Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd - [2010] WASCA 43

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION: SPIERS EARTHWORKS PTY LTD -v- LANDTEC PROJECTS CORPORATION PTY LTD [2010] WASCA 43

CORAM: PULLIN JA
KENNETH MARTIN J

HEARD: 2 FEBRUARY 2010

DELIVERED : 2 FEBRUARY 2010

FILE NO/S: CACV 83 of 2009

BETWEEN: SPIERS EARTHWORKS PTY LTD
Appellant
AND
LANDTEC PROJECTS CORPORATION PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :WAGER DCJ
File No  :CIV 495 of 2007

Catchwords:

Application for extension of time and for leave to appeal against interlocutory orders of trial judge - Late amendment to counterclaim refused by trial judge - Prejudice - Delivery of trial reasons interrupted - No reason to interfere before final reasons for decision published - Unsatisfactory interruption to delivery of trial reasons by application

Legislation:

District Court of WA Act (1969) WA, s 79(1)(b), s79(2)
Supreme Court (Court of Appeal) Rules 2005 (WA), r 26(1)

Result:

Application for extension of time for leave to appeal interlocutory decisions of trial judge dismissed

Category: B

Representation:

Counsel:

Appellant: Mr B P Wheatley
Respondent: Mr A Metaxas

Solicitors:

Appellant: Mossensons
Respondent: Metaxas & Hager

Case(s) referred to in judgment(s):

Adam P Brown Male Fashion Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170
Allmark v Mossensons [2006] WASCA 127
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Boral Contracting Pty Ltd v Moore [2009] WASCA 64
Clambake Pty Ltd v Owsten Nominees No 2 Pty Ltd [2007] WASCA 286
Esther Investments Pty Ltd Markalinga Pty Ltd (1989) 2 WAR 196
Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478
Gould v Mount Oxide Mines (In liq) [1916] HCA 81; (1916) 22 CLR 490
Sinclair v The Minister for Health [2007] WASCA 253
The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40
Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491
Wilson v Metaxas [1989] WAR 285
Wing Luck Foods v Lay Choo Lim [1989] WAR 358
Zygot v Hughes [2009] WASCA 76

JUDGMENT OF THE COURT: On 2 February 2010, the court dismissed Spiers Earthworks Pty Ltd's (appellant's) application for an extension of time to pursue an application for leave to appeal against two interlocutory decisions delivered by Wager DCJ in the District Court on 11 June and 9 July 2009, respectively. The court indicated that it would publish its reasons for refusing the extension of time. These are our reasons.
The appellant contends that her Honour erred in refusing to accept an affidavit of Mrs Helen Spiers, sworn 4 June 2009, submitted on behalf of the appellant in support of its application to amend its reply and counterclaim. That decision made on 11 June 2009 gives rise to ground 1 of the appellant's four grounds of appeal in respect of which leave to appeal is required.
Her Honour's further interlocutory decision of 9 July 2009, namely refusing the appellant's application for leave to amend its reply and counterclaim, is the subject of grounds 2, 3 and 4 of the grounds of appeal.
It is necessary to observe at the outset that at the time of both decisions her Honour stood reserved on her reasons for judgment in respect of a civil trial held before her over eight hearing days, between 9 and 19 March 2009. By the end of the last hearing day, the appellant's evidence was not complete. Accordingly, the appellant had not closed its case at trial.
At the end of the eighth hearing day, Mrs Spiers' evidence was not finished. She was in the midst of cross‑examination by counsel for Landtec Projects Corporation Pty Ltd (respondent) and it was not clear whether she would be required to provide further evidence. This unresolved issue was a matter for counsel to discuss and advise whether Mrs Spiers would continue her evidence early the following week.
The trial judge was advised on 30 March 2009 that there would be no further evidence from Mrs Spiers. At that point, the appellant's evidentiary case was closed.
On 19 March 2009, her Honour made programming orders for the filing of written closing submissions by each side. Those orders envisaged closing submissions from the appellant (counterclaimant) followed by submissions from the respondent. The respondent was claiming relief as well as resisting the appellant's counterclaim in relation to a building dispute arising out of building works at Pinjarra under contractual arrangements between the parties as developer and roadworks contractor, respectively, in 2005.
According to an agreed chronology filed between the parties, the appellant closed its case on 30 March 2009 via an email to her Honour's Associate. That communication informed her Honour that the defendant's last witness at the trial, Mrs Spiers, would not be giving further evidence.
The appellant filed its closing submissions on 23 April 2009 and the respondent filed its closing submissions on 8 May 2009, in accordance with her Honour's directions of 19 March 2009.
The respondent's submissions asserted, under par 7:
Paragraphs 71 to 75 of the defendant's submissions are an attempt to re‑plead the counterclaim when no leave was sought, let alone granted, and accordingly it must fail.
Paragraph 10 of the respondent's submissions also contended that, as a result, the appellant's counterclaim was essentially limited to an amount of $93,196.44, comprising of:
10.1Invoice V612 dated 28 February 2006 - $84,929.39; and
10.2Invoice 1023 dated 30 June 2006 - $8,267.05.
The respondent's objection at par 7 of its submissions generated a further tranche of written closing submissions from the appellant on 21 May 2009. However, the appellant's further submissions did not fall within the framework of materials allowed under her Honour's programming orders. As a result, her Honour listed the matter for a hearing before her on 11 June 2009, ostensibly, it appears, to resolve the status of the appellant's further submissions. The respondent objected to the appellant's further submissions.
The appellant then filed an affidavit of Mrs Spiers, sworn 4 June 2009 (see GAB, pages 18 to 25). Mrs Spiers' affidavit, at par 13, reads:
In view of the above and in order that the true issues be determined between the parties in the interests of justice, the Defendant seeks to amend its Reply to add the following paragraph to reflect both Exhibit 4.1 and the oral evidence I gave at trial:
5.The Defendant says that in substitution for the amounts set out in the Defendant's Set-off and Counterclaim, the Defendant's entitlement is calculated as follows:

