TerraVision Pty Ltd v Black Box Control Pty Ltd [No 4] - [2016] WASC 378

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: TERRAVISION PTY LTD -v- BLACK BOX CONTROL PTY LTD [No 4] [2016] WASC 378

CORAM: LE MIERE J

HEARD: 25 JULY 2016

DELIVERED : 23 NOVEMBER 2016

FILE NO/S: CIV 2103 of 2012

BETWEEN: TERRAVISION PTY LTD
Plaintiff
AND
BLACK BOX CONTROL PTY LTD
Defendant

Catchwords:

Practice and procedure - Leave to file rejoinder - Case management principles - Whether discretion should be exercised - Turns on own facts

Practice and procedure - Leave to serve rejoinder - Whether deficient pleading - Pleading sufficient - Turns on own facts

Practice and procedure - Leave to serve rejoinder - Whether abuse of process - Anshun estoppel or estoppel by election - Whether Anshun estoppel can arise in same proceeding - Whether election which supports an estoppel - No estoppel - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 20 r 6

Result:

Defendant have leave to serve rejoinder

Category: B

Representation:

Counsel:

Plaintiff: Mr M F Holler & Mr D K J Danagher
Defendant: Ms P E Cahill SC & Mr P Mendelow

Solicitors:

Plaintiff: Danaghers Commercial and Corporate Lawyers
Defendant: Bowen Buchbinder Vilensky

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

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119
Aon Risk Management v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82
Brocx v Hughes [2010] WASCA 57; (2010) 41 WAR 84
Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394
HIH Casualty & General Insurance Ltd v AXA Corporate Solutions [2002] EWCA Civ 1253; [2002] All ER (Comm) 1053
National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1 NZLR 548
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589
Terravision Pty Ltd v Black Box Control Pty Ltd [2014] WASC 261
Terravision Pty Ltd v Black Box Control Pty Ltd [No 2] [2015] WASC 66
Terravision Pty Ltd v Black Box Control Pty Ltd [No 3] [2016] WASC 95
Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750
LE MIERE J:

Summary

In this action the plaintiff, TerraVision, seeks relief concerning the obligations of the defendant, Black Box, to inform TerraVision of transactions between Black Box and its customers and to pay to TerraVision royalty or licence fees in respect of those transactions which are payable to TerraVision under the agreement between TerraVision and Black Box of 13 June 2006 (Agreement).
A major issue or issues concern the proper construction of cl 10 of the Agreement and the price list attached to the Agreement (Price List). I ordered that certain questions concerning the construction of the Agreement be tried as separate questions. I answered those questions on 30 March 2016: Terravision Pty Ltd v Black Box Control Pty Ltd [No 3] [2016] WASC 95.
The defendant now seeks leave to serve a rejoinder in terms of its minute of proposed rejoinder dated 5 July 2016 (Proposed Rejoinder). The Proposed Rejoinder raises two defences. The first is that TerraVision is estopped from departing from the assumption that the royalty payments under the Agreement would be capped at $20,000 a month. TerraVision does not object to leave being granted to file a rejoinder pleading that defence. The second is that TerraVision is estopped from denying an assumption, described as the Software Fee Assumption, which is that where Black Box supplies to customers TerraVision software together with other products, Black Box must pay to TerraVision 15% of the gross revenue of the TerraVision software component alone and not 15% of the gross revenue of the composite transaction. TerraVision opposes the grant of leave to plead the Software Fee Assumption.
For the reasons which follow Black Box should have leave to serve the Proposed Rejoinder.

