Thornett v Argyle Diamond Mines Pty Ltd

[2004] WADC 94

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   THORNETT -v- ARGYLE DIAMOND MINES PTY LTD [2004] WADC 94

CORAM:   CHANEY DCJ

HEARD:   7 MAY 2004

DELIVERED          :   14 MAY 2004

FILE NO/S:   CIV 1659 of 2002

BETWEEN:   WENDY THORNETT

Plaintiff

AND

ARGYLE DIAMOND MINES PTY LTD
Defendant

MACMAHON CONTRACTORS PTY LTD
Third Party

Catchwords:

Leave to amend defence - Good faith - Adequacy at pleading - Prejudice

Legislation:

Workers' Compensation and Rehabilitation Act 1981

Result:

Leave granted

Representation:

Counsel:

Plaintiff:     Mr D Bruns

Defendant:     Ms F Davis

Third Party                   :     No appearance

Solicitors:

Plaintiff:     Separovic & Associates

Defendant:     Phillips Fox

Third Party                   :     No appearance

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

Fightvision Pty Ltd v Onisforou & Ors (1999) 47 NSWLR 473

Hewitt v Benale Pty Ltd (2002) 27 WAR 91

Upper Hunter County District v Australian Chilling and Freezing Co Pty Ltd (1968) 118 CLR 429

Case(s) also cited:

Nil

1. CHANEY DCJ: In September 2003, the defendant applied to amend its defence. The objective of the amendment was to bring the defendant within the definition of a deemed employer under s 175 of the Workers' Compensation and Rehabilitation Act 1981 so as to enable it to rely upon s 93E(3) of that Act. That application was dismissed by a registrar. The reasons for the dismissal are not revealed on a review of the file, but it was common ground between the parties that the registrar concluded that the material facts sought to be introduced by the proposed amendment would not, if proved, bring the defendant within s 175 of the Act.

2. This is an appeal from that decision, although the defendant does not now propound the same minute of proposed defence.  Rather a number of changes have been made to the original minute which reflect both the acknowledgment of the original deficiencies in the proposed amended defence, and the fact that, as time has gone on, the defendant's investigations have identified a need to plead factual position different from that which originally formed the basis of the pleading.

3. As a result, what is now before me is a third minute of proposed amended defence dated 4 May 2004, to which some further amendments were suggested during the course of argument. 

4. It is relevant to my consideration of the matter to consider the history of the action to date.  The writ was issued on 20 June 2002.  That was the day after the Full Court of the Supreme Court of Western Australia delivered its reasons in Hewitt v Benale Pty Ltd (2002) 27 WAR 91. That case determined that the provisions of s 93E of the Act applied to parties who were deemed employers pursuant to s 175.

5. The statement of claim was filed on 12 December 2002, although I was informed from the Bar table that the writ was not served until January 2003. According to the affidavit of Ms Catherine Anne Elphick, the statement of claim was not served until 18 February 2003. On 26 February 2003 the defendant filed a defence. The defence did not raise or rely on s 175 and s 93E of the Act.

6. Discovery was given by the plaintiff on 30 June 2003 and the defendant on 28 July 2003.  Each discovery contained documents relevant to the question of the plaintiff's employment, or more particularly the identity of her employer. 

7. In August 2003, documents for entry of trial were filed and served by the plaintiff.  On 5 September 2003, the defendant foreshadowed a proposed amendment to the defence to invoke the principles emerging from Hewitt v Benale.  On 23 September 2003 the initial application to amend the defence was filed and it was dismissed on 15 October 2003. 

8. On 20 October 2003 the notice of appeal against that dismissal was filed.  A new minute of amendment was filed with the notice of appeal seeking to address the defect in the original pleadings which had been identified by the Registrar. 

9. On 4 November 2003, a pre‑trial conference was adjourned pending the appeal.  On 11 November 2003, a chamber summons was issued by the defendant seeking leave to issue a third party notice against the plaintiff's employer, MacMahon Contractors Pty Ltd.  That summons was accompanied by a minute of proposed statement of claim against the proposed third party.  On 20 November 2003, the orders sought in that summons were granted.  The third party proceedings do not appear to have been progressed beyond those steps save that the third party entered an appearance on 23 December 2003. 

10. A further pre‑trial conference was set for 27 January 2004 but was adjourned pending this appeal which was then listed to be dealt with in February. On 9 February 2004, the defendant sought and obtained an adjournment of the appeal in order to seek more evidence in relation to the contractual relations between the third party, MacMahon Contractors Pty Ltd, and a related company called MacMahon Contractors (WA) Pty Ltd, which had a contract with the defendant for the provision of services at the site on which the plaintiff suffered her injury. It is asserted by the defendant that the plaintiff was engaged in the work the subject of the contract with MacMahon Contractors (WA) Pty Ltd, but was employed by MacMahon Contractors Pty Ltd, which was not originally a party to the contract with the defendant for the provision of those services. It would appear from Mr Elphick's affidavit of 9 February 2004, that, as at February 2004, the defendant believed that there may have been a subcontract between the two MacMahon Contractors companies in relation to those services. The adjournment of the appeal was granted on the basis that that matter needed exploration before the defence under s 175 and s 93E of the Act could be properly pleaded.

