Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited (No 3) [2010] FCA 1439 (21 December 2010)

Last Updated: 21 December 2010

FEDERAL COURT OF AUSTRALIA

Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited

(No 3) [2010] FCA 1439

Citation:		Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited (No 3) [2010] FCA 1439
Parties:		TROPICAL REEF SHIPYARD PTY LTD (ACN 098 851 775) v QBE INSURANCE (AUSTRALIA) LIMITED (ACN 003 191 035)
File number:		VID 157 of 2009
Judge:		GORDON J
Date of judgment:		21 December 2010
Catchwords:		PRACTICE AND PROCEDURE – application to further amend statement of claim – where the Court had previously identified method of pleading causation – whether the applicant properly pleaded causation.
Legislation:		Federal Court of Australia Act 1976 (Cth)
Cases cited:		QBE Insurance (Australia) Limited v Tropical Reef Shipyard Pty Ltd [2009] FCAFC 161 Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited [2009] FCA 1088 Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited (No 2) [2010] FCA 1093 Commonwealth v Verwayen (1990) 170 CLR 394
Date of hearing:	9 December 2010
Date of last submissions:	9 December 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	25
Counsel for the Applicant:	P Murdoch QC with P Solomon SC
Solicitor for the Applicant:	Turks Legal
Counsel for the Respondent:	DL Williams QC with HNG Austin
Solicitor for the Respondent:	HWL Ebsworth Lawyers

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 157 of 2009

BETWEEN:	TROPICAL REEF SHIPYARD PTY LTD (ACN 098 851 775) Applicant
AND:	QBE INSURANCE (AUSTRALIA) LIMITED (ACN 003 191 035) Respondent

JUDGE:	GORDON J
DATE OF ORDER:	21 DECEMBER 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The parties bring in orders to give effect to these reasons for decision and for the future management of the proceeding by no later than 4.00 pm on 24 January 2011.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 157 of 2009

BETWEEN:	TROPICAL REEF SHIPYARD PTY LTD (ACN 098 851 775) Applicant
AND:	QBE INSURANCE (AUSTRALIA) LIMITED (ACN 003 191 035) Respondent

JUDGE:	GORDON J
DATE:	21 DECEMBER 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. The applicant (TRS) seeks leave to file the “Applicant’s Proposed Further Amended Claim” (the FAC). It is their fourth attempt to formulate a claim for loss of turnover. For the reasons that follow, I would refuse leave to TRS to file the FAC. It was common ground that if TRS was not granted leave to file the FAC, then judgment should be entered in favour of QBE Insurance (Australia) Limited (QBE) on this part of TRS’ claim.
2. The issues in this proceeding have been the subject of previous consideration by Finkelstein J and by the Full Court of the Federal Court: see Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited [2009] FCA 1088, QBE Insurance (Australia) Limited v Tropical Reef Shipyard Pty Ltd [2009] FCAFC 161 and Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Limited (No 2) [2010] FCA 1093.
3. In the last of those decisions (dealing with the third attempt by TRS to formulate a claim for loss of turnover), Finkelstein J described the issues in the proceedings as follows:
   1. This case involves several claims by the insured, Tropical Reef Shipyard Pty Ltd (TRS), under two policies of insurance issued by QBE Insurance (Australia) Ltd (QBE). The policies, entitled “Instant Profits Insurance – Cash Flow Insurance – Simplified Business Interruption Insurance”, are intended to protect the assured against “weekly loss of Turnover suffered ... if the Business is interrupted or interfered with due to ... property ... having sustained ... loss or damage”. QBE seeks to bring the claims to an end through a summary judgment application under s 31A of the Federal Court of Australia Act 1976 (Cth). The application is brought on the basis that “TRS have not pleaded, and it should be inferred that it cannot advance, an arguable claim of a loss of Turnover established consistently with the operation of the Policies”.
      

Background

...