Dispute underlying this application

Before addressing the arguments for and against granting leave to serve the rejoinder pleading the Software Fee Assumption estoppel, it is necessary to outline matters in issue in this proceeding.
TerraVision develops and supplies software systems to provide data for location of vessels, vehicles and other assets as well as data relating to the operation of those assets. It holds intellectual property rights including the copyright and software source code in certain software (TerraVision software) and materials and physical items that are utilised by TerraVision software (TerraVision hardware). Black Box provides hardware and software systems for the transmission of information concerning the location of and other information about vehicles and mobile assets and access to that information in a useful form. In supplying services to its customers Black Box uses TerraVision products pursuant to the Agreement.
Clause 10 of the Agreement provides for Black Box to notify TerraVision of transactions Black Box enters into with its customers and for TerraVision to invoice Black Box for the price calculated in accordance with the Price List. This application is principally concerned with cl 10.2 which provides that for a Sale Transaction to a customer that includes providing TerraVision software, Black Box will notify TerraVision of the Sale Transaction and TerraVision will invoice Black Box for the Price, that is the price of the product or service shown in the Price List. Clause 12 provides that Black Box must notify TerraVision of the Sales Transactions of the prior month so that the appropriate price may be calculated in accordance with the Price List and pay TerraVision the calculated price within 30 days of receiving an invoice.
The principal differences between TerraVision and Black Box underlying this application concern the interpretation and effect of cl 10.2 arising from the provision by Black Box of tracking services that include TerraVision software and other services or products not supplied by TerraVision.
Where Black Box has provided to a customer services incorporating TerraVision software and other non‑TerraVision products, Black Box has issued to its customers separate invoices, or invoices with separate line items, relating to the TerraVision software on the one hand and the non‑TerraVision products on the other hand. TerraVision says that the Sale Transaction of which Black Box must notify it is the whole of the dealing or transactions between Black Box and its customer in relation to the products or services which are together the supply of an integrated land‑based vehicle or mobile asset tracking service. Black Box calls this a composite transaction. TerraVision says that the Price which Black Box must pay it is 15% of gross revenue of the composite transaction. Black Box says that a Sale Transaction in cl 10.2 is confined to the supply by Black Box to a customer of TerraVision software and not the composite transaction. Black Box says that the Price which it must pay is 15% of the gross revenue of the TerraVision software only.

History of the pleadings and trial of separate questions

The pleadings have a convoluted history. There have been many amendments to the pleadings. By its Re‑amended Statement of Claim filed on 12 March 2014 TerraVision substantially amended its statement of claim. On 17 April 2014 Black Box filed a substituted defence in response to TerraVision's Re‑amended Statement of Claim. On 14 May 2014 TerraVision filed a reply to the defendant's substituted defence. Black Box provided to the court and to TerraVision documents for the purpose of a strategic conference to be held on 3 June 2014 including a minute of proposed rejoinder dated 29 May 2014 (2014 Minute of Proposed Rejoinder).
The plaintiff proposed the trial of separate questions. On 23 July 2014 I determined that the construction issue which TerraVision described as the 'transactions of the defendant' issue should be determined as a separate question: TerraVision Pty Ltd v Black Box Control Pty Ltd [2014] WASC 261. I directed the parties to confer in relation to the formulation of the question or questions to be separately tried and adjourned the matter to 26 August 2014.
On 26 August 2014 Black Box filed an amended substituted defence. TerraVision applied for certain paragraphs of the amended substituted defence to be struck out. On 4 September 2014 Black Box filed a further defence entitled 'Re‑amended Substituted Defence to Re‑Amended Statement of Claim'. TerraVision then filed an amended minute of pleading defects in Black Box's defence of 4 September 2014. TerraVision did not, at that time, press all of its objections to the Re‑amended Substituted Defence. TerraVision pressed only objections to paragraphs of the Re‑Amended Substituted Defence which relate to the issue which I had determined should be the subject of a separate trial. On 25 February 2015 I determined that certain paragraphs of the amended substituted defence should be struck out: TerraVision Pty Ltd v Black Box Control Pty Ltd [No 2] [2015] WASC 66.
On 19 March 2015 the defendant filed its Further Re‑amended Substituted Defence. On 27 March 2015 the plaintiff filed its Further Re‑amended Statement of Claim and its Amended Reply.
On 2 April 2015 I ordered the trial of separate questions including:
Upon a proper construction of cl 10 of the Licence Agreement, taken as a whole:
(i)what is the meaning of 'Sale Transaction'?
...
The trial of the separate questions was held over five days in July and August 2015. There were two major aspects of the parties' competing contentions. The first aspect concerns whether, as TerraVision contended, cl 10.4 requires Black Box to advise TerraVision of all transactions it has entered into with its customers of which it has not advised TerraVision pursuant to cl 10.1, 10.2 or 10.3. This is not presently relevant. The second aspect concerns whether the relevant transaction is the composite transaction between Black Box and its customer in relation to the products or services supplied or whether each invoice issued by Black Box to a customer, or line item in such an invoice, in respect of TerraVision software or services is a separate transaction or dealing for the purposes of the Agreement. I delivered reasons for judgment on 30 March 2016: TerraVision Pty Ltd v Black Box Control Pty Ltd [No 3] [2016] WASC 95. I answered the separate question as follows:
Question: What is the meaning of Sale Transaction?
Answer: Sale Transaction means the whole of a transaction or series of connected transactions between Black Box and its customer by which Black Box sells or otherwise supplies a Black Box product or service, such Black Box product or service being the whole of a Black Box integrated land-based vehicle and mobile asset tracking services solution provided to a customer or any part of an integrated land-based vehicle and mobile asset tracking services solution provided to a customer.
In the terminology adopted by Black Box, I decided that a Sale Transaction is the composite transaction and not only the sale or supply of the TerraVision software component of the composite transaction.

