Prolift Equipment Pty Ltd v Pronto Software Pty Ltd & Ors No. Scciv-01-1073

[2003] SASC 170
PROLIFT EQUIPMENT PTY LTD V PROMETHEUS SOFTWARE DEVELOPMENTS PTY LTD

LANDER J. The proceedings in this matter were issued on 18 July 2001. The summons was endorsed with a statement that a claim had been notified in accordance with r 6A as required by r 6A.09.
I have been told from the bar table that prior to the issue of the proceedings the plaintiff did indeed give a notice under r 6A and accompanying that notice was an expert’s report from Mr Bastian.
The plaintiff was thus in possession of an expert’s report prior to the issue of these proceedings.
The plaintiff filed an amended statement of claim on 8 April 2002 taking advantage of the provisions of r 53.01. That amended statement of claim has stood as the plaintiff’s pleading since that time.
This matter has proceeded very slowly.
Both the plaintiff and the first defendant have complied with a number of directions which I have given from time to time. The plaintiff has been particularly tardy about making proper discovery in this matter. On 6 September 2002 I ordered that all parties make discovery within 35 days. On 31 October 2002 I ordered the plaintiff to make further and better discovery of a number of documents. At that time I ordered the plaintiff to make its discovery on oath.
Because of the plaintiff’s inability to make proper discovery I discharged an order which I had previously made requiring the first defendant to provide its experts’ reports.
On 6 December 2002 the managing director of the plaintiff swore an affidavit deposing that the plaintiff had discovered all of the document which were or had been in the plaintiff’s possession, custody or power which relate to any matter in question in this action.
On 17 December I was advised by the plaintiff that so far as it was concerned all interlocutory matters had been complied with and there were no interlocutory matters outstanding.
On the same day I was advised by the first defendant that it would be providing its experts’ reports by about mid February. Consequently I directed the first defendant to provide its experts’ reports by 28 February.
At the same time I was advised by the parties that they had been “on track for a mediation”. I was advised that the mediation had not taken place because the experts’ reports had not been made available. The parties had agreed, however, that when the first defendant had provided its experts’ reports the matter could go to mediation.
Acting upon that information I adjourned the management conference until 2 May 2003 to enable the first defendant to comply with my direction in relation to experts reports and to allow the parties to appoint a mediator and submit to mediation.
On 3 April 2003, the plaintiff’s present solicitors filed a notice that they were acting in lieu of the plaintiff’s former solicitors.
On 16 April the plaintiff filed a notice for specific directions seeking the adjournment of the management conference until September 2003, which was supported by an affidavit of the plaintiff’s present solicitor, Mr Comazzetto, who deposed that he had first been instructed by the plaintiff on 7 March 2003 and had requested the plaintiff’s former solicitors to cease to act on 14 March 2003.
He deposed to efforts he had made between that time and the date of his affidavit to obtain the previous solicitor’s file and various instructions. He stated that new counsel had been retained in lieu of previous counsel.
He said, in his affidavit, that discovery was not complete. He said that he needed to assess whether his client had made appropriate discovery. He also said that the first defendant had failed to make appropriate discovery.
He asked for the adjournment of the management conference to enable those matters to be attended to and the mediation to take place. I refused that application on 28 April 2003.
I directed the parties to file whatever applications they were instructed so as to bring the interlocutory matters to a conclusion.
On 30 April, the first defendant filed a notice of specific directions which addressed issues of further and better discovery, verification on oath, the filing of an amended defence and the striking out of paragraphs 26 and 32 of the amended statement of claim.
On the same day the plaintiff filed a notice for specific directions seeking orders for leave to file a further amended statement of claim; for an order that the first defendant make further and better discovery; for an order that the first defendant comply with r 38; for orders that the second and third defendant make further and better discovery; and for an order for non-party discovery against a named party.
I have since heard all those applications and made orders in respect of all of them.
One of the orders was that the plaintiff make further and better discovery. That order was made on a concession made by the plaintiff’s counsel that further discovery needed to be made by the plaintiff, notwithstanding that the plaintiff had purportedly made further and better discovery on 16 May 2003.
It is clear beyond doubt that at the time that the plaintiff’s managing director swore his affidavit verifying that discovery had been made in this matter that the plaintiff was seriously in default in its obligations to make discovery.
The point of mentioning these matters is to show that notwithstanding judge management, the parties, and in particular the plaintiff, have not responded to directions made by the Court sometimes at all, and on other occasions in a timely fashion.