3. The principal issue in dispute concerned the meaning of the insuring clause. That clause provides that “for each week we [QBE] will pay an amount based upon Weekly Calculations not exceeding the Weekly Sum Insured each week in respect of loss of Turnover suffered by you [TRS] during the Indemnity Period”, such payment to “be made every seven days whenever practicable”. “Weekly Sum Insured” is defined to mean “the sum insured for each week which you have selected and which appears in the Schedule. All calculations shall be on a weekly basis”. The sum insured in the Schedule for the first policy is $201,000 and for the second it is $183,900. “Turnover” is defined to mean “money paid or payable to you for goods sold and for services rendered”. It is agreed on both sides that loss of Turnover is calculated by subtracting actual weekly Turnover from Actual Average Weekly Turnover for each week. Actual Average Weekly Turnover is defined as “the Actual Average of the Turnover for the twelve (12) months preceding the commencement date of the interruption”.
   
4. Three incidents are alleged to have caused damage to a slipway used by TRS to slip vessels to enable it to provide repair and maintenance services. The damage to the slipway is said to have interrupted the business operations of TRS resulting in it suffering a loss of weekly Turnover for which it makes claim under the policies.
   
5. As it turns out, there was not a loss of Turnover in each week during the indemnity period covered by each policy. In some weeks TRS’s actual Turnover exceeded its Actual Average Weekly Turnover. ...
   

...

4. There was and remains a dispute about the approach to TRS’ calculation of its loss. Some aspects of the issue have been considered by Finkelstein J. First, one of the questions (Question 4) his Honour reserved for determination was to test QBE’s approach to the calculation of loss. The question and answer was as follows:

Question 4:

Upon the assumption that:

(a) the Actual Weekly Turnover and Average Weekly Turnover figures pleaded in Annexures D, G and H to the Applicant’s Claim are correct (as corrected by paragraphs 21-23 of the Supplementary Report of Stephen Munro Gibson dated 10 June 2009);

(b) the allegations pleaded in paragraphs 1, 2, 4 to 15, 22 to 26, and 32 to 36 of the Applicant’s Claim are established;

(c) the Respondent has paid a total sum of $2,000,000 to the Applicant in respect to the claims made in the proceedings; and

(d) the Applicant’s claims pursuant to the 2005 renewal (as defined in paragraph 5 of the Applicant’s Claim) and the 2006 renewal (as defined in paragraph 8 of the Applicant’s Claim) are as pleaded in Annexures D, G, H and I to the Applicant’s Claim (as corrected by paragraphs 21-23 of the Supplementary Munro dated 10 June 2009);

upon the proper construction of the 2005 renewal and the 2006 renewal, is the Applicant entitled to any and if so what amount under the 2005 renewal and/or the 2006 Renewal in respect to loss of Turnover under the said policies?

Answer: The Applicant is entitled to loss of Turnover under:

(a) the 2005 Renewal for the weeks ending 12 April 2007 to 25 October 2007 in respect to the September 2006 Incident;

(b) the 2006 Renewal for the weeks ending 22 February 2007 to 5 April 2007 and 1 November 2007 to 14 February 2008 in respect to the November 2006 Incident;

calculated in accordance with the methodology identified in the reasons for judgment, subject to proof of the loss of Turnover and the causal connection required by the terms of each of the policies.

(Emphasis added.)

5. After Finkelstein J explained his answer to Question 4 (in Tropical Reef Shipyard Pty Ltd [2009] FCA 1088 at [14]), he identified the issues that remained to be resolved (at [15]) to be “(a) whether there is a causal connection between the incidents and the loss claimed and (b) whether Turnover, and therefore Actual Average Weekly Turnover, ought be calculated by reference to total invoiced sales or cash receipts, or a combination of both, plus work in progress”.
6. On TRS’ third attempt to plead these issues, Finkelstein J agreed with QBE that the approach then adopted by TRS was not what the policy called for and held that TRS was not able to sustain its claim for lost income as it was then formulated. This aspect of the judgment is important because TRS maintains that claim as its “alternative methodology” in the FAC despite Finkelstein J refusing TRS leave to file that claim. Notwithstanding that leave was refused, Finkelstein J did not accept that TRS could not establish a claim for compensation. His Honour went on to say (at [27]) that:

To do so [TRS] will have to replead its case in accordance with the following methodology. First step – identify the date of commencement of interruption. Second step – calculate the Actual Average Weekly Turnover for the 12 months preceding the date of commencement of interruption. Third step – calculate the weekly Turnover for each relevant week: that is for each week in respect of which loss is claimed. I have described how Turnover is to be calculated for purposes of both step two and step three. Fourth step – calculate the loss of weekly Turnover by deducting weekly Turnover from the Actual Average Weekly Turnover for each week. Fifth step – establish that any reduction in income is caused by the interruption. One way of proving causation is to: (1) identify the vessels TRS was unable to slip and repair in the relevant period; (2) estimate the vessels it lost the opportunity to slip and repair in the relevant period; and (3) determine the value of the work that could have been performed on those vessels and the date or dates upon which invoices for that work would have been issued. There may be other ways to prove causation. Sixth step – reduce the loss of weekly Turnover by the Rating Classification percentage and (where applicable) reduce the figure to the maximum Weekly Sum Insured.