Pleadings concerning content of a Sales Transaction

TerraVision Says that it pleaded what constitutes a Sales Transaction in paras 4(f) and 4(g) of its Re‑amended Statement of Claim filed 12 March 2014. Black Box says those paragraphs do not plead that a Sales Transaction refers to a composite transaction.
The pleadings are not characterised by informativeness, clarity and succinctness. They tend to obscure rather than elucidate the issues in the proceeding. Nevertheless, a competent lawyer conscientiously trying to understand the pleading would understand [4(f)] of the Re‑amended Statement of Claim to plead that a Sale Transaction in relation to a transaction in which the defendant supplies products or services that include TerraVision software as well as other products or services refers to the composite transaction not merely the supply of the TerraVision software or service. Similarly, a competent lawyer conscientiously trying to understand the pleading would understand [4(g)] of the Re-amended Statement of Claim to say that the licence fee for each of the defendants Sale Transactions in respect of a transaction which includes TerraVision software to be 15% of gross revenue of the composite transaction not merely 15% of gross revenue of the TerraVision software.
On 27 March 2015, TerraVision filed a Further Amended Reply which includes para 17(c). Black Box says that that pleading makes it clear that TerraVision says that where Black Box supplies TerraVision software and non‑TerraVision products to a customer as part of a composite transaction, the Sales Transaction is the composite transaction not merely the supply of the TerraVision software.

Black Box seeks leave to serve rejoinder

Black Box says that a rejoinder is necessary to answer the allegation made in [17(c)] of TerraVision's amended reply. It is therefore necessary to attempt to grasp at least the relevant aspects of the pleadings.
Black Box wishes to plead in the Proposed Rejoinder that TerraVision is estopped from departing from the Software Fee Assumption. The Software Fee Assumption is that, if upon a proper construction of the Agreement, the Price in cl 10.2 read with the Price List is to be construed by reference to 15% of gross revenue on the entirety of a transaction by which TerraVision's software is sold or supplied by Black Box to a customer together with hardware products and/or services not sourced from TerraVision (composite transaction) then TerraVision and Black Box assumed that under the Agreement, and in any event, a fee of 15% of gross revenue was only payable to TerraVision in relation to the software alone supplied as part of a composite transaction. The estoppel is pleaded as a conventional estoppel. Black Box says that TerraVision is estopped from denying that a fee of 15% of gross revenue was only payable to TerraVision in relation to the software component of the composite transaction.

Leave to serve a rejoinder

Order 20 r 6 of the Rules of the Supreme Court 1971 (WA) (RSC) provides that no pleading subsequent to a reply shall be served except with the leave of the court. In general, the court should give leave to serve a rejoinder so that the court may decide all matters in issue between the parties unless the proposed rejoinder is defective in the sense that it is in a form which ought to be struck out or granting leave would cause an injustice to the other party or there is some other good reason for refusing leave.
Black Box says that it is necessary to serve the Proposed Rejoinder for Black Box to be able to advance the Software Fee Assumption argument at trial. TerraVision says that the Proposed Rejoinder is a deficient pleading and leave should not be given to file a deficient pleading. TerraVision further says that Black Box should be refused leave on 'general abuse of process principles'. I will first address the sufficiency of the pleading.