(a)    the sum of $120,842.85 referred to in Schedule A to the Plaintiff's Defence to Set‑off and Counterclaim - see Ex. 4

$120,842.85

(b)    Invoice 1023- see Ex 4.1 -

    $8,267.05

(c)    Invoice V612, shortfall - see Ex. 4.1

$16,593.41

(d)    Incorrect deductions from second contract for traffic control, road closure and GST - see Ex. 4.1

$33,000.00

(e)    GST on $37,870.80 incorrectly deducted from second contract - see Ex 4.1

$3,787.08

(f)    GST on the adjusted first contract sum - see Ex. 4.1

$46,029.36

(g)    Balance due on Invoice 407 for the second contract - see Ex. 4.1

$20,755.90

(h)    Retention of 5% on second contract - see Ex. 4.1

$10,862.00

__________

Total

$260,137.66

Some of the terminology used in Mrs Spiers' affidavit, namely the reference at par 13 to seeking to amend the appellant's 'Reply' is confusing, given that the appellant is actually the counterclaimant and a reply and defence to set‑off and counterclaim has been filed by the respondent.
The proposed amendment referred to in par 13 of Mrs Spiers' affidavit, presaged alterations to the appellant's reply to the defence and (sic: to) set‑off and counterclaim filed on 16 March 2009.
Mrs Spiers' affidavit concluded at para 19:
The Defendant also seeks leave to file and serve the Defendant's Submission in Reply in the interests of justice between the parties.
On 11 June 2009, (in the absence of trial counsel for the respondent, who was not available that day) Wager DCJ expressed concerns as to Mrs Spiers' affidavit. She referred to the communication of 30 March 2009 received via her Associate, to the effect that Mrs Spiers' evidence had been completed, and observed:
So I can't and I don't accept the evidence from Mrs Spiers in relation to new or additional evidence to the evidence that was given in evidence‑in‑chief and in cross‑examination.
She was a witness who took an oath and the best evidence was clearly the evidence she gave during the listed trial. The fact that I've now received an affidavit doesn't extend that evidence in any way, shape or form. I do however thank Mr Wheatley for the authorities and that he has suggested I refer to.
So for that reason I - I just wanted to make that very clear. I thought it was inappropriate for me not to do so and to simply proceed with matters on the understanding that I've - haven't received the material or that I have or leaving it in any dispute that I had received the material (ts 4).
Her Honour then asked counsel whether there were any matters that needed to be clarified. Counsel for the appellant replied:
Your Honour, just a couple of points. In relation to the amendment, the proposed amendment - we would say that firstly in relation to that that the court has power to make an amendment at any time in to the particular pleadings (ts 4).
The transcript for the hearing on 11 June 2009 reveals that the matter was adjourned that day, so that a foreshadowed application by the appellant to amend could be brought on at a time when both trial counsel were available. Accordingly, the appellant's proposed amendment was not resolved on 11 June 2009. However, her Honour, at that time, rightly observed upon the incongruity of the late filing of Mrs Spiers' affidavit after her trial evidence had been completed. Her Honour properly made plain her view that she would have no regard to a late affidavit as part of the trial materials. But the issue of the appellant's proposed amendment remained live at that time.
The transcript of 11 June 2009 does not record any submission or observation by counsel for the appellant that the appellant be allowed to read the content of Mrs Spiers' affidavit for the purpose of an argument on the amendment application. That course, in any event, would be problematic for the reasons, in effect, her Honour observed.
The matter was relisted for 9 July 2009 to deal with the unresolved issue of the appellant's proposed amendment.
In the interval between 11 June and 9 July 2009, the appellant appears to have reached a view that it would be more appropriate to amend its counterclaim rather than its reply to the respondent's defence (to) counterclaim.
The proposed amendment to the appellant's counterclaim was finally embodied in a minute of amended defence and counterclaim (Minute), of 6 July 2009. Paragraph 25 of the Minute essentially reiterates par 13 of Mrs Spiers' affidavit, to which we have already referred. It embodies the eight subcomponent amounts claimed, totalling $260,137.66.
The proposed amendment to the appellant's counterclaim is almost entirely embodied within the new par 25, and is accompanied by some consequential adjustments to the appellant's prayers for relief on its counterclaim.
Paragraph 25 is introduced by the preface:
In substitution for the amounts set out above, the defendant's entitlement is calculated as follows:
(a)…
…
(h)…
Totalling $260,137.66.
The consequential adjustments to the counterclaim's prayers for relief are:
And the defendant counterclaims:
(a)~~$266,614.95~~ $260,137.66, pursuant to paragraph~~s 7, 7A, 22 and 24~~ 25 above.
(b)Interest on the sum of ~~$66,093.01~~ $260,127.66 …
Paragraph 25 introduces its content on a basis of 'substitution', for amounts, 'set out above'. But it is not made clear what amounts 'set out above' are being referred to. Moreover, no material facts can be found in par 25. The new plea essentially takes the form of a submission, replicating, in effect, the content of exhibit 4.1 - a summary document schedule which was tendered by the appellant during the evidence‑in‑chief of Mrs Spiers on the last day of the trial.
An exercise in attempted 'substitution' under par 25 of the counterclaim impacts against the residual status (if any) of the earlier paragraphs in the set‑off and counterclaim (commencing at par 15), because it undermines the relevance of that material. It is not clear what or how much of the appellant's prior set‑off and counterclaim was to be removed and replaced under the 'substitution'. In that regard, it is important that the counterclaim's original prayer for relief made explicit that the total amount claimed ($266,614.95) was tied to the four identified paragraphs, namely pars 7, 7A, 22 and 24 of the defence, set‑off and counterclaim. The proposed amendment to the counterclaim's prayer for relief suggests that this was no longer the case - with, in effect, sole reliance now on par 25.
Paragraphs 7 and 7A of the defence identify, respectively, claims of: $32,526.72 (a retention amount held by the respondent to which the appellant claims that it was entitled to have returned); $25,299.24 (pursuant to invoice number V612 of 28 February 2006); and $8,267.05 (under invoice number 1023 of 30 June 2006).
Paragraph 24 of the counterclaim reiterates the appellant's claim for the amounts under pars 7 and 7A of the defence and then pursues the amount outlined in par 21, namely $190,891.80 (under invoice number 489 of 31 October 2005 for $30,360, plus $160,531.80 under invoice number 600 dated 30 November 2005 for traffic control, drains, etc). Paragraph 22 of the counterclaim also asserts a claim for extra works by the appellant by reference to a portion of invoice V612 of 28 February 2006 in the amount of $59,630.14.
The bare 'substitution' attempted under par 25 would seem to render the above amounts pursued under the counterclaim, essentially redundant. Yet there is no express statement in the Minute that paragraphs 7 and 7A of the defence, or any of the paragraphs of the set‑off and counterclaim, namely 15 through 24, are removed or abandoned. The consequence, from a pleading perspective, produces wholly unacceptable confusion and pleading embarrassment.
The Minute which was rejected by her Honour, emerged some two months after the appellant had closed its evidentiary case. That temporal lag raises further obstacles to the Minute's acceptance, which extend well beyond its embarrassing formulation.
It does not appear, from perusal of the transcript of the hearing on 9 July 2009, that counsel for the appellant sought to read or press Mrs Spiers' affidavit to her Honour, on that application to amend the counterclaim, in accordance with the Minute. Counsel, at ts 10, merely said after an objection by counsel for the respondent:
In relation to that, your Honour, I don't know whether your Honour - your Honour did make a ruling the last time we came back before you ... We say it's clear, both from Mrs Spiers' evidence, that that is what happened in any event.
The appellant must surmount conceptual and legal obstacles in seeking an extension of time for an application for leave to appeal against her Honour's interlocutory decisions. First, as a matter of merit, it does not appear that counsel for the appellant sought to read or press the affidavit of Mrs Spiers, on either 11 June 2009, or 9 July 2009 for the purpose of supporting the amendment (as distinct from seeking to supplement her trial evidence, which her Honour correctly rejected on 11 June 2009). In any event, the rejection of Mrs Spiers' affidavit did not inhibit the appellant's pursuit of its application to amend. For that reason alone, ground 1 of the appeal is misconceived. It lacks any arguable merit and therefore provides no basis for an extension of time, let alone for a grant of leave to appeal.