(Emphasis added.)

7. Finkelstein J gave TRS 28 days to make any further amendment application. It filed such an application on 8 November 2010 and it is that application which is before the Court.
8. What then did the FAC contain? The FAC, as with the earlier drafts, pleaded the general nature of TRS’ claim, the Business Interruption Policy and the renewals of that policy in 2005 and 2006 (collectively, the Policy) and a statement of TRS’ case. Each incident was then pleaded separately – the September 2006 Incident Claim and the November 2006 Incident Claim.
9. Each of the claims was pleaded in substantially identical terms. So far as is presently relevant to the issues currently before the Court, I will deal with the September 2006 Incident Claim. After pleading that on or about 4 September 2006, the vessel Castel Braz collided with the bottom end of the slipway (para 16), TRS pleads that the slipway sustained damage in that its bottom 15 metres were structurally damaged rendering it unsuitable for use and requiring reconstruction (para 17). At paragraph 20, TRS pleads that QBE accepted the claim under the Policy and made identified payments to TRS totalling in excess of $1.445 million.
10. TRS pleads that it first became aware of the damage to the bottom end of the slipway on 3 April 2007 (para 23). The claim then pleads that after that date (3 April 2007), TRS investigated and assessed the damage (para 24), took advice and then undertook repairs from July until 22 October 2007 (paras 25 – 28). The next few paragraphs are critical. It is necessary to set them out in full:

[29]. In the premises of paragraphs 23-28, above, throughout the period 3 April 2007 – 22 October 2007, [TRS]:

(a) was unable to, and did not, slip any vessels which required the use of the bottom 15 metres of the slipway;

(b) sustained interference to the work schedule of vessels in fact on the slipway, as a result of an inability to utilize the bottom 15 metres of the slipway;

(c) lost opportunities to undertake double slipping of vessels, as a result of an inability to utilize the bottom 15 metres of the slipway;

(d) lost opportunities to seek smaller vessels (which did not need to use chainage 174 – 189) by reason of the need to investigate and undertake repairs of the type described above;

(e) further to the above, lost opportunities to slip and repair vessels by reason of the closure in April 2007, the investigations in April and May 2007, the repairs in July and August 2007, the closure for further repairs in each of September 2007 and October 2007 and the stranding of HMAS Leeuwin on the slipway in October 2007.

Loss

[30]. Accordingly, in these premises, in the period 3 April 2007 – 22 October 2007, the ship repair and engineering business of [TRS] was interrupted or interfered with.

[31]. By virtue of the interruption and/or interference set out above, [TRS] sustained loss and damage, constituted both by direct losses and, further, by reason of lost opportunities to slip and repair vessels.

Particulars

(a) By virtue of the business undertaken by [TRS] in the periods April – October 2005, April – October 2006 and April – October 2008, in which the bottom 15 metres of the slipway were utilized, [TRS] would have expected to slip four vessels requiring the use of the bottom 15 metres of the slipway in the period April – October 2007, and derive revenue from that work. In the premises above, that did not occur;

(b) [TRS] suffered both direct loss and lost opportunities loss as a result of interference to the work schedule which, but for the damage to the slipway, would have occurred as follows:

(i) because the DPI Pontoon was stranded on the slipway while investigations of the slipway damage were conducted and the slipway bogies were recovered;

(ii) in respect of the vessel “HMAS Leeuwin”, because the tides were not sufficiently high to allow the vessel to be slipped without the use of the bottom 15 metres of the slipway;

(iii) in respect of the vessel “HMAS Leeuwin”, because the tides were not sufficiently high to allow the vessel to be unslipped without the use of the bottom 15 metres of the slipway leaving it stranded on the slipway until repairs to that part of the slipway were completed;

(iv) in or about October 2007, in respect of the vessel “Melville”, a sister ship to HMAS Leeuwin, by reason of the fact that the slipway was closed for three weeks and HMAS Leeuwin was stranded on the slipway for a further two weeks resulting in the slipping occurring later than planned and previously requested work being reduced in scope.