Alleged defects in Proposed Rejoinder

TerraVision says that the Software Fee Assumption plea in the Proposed Rejoinder does not make out a cause of action based on estoppel by convention. The elements of estoppel by convention were referred to by Buss JA in Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119 where his Honour agreed that the elements of the doctrine of estoppel by convention are as summarised by the Court of Appeal of New Zealand in National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1 NZLR 548:
The authorities show that for an estoppel by convention to arise the following points must be established by the party claiming the benefit of the estoppel (the proponent):
(1)The parties have proceeded on the basis of an underlying assumption of fact, law, or both, of sufficient certainty to be enforceable (the assumption).
(2)Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction.
(3)Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them.
(4)The proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding.
(5)The proponent would suffer detriment if the other party were allowed to resile or depart from the assumption.
(6)In all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption (550).
I would add that the assumption giving rise to an estoppel by convention may be about the legal effect of a contract: see Cheshire & Fifoot, Law of Contract (10th ed Aust) page 67 footnote 45.
TerraVision submitted that for an estoppel to arise TerraVision must have been reasonably seen by Black Box to be foregoing TerraVision's contractual rights in relation to the calculation of the fee. Otherwise counsel for TerraVision, Mr Holler, submits, TerraVision's rights would be lost in ignorance that they ever existed. Mr Holler says that a convention about the legal rights of the parties can only be established if they have been identified in some way and refers to HIH Casualty & General Insurance Ltd v AXA Corporate Solutions [2002] EWCA Civ 1253; [2002] All ER (Comm) 1053, 1062 ‑ 1063. I do not think that HIH is authority for the proposition that TerraVision must have adverted to its contractual entitlement upon a proper construction of the contract and by its conduct foregone the right to receive fees calculated in accordance with that proper construction. The point made by Mr Holler is not sufficiently established by authority that I should refuse to allow a pleading on that ground.
Mr Holler further submits that the Proposed Rejoinder does not plead the necessary material facts, including required particulars of knowledge and intention. First, Mr Holler says that the pleaded Software Fee Assumption is not sufficiently certain. Mr Holler asks rhetorically:
How was the price of 'a fee of 15% of gross revenue … payable to the plaintiff in relation to the software alone supplied as part of a composite transaction) to be calculated?
Mr Holler says that absent an agreed method of calculation there was nothing to stop Black Box unilaterally and arbitrarily attributing a low price to the software component supplied as part of a composite transaction. Secondly, the pleading fails to say that the assumption is that TerraVision will forego its contractual rights to invoice 15% of gross value on sales transactions including items other than software in circumstances that show TerraVision was aware of those rights or content in any event to abandon any rights. Thirdly, Mr Holler says that the Proposed Rejoinder fails to plead facts supporting the inference pleaded at [21] that:
It is to be inferred from the matters pleaded in paragraphs 15 to 19 above that from the execution of [the Agreement] the plaintiff adopted the Software Fee Assumption and intended that the defendant act on the basis of the Software Fee Assumption.
Mr Holler says that the matters pleaded in [15] to [19] of the Proposed Rejoinder fail to support the inference pleaded at [21]. Fourthly, Mr Holler says that the Proposed Rejoinder does not plead that pursuant to its obligations under the Agreement Black Box provided TerraVision with information from which TerraVision could create an invoice for more than the software component alone and that TerraVision deliberately chose not to do so and made it plain to Black Box that it had made a deliberate choice not to do so.

Senior counsel for Black Box, Ms Cahill SC, submitted that whilst the pleading was capable of greater particularisation, it sufficiently pleads the defendant's conventional estoppel defence. I agree. The practice of this court will ensure that the case will not go to trial before various orders have been made requiring the pre‑trial disclosure of all the evidence that will be adduced at trial: see Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82 [16]. Senior Counsel for Black Box conceded that particulars should be provided in relation to the pleading and will be upon an appropriate request being made.
The pleading of the Software Fee Assumption estoppel in the Proposed Rejoinder is sufficient. The pleading fulfils the role of pleadings in this court, that is:
(a)to define the issues so that the court can control the preparation of the case in the conduct of the trial;
(b)to provide sufficient information to enable an assessment of whether the pleading gives rise to an arguable defence; and
(c)to appraise TerraVision of the case it has to meet.
Essentially, Black Box's case is that there was a shared assumption, to be implied from the conduct of TerraVision and Black Box, that notwithstanding the words of cl 10.2 and the Price List the fee on a transaction by which TerraVision's software is supplied by Black Box to a customer together with hardware products and/or services not sourced from TerraVision would not be calculated by reference to 15% of gross revenue on the entirety of the transaction but rather by reference to 15% of gross revenue in relation to the software alone supplied as part of the composite transaction. Whether or not the pleaded assumption is sufficiently certain is a matter for trial. It is not so clearly insufficient to not allow the pleading. Whether or not the matters pleaded in [15] to [19] of the Proposed Rejoinder are sufficient to give rise to the inference pleaded at [21] is a matter for trial. The facts pleaded are not so clearly insufficient for the court to disallow the pleading.

