The plaintiffs’ February 2019 written submissions state:[85]
A key component of the claim involves the effect of the CFMEU conduct on subcontractors at the site. It will be necessary for the Plaintiffs to make enquiries of all subcontractors that have been particularised, and obtain information as to their decision-making in light of the alleged conduct engaged in by the CFMEU. Depending on the particular subcontractor, the departure from the site, the increases in labour costs, the decrease in labour resources, or the passing on of associated costs are all relevant. This information is not presently in the Plaintiffs control, and subpoenas and like processes will be necessary.
[85]Plaintiff’s written submissions 1 February 2019 9 [22(a)], contained in Exhibit JN-10 to the fifth Naughton affidavit (emphasis added).
The subpoenas sought the following classes of documents.[86]
[86]Subpoena addressed to Super Kitchens Pty Ltd issued on 25 March 2019. The other subpoenas issued on that date contain identical classes of documents sought.
The documents you must produce are those documents:
–That were created during the time at which you performed works at the Pentridge Village development at Urquhart Street, Coburg (Pentridge Site); and
– That record:
–any request, demand or direction given or made by any official, delegate or employee of the Construction, Forestry, Mining and Energy Union (CFMEU) or Mr Ken Hardy identified in paragraphs 1 to 6 below (CFMEU Request); or
–any communication by you (or your officers or employees) to officers or employees of Pentridge Village Pty Ltd or West Homes Australia Pty Ltd of any CFMEU Request.
What comprises a ‘CFMEU Request’ for the purposes of this Subpoena?
1. A request of you, or your workers, to become members of the CFMEU;
2. A request of you, or your workers, to:
(a) pay membership fees or any other amounts to the CFMEU;
(b)change the way in which you engaged your workers (for example, creating an employment relationship);
(c)change the way in which you otherwise administered your relationships with your workers (for example, taxation, superannuation or leave administration); Incorporate as a company;
(d) register with IncoLink;
(e) register with CBUS.
3.A request of you to leave, cease performing work at, or refrain from entering, the Pentridge Site;
4.A request of you to provide different terms and conditions to your workers at the Pentridge Site to what you had been providing, or intended to provide;
5.A request of you to enter into an enterprise agreement (or a like agreement or understanding) with the CFMEU or another union for the work at the Pentridge Site;
6.A request of you to utilise a particular supplier for the works at the Pentridge Site.
As is evident above, the subpoenas certainly sought information regarding decision-making as foreshadowed by the plaintiffs at the February 2019 hearing. However, the subpoenas did not seek information regarding ‘the increases in labour costs, the decrease in labour resources, or the passing on of associated costs’ as foreshadowed by the plaintiffs.[87] Specifically, the subpoenas did not seek estimates, quotes or invoices generated from the subcontractors in respect of the Pentridge Site work. Perhaps all this information is already in the possession of the plaintiffs. If that is so, it is contrary to the indication given to the Court in submissions (referred to above) that the information was not in their control. Such information is clearly relevant to the calculation of loss on the plaintiffs’ own case which claims loss based on the variance between estimated and actual costs. Further, the July 2019 particulars are not reflective of the plaintiffs making a calculation from that information. Rather, as discussed above, the July 2019 particulars state they were prepared on the basis of the Napier & Blakely reports and by totalling remittances paid.[88]
[87]Plaintiff’s written submissions 1 February 2019 9 [22(a)], contained in Exhibit JN-10 to the fifth Naughton affidavit.
[88]July 2019 particulars [5], part A.
As discussed above, the subpoenas did not result in any documents. The plaintiffs have not established a proper basis for their claim. That is, as discussed above, the plaintiffs have not articulated the causal nexus between conduct and loss.
Conclusion
This proceeding fits Byrne J’s description above of a ‘snowstorm’.[89]
[89]John Holland 693 [22].
Given the findings above, I will make orders sought by the defendants. That is, I will make orders striking out paragraphs 17, 19, 21, 24, 26, 28, 30, 32, 33 and 38 of the 2FASOC and the July 2019 particulars.
SCHEDULE OF PARTIES
| S CI 2016 02556 | |
| BETWEEN: | |
| PENTRIDGE VILLAGE PTY LTD (IN LIQUIDATION) ACN 087 151 068 | First Plaintiff |
| WEST HOMES AUSTRALIA PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 004 964 185) | Second Plaintiff |
| LEIGH CHIAVAROLI | Third Plaintiff |
| - v - | |
| CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION | First Defendant |
| BILL OLIVER | Second Defendant |
| JOHN SETKA | Third Defendant |
| IVAN DADIC | Fourth Defendant |
| KEN HARDY | Fifth Defendant |
| ANTON SUCIC | Sixth Defendant |
| GERALD BENSTEAD | Seventh Defendant |
| SHAUN REARDON | Eighth Defendant |
| MARIO AMENTA | Ninth Defendant |
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