Wise v Chu Underwriting Agencies Pty Ltd

[2010] WADC 14

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   WISE & ORS -v- CHU UNDERWRITING AGENCIES PTY LTD [2010] WADC 14

CORAM:   WAGER DCJ

HEARD:   15 OCTOBER 2008

DELIVERED          :   10 FEBRUARY 2010

FILE NO/S:   CIV 1051 of 2001

BETWEEN:   DOUGLAS RANKIN WISE

Second Plaintiff

CAROL JANETTE McKEOWN
Third Plaintiff

DOROTHY MARGARET WISE
Fourth Plaintiff

AND

CHU UNDERWRITING AGENCIES PTY LTD (ACN 001 580 070)
Defendant

Catchwords:

Practice and procedure - O 21 r 5 Rules of the Supreme Court - Leave to amend statement of claim - Application allowed

Legislation:

Rules of the Supreme Court, O 21 r 5

Result:

Application allowed

Representation:

Counsel:

Second Plaintiff            :     Mr R R Cywicki

Third Plaintiff               :     Mr R R Cywicki

Fourth Plaintiff             :     Mr R R Cywicki

Defendant:     Ms L G Rafferty

Solicitors:

Second Plaintiff            :     Butcher Paull & Calder

Third Plaintiff               :     Butcher Paull & Calder

Fourth Plaintiff             :     Butcher Paull & Calder

Defendant:     Sparke Helmore

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

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175

O'Malley Nominees Pty Ltd v Shawtec Pty Ltd & Ors [2009] WADC 171

1. WAGER DCJ: The second, third and fourth plaintiffs apply for leave to amend the substituted statement of claim in this matter pursuant to O 21 r 5 Rules of the Supreme Court.

2. The application was listed before me on 15 October 2008.  On 22 October 2008 I ordered that the second plaintiff file and serve an affidavit in support of the plaintiffs' application within 21 days and that the defendant have leave to file an answering affidavit within 21 days of receiving the second plaintiff's affidavit.  I indicated that a decision would be made once the documentation was received.

3. The second plaintiff filed an affidavit on 25 November 2008, however the affidavit was subsequently substituted by an affidavit filed on 2 June 2009.  On 18 September 2009 Registrar Kingsley extended the time in which the defendant could file and serve an affidavit in response until 30 October 2009.  The defendant chose not to file an affidavit in response.  The matter now comes to me for determination.

4. Briefly the history of the claim is as follows.  In 1998 the plaintiffs who are each owners of one or more transportable holiday residential units, being lots of a strata title development in Exmouth, entered into contracts of insurance with the defendant.  In March 1999 Cyclone Vance caused damage to the units.  The plaintiffs lodged claims under the policies of insurance for damage caused.  Work was then carried out by Mr Carroll who was appointed and approved by the defendant.

5. The plaintiffs were unhappy with the work performed and plead that the defendant failed to adequately repair the damage.  The endorsement of claim filed on 26 April 2001 states:

   "The first and second plaintiffs' claim against the defendant, damages arising out of the defendant's breach of its insurance contract with the plaintiffs in failing to indemnify and remedy the plaintiffs for damage caused to the plaintiffs' property located in Exmouth arising out of Cyclone Vance on or about 22 and 23 March 1999."

6. The first plaintiff obtained judgment by consent against the defendant on 21 June 2002.  The second and third plaintiffs were joined in 2004.  Although leave was not sought, the plaintiffs filed applications to amend substituted statements of claim on four occasions.  The current application relates to the fifth substituted statement of claim (the sixth statement of claim) dated 18 November 2005.

7. The plaintiffs submit that the amendments sought quantify damages that arise from the defendant's breach of contract consistent with the original claim and clarify matters for trial.  The second plaintiff in his substituted affidavit sworn 2 June 2009 refers to the first statement of claim that was filed having a number of problems including the omission of the third and fourth plaintiffs.

8. The second statement of claim filed was substantially amended and particularised the work done by the plaintiffs or the plaintiffs' agents to the relevant units.  Reimbursement for the cost of the work performed and for incidental items was also claimed as is the work that the plaintiffs allege was not performed properly by Mr Carroll and particulars of loss of rental, loss of enjoyment, inconvenience, disappointment, anxiety and stress.