TerraVision objects to Proposed Rejoinder on abuse of process grounds

Counsel for TerraVision, Mr Holler, submitted that leave to file the Proposed Rejoinder should be refused mainly on 'general abuse of process principles'. Mr Holler said that TerraVision's argument is put on the basis of Anshun estoppel or estoppel by election in the conduct of litigation and on the principles stated by the High Court in Aon Risk Management v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (Aon) and case management principles generally.
TerraVision's abuse of process or Anshun estoppel or estoppel by election arguments are founded on the contention that the Software Fee Assumption defence was so relevant to the subject matter of the separate questions answered on 30 March 2016 that it would have been unreasonable not to rely on it.

Anshun estoppel

Mr Holler submits that Black Box is precluded by Anshun estoppel from raising the Software Fee Assumption estoppel defence because it did not raise the defence before the court decided to order the trial of the separate questions and before the determination of those separate questions.
Anshun estoppel is an estoppel which prevents a party from bringing a claim or raising a defence which should have been pursued in earlier proceedings. It arose in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. The joint judgment of Gibbs CJ, Mason and Aitken JJ contained this statement of principle:
There will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding (602).
In Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750 French CJ, Bell, Gageler and Keane JJ said at [22] that Anshun estoppel is one of three forms of estoppel recognised by the common law of Australia as having the potential to result from the rendering of a final judgment in an adversarial proceeding.
The plaintiff did not refer to any Australian authority in which a party has been precluded from amending its pleading by reason of Anshun estoppel in circumstances where it is said that the party omitted to raise the claim or defence earlier in the same proceeding. In my opinion Black Box is not estopped by reason of Anshun estoppel from raising the Software Fee Assumption defence because it omitted to do so before the trial of the separate questions.

Election in the conduct of litigation

Election in the conduct of litigation was referred to by Mason CJ and Gaudron J in Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279:
If the defence is to be treated as withdrawn from the trial it can only be on the basis that the Bank's non‑attendance gave rise to what is referred to in Spencer, Bower and Turner, The Law Relating to Estoppel by Representation, 3rd ed (1977), pp 333‑40, as an estoppel by election in the conduct of litigation. An estoppel of that nature depends on a party showing by 'conduct that he does not intend [to take the point], but lies by and thereby puts the other party in a worse position': Murray v Munro (1906) 3 CLR 788 per Griffith CJ at 796.
Election in the conduct of litigation is referred to in the 4th edition of Spencer Bower Estoppel by Representation, edited by Piers Feltham, Daniel Hochberg and Tom Leech, (2003) at XIII.2.37 in these terms:
In the course of litigation it frequently happens that a party is confronted with the necessity of making an immediate choice between two possible courses of action which are mutually exclusive. Wherever this occurs, the principle of election comes into play. If by word or by conduct or inaction, one party represents to the other party his or her intention to adopt one of the two alternative and inconsistent proceedings or positions, that party is precluded from resorting afterwards to the course which he has waived or abandoned.
The courses of action open to a party faced with an election may involve a choice between procedural steps or requirements as well as substantive rights. For example, a party who voluntarily submits to the jurisdiction of a court is precluded thereafter from objecting to the court exercising its jurisdiction in respect of such a claim. However, in general the doctrine of election does not apply to the pleadings within a proceeding. The authors of the fourth edition of Spencer Bower Estoppel by Representation at XIII.2.40 say:
In the absence of an estoppel per rem judicatam there are no rules of court or principles of law which prevent a party advancing a new case which is inconsistent with a case put forward in earlier proceedings. Again, there are no rules of court or principles of law which prevents a party from asserting alternative but inconsistent cases in the same proceedings or from amending a statement of case to advance an alternative or inconsistent case with that advanced at the beginning of the proceedings.
In the second edition of Estoppel by Conduct and Election, (2016), K R Handley says at [15-029]:
Decisions as to the form of the pleadings and the relief to be sought are not an election against reliance on other allegations of fact or law, or other claims, and a party may change its position subject to obtaining leave.
The author says that a defence in one form is not an election against an amendment.
In Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394, the court did not decide that pleadings will normally convey an implied representation or promise which can support an estoppel against an amendment. Mason CJ said at 414 that:
In an ordinary case, the nature of pleadings and their susceptibility, whether by leave or otherwise, to amendment would make it most unlikely that it could be inferred from the pleadings alone that the pleader had induced another party to make an assumption that a particular matter would or would not be pleaded. The other party might reasonably be expected to appreciate that no inference can be drawn from the state of the pleadings alone at a particular time as to the future course which the pleader may decide to take. Still less would it be reasonable to assume that an implied promise not to amend the pleadings, if such a promise could be identified, would be enforceable in the absence of consideration ... (414).
TerraVision does not say that the election, or estoppel, arises from the pleadings alone. TerraVision says that the election arises from Black Box permitting the separate questions to be determined without pleading the Software Fee Assumption. I do not accept that submission for at least two reasons. First, Black Box did not permit the trial of the separate questions. The trial of the separate questions was ordered by the court.
Secondly, the Software Fee Assumption estoppel defence sought to be advanced by Black Box is not inconsistent with its denial that upon the proper construction of the Agreement it is obliged to pay TerraVision 15% of gross revenue on a composite transaction. Black Box's proposed Software Fee Assumption estoppel defence is not inconsistent with the finding of the court that the words Sale Transaction in cl 10.2 of the Agreement refer to a composite transaction.
The failure of Black Box to raise the Software Fee Assumption estoppel defence before the hearing of the separate questions was not an unequivocal representation that it did not intend to rely upon the Software Fee Assumption estoppel. The principles of Anshun estoppel and election in the conduct of litigation do not preclude Black Box being given leave to serve a rejoinder raising a defence based upon the Software Fee Assumption estoppel.

