Practice and procedure - Application for leave to amend particulars of loss and damage - Distinction between material facts and particulars - Whether may prejudice, embarrass or delay the fair trial of the action - Turns on own facts

Rules of the Supreme Court 1971 (WA), O 20 r 2(1), O 20 r 8(1), O 20 r 13

Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344

Bruce v Odhams Press Ltd [1936] 1 KB 697

Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64

GEC Marconi Systems v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1

Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350

Perestrello E Companhia Limitada v United Paint Co Ltd [1969] 1 WLR 570

Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 2 NSWLR 340

1 LE MIERE J: The plaintiff applies for leave to amend its particulars of loss and damage. The defendant opposes the amendment on the ground that the amended particulars advance a case that is not pleaded in the statement of claim and may prejudice, embarrass or delay the fair trial of the action.

2 By a lease dated 20 January 1999 (the Lease) the defendant local government authority leased to Transpacific Industries Pty Ltd land at Kalgoorlie-Boulder for the purpose of operating a waste processing facility. In December 2001 Transpacific assigned the Lease to the plaintiff. The Lease was for a term of 11 years commencing on 1 July 1999 with two options to renew each for a further term of five years.

The Lessor shall accept the treated liquid discharge from the Facility to the sewage treatment plant in the vicinity of the Facility, and deal with it in accordance with the waste discharge permit to be issued by the Lessor to the Lessee. The Lessor must establish reasonable acceptance standards to be contained in the permit. The Lessee shall provide documentary evidence in the form reasonably required by the Lessor as to compliance with those standards.

4 On 9 July 2002 the defendant issued to the plaintiff a waste discharge permit (Permit). The Permit stated that the defendant will accept treated liquid discharge from the plaintiff's facility to the defendant's waste water treatment plant subject to the liquid discharge complying with the criteria and conditions specified in the Permit.

5 Paragraph 1 of the Permit specified acceptance criteria for a range of waste components listed in sections 1, 2 and 3. Sections 1 and 2 listed acceptance criteria for waste components and heavy metals respectively. Section 3 stated that in addition to the criteria set out in sections 1 and 2, waste components must be approved for discharge by the Health Department of WA. Paragraph 8 of the Permit provides that the defendant reserves the right to cancel the permit without notice if, at any time, the discharge from the plaintiff's facility impacts adversely on the operation of the defendant's waste water treatment facility or the volume of inflow from the defendant's sewage collection system reaches the treatment capacity of its waste water treatment plant.

6 The plaintiff was unable to comply with the conditions and criteria specified in the Permit and the defendant did not accept treated liquid discharge from the plaintiff's facility to the defendants waste water treatment plant. The plaintiff says that the criteria and conditions specified in the Permit were not reasonable acceptance standards. The plaintiff claims that the defendant breached cl 8.04 of the Lease by failing to establish reasonable acceptance standards, failing to issue a waste discharge permit in accordance with cl 8.04 and refusing to accept treated liquid discharge from the plaintiff's facility to the defendant's waste water treatment plant. The plaintiff had to make other arrangements to dispose of treated liquid discharge from its facility and in doing so incurred costs, or greater costs, that it would not have incurred if it had discharged that waste to the defendant's waste water treatment plant. The plaintiff seeks to recover those losses in this action.

7 It is necessary to refer to the history of the pleadings in this case before considering the plaintiff's proposed amended particulars of loss and damage.

8 The plaintiff caused the writ of summons to issue on 4 November 2004. The indorsement of claim referred to the Lease and alleged that the defendant had breached its obligations under cl 8.04 of the Lease in that the defendant had failed to issue a waste discharge permit as required under the Lease, had failed to establish reasonable acceptance standards as required under the Lease and had refused to accept treated liquid discharge from the plaintiff's facility to the defendant's sewage treatment plant in the vicinity of the facility. The plaintiff said alternatively that if the issue by the defendant of the Permit amounts to the issuing of a waste discharge permit under cl 8.04 of the Lease then the defendant had not accepted treated liquid discharge from the plaintiff's facility to the sewage treatment plant and the Permit does not include reasonable acceptance standards. The indorsement stated that 'as a consequence of the defendant's breaches of the Lease, the plaintiff has suffered loss and damage'.

9 In its statement of claim of 10 November 2004 the plaintiff said that the Permit does not include reasonable acceptance standards in that:

(a) It includes a condition that all waste must be approved for discharge by the Health Department of WA; and

(b) the defendant reserves the right to cancel the permit without notice if, at any time, the discharge from the facility impacts adversely on the operation of the defendant's waste water treatment facility or the volume of inflow from the defendant's sewage collection system reaches the treatment capacity of its waste water treatment plant.

10 The plaintiff pleaded that it was unable to comply with the conditions and criteria specified in the Permit and the defendant did not accept treated liquid discharge from the plaintiff's facility to the defendant's waste water treatment plant. The plaintiff pleaded that the defendant breached its obligations under cl 8.40 of the Lease in that the defendant:

(a) failed to issue a waste discharge permit;

(b) failed to establish reasonable acceptance standards; and, or alternatively

(c) since 1 May 2002 refused to accept treated liquid discharge from the facility to the sewage treatment plant in the vicinity of the facility.

11 The plaintiff pleaded that as a consequence of the breaches of Lease referred to the plaintiff has suffered loss and damage, and stated that full particulars of the loss and damage would be provided prior to trial. The plaintiff claimed relief including damages.

