Zurich Bay Holdings Pty Ltd v ATM Enterprises Pty Ltd - [2010] WADC 120

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: ZURICH BAY HOLDINGS PTY LTD -v- ATM ENTERPRISES PTY LTD & ANOR [2010] WADC 120

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 28 JULY 2010

DELIVERED : Delivered Extemporaneously on 28 JULY 2010 typed from tape and edited by the Principal Registrar

FILE NO/S: CIV 1899 of 2006

BETWEEN: ZURICH BAY HOLDINGS PTY LTD (ACN 009 422 093)
Plaintiff
AND
ATM ENTERPRISES PTY LTD (ACN 083 885 018)
First Defendant
MURRAY PADDISON
Second Defendant

Catchwords:

Pleadings - Late application to amend

Legislation:

Nil

Result:

Application dismissed

Representation:

Counsel:

Plaintiff:     Mr T H F Caspersz
First Defendant              :     Mr M T S Rennie
Second Defendant         :     Mr M T S Rennie

Solicitors:

Plaintiff:     Jackson McDonald
First Defendant              :     HFM Legal
Second Defendant         :     HFM Legal

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

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Fletcher v St George Bank Limited [2010] WASC 75
Traeger v Harris [2010] WADC 101

PRINCIPAL REGISTRAR GETHING: By application dated 21 July 2010 the plaintiff has applied for leave to amend the statement of claim and for specific discovery. The application for specific discovery is consequential upon the amendments made to the statement of claim. I propose to deal with that second.
The application takes as its context the plaintiff's action against the defendants in relation to alleged defects with a cab over a D3 bulldozer. The cab, it appears, comprises of the cabin and a rollover protective structure, which is referred to by the acronym ROPS. The key allegations include an allegation that the cabin was not manufactured and installed in a proper and workmanlike manner. For present purposes, this is contained in par 12 of the statement of claim.
The current particulars to par 12 are as follows: "the cabin experienced excessive movement resulting in cabin seals failing prematurely, cabin mount failure, cabin doors not closing, broken cabin glass, and damage to the cabin air‑conditioner". The particulars go on to provide that further particulars will be provided by way of expert's report.
The plaintiff seeks to add in the following paragraph as par (c):
"The first defendant has failed to supply a test report containing the information required by AS2294.2-1997, and in addition, the qualification and status of the testing office in accordance with clause 6.4: 'Certification' of Earthmoving Machinery - Protective structures Part 2: Laboratory tests and performance requirements for rollover protective structures."
The law in relation to pleadings amendments, in particular late pleadings amendments, requires me to undertake, effectively, a two‑stage analysis. The first stage analysis is to determine whether or not on the ordinary rules relating to pleadings the pleading out to be allowed. The second relates to discretionary considerations.

Pleadings objections

Dealing with the first point, the defendants raise the issue that the amendment in its current form is essentially embarrassing. The concern, it appears from the defendants' submissions, is that the particulars, although purporting to be in a limited form, will inevitably open up the question of whether or not the ROPS frame, and indeed the cabin generally, was constructed in accordance with AS2294.2-1997 (which I will refer to as the "Australian Standard"). The plaintiff submits that the allegation is limited to the failure to supply the test report.
In relation to late pleadings amendments, the Chief Justice recently commented in the decision of Fletcher v St George Bank Limited [2010] WASC 75 at [30] that a late pleadings amendment ought to be fully particularised. It seems to me that the particular in par (c) sought to be added is not fully particularised.
The link between the failure to supply a test report and the alleged defective manufacture and installation of the cabin is not demonstrated. There is a gap in the flow of logic from the fact of the failure to supply a test report to the conclusion that this meant that the manufacture and installation was not done in a proper and workmanlike manner.
That link could be supplied in one of two ways. The first is that there is some applicable obligation, perhaps in the Australian Standard, which provides that a cabin on a bulldozer of this type cannot be used without the supply of a test report. The existence of an obligation in those terms is not particularised, nor pleaded. The second way it could arise is if the cabin itself was not constructed in accordance with the Australian Standard and the failure to supply the test report is given as evidence of that. Either way, the defendant does not know the case it has to meet.
As the High Court has iterated in a number of cases, including Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286:
"In determining the adequacy of a pleading, it is fundamental that a party is entitled to a statement of the opponent's case sufficiently clear to allow a party a fair opportunity to meet it."
On that basis alone, I am not satisfied that the pleading ought to be allowed.