Case management principles

The relevant principles to be considered are those considered by the High Court in Aon. In Brocx v Hughes [2010] WASCA 57; (2010) 41 WAR 84 Newnes JA said at [94] that whilst the observations of the High Court in Aon were made in respect of a late application to amend the pleading they are of general application.
In Aon the plurality (Gummow, Hayne, Crennan, Kiefel and Bell JJ) said that an application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs. The same principle applies to applications to amend a defence to raise an arguable defence or to a late application to file a rejoinder to raise a new defence. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment or serve a rejoinder to raise a new defence must be weighed.
In Aon the High Court said that the starting point for determining an application to amend is the rules governing such applications in the relevant jurisdiction. The relevant rules in this jurisdiction are RSC O 20 r 6 and O 1 r 4A and r 4B RSC. Order 20 r 6 provides that no pleading subsequent to a reply shall be served except with the leave of the court. Leave to file a rejoinder depends on the discretion of the judge, who must take all relevant matters into account, including the concerns of case management.
In Aon the High Court indicated that matters relevant to the exercise of the judicial discretion to allow amendment include:
1.the extent of delay in seeking leave and its associated cost;
2.the point the litigation has reached: applications brought during the time set for trial and that require vacating trial dates are less likely to be granted;
3.the prejudice to the respondent if leave is granted ‑ including the financial and emotional strain of ongoing litigation, which even indemnity costs may not heal;
4.the prejudice to other litigants and the efficient use of court resources: that is, the court held that the just resolution of disputes is not limited to justice between the parties, but requires account to be taken of other litigants;
5.the applicant's explanation for the delay;
6.the nature and importance of the amendments to the applicant; and
7.the need to maintain public confidence in the judicial system.
An explanation for the delay will generally be required to justify late amendment applications but its absence is not fatal where this is outweighed by other factors such as severe prejudice to the applicant. The ultimate aim of the court proceedings is justice but the judgments in Aon recognise that expedition and efficiency are essential aspects of justice. Aon does not require that a party be punished by refusing a late amendment application that involves wasted time and costs. The court must balance all relevant considerations including those enumerated in Aon.
Similar considerations inform the exercise of the court's discretion to allow an application to serve a late rejoinder. TerraVision says that the application for leave to serve a rejoinder is late in that it is made more than 12 months after the service of TerraVision's reply and after the trial of separate questions which are relevant to the Software Fee Assumption defence.
TerraVision served its Amended Reply on 27 March 2015. RSC O 20 r 20 provides that the pleadings are deemed to be closed at the expiration of 14 days after service of the reply. Therefore, the pleadings had been closed for more than 12 months when Black Box applied for leave to serve a rejoinder. During that time the court heard and determined the separate questions.
TerraVision says that permitting Black Box to plead the Software Fee Assumption defence would render the answers to the separate questions nugatory. That is because if the Software Fee Assumption estoppel is made out then instead of being entitled to 15% of the gross revenue of the composite transaction TerraVision would be entitled to 15% of the gross revenue of only the software component supplied as part of a composite transaction. TerraVision says that if leave to serve the Proposed Rejoinder is granted then the time and cost of the trial of the separate questions will have been wasted. TerraVision says that had it known of Black Box's intention to seek to rely upon the Software Fee Assumption then it would not have proceeded with its application for a trial of the separate questions and instead would have sought for the matter to be programmed to the earliest possible date for a final trial hearing.
TerraVision says that if Black Box is allowed to rely upon the Software Fee Assumption there will be significant delay to the prosecution of TerraVision's claim to a final determination and there will be significant additional costs to be borne by TerraVision.
Black Box says that its Software Fee Assumption defence is directed to the assertion in [17(c)] of TerraVision's amended reply. Black Box's application is supported by an affidavit of its solicitor, David Vilensky. Mr Vilensky says that on 23 July 2014 when I directed that there should be a trial of separate questions, TerraVision had not pleaded the matter set out in [17(c)] of its Further Amended Reply. Mr Vilensky says that on or about 27 March 2015 when the plaintiff served its Further Amended Reply it was his view, the view of Craig Hollett (the solicitor with the conduct of the matter) and Paul Mendelow (counsel for Black Box) that there was little point in reviewing the 2014 Minute of Proposed Rejoinder in light of the Further Amended Reply until the separate questions had been heard and determined. Mr Vilensky says that prior to receiving on 30 March 2016 my reasons for deciding the separate questions he and Black Box's other legal advisers did not give any consideration to the possibility or necessity of pleading the Software Fee Assumption pleaded in [14] to [22] of the Proposed Rejoinder. Mr Vilensky says that neither the possibility nor the probability of Black Box relying upon the Software Fee Assumption was in his mind or the mind of Black Box's other legal advisers prior to the hearing of 4 July 2014 of TerraVision's application for a trial of separate questions.
