Re Caruso Australia Pty Limited and Porteco Australia Pty Limited v Portec Australia Pty Limited and Caruso Australia Pty Limited [1986] FCA 23 (13 February 1986)

FEDERAL COURT OF AUSTRALIA

Re: CARUSO AUSTRALIA PTY LIMITED and PORTECO AUSTRALIA PTY LIMITED
And: PORTEC AUSTRALIA PTY LIMITED and CARUSO AUSTRALIA PTY LIMITED
No. WA G29 of 1983
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Muirhead J.

CATCHWORDS

Practice and Procedure - application to further amend defence consequential upon amendment of Statement of Claim - denial of issues previously admitted and not consequential to amendment to Statement of Claim - principle discussed - amendments allowed subject to order as to costs.

Federal Court Rules Order 3 Rule 3(1) and (2) and Order 13 Rule 2

Clough v. Frog (1974) 4 ALR 615

Cropper v. Smith (1884) 26 Ch D 700

Leotta v. Public Transport Commission (1976) 9 ALR 437

HEARING

PERTH
13:2:1986

ORDER

Pursuant to Order 3 Rule 3(1) and (2) I extend the time within which the applicant should file its amended Statement of Claim until 20 March 1985 (being the date it was filed).

Pursuant to the same Rule and subject to an amendment of the respondent's Notice of Motion I extend the time for the filing of the amended defence until the 18 October 1985.

Upon the respondent's Notice of Motion filed on 30 January 1986 and pursuant to Order 13 Rule 2 I order as follows:

(1) that paragraph 10 of the amended Defence be deleted and

in lieu thereof the following be inserted "The
respondent denies each and every of the allegations and
particulars pleaded in paragraph 13 of the amended
Statement of Claim".

(2) that paragraph 12 of the amended Defence be amended so
that it reads "12 - The respondent denies paragraphs 16
and 17 of the amended Statement of Claim". (This order
is made by consent in the terms sought.)

(3) The respondent file and serve on the applicant a copy of
the amended Defence (as amended to date and by reason of
this order) within 7 days of this date.

(4) The respondent shall pay the applicant's costs of and
incidental to this Motion.

(5) The respondent shall further pay, and in any event, the
applicant's added costs and disbursements reasonably
incurred in the parparation of the applicant's case for
trial by reason of paragraph (1) of this order, being
costs and disbursements incurred after this date in
obtaining or seeking to obtain proof of such facts,
allegations or particulars as were not previously in
issue upon the pleadings. Such costs and disbursements,
unless agreed, shall be taxed and may if appropriate,
include fees or disbursements payable prior to trial to
expert witnesses by reason of this order.

(6) Liberty to apply.

Upon the applicant's Motion pursuant to Notice of Motion filed on 11

February last there will be an order in terms of paragraph 1, there will be no order upon paragraph 2 and the respondent shall pay the applicant's costs of and incidential to that Motion also. Liberty to apply.

It is important I believe that a further directions hearing be held in the near future. As these orders did not arise out of a directions hearing I am not confident of my power to now order a directions hearing otherwise than upon an application to that effect. I therefore simply suggest that the parties should apply for such a hearing to be held within the next four or five weeks.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

Yesterday I heard submissions on two Notices of Motion. The first filed on 30th January last on behalf of the respondent seeks an order pursuant to Order 13 Rule 2 that the respondent be granted leave to amend an already amended defence filed on 10th October 1985. One of the proposed amendments sought is most material.

2. The applicant opposes this application and seeks orders (inter alia) that the amended defence, already filed, be struck out on the grounds firstly that on the date it was filed the time previously ordered by the Court within which it was to be filed had expired. Secondly, it is claimed that the amendments were not consequential upon the applicant's amended Statement of Claim which was filed pursuant to order of the Court, thirdly that the amendment has a tendency to cause prejudice, embarrassment or delay and in the alternative represents an abuse of the process of the Court. The action involves a claim for damages by the applicant which carried on business as an earthmoving contractor and which in November 1982 had secured a contract for the supply of aggregate. The respondent agreed to design and provide appropriate rock crushing plant which the applicant claims proved incapable of crushing the contemplated quantities and which was otherwise unsuitable. The applicant, relying on the provisions of the Trade Practices Act 1974 and other causes of action claims very substantial damages.

3. On 7 December 1984, Toohey J. made certain procedural orders following a directions hearing. He ordered inter alia that the applicant should file an amended Statement of Claim within 21 days and that the respondent should file any amended Defence within 21 days of receipt of the amended Statement of Claim. Other orders were then made. In fact, the amended Statement of Claim was not filed until 20 March 1985, well beyond the time limited by the order.