It is the plaintiff’s case. The plaintiff has a responsibility to prosecute it diligently and in such a way as to cause the minimum cost to the defendants. This plaintiff has failed to prosecute this case in accordance with its obligations to the other parties and to the Court.
The plaintiff asserts that it changed its solicitors because it did not receive appropriate advice from its previous solicitors and those solicitors failed to communicate with the plaintiff at all or were tardy about those communications.
It is not for me to inquire into the relationship between the plaintiff and its former solicitors but whatever that relationship was the plaintiff is not entitled to use that as an excuse for its failure to comply with its obligations under the Rules.
The plaintiff’s case has not been stabilised. The plaintiff sought leave to file a further statement of claim but I refused that application because the plaintiff was obliged to concede that the statement of claim sought to be filed was, as it were, a temporary one. Further inquiries were being made about the proper particularisation of the existing statement of claim and the proposed amended statement of claim.
I refused the plaintiff’s application to file this statement of claim indicating, during argument, that I would not allow the filing of a document which was, on the party’s own concession, still inadequate.
If the plaintiff wishes to make an application to file a statement of claim in a form which the plaintiff says contains its case then I will hear that application. However, I am not prepared to allow the plaintiff to file a statement of claim, require the defendants to plead to it and then have the plaintiff make a further application to file a further amended statement of claim. That is simply not fair to the defendants. It would put the defendants to increased and unnecessary cost. It is also not useful because all parties would understand that it was only a temporary measure.
I heard the defendant’s application to strike out paragraphs 26 and 32 of the plaintiff’s existing statement of claim. I made an order striking out paragraph 32 on the concession of senior counsel for the plaintiff that it lacked particularity.
After hearing argument I struck out most of paragraph 26 giving short reasons for doing so. At the time I indicated that I would give reasons for doing so if requested by the plaintiff. The plaintiff has now made that request and I offer these reasons.
The plaintiff’s claim is for damages arising out of purchase, installation and implementation of a software package entitled the “Pronto System”.
The plaintiff claims that the first defendant was the manufacturer of the software system and that the second and third defendants were the first defendant’s agents.
It is claimed that representations were made to the plaintiff about the capabilities and suitability of the Pronto System.
It is also claimed that all defendants owed a duty of care to the plaintiff. Further it is claimed there was a contractual relationship between the plaintiff and the first defendant.
It is claimed that the representations amounted to breaches of Misrepresentations Act 1972 (SA) and Trade Practices Act 1974 (Cth). It is further claimed that the defendants were in breach of their duty of care and the first defendant was in breach of its contractual obligations to the plaintiff.
The plaintiff claims, in paragraph 32, that it suffered loss and damage in the sum of $2,647,671. Paragraph 32 contains almost no particulars at all. I struck out paragraph 32 as I have said on the concession of senior counsel that it lacked the appropriate particularity.
The striking out of paragraph 32 leads to the result that the present statement of claim might not disclose any cause of action at all because there is no plea that any damage was suffered as a result of any of the alleged breaches to which I have referred.
As I have already indicated the plaintiff intends to apply for leave to file a further statement of claim. In those circumstances the orders which I made in respect of paragraph 26 are only marginally relevant. However, as requested I give the reasons which I offered to give, if requested so to do.
I set out paragraph 26:
“Subsequent Conduct
26 The defendants:
26.1provided a version of Pronto and could only provide a version of Pronto that:
26.1.1was not easy to use;
26.1.2was not readily capable of installation by a company that has not performed installations of that type before;
26.1.3did not accurately record and update staff with information about when tasks (such as the service of a forklift) must be complete;
26.1.4did not accurately record marketing information, such as customer names and details; and
26.1.5did not accurately perform the accountancy and record keeping functions of a business that sells, hires and services forklifts;
26.2provided and were only capable of providing a version of Pronto which was inadequate to meet the Prolift Group’s software needs and which was not fit for the purpose for which the Prolift Group required the software;
26.3provided a version of Pronto and were only capable of providing a version of Pronto in a form which could not be easily upgraded or which could accommodate the introduction of the GST;
26.4did not give and could not at any time give the Prolift Group adequate on-going support, advice and maintenance services to ensure the consistent function of Pronto as a part of the Prolift Group’s business;
26.5did not and could not provide services to the Prolift Group with due care;
26.6provided the Prolift Group and were only capable of providing the Prolift Group with a version of Pronto containing insufficient modules of software to meet all of the specifications set out in the “Software License Agreement”;
26.7provided software and were only capable of providing software which created a malfunctioning, or, in the alternative, only partially functioning:
26.7.1General Ledger and electronic journals;
26.7.2Inventory Management system;
26.7.3Planned Maintenance Facility (per clause 3.5 of Schedule E of the License Agreement);
26.7.4Asset Register;
26.7.5Job Costing Processing system;
26.7.6Rental Contract Management system (including invoicing and contract maintenance);
26.7.7field service and workshop management system;
26.7.8facility to account for sales tax (and GST);
26.7.9facility to produce balance sheets, profit and loss statements and other operational reports; and
26.8provided the Prolift Group and were only capable of providing the Prolift Group with an electronic general ledger and electronic journals which generally failed to function according to current accounting principles, in that (among other things) the general ledger and journals from time to time failed to:
26.8.1in calculating work in progress, allow the Prolift Group to accurately match its revenue against its expenses;
26.8.2avoid duplication of transactions recorded in the general ledger;
and
26.8.3post GST amounts payable by the third plaintiff to the third plaintiff’s accounts but posted those GST amounts to the accounts of the first plaintiff;
26.9did not and could not adequately install Pronto on the Prolift Group’s computer hardware;
26.10did not and could not adequately ensure that Pronto was ready to go live on the Prolift Group’s computer hardware by 1 April 1999, which was the timeframe initially agreed between Adams and Nicholl during discussions in December 1998;
26.11gave the Prolift Group insufficient assistance and were incapable of giving the Prolift Group sufficient assistance in installing Pronto on its computer hardware and configuring the software for use in the Prolift Group’s business;
26.12did not correct and were not capable of correcting reported malfunctions of Pronto within a reasonable period of being notified by the Prolift Group or at all;
26.13responded to reported malfunctions by writing new software code with the result that malfunctions re-occurred when standard Pronto upgrades were installed for the purposes of accommodating the GST;
26.14did not sufficiently document the manner in which the malfunctions in Pronto were addressed, so that, from the perspective of the Prolift Group, when at a later time many of the same malfunctions arose again, the same work was needlessly repeated adding to the time and cost of the attempts made to remedy defects in Pronto;
26.15improperly customised and were not capable of properly customising software code leading to further malfunctions when software was installed to upgrade Pronto for the GST;
26.16undertook insufficient of the analysis and were not capable of performing the sufficient analysis required to ensure that Pronto would meet the Prolift Group’s software needs, to minimise malfunctions and to ensure that any malfunctions which occurred could be addressed efficiently;
26.17did not reasonably or adequately communicate cost and resources involved in installing/implementing Pronto and did not inform the Prolift Group about or provide the Prolift Group with a copy of a document entitled the Pronto Implementation Methodology (“PIM”) which was designed by Prometheus for the purpose of administering the installation/implementation of Pronto;
26.18inadequately explained the importance of the PIM to the Prolift Group or the expertise or resources required to undertake an installation/implementation of the scope required;
26.19inadequately employed the PIM in implementing/installing Pronto on the Prolift Group’s computer hardware;
26.20provided insufficient resources for the project management of the installation/implementation of Pronto on the Prolift Group’s computer hardware;
26.21inadequately maintained Pronto so that it did not function as required by the Prolift Group;
26.22provided training;
26.22.1too early to the Prolift Group’s staff, so that the staff members had forgotten part or all the training that was provided once that Pronto went live;
26.22.2on only some but not all of the Pronto software modules supplied;
26.22.3to only some of the Prolift Group’s staff;
26.22.4without using the Prolift Group’s data; and
26.22.5without using the specific software interface that staff would use in servicing customers;
26.23did not ensure that the defendants’ relevant personnel had sufficient expertise and qualifications to:
26.23.1install/implement Pronto;
26.23.2correct malfunctions in Pronto;
26.23.3write new software code for Pronto; and
26.23.4conduct an appropriate analysis for the installation/implementation of Pronto on the Prolift Group’s computer hardware; and
26.24inadequately communicated with, and supervised the actions of the defendants’ relevant personnel in the implementation/installation of Pronto;
26.25inadequately communicated with the Prolift Group during the implementation/installation of Pronto and during the process of the correction of Pronto’s malfunctions;
26.26failed to provide a version of Pronto that supplied a fully integrated enterprise management software solution for businesses covering the areas of accounting, distribution, service, and contracting (as represented in Prometheus’ brochure referred to in paragraph 11 of this claim);
26.27failed to provide a version of Pronto that met or which could be adapted to meet the Prolift Group’s Industry requirements set out in Schedule E to the Software License Agreement entered into between the Prolift Group and Prometheus (as represented in Prometheus’ brochure referred to in paragraph 11 of this claim);
26.28failed to provide an absolute commitment to the on-going development of Pronto for the Prolift Group (as represented in Prometheus’ brochure referred to in paragraph 11 of this claim);
26.29did not enhance the functionality of Pronto to meet the Prolift Group’s needs (as represented in Prometheus’ brochure referred to in paragraph 11 of this claim); and
26.30generally discharged their duties without due care and skill.”