Black Box should have given consideration to the issues raised by [4(f)], and [4(g)] of the Re‑amended Statement of Claim and [17(c)] of TerraVision's Further Amended Reply no later than when it was served with the Further Amended Reply on 27 March 2015. That was more than four months before the end of the trial of the separate questions.
Black Box knew that at least from the time TerraVision's Further Amended Reply was served on 27 March 2015 TerraVision's case is that in respect of a Sale Transaction that includes TerraVision software, the Sale Transaction of which Black Box must notify TerraVision and in respect of which TerraVision will invoice Black Box for the Price is the composite transaction not merely the software component of such a transaction. In its written closing submissions on the trial of the preliminary questions, Black Box made the following submissions:
155.The sequence of events prescribed by clause 10.2 sheds light on how 'Sale Transaction' is to be interpreted. It is as follows:
(a)there is a 'Sale Transaction' to a customer of Black Box that includes providing 'TerraVision software to the customer';
(b)Black Box is to notify TerraVision of the Sale Transaction (clause 10.2(a)). Properly construed, what this means is that Black Box is to notify TerraVision that there has been a dealing with Black Box's customer which includes the provision of the software. In other words, there is required to be a notification of an event in which TerraVision software has been included in the supply to a Black Box customer. The notification requirement of clause 10.2(a) does not mean that Black Box is required to pay 15% of gross revenue on the entirety of the customer invoice, if the invoice includes for example TerraVision hardware (ie if TerraVision hardware had been supplied notwithstanding that TerraVision had in reality ceased supply of such hardware in March 2004, prior to execution of the 2005 Agreement and the 2006 Agreement);
(c)Black Box is to provide the software to the customer (clause 10.2(b));
(d)Black Box is to invoice the customer (clause 10.2(c));
(e)TerraVision is to invoice Black Box for the 'Price' (clause 10.2(d)).
The word 'Price' is defined to mean '... the price of a TerraVision Product, as shown in the Price List'. It is not defined to mean' ... the price of the TerraVision Product, as shown in the Price List'. In other words it is expressed to be in the singular. The word 'Price' 'in clause 10.2(d) is referable to the 'Price' of the 'TerraVision software'. It is not referable to the 'Price' of the 'Sale Transaction'. Had it been intended that the word 'Price was to be referable to the entirety of the "Sale Transaction", clause 10.2(d) would have read:
'(d)TerraVision will invoice Black Box for the Sale Transaction'.
156.In summary therefore, had it been intended that TerraVision would invoice Black Box for the entirety of the 'Sale Transaction', the term 'Sale Transaction' would have been used in clause 10.2(d) instead of the term 'Price'. This is particularly so in circumstances in which the term 'Sale Transaction' is used in clause 10.2(a) but not in clause 10.2(d). The 'Sale Transaction' is the notification event, notifying TerraVision that its software has been used. (emphasis added)
I infer from the history of this litigation, including the strategic conference, the pleadings, the application for the trial of separate questions and the hearing of these separate questions the following. First, at and prior to the hearing of the separate questions Black Box knew that TerraVision's case is that Sale Transaction in cl 10.2 refers to the composite transaction by which its supplies TerraVision's software and other products or services to customers, not merely the supply of TerraVision software. Secondly, TerraVision's case is that in respect of a composite transaction the price payable under cl 10.2 is 15% of gross revenue of the composite transaction, not 15% of gross revenue of the TerraVision software alone supplied as part of a composite transaction. Thirdly, at and prior to the hearing of the separate questions Black Box contended that upon the proper construction of the Agreement, in respect of a composite transaction, the fee payable under cl 10.2 is 15% of gross revenue of the TerraVision software supplied as part of a composite transaction not 15% of gross revenue of the composite transaction. Fourthly, at no time prior to the delivery of my reasons for judgment on the separate questions did Black Box contend that TerraVision was estopped from denying that the fee payable under cl 10.2 in respect of a composite transaction is 15% of gross revenue of the TerraVision software component of the composite transaction by reason of the Software Fee Assumption.