As to grounds 2,3 and 4, her Honour's refusal to grant leave to amend the counterclaim on 9 July 2009 was also a discretionary interlocutory decision in respect of which leave to appeal is required. Moreover, it is an interlocutory decision regarding a pleading point - obviously raising matters of practice and procedure. A tight rein needs to be kept on applications seeking to interfere with interlocutory orders of judges at first instance, especially in matters of practice and procedure. See Adam P Brown Male Fashion Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170 at 177; and Sinclair v The Minister for Health [2007] WASCA 253.
As to whether leave to appeal should be granted, s 79(1)(b) of the District Court of Western Australia Act 1969 (WA) enacts the general discretion concerning leave required to pursue an appeal against a judgment that is not a final judgment or order. An interlocutory order is not a final judgment: Allmark v Mossensons [2006] WASCA 127 [23]. A refusal of an application to amend pleadings is an interlocutory order. The decision to refuse to admit Mrs Spiers' affidavit was also an interlocutory decision. No rigid rules govern the grant of leave for interlocutory appeals. Usually, however, an appellant needs to show that the decision appealed against is wrong, or at least is arguably attended with sufficient doubt to support a grant of leave to appeal. There is usually a further requirement to demonstrate that substantial injustice would be done in leaving the challenged interlocutory decision unreversed: see Wilson v Metaxas [1989] WAR 285; Wing Luck Foods v Lay Choo Lim [1989] WAR 358 and The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40, per Malcolm CJ at 54 ‑ 55. Principles in respect of extensions of time are dealt with by Kennedy J in Esther Investments Pty Ltd Markalinga Pty Ltd (1989) 2 WAR 196 at 198. One of four considerations mentioned by his Honour focuses upon the underlying merits of a proposed appeal.
In this case, and particularly for proposed grounds 2, 3 and 4 of the appeal grounds, the interlocutory character of the decision to refuse leave to amend the counterclaim is of considerable significance. By 9 July 2009, for all intents and purposes, the parties' cases were closed in respect of the trial evidence.
Her Honour has not yet delivered her final reasons for decision in respect of the trial. Indeed, her Honour's reserved decision has been interrupted pending the determination of this application for an extension of time to appeal and leave to appeal. Her Honour's extemporaneous reasons of 11 July 2009, only rule upon an interlocutory issue. Putting the rejected amendment to the counterclaim to one side, it remains to be seen whether by reference to the whole of the trial evidence and the way the trial was run, there could be established any legitimate basis for the appellant to pursue the eight amounts the subject of the par 25 amendment (also the subject of exhibit 4.1). Her Honour will no doubt, in her final reasons, assess whether there subsists any legitimate basis, absent the rejected amendment, for the appellant to pursue those amounts in the context of the trial by applying well‑recognised principles governing the running of trials: see Gould v Mount Oxide Mines (In liq) [1916] HCA 81; (1916) 22 CLR 490 at 511 and Water BoardvMoustakas [1988] HCA 12; (1988) 180 CLR 491 at 497.
In Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; (2002) 209 CLR 478, Gaudron, McHugh and Hayne JJ observed upon interlocutory orders in the context of an appeal against a final judgment. Their Honours said:
4.In the course of a trial, and even before the trial commences, interlocutory orders may be made which affect the substantive rights of the parties. Rulings that are made in the course of trial about what evidence will be admitted are an obvious example. To adopt a rule that precluded challenging any interlocutory order except by an appeal against that order would provoke unnecessary multiplication and fragmentation of proceedings.
5.It is not surprising, then, that in at least some circumstances, a party may challenge the correctness of the final judgment entered in a matter on the ground that some interlocutory decision was wrong. …
6.The proposition that any interlocutory order can be challenged in an appeal against the final judgment in the matter is often stated in unqualified terms: Nolan v Clifford (1904) 1 CLR 429. The better view, however, is reflected in the formulation adopted in Spencer Bower, Turner and Handley The Doctrine of Res Judicata 3rd ed (1996) pp 79-80 par 170 where it is said that: 'On an appeal from the final order, an appellate court can correct any interlocutory order which affected the final result' (emphasis added).
See also Clambake Pty Ltd v Owsten Nominees No 2 Pty Ltd [2007] WASCA 286, per Pullin JA at [8], Boral Contracting Pty Ltd v Moore [2009] WASCA 64, at [7], and Zygot v Hughes [2009] WASCA 76 [4].