4. Paragraph 12 of the original Statement of Claim set out certain representations made on behalf of the respondent as to the qualities and capacity of the rock crushing plant. Paragraph 13 alleged the representations were false and paragraph 14 set out five particulars of falsity:

"(a) The rock crushing plant was incapable of
producing anywhere near 150 tonnes per hour
and in fact never produced more than 30
tonnes per hour, even after extensive
modification by the Respondent and the
addition of an extra crushing component;

(b) The conveyor systems, the Portec primary
crusher and the Spokane crusher were used
components;

(c) The Aran screens were incapable of sorting
150 tonnes of aggregate per hour and were so
designed and constructed that they failed to
pass or properly pass the aggregate
according to the specifications;

(d) The plant was not integrated and in fact
consisted of independent component parts none
of which were designed for use with the other
component parts;

(e) The Spokane was unsuitable for crushing rock
from the Nillibubbaca quarry site and in fact
reduced that rock to a fine unusable powder."

5. In the original defence, the respondent which denied paragraph 13 of the Statement of Claim, pleaded to paragraph 14 as follows:

"11. As regards paragraph 14 of the statement of
claim:
(a) Save that the respondent says that the
rock crushing plant was eventually able
to maintain a production rate of 70
tonnes per hour, sub-paragraph (a) is
admitted.

(b) Sub-paragraphs (b), (c) and (e) are
admitted.

(c) Sub-paragraph (d) is denied."

6. This constituted a substantial admission of particular (a) (as to capacity), and admissions that substantial sections of the plant were not new, that the screens were incapable of properly coping with the quantities of aggregate required, and that the Spokane portable plant was unsuitable for the contemplated function. It is not possible for me upon an application such as this to assess the actual significance of these admissions but they appear to be such as would preclude the necessity of the applicant calling evidence to support several of its allegations of breach of warranty and unsuitability.

7. Be that as it may the amended Statement of Claim filed pursuant to Toohey J's order produced only one substantive amendment to paragraph 14 of the original (paragraph 13 in the amended pleading) and that was that '150' tonnes in paragraphs (a) and (c) was amended to '105', not something, again on its face, which one would expect to be of tremendous importance, especially as the incapability of producing the higher capacity previously pleaded was not in itself originally traversed.

8. The defence as amended, and filed on 18 October 1985 (over six months after the amended Statement of Claim) undoubtedly served to withdraw most of the earlier significant admissions. It was in this form:

"10 Save for admitting sub-paragraph (e) of the
particulars of falsity, the respondent denies
paragraph 13 of the statement of claim and
each and every allegation in sub-paragraphs
(a), (b), (c) and (d) of the particulars of
falsity contained therein."

9. The respondent's Notice of Motion now before me seeks in effect to withdraw the residual admission contained in the pleadings on this aspect and leave is now sought to amend the defence so as to read in answer to paragraph 13 of the amended Statement of Claim "The respondent denies each and every allegation in paragraph 13 of the Statement of Claim". Thus the substantial admissions are to be substituted by denials.

10. The respondent contends that the applicant's amendment as to the quantities of tonnes, from 150 to 105 entitles it to withdraw its admission that the "crushing plant was eventually able to maintain a production rate of 70 tonnes per hour" despite the fact that this quantity is still well below the reduced capacity of 105 tonnes of aggregate per hour. As to the admission that certain sections of the plant were 'used', as opposed to new, I am told this was pleaded in error due to misunderstandings between solicitor and client. On the material before me I am far from persuaded that either the amended defence filed, of the amendment now sought, was consequential upon the amendment to the Statement of Claim. It is an area where I must tread with some caution being appreciative that technical and possibly expert evidence may be involved, but I am not satisfied that such amendments are permissible as consequential pursuant to the order of Toohey J. and subsequent events. Should I in such circumstances permit the amendment?

11. The powers of this Court to amend pursuant to Order 13 Rule 2 are more than wide, they tend to be remedial in that "all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings". Consideration of the authorities indicates that an amendment should only be refused where bad faith is demonstrated or where the consequential injury or prejudice to the other party is incapable of remedy. And this reasoning applies to amendments sought during trial or on the eve of trial. See, for example, Clough v. Frog (1974) 4 ALR 615, where the High Court cited the words of Bowen L.J. in Cropper v. Smith (1884) 26 Ch D 700 at 710-11:

" . . . the object of courts is to decide the rights of the
parties, and not to punish them for mistakes they make
in the conduct of their cases . . . I know of no kind of
error or mistake which, if not fraudulent of intended
to overreach, the court ought not to correct, if it can
be done without injustice to the other party . . . as soon
as it appears that the way in which a party has framed
his case will not lead to a decision of the real matter
in controversy, it is as much a matter of right on his
part to have it corrected, if it can be done without
injustice, as anything else in the case is a matter of
right."