Notwithstanding Black Box's failure to plead or assert the Software Fee Assumption before my delivery of reasons for judgment on the separate questions, I will not refuse Black Box leave to file the Proposed Rejoinder.
The pleadings and the trial of the separate questions have unfolded in a disjointed manner. TerraVision pleaded the meaning of Sale Transaction and how the price is to be calculated under cl 10.2 in [4(f)] and [4(g)] of its Re‑amended Statement of Claim filed 12 March 2014. In its defence of 17 April 2014 Black Box did not expressly state the meaning of Sale Transaction it contended for or how the fee payable under cl 10.2 was to be calculated. Black Box pleaded the definition of Sale Transaction in the Agreement and that it agreed to pay a fee to TerraVision 'for a Sale Transaction to a Contracting Party that included providing TerraVision software to a Contracting Party (cl 10.2)' that is Black Box referred to the terms of cl 10.2 without asserting how the fee was to be calculated. Black Box otherwise denied the allegations in [4] of the Re‑amended Statement of Claim. On 25 July 2016 Black Box was given leave to further amend its defence. In its Amended Further Re‑amended Substituted Defence filed on 16 August 2016 Black Box expressly denies [4(g)] of the Further Re-amended Statement of Claim, which is in the same terms as [4(g)] of the Re‑amended Statement of Claim, and pleads that upon a proper construction of the Agreement the price payable pursuant to cl 10.2 is 15% of the gross revenue earned by Black Box from the provision of the services component of a Sale Transaction, including any software products or services provided as part of those services but excluding any hardware component. Black Box continues to otherwise deny the allegations in [4] of the statement of claim. In short, the fee payable pursuant to cl 10.2 upon the proper construction of the Agreement is a matter in issue. Answer 1 to the separate questions stated the meaning of Sale Transaction but not how, on the proper construction of the Agreement, the fee payable under cl 10.2 is to be calculated. Whether the fee payable under cl 10.2 is 15% of gross revenue of the software component of a composite transaction or 15% of gross revenue of the composite transaction is a matter in issue. At present Black Box relies upon the proper construction of the Agreement to support its contention that the fee payable is 15% of gross revenue of the software component of the composite transaction. Giving Black Box leave to rely upon the Software Fee Assumption estoppel in support of its contention that the fee payable is 15% of gross revenue of the software component of the composite transaction is to allow Black Box to raise another argument in support of a matter in issue, not to put in issue a matter which was otherwise determined by the answer to the separate questions.
Although the separate questions have been tried and determined, the remaining issues between the parties have not yet been listed for trial. Granting leave will increase the financial and emotional strain of ongoing litigation to TerraVision and its principal, Mr Clifford. However, greater prejudice would be caused to Black Box if it is not permitted to advance a defence which, if made out, will have a significant effect on the outcome of the proceedings.
Black Box will have leave to file the Proposed Rejoinder.