11. Subsequent investigations appear to have determined that no such subcontract exists.  Accordingly, the defendant has now brought in a minute of proposed amended defence which seeks to establish the necessary contractual relationship between the plaintiff's employer, MacMahon Contractors Pty Ltd, and the defendant by way of novation. 

12. The plaintiff's opposition to the grant of leave to amend is based on the proposition that the delay and difficulty in the defendant pleading a clear defence on the s 93E issue demonstrates a lack of good faith on the part of the defendant.  It is further submitted that the proposed pleading in par 4 and par 8 of the minute dated 4 May 2004 is vague and does not demonstrate a "secure basis for defence", and on that basis should not be allowed.  Finally, the defendant submits that the grant of the amendment will give rise to new factual issues which will require investigation as to a course of conduct between the relevant parties, the administration of interrogatories and further discovery.  The delay which will flow from these investigations will, it is submitted, cause delay which is prejudicial to the plaintiff who should be entitled to have her case heard.  Against that prejudice it was submitted that given the difficulty that the defendant has had in pleading the proposed defence, there is an apparent lack of substance in it, and thus the prejudice to the defendant in not allowing the amendment would be minimal. 

13. I do not accept the submission that the defendant's conduct indicates a lack of good faith.  Although it may have been desirable for the defendant to have proceeded with its investigations more quickly than it has, it is clear that the matters which have caused confusion are matters concerning the relationship between two companies over which the defendant has no control.  Although the defendant had a contract with one of those companies and now asserts that there was a novation of that contract with the other company, I accept that that does not necessarily mean that the defendant must have been fully apprised of the circumstances which led to the latter company undertaking the work the subject of the original contract.  I accept that the defendant may have needed to have made investigations which took time before it could adequately plead the case which it wished to assert. 

14. As to whether the pleading adequately establishes a factual basis upon which a novation could be found to have occurred, I expressed at the hearing some reservations as to the position as pleaded in the minute of 4 May 2004.  In the light of those reservations, counsel for the defendant suggested a further amendment to par 4.2 of the proposed minute so that it reads: 

    "In or about May 2002, MacMahon Contractors assumed the rights and obligations of MacMahon Contractors (WA) under the Contract and performed the work for the defendant under the Contract in lieu of MacMahon Contractors (WA) and the defendant paid MacMahon Contractors for that work." 

15. The defendant relied upon the decision in Fightvision Pty Ltd v Onisforou & Ors (1999) 47 NSWLR 473 to support the submission that the pleading as proposed was sufficient to support a claim of novation. The Court there cited the observation of Barwick CJ in Upper Hunter County District v Australian Chilling and Freezing Co Pty Ltd (1968) 118 CLR 429 at 437 that, in searching for the contractual intention, "no narrow or pedantic approach is warranted, particularly in a case of commercial arrangements" and applied those comments to the question of intention in relation to novation.

16. In my view, the pleading, at least as proposed by counsel at the hearing, should not be disallowed on the basis that it does not disclose a cause of defence.  Whether the plea can ultimately be made good, or a trial Judge may ultimately find that the circumstances pleaded constitute a novation, remains an open question for trial. 

17. Finally, there is the question of prejudice.  It is no doubt frustrating for a plaintiff wishing to proceed with their action, to have delay foisted on her while the defendant clarifies the defence it wishes to run.  On the other hand, disallowing the amendment would prevent the defendant from arguing a defence which, if established, may be a total answer to the plaintiff's claim.  Although the matter has been entered for trial, no trial date has yet been set.  Furthermore, leave to commence third party proceedings has been given.  Those third party proceedings are likely to raise the very same issues as the defendant will wish to ventilate in the context of the defence under s 93E of the Act.  No third party directions have yet been given, but it is quite likely that the third party proceedings will be dealt with at the same time as the trial of the main action.  The delay of which the plaintiff complains would in large part be likely to occur in any event by reason of the third party proceedings.  That said, it behoves the defendant to prosecute the third party proceedings with due despatch. 

18. In the circumstances, I have reached the view that leave should be granted to amend the defence in terms of the minute dated 4 May 2004 subject to certain amendments.  The first is that par 4.2 should read as set out above.  The second is that par 5.2 of the minute should be deleted.  The third is that, in par 8, the words "had agreed to" in the second last line should be deleted, and the word "perform" should read "performed".  Leave will be granted to amend the defence in terms of the minute date 4 May 2004 as so amended.