(c) further to (b) above, [TRS] lost the opportunity to double slip vessels as follows:

(i) in or about April 2007, the vessels “GHT22” and “Wilunga”;

(ii) in or about April 2007, the vessels “Mermaid” and “Peluma”;

(d) further to (b) and (c) above, by reason of its inability to slip vessels that would or might require the bottom 15 metres of the slipway in order to be slipped, and/or by reason of the fact that it was required to turn away vessels during the slipway closures in April and September 2007 while repairs to the bottom end of the slipway were undertaken, [TRS] lost opportunities to undertake work on vessels as follows:

(i) in or about April/May 2007, several large purse seine vessels;

(ii) in or about April/May 2007, the vessel “ACPB Bundaberg”;

(iii) in or about May 2007, the vessel “Western Triumph”;

(iv) in or about May/June 2007, the vessel “Solomon Chiefton”;

(v) in or about September 2007, the vessel “Caroline Voyager”;

(vi) in or about September 2007, the vessel “Cruise Whitsundays”.

(e) further to (a) – (d) above, throughout the period April – October 2007, the necessity to repair the bottom 15 metres of the slipway caused management to focus not on attracting new business, but rather, and to the contrary, on the necessary investigations and repairs of the bottom 15 metres of the slipway.

11. TRS then turned to quantification of its claim. The FAC outlined the steps (at [33]) as follows:

(a) First Step – identify date of commencement of interruption.

(b) Second Step – calculate “Actual Average Weekly Turnover” for the 12 months preceding the said date of commencement of interruption;

(c) Third Step – calculate “Loss of Weekly Turnover” from the said date of commencement of interruption, until 22 October 2007, on a “week by week” basis;

(d) Fourth Step – apply to each week’s “Loss of Weekly Turnover” figure:

(i) the “Rating Classification” percentage; and

(ii) (where applicable) reduce the figure to the maximum “Weekly Sum Insured”.

12. TRS submitted that its formulated claim for loss of turnover had adopted the template set out in the reasons for decision of Finkelstein J at [6] above. QBE opposed TRS being granted leave to further amend its statement of claim to formulate its claim for loss of turnover on the basis that in relation to the second, third and fourth steps, each of the methodologies pleaded by TRS were defective:
    1. in relation to what TRS describes as its Primary Methodology, QBE submitted that TRS had not amended its pleading to plead a case which framed the case suggested by Finkelstein J (see [6] above) and, in any event, it was evident from TRS’ own materials that it could not properly do so; and
    2. as noted earlier (see [6] above) TRS had retained, as its Alternative Methodology, a pleaded case which Finkelstein J decided in Tropical Reef Shipyard Pty Ltd [2009] FCA 1088 could not be sustained.

I will deal with each methodology in turn.

Primary Methodology

13. TRS pleaded its claim in the following terms:

First Step

34. ... [T]he date of commencement of interruption to the “Business,” resulting from the 3 September 2006 incident, is 3 April 2007.
    

Second Step ...

34A. As set out in page 1 of 2 of Annexure E1 hereto, the “Actual Average Weekly Turnover,” for the period 4 April 2006 – 3 April 2007, is $392,431. The methodology applied in calculating that figure is explained in paragraph 34B below.

34B In allocating “Turnover” to each week, in the period 4 April 2006 – 3 April 2007 in order to give effect to the language: “money paid or payable to [TRS] for goods sold and for services rendered”, regard has been had to:

(a) the value of invoices issued in each week;

less

(b) the value of credit notes issued in each week,

without regard to the timing of the rendering of services.

...

Third Step ...

37A As set out in Annexure F1 hereto, for each week in the period 3 April 2007 – 22 October 2007, “Loss of Weekly Turnover” is as set out in the column, styled “Loss/(Gain) of Average Weekly Turnover”.

37B. The methodology in relation to the quantification of turnover within the column styled “Weekly Turnover” is equivalent to the methodology described in paragraph 34B above ...

...

Fourth Step ...