The observations from Gerlach are apposite to this case. In her Honour's final reasons for decision which will evaluate eight days of trial evidence and submissions, she will need to deal with issues raised by the appellant's counterclaim as it presently stands. She will also need to assess the effect of the evidence of Mrs Spiers at the trial, including the adducing of exhibit 4.1 during Mrs Spiers' examination‑in‑chief. On our reading of the transcript there was no objection to the court's receipt of exhibit 4.1 when it was introduced into evidence by counsel for the appellant (see ts 719).
We say nothing as to the ultimate merits or demerits of the appellant's pursuit at trial of the eight subcomponents of exhibit 4.1. Whether or not the trial has in fact proceeded upon a basis that enables the appellant to legitimately pursue any of the subcomponents in exhibit 4.1 (as was submitted, in effect, to us) is entirely a matter for her Honour to address in her final reasons.
Under the Gerlach principle, this court can ultimately correct any ascertained error in respect of an allowance or disallowance by her Honour of those components of exhibit 4.1 within a context of a review of the final reasons for decision of her Honour. For instance, the first component of exhibit 4.1 refers to a Landtech tally sheet and seeks $120,842,85. It records a balance figure that is derived at the end of schedule A in exhibit 4 (also attached to the respondent's further re‑amended reply and defence to set‑off and counterclaim of 6 March 2009). If the respondent (on the qualified basis explained under its case) reconciles the appellant's claimed invoices, thereby generating an accepted balance amount falling due to the appellant, it would seem, prima facie, to be open to the appellant to pursue that balance amount on the basis of an admission under the existing trial pleadings - without the need for amendment to the appellant's counterclaim.
The legitimacy of the other seven components of exhibit 4.1, absent any amendment to the counterclaim, remains entirely a matter for her Honour's consideration by reference to the trial evidence as a whole. Her Honour must assess, in her final reasons, whether, absent amendment to the appellant's counterclaim under the Minute (which is all that has been resolved to date), any legitimate forensic basis exists for the appellant to pursue those amounts.
As we have already observed, the form of the proposed amendment in the Minute is, in any event, wholly unsatisfactory in foundation. That aspect alone supports declining leave to amend the counterclaim. It also points to a lack of merit in the appeal against her Honour's interlocutory decision and therefore negates the basis for an extension of time, or the grant of leave to appeal.
We would also observe that after hearing eight days of trial evidence in March 2009, her Honour was in the best position in July 2009 to assess any issues of forensic prejudice associated with leave to amend the counterclaim.
Her Honour's decision to decline leave for the late amendment to the counterclaim also accords with modern case flow management principles and the wider understanding of the concept of prejudice. The significance of this was recently explained by the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, which was delivered on 5 August 2009 (less than a month after her Honour's refusal of leave to amend the appellant's Counterclaim).
Regrettably, the filing of this application has produced the highly unsatisfactory outcome that the determination of the trial by her Honour has been delayed. Such unnecessary interruptions are prejudicial to the interests of justice. The decision refusing to admit Mrs Spiers' affidavit was made on 11 June 2009 and the order refusing leave to amend the pleading was made on 9 July 2009. The time for appealing was 14 days. See r 26(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA). Rule 26(1) refers to an 'interlocutory civil appeal' which is defined in r 3(1) to mean an appeal from an interlocutory decision made in civil proceedings in the General Division by a judge or master. However, s 79(2) of the District Court of Western Australia Act 1969 provides that an appeal under s 79 should be made in the same way as an appeal from a judgment or order of the Supreme Court or a judge thereof and that in all respects, the practice and procedure of the Court of Appeal in the appeal shall be the same as though the appeal were an appeal to the Court of Appeal from a judgment or order of the Supreme Court or a judge thereof.
The appeal notice was not filed until 30 July 2009, this being seven days out of time in relation to the 9 July 2009 order and much further out of time in relation to the decision concerning the affidavit. The principles governing an application for an extension of time are referred to in Allmark [27]. The appellant has no reasonable prospects of success in its application for leave to appeal and for that reason, the application for an extension of time should be refused.