The first thing to notice about paragraph 26 is that it is entitled “Subsequent Conduct”. The subsequent conduct is pleaded to support the three separate causes of action in misrepresentation (including Trade Practices), negligence and breach of contract. The pleading is impermissible in that form. What might amount to a misrepresentation might not necessarily be a particular of a breach of a duty of care or a particular of a breach of contract. For example, in paragraph 26.1 it is pleaded that the defendants (26.1.1) provided a version of Pronto and could only provide a version of Pronto “that was not easy to use”. That could never be a satisfactory particular of negligence or breach of contract. It might be a particular which could be relied on to establish that a previous representation was false. However, the plaintiff has not pleaded that way.
The plaintiff has provided a pleading in paragraph 26 which purports to cover all three causes of action. That form of pleading is simply impermissible because the defendant cannot identify the material facts relied upon to constitute the individual causes of action.
The second matter to observe is the alternative pleas which are provided for throughout paragraph 26. For example, in 26.1 it is pleaded that the defendants provided a version of Pronto and “could only provide a version of Pronto” etc. They are two separate pleas. First, that it did provide a version of Pronto and secondly that it could only provide a version of Pronto.
The alternative plea is meaningless. It is not to the point that the defendants could only do or not do something. What the pleader has to show, in the case of misrepresentation and the Trade Practices Act, is that a representation was made and that the representation was false; in the case of a breach of a duty of care, the duty of care and the breach of the duty of care; and in the case of contract, the term of the contract, whether it is express or implied, and the breach of the contract. Whether the defendants “could only provide a version of Pronto” is not to the point.
Paragraph 26 is also studded with adverbs e.g. “readily”; “accurately”; “easily”; “partially”, “generally”; etc. Those pleas are quite unhelpful. They raise more problems than they solve. Descriptions of conduct of that kind are too vague. It is necessary, particularly in a case with facts as complex as these that the precise breach is pleaded rather than a general description. Words of such generality do not allow for a proper response by the defendants: ArthurYoung & Anor v Tieco International & Ors (1995) 182 LSJS 367.

Rule 46A, which governs these pleadings, requires a plaintiff to plead only the material facts relied upon to constitute any cause of action and such further material facts as are necessary to give either parties fair notice of the case which it will have to answer: r 46A.03.
A plea of this kind is not a material fact. It does not give fair notice to the opposition of the case relied upon.
The purpose of r 46A was to avoid pleading argument and I think it has been mainly successful. A party is no longer entitled to particulars as they were under r 46.20. Under the present Rules the right to further material facts is governed by r 46A.09. However this was not an application for further material facts. This was an application to strike out a defective pleading. The pleading in this case is defective in its form.
Indeed the first defendant could have relied upon the fact that the pleader had rolled up the misrepresentation, the breach of duty of care and the breach of contract in the one plea and had it struck out for that reason. However the first defendant attacked it piece by piece and I ruled accordingly.
The plaintiff’s statement of claim does not now conform with the rules. It has not particularised the misrepresentations, the breach of duty of care or the breach of contract. It has no plea for damages.
The statement of claim might be liable now to be struck out in its entirety for other reasons.
It is at the very least regrettable that this plaintiff has not been able to get its proceedings in order. It has not yet got its initiating document in a form which properly discloses its claim and the grounds upon which its claim is made, in circumstances where the proceedings were commenced two years ago and notice had been given under r 6A more than two years ago.
I said during argument that I have to bear some of the responsibility of the plaintiff’s failure to get its case in order. I have had the responsibility of managing the case. Not by way of excuse or self justification I point out that the management of litigation of this kind is extraordinarily difficult if the only sanction which may be visited upon a defaulting party is costs because it is likely that litigants will continue to fail to respond to directions given by this Court. The single sanction of cost is not sufficient, in my experience, to focus parties’ minds on their obligations under the rules.
In any event, for the above reasons, I made an order one that paragraphs 26.1.1, 26.1.2, 26.2-26.8 inclusive, 26.11 to 26.25 inclusive and paragraph 26.30 of the amended statement of claim be struck out.
I have still yet to hear the parties as to costs.

[2003] SASC 170

6 June 2003