Discretion

Were I of the view that the pleading ought to be allowed, then I would need to consider the issue of discretion. I propose to provide some reasons in relation to discretion in case the plaintiff seeks to make another attempt at amending the pleading by providing a greater level of particularity.
The law in relation to late pleadings disputes, as it seems to me, involves the overarching issue of balancing the competing risk of injustice in the context of maintaining public confidence in the legal system as a whole. Four factors emerge from the decided cases:
(a)the reason for delay in making the application;
(b)the prejudice to the plaintiff if leave is not granted;
(c)the prejudice to the defendant if leave is granted; and
(d)the impact on public interest if leave is granted.
For present purposes, it is sufficient that I refer to the decisions in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, the decision of the Chief Justice in Fletcher (supra) and my earlier decision in Traeger v Harris [2010] WADC 101 at [57].
Turning first to the reasons for delay in making the application, it is clear that the issue of the Australian Standard has been apparent on the face of the material since the commencement of the issues in dispute. In particular, the invoice pursuant to which the cabin was manufactured states:
"Manufacture and install cabin in accordance with Australian Standards AS2294."
It was thus open from the commencement of the action for the plaintiff to have made an allegation in relation to the Australian Standard and its effect on the allegation that the cabin was not manufactured and installed in a proper and workmanlike manner. This is not a case where there is a recent catalyst for this information coming to light. The affidavit filed in support of the application by one Lauren Cook sworn on 21 July 2010 does not set out any further reason as to why this issue was not dealt with earlier.
There was a request made on 21 May 2010 for documents relating to the ROPS, the rollover protective system, on the bulldozer. The initial discovery was provided by affidavit in May 2007. I am advised from the Bar table that in essence the issue arose in relation to the final preparation of witness statements for the trial. This is not a case where there is a catalyst for a late amendment.
In the course of submissions, I asked counsel for the plaintiff whether or not the reference to the test report was a particular arising out of the experts' reports exchanged. Further particulars arising from the experts' reports were foreshadowed in the pleading in its original form. I was advised that this is not a particular arising out of the experts' reports.
Turning then to the prejudice to the plaintiff, the prejudice is that it will not be able to run the allegation that the cabin was not manufactured and installed in a proper and workmanlike manner because, among other things, the first defendant failed to supply a test report containing the information required by the Australian Standard.
As I have already indicated, the mere fact of the failure to supply a test report does not logically lead to the conclusion that the manufacture and installation was not done in a proper and workmanlike manner. There are intermediate facts missing in that analysis. Be that as it may, the effect of not allowing the amendment is for the plaintiff not to be able to raise that issue.
The prejudice is only at the margin. The issue as to whether or not the cabin was manufactured and installed in a proper and workmanlike manner appears to have been the subject of detailed expert evidence. A minute relating to conferral between experts on 16 April 2010 was filed on 24 May 2010. The statement of position of each expert, Mr Apgar for the defendant, Mr Rossi for the plaintiff, does not refer to the Australian Standard.
There was common ground that, based on the fatigue cracking around the right front mounting bracket, the design of the bracket and method of welding were deficient. The disagreement relates to effectively whether or not the defect could be repaired or whether or not the cabin had to be removed with all the mounts redone.
It seems then to me that even if the amendments are not allowed, the plaintiff will be able to run the case that the cabin is defective. It looks like it has been agreed between the experts that the design and method of attachment were deficient. The real question seems to be the consequent damage. It seems to me that, notwithstanding the amendment, that substantive justice will still be able to be done between the parties.
Dealing then with the defendant, the prejudice to the defendant if the argument is granted is in this case linked to the issue of the public interest. The public interest takes as its sharpest form the question of imperilling trial dates. The present action is listed for a three day trial commencing 17 August.
The risk raised by the defendant in submissions is that inevitably the particular that is sought to be introduced will open up the whole issue of whether or not the ROPS frame complies with the Australian Standard. That in turn would lead to the question of expert evidence on whether or not the ROPS frame complied with the relevant Australian Standard.
I agree with that submission. It seems to me that the only way the question of the Australian Standard could come into relevance in the action is if the failure to comply with it can lead to the conclusion that the cabin was not manufactured and installed in a proper and workmanlike manner. It seems to me that inevitably the issue will lead to further expert evidence. It will also lead to further discovery, as the plaintiff has sought further discovery in the action as a consequence of making the amendment.
The scope of the discovery sought confirms my fear that the amendment will lead to the opening up of this issue. The scope includes documents relating to the design of the ROPS and the specification for the ROPS. It seems to me that introducing this issue opens up a new line of inquiry in the case, one for which the defendant will need to go to considerable effort to meet.
Turning then to the public interest, as I have mentioned, the trial is listed for three days commencing on 17 August. The amount in issue in this case is in the vicinity of $150,000. In that context, the decisions coming out of the Supreme Court require me to look at the issue of proportionality very closely.
It seems to me that one grave risk of allowing the amendment is that there will have to be considerably more trial preparation and inevitably the trial dates will be imperilled and vacated. It seems to me in this case that the public interest is served by the parties being required to go to trial on the basis of the issues that have been identified to date.
It is significant to my decision that the experts have conferred in relation to this action and set out the issues. It seems to me inevitable that if I allow the amendment that carefully considered process will be undone. That will cause expense, but more significantly extra time. There have also been witness statements filed. Again, if this issue is introduced, it seems to me inevitable that witness statements will need to be redone and additional statements done.
At three to four weeks out from trial, there is no possibility of the court reusing the trial dates commencing 17 August. This means that other litigants in the system would have been deprived of the use of those trial dates by reason of a late adjournment in this case.
As the High Court commented in the Aon (supra) decision at [98], [102]:
"Limits may be placed on re-pleading when delay and cost are taken into account."
In my view, the plaintiff has had ample opportunity to have made an amendment along these lines at a prior stage in the litigation. It has not done so. To allow the amendment at this stage runs the significant risk, indeed inevitably, that the allocated trial dates will be vacated. For those reasons, even if I were of the view that the amendment met the relevant rules in relation to pleadings, I would have declined to allow it on a discretionary basis.
Dealing then with the application for further discovery, that follows from the decision in relation to pleadings. That application ought not to be allowed.