9. The third statement of claim contained relatively minor amendments.

10. The fourth statement of claim was prepared by the second plaintiff who was self‑represented at the time.  Additional claims including a claim for carpets and claims for personal inconvenience, disappointment, anxiety and stress suffered by the plaintiffs were added.  Monetary sums were included in the particulars.

11. The fifth statement of claim omitted claims for loss of rent and personal distress.  The plaintiffs' solicitor at the time, Mr Goodlet of Unmack & Unmack, amended the pleadings in such a way that the plaintiffs considered the loss quantified to be too low and the pleadings too narrow.  The second plaintiff represented himself in late 2006 and early 2007 and attempted to further revise the statement of claim.

12. In June 2007, the plaintiffs instructed new legal representatives, Butcher, Paull & Calder and the sixth statement of claim (the proposed substituted statement of claim) was drafted.  The proposed substituted statement of claim significantly increases the claim by including a sum for further remedial work quoted at a cost of $150,513 plus GST.  The second plaintiff deposes that expert reports upon which this sum is substantially based were not available at the time when previous pleadings were drafted and that the pleadings are necessary for there to be a proper and fair hearing of the issues between the parties at trial.  Importantly the plaintiff states in par 114:

    "I do not contemplate any further amendments to the pleadings."

13. The defendant opposes the proposed amendments to the statement of claim because the defendant submits that the plaintiffs have repeatedly amended their pleadings.  A period of 10 years has passed since the cyclone and more than four years since all parties were joined.  The plaintiffs have obtained expert reports in the past including reports from Cooper & Oxley and from Mears Construction.  It is submitted that it is improper and unfair to include new particulars and new heads of damages after repeated amendments and the passing of time.  The new expert reports of Ausco Building Systems and Robin Salter & Associates identify remedial works that have yet to be performed and that were identified for the first time 8½ years after the cyclone.  The defendant submits that the contents of the reports are inconsistent with earlier proceedings.  It is submitted that the reports have limited or no particularity.

The law – O 21 r 5 Rules of the Supreme Court

1. Principal Registrar Gething recently summarised the law relevant to the discretion to allow amendment pursuant to O 21, r 5 of the Rules of the Supreme Court.  In O'Malley Nominees Pty Ltd v Shawtec Pty Ltd & Ors [2009] WADC 171. At par 123 the Principal Registrar stated:

   "What may be described as the traditional approach to the exercise of discretion in relation to pleadings amendments is summarised by Newnes AJA in May v Thomas [2008] WASCA 215 in the following terms (at [33] – [34]):

   'The relevant principles to be applied on an application to amend a pleading are well-known.  In general, a party should be permitted to amend their pleading so that the court may decide all matters in issue between the parties, unless the amendment would cause an injustice to the other party which could not be adequately remedied, for instance by an order for costs: Cropper v Smith (1884) 26 Ch D 700, 710; Shannon v Lee Chun (1912) 15 CLR 257, 260 - 261; Clough v Frog (1974) 4 ALR 615, 618; The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, 154.

   The party seeking the amendment bears the burden of persuading the court that the amendment will not cause irremediable prejudice to the other party: Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd [1992] 1 WLR 1025, 1030; McKenzie v Commonwealth of Australia [2001] VSC 361 [22] - [23]; Burk v Commonwealth of Australia (No 3) [2004] VSC 210. However, the party opposing the amendment ordinarily bears the evidential onus of adducing evidence in relation to the prejudice, at least where the proof of that prejudice lies in the hands of that party; the non-existence of prejudice is difficult to prove, so that in practice in the latter circumstances an evidential burden is borne by the party resisting the amendment: Hancock Shipping Co Ltd (1030).  But it is not sufficient for a party to rely on prejudice which results from an unreasonable act or omission on the part of that party: Steward v North Metropolitan Tramways Co (1886) 16 QBD 556, 559 ‑ 560; Wilson v Grimwade [1995] 2 VR 628, 632'."

2. Further, at par 126 the Principal Registrar referred to the decision of Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175:

   "The majority in Aon made the following comments on (Court Procedure Rules 2006 (ACT)) Rules r 21 which are relevant to the interpretation of RSC O 1 r 4A and 4B (in relation to case management) (at [98], [102]):

   'Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a 'just resolution' is to be understood in light of the purposes and objectives stated.  Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings.  This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account.  The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution.  It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.