See also the observations of the majority of the High Court in Leotta v. Public Transport Commission (1976) 9 ALR 437 AT 446. Here the application is not made on the eve of trial. I am told that the applicant hopes to obtain a hearing date shortly but interrogatories for the examination of the respondent are proposed but not yet delivered. Such interrogatories may assist the applicant in proof of those allegations once admitted but, by consequence of the proposed amendments, now denied. The applicant's counsel stressed that further preparation may be required to proof witnesses, including experts, to gather evidence in proof of the allegations which will be required should the amendments be allowed. I readily appreciate these problems but it cannot be said that any prejudice to the applicant cannot be remedied or compensated for by an appropriate order for costs. I recognize that an order as to costs may in fact be an inadequate remedy to a party who by reason of an amentment to his opponent's pleadings is faced with a claim or defence of different perspective. Clough v. Frog (above) was one such case, but in view of the volume of authority on this aspect I would err in holding, with adequate time available before trial, that in the present situation the damage or injury to the applicant is incapable of remedy. These proceedings were initiated a long time ago, the amount claimed is apparently not far short of one million dollars and time remains for the applicant to meet any problems caused by the amendments now sought. The applicant's counsel informed me that due to the passage of time, subsequent use of the plant or perhaps its disassembly, formidable difficulties may be encountered in obtaining expert or other evidence in proof of the deficiencies in issue. These matters, if encountered, indeed the amendments themselves, may become of some significance in evidence. These are matters I cannot anticipate. On the other hand the issues may be crucial and in this type of case where the ultimate decision may rest on findings as to the factual matter I am dealing with, a substantial injustice may be done to the respondent if it is precluded from putting its case in toto. I therefore consider that the amendments now sought by the respondent must be allowed, subject to orders designed to minimise prejudice to the applicant.

12. The present state of this action is not satisfactory in part due to the fact that previous directions of this Court have not in all respects been complied with. In the orders I make I endeavour to bring matters up to date in the hope that further delays may be avoided. I make this order subject to an amendment of the Applicant's Notice of Motion seeking such relief.

1. Pursuant to Order 3 Rule 3(1) and (2) I extend the time
within which the applicant should file its amended
Statement of Claim until 20 March 1985 (being the date
it was filed).

2. Pursuant to the same Rule and subject to an amendment of
the respondent's Notice of Motion I extend the time for
the filing of the amended defence until the 18 October
1985.

3. Upon the respondents Notice of Motion filed on 30
January 1986 and pursuant to Order 13 Rule 2 I order as
follows:

(1) that paragraph 10 of the amended defence be deleted
and in lieu thereof the following be inserted "The
respondent denies each and every of the allegations
and particulars pleaded in paragraph 13 of the
amended Statement of Claim".

(2) that paragraph 12 of the amended defence be amended
so that it reads "12 - The respondent denies
paragraphs 16 and 17 of the amended Statement of
Claim". (This order is made by consent in the
terms sought.)

(3) The respondent file and serve on the applicant a
copy of the amended defence (as amended to date and
by reason of this order) within 7 days of this
date.

(4) The respondent shall pay the applicant's costs of
and incidental to this Motion.

(5) The respondent shall further pay, and in any event,
the applicant's added costs and disburements
reasonably incurred in the preparation of the
applicant's case for trial by reason of paragraph
(1) of this order, being costs and disbursements
incurred after this date in obtaining or seeking to
obtain proof of such facts, allegations or
particulars as were not previously in issue upon
the pleadings. Such costs and disbursements,
unless agreed, shall be taxed and may if
appropriate, include fees or disbursements payable
prior to trial to expert witnesses by reason of
this order.

(6) Liberty to apply.

13. Upon the applicant's Motion pursuant to Notice of Motion filed on 11 February last there will be an order in terms of paragraph 1, there will be no order upon paragraph 2 and the respondent shall pay the applicant's costs of and incidental to that Motion also. Liberty to apply.

14. It is important I believe that a further directions hearing be held in the near future. As these orders did not arise out of a directions hearing I am not confident of my power to now order a directions hearing otherwise than upon an application to that effect. I therefore simply suggest that the parties should apply for such a hearing to be held within the next four or five weeks.