40A. As identified in Annexure F1 hereto, total loss in the period 3 April 2007 – 22 October 2007, after applying the “Rating Classifications percentage” and (where applicable) the weekly cap, totals $3,187,059.

14. A careful reader of the pleading will note that the four steps pleaded by TRS (see [13] above) omit the fifth step of the Finkelstein J’s template. QBE submits that TRS not only failed to plead, but cannot plead, the fifth step identified by Finkelstein J – to establish that any reduction in income was caused by the interruption due to property having sustained loss or damage. In particular, QBE submits that TRS was obliged to plead, and did not plead, the following elements to establish causation:
    1. identify the vessels TRS was unable to slip and repair in the relevant period;
    2. estimate the vessels it lost the opportunity to slip and repair in the relevant period; and
    3. determine the value of the work that could have been performed on those vessels and the date or dates upon which invoices for that work would have been issued.

Although his Honour said (see [6] above) that there may have been other ways to prove causation, in the present case TRS did not suggest that there was another way. Indeed, TRS submitted that they had adopted what was colloquially described as the “Finkelstein template” or the “Invoice Methodology”: see [6] above.

15. TRS, on the other hand, submits that it pleaded causation in pars [29] – [31] of the FAC: see [10] above. For the following reasons, I reject TRS’ submissions.
16. The core of TRS’ problem is identified by the fact that TRS has not pleaded (and in my view, must plead) that the amount of turnover allegedly lost in any particular week is the consequence of the interruption. A number of points must be noted. First, it is now common ground that the loss of turnover is calculated and paid weekly: see [11] above. In the present case, the weekly calculation of loss of turnover was set out in Annexure F1 to the FAC as follows:

Week of Indemnity	Week commencing	...	Weekly Turnover [(Actual)]	Loss/(Gain) of Average Weekly Turnover
1	3 Apr 2007		95,455	296,976
2	10 Apr 2007		12,780	379,652
3	17 Apr 2007		96,996	295,435
4	24 Apr 2007		2,214,658	(1,822,227)
5	1 May 2007		474	391,957
6	8 May 2007		918,202	(525,771)
7	15 May 2007		414,481	(22,050)
8	22 May 2007		188,870	203,561
9	29 May 2007		2,273,657	(1,881,226)
10	5 Jun 2007		751,142	(358,711)
11	12 Jun 2007		10,096	382,335
12	19 Jun 2007		20,193	372,239
13	26 Jun 2007		2,027,686	(1,635,255)
14	3 Jul 2007		373,853	18,578
15	10 Jul 2007		40,255	352,176
16	17 Jul 2007		349,928	42,503
17	24 Jul 2007		140,661	251,770
18	31 Jul 2007		56,513	335,918
19	7 Aug 2007		181,004	211,427
20	14 Aug 2007		579,700	(187,269)
21	21 Aug 2007		31,307	361,124
22	28 Aug 2007		670	391,761
23	4 Sep 2007		216,853	175,578
24	11 Sep 2007		(191,227)	583,658
25	18 Sep 2007		1,125,981	(733,550)
26	25 Sep 2007		814,526	(422,095)
27	2 Oct 2007		(139,154)	531,586
28	9 Oct 2007		628,753	(236,321)
29	16 Oct 2007		219,377	173,055
			13,453,693	(2,073,185)

17. A number of matters should be noted about the contents of this Annexure.
    1. The Weekly Turnover was based on the value of the invoices issued in each week less the value of the credit notes issued in each week: see paragraphs 3.8 and 3.9 of the Report prepared by Deloitte dated 5 November 2010.
    2. The weekly turnover and, therefore, the weekly loss or gain fluctuated widely. In some weeks, (eg week 4), TRS made a substantial gain compared to the average weekly turnover. In other weeks, there was an increased loss compared to the average weekly turnover because TRS had issued credit notes (see, for example, weeks 24 and 27);
    3. During the period of interruption from 31 August 2007 to 21 September 2007 when the slipway was closed for repairs as a result of the September 2006 incident (see [27] of the FAC), the actual turnover was $1,152,277. A similar result applies for the period when TRS pleads that the slipway was closed due to the November 2006 incident.
    4. TRS filed a witness statement which explained that TRS adopted three different types of chargeable jobs; fixed price - where the customer pays a fixed price for completion of the work; estimate / budget – where the work is completed on a labour and material charge basis but it is expected that the job will be completed + / - 15% of the budget / estimate and cost plus – where the work is completed on a labour and material charge basis. As a result of the differing contractual and payment terms with different customers, there are three different types of invoicing practices adopted:

4.1 Milestone invoicing – where the customer may only be able to be invoiced when particular milestones are achieved (for example, completion of particular work);

4.2 Progress invoicing – either on a dollar value or time basis (or both) as agreed with the customer (for example, every two weeks value of work in progress); and / or

4.3 Completion invoicing – where invoices are raised on completion of the work.

5. Finally, although not determinative (cf [14] of Finkelstein J in Tropical Reef Shipyard Pty Ltd [2009] FCA 1088) as a global and not a weekly figure, TRS’ turnover was in fact greater during the period of indemnity compared to the same period immediately preceding the incidents.
18. The question which arises therefore is whether TRS has sufficiently pleaded that the loss claimed in the column headed Loss/(Gain) of Average Weekly Turnover in [16] above was a consequence of the interruption? In other words, has TRS sufficiently tied pars [29]-[31] of the FAC (see [10] above) to the quantification of its claim for turnover? TRS contends that it has done enough.
19. The allegations in paragraphs [29] – [31] are in general terms. What is alleged to be the weekly loss is quantified: see [16] above. It is to be noted, however, that there is no specific pleading that the loss in any particular week is as a result of the interruption to the business. The pleaded case claims the whole of the difference between the average weekly turnover and the actual weekly turnover (subject to some required exclusions which may be put to one side). Read as a whole, the pleading asserts that the loss alleged came about because of the matters alleged in par [29] of the FAC (which in turn refers back to the premises provided by pars [23] to [28] of the FAC). Whether this form of connection between the alleged loss and the damage to the slipway is sufficient depends upon the proper construction of the Policy. Or, to put the same point another way, whether the plaintiff must prove that the loss suffered in a particular week bore a specified relationship with the damage to the slipway depends upon the proper construction of the Policy.
20. Ordinarily the question of construction would await argument at trial. In this case, however, having regard to the decision of separate questions, the relevant point of construction has been concluded.
21. Under the Policy, the cover provided that “for each week [QBE] will pay [TRS] ... in respect of loss of Turnover”. Finkelstein J found at [14] in Tropical Reef Shipyard Pty Ltd [2009] FCA 1088, this meant that the calculations are to be made on a weekly basis. That conclusion was found to be reinforced by a number of aspects of the Policy:
    1. the introduction to the Policy which referred to “weekly loss of Turnover”; and
    2. where a loss arises, it must be paid within “seven days whenever practicable”.

The Policy provided indemnity for losses incurred on a week by week basis. In other words, if a weekly claim had been made, for example, on 17 April 2007, TRS was obliged to establish the causal link between the loss claimed in that week and the interruption to TRS’ business. If it was established, then the claim was paid within “seven days whenever practicable”. The next week the same was required of TRS and so on. The facts for each week may well have been different because the cause or causes of the loss (if there was a loss) may well have been different. In the case of TRS, given the nature of its business and the different contractual and payment terms with different customers (see [17] above), it would be expected that the loss in any one week was caused by a different set of facts and matters.

22. How each of those facts and matters relate to a claimed loss in any one week is not pleaded and contrary to TRS’ submission it should not, in my view, be simply inferred that the loss of turnover (set out in [16] above) was caused by the matters pleaded in [29]-[31] of the FAC. It is drafted as an ambit claim. The difficulty is that the ambit claim ignores the words of the Policy that required TRS to address the claim on a week by week basis. Put another way, the amendment is futile and should not be allowed: Commonwealth v Verwayen (1990) 170 CLR 394 at 456 per Dawson J.

Alternative Methodology

23. Given the views I have formed about TRS’ Primary Methodology, it is unnecessary to reconsider TRS’ Alternative Methodology.

CONCLUSIONS

24. For those reasons, I would refuse TRS leave to file the FAC. As noted earlier, it was common ground that if TRS was not granted leave to file the FAC, then judgment should be entered in favour of QBE on this part of TRS’ claim.
25. I will direct the parties to bring in orders to give effect to these reasons for decision and to address the future management of the proceeding by no later than 4.00 pm on 24 January 2011.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:
Dated: 21 December 2010