   …

   The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will.  Factors such as the nature and importance of the amendment to the party applying cannot be overlooked.  While r 21 assumes some ill‑effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail.  It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case.  Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made.  There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates.  Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion.  Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment'.

   and (at [112] – emphasis in original):

   'A party has the right to bring proceedings.  Parties have choices as to what claims are to be made and how they are to be framed.  But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced.  That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate'."

The recent expert reports – the basis of the proposed amendments

1. The defendant submits that the recent reports are substantially inconsistent with previous building inspection reports and should therefore be disregarded until the Court is satisfied on proper factual evidence that the amendments should be allowed and submits that the reports do not sufficiently particularise the amendments they allegedly support.  The plaintiffs, however, submit that the expert reports speak for themselves and provide sufficient information to identify liability and support the pleadings.  The plaintiffs specifically rely on the conclusions reached in the report of Robin Salter & Associates dated 11 February 2008 that include the following:

   "2.1... floor repairs did not resolve water damage from the cyclone event which has now become a serious problem. External panel connections have rusted significantly since the Cyclone Vance event and the rebuild.

   2.2The carpet has been replaced since Cyclone Vance but is installed very poorly.  The replacement carpet has not been cut to the correct size for the rooms it is installed in and in some places it is rumpled up.  There has been further moisture damage to the floor and carpet due to the inadequate rebuild undertaken previously.

   ...

   There is extensive damage to the bathrooms and toilets of each unit where the floor has not been repaired adequately or at all.  There is a very large amount of vertical movement in the floors, particularly near drain ports and many tiles are loose due to the floor movement.  Where vinyl has been installed, the vinyl is lifting for the same reasons.

   ...

   2.3There are numerous instances of debris impact damage to external panels of each of the buildings.  Many of the panels require replacement and even those that don't will prove difficult to install into the replacement steel channel which is required due to extensive corrosion.

   2.4Many window frames are out of square.  This is most likely due to the building flexing during Cyclone Vance.  It would appear a large amount of silicone sealant has been used in many cases to try to make the frame joints to the wall frames weatherproof with varying levels of success.

   ...

   3.1It is apparent from the current state of the units that whatever repairs were carried out, the units were not made good.  There is ongoing water damage occurring to the floors and ceilings of the units."

2. Although the reports are more extensive than the subparagraphs quoted, this quotation illustrates that the conclusions do not appear to be speculative in their nature.  I am satisfied that the amendments sought relate to the issues raised in the new reports and place the defendant on notice of the case it is required to meet.

The reasons for delay in making the application

1. Although the cyclone event occurred 10 years ago, the plaintiffs' solicitors arranged for the provision of expert reports and prepared the substituted statement of claim the subject of this application without delay once instructions were taken in 2007.  The defendant, in oral submissions, highlighted some of the defects in earlier pleadings and in earlier expert reports.  I accept the matters deposed to by the second plaintiff in his substituted affidavit sworn 2 June 2009 as being the reasons for delay and note specifically that in the period of 2005 to 2007 (when the second plaintiff was self‑represented) the amendments sought were not appropriate and that the amendments sought in 2007 (prior to the proposed substitute to the statement of claim) were unduly restrictive in light of the contents of the new experts reports.

The prejudice to the plaintiffs if leave is not granted

1. The proposed substituted statement of claim increases the identified cost of further remedial work from $12,737.92 to $150,513 plus GST.  The matters raised in recent expert reports go beyond the issues raised in previous reports.  The plaintiffs would be significantly prejudiced if leave was not granted.

Prejudice to the defendant if leave is granted

1. Although I accept that after a period of 10 years the defendant is entitled to resolution and that repeated delays are contrary to case flow management principles, the expert reports and the amendments sought sufficiently particularise the plaintiffs' claim to allow the defendant to meet it.  Although the defendant's costs relating to trial will be increased, this is not the only matter to consider.  The defendant has had notice of the amendments sought and the contents of the expert reports for nearly two years.  The defendant does not suggest that the pleadings the subject of the amendments sought are defective.

2. There is no reason why the defendant cannot meet the plaintiffs' case as amended.

The impact on the public interest if leave is granted

1. Although the plaintiffs should be able to properly plead their case, this matter has now been delayed for long enough.  The second plaintiff states at par 114 of his affidavit "I do not contemplate any further amendment to the pleadings".  In my view this view must be taken by the second plaintiff and will be taken by the Court (Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175). If there is any further application for amendment then it would be argued that it would not be in the public interest. This matter should now proceed consistent with the principles of case flow management.

2. The application is allowed.