12 In its defence of 10 December 2004 the defendant said that the Permit contains reasonable acceptance standards, it established reasonable acceptance standards by issuing the Permit and it had always been prepared to accept waste water from the plaintiff's facility to its treatment plant if the plaintiff complied with the conditions of the Permit. The defendant said that any liquid waste the plaintiff proposed to discharge did not comply with the Permit conditions as to allowable waste components and the plaintiff failed to comply with the Permit condition of obtaining approval for discharge by the Health Department. The defendant further said that the discharge of liquid waste into its treatment plant would have been illegal as being contrary to the Department of Environmental Protection (DEP) licence granted to the plaintiff in the period to 12 June 2002 and from 9 December 2003.

13 The plaintiff filed a reply on 23 December 2004. The plaintiff said that a condition of the DEP licence required the plaintiff to place all liquid waste from the biodegradable aqueous waste treatment process, the oily water separation process and the chemical fixation and solidification plant into onsite impervious evaporation ponds. The plaintiff said that in light of the defendant's conduct the plaintiff did not apply to the Director for approval of any other discharge of liquid waste. The plaintiff further says that on 28 June 2004 an appeal was granted against the terms of the licence so as to permit the liquid waste from the biodegradable aqueous waste treatment process, the oily water separation process and the chemical fixation and solidification plant to be discharged to onsite evaporation ponds or a suitably approved and licensed waste water treatment plant or other facility capable of accepting the liquid waste. The plaintiff says that the defendant's waste water treatment plant is a suitably approved and licensed waste water treatment plant capable of accepting the liquid waste.

14 On 28 June 2005 the defendant amended its defence by adding a further plea. The defendant pleaded that even if the criteria in the Permit requiring all waste to be approved for discharge by the Department of Health is unreasonable, the defendant has never been obliged to accept liquid waste from the plaintiff because the plaintiff failed to meet the condition precedent specified in the Lease and the Permit of producing written proof from a NATA registered laboratory that the liquid waste the plaintiff proposed to discharge complied with permit conditions as to allowable waste components.

15 In its amended reply filed 22 July 2005 the plaintiff said that because of the defendant's conduct in refusing to accept any waste discharged by the plaintiff no occasion arose requiring the production by the plaintiff of written proof of testing by a NATA registered laboratory.

16 On 27 June 2005 a registrar ordered the plaintiff to file and serve better particulars of loss and damages pleaded in [8] of the statement of claim. On 18 August 2005 the plaintiff filed and served particulars of loss and damage pleaded in [8] of the statement of claim. On 22 August 2005 a registrar ordered that the parties have leave to adduce expert evidence at trial. Directions were subsequently made for the service of expert reports. On 7 September 2006 the plaintiff filed amended particulars of loss and damage. The amended particulars include:

1.1 Payments to Cleanaway (Brambles Industries Ltd) for alternate disposal of industrial waste between May 2002 and December 2003 ($2,062,572.20)

Less costs that plaintiff would have incurred internally if the plaintiff had been permitted to discharge that waste to the defendant ($1,702,451.10)

Total $360,121.13

...

1.2 Costs charged by Water Corporation for access to its sewer between 1 July 2002 and 30 June 2004.

$46,795.97

...

1. Costs Associated with 2003 Application to Department of Environment for Extra Pond

1. Costs Arising Out of Odour Problems (Including Avoidance and Odour Management Costs)

1. Loss and Damage Since January 2006 and Future Loss and Damage

8.1 Costs of fixation and off-site dumping of liquid waste that would otherwise have been discharged to the defendant (From February 2006 to August 2006, continuing) - $30,019.33 per month

8.2 Cost of additional treatment of ponds so as to reduce risk of odour emissions (From February 2006 to August 2006, continuing) - $8,555.83 per month

8.3 Cost of de-sludging of ponds so as to reduce risk of odour emissions (From 2006, continuing) - $205,949.00 per annum

17 The defendant made no application to disallow or otherwise object to the amended particulars.

18 On 22 December 2006 the defendant amended its defence. Amongst other things, the defendant pleaded that if the plaintiff has suffered any loss it has failed to mitigate its loss by:

17.1 Constructing and operating its plant in the manner [pleaded by the defendant] so as to produce treated liquid discharge [as defined by the defendant in its pleading] and

17.2 Seeking and pursuing approval for discharge from the Department of Health on the basis that it would construct and operate its plant as referred to in 17.1 above.

The plaintiff joined issue with the defendant on that plea.

Defendant issues revised Permit on 15 November 2007

19 On 15 November 2007 the defendant issued to the plaintiff a notice in the following terms:

NOTICE PURSUANT TO CLAUSE 8.04 OF LEASE

Due to the commencement of a contract for sale of treated effluent to a mining company, a pond has become available at the City of Kalgoorlie-Boulder (CKB) Sewage Treatment Plant that can be isolated from the rest of the Sewage Treatment Plant.

As a consequence CKB is now able to take wastewater form the Total Waste Management (TWM) Waste Water Treatment Plant pursuant to clause 8.04 of the Lease, notwithstanding that such waste water does not comply with all of the acceptance criteria contained in the Waste Discharge Permit.

The waste water that will be accepted in the pond must comply with the following parts of the Waste Discharge Permit (a copy of which is attached):

• The criteria set out in paragraph 1 'Waste Components' at sections 1 and 2;
• The criteria set out at paragraph 4 'Testing' and paragraph 5 'Metering'.

You advised that TWM accepted that this criteria constituted reasonable acceptance standards in the McCallum Donovan Sweeney letters of 5 January 2005 and 9 January 2005.

As this pond will be quarantined from the rest of the sewage treatment plant and the water in it will not be subject to re-use on parks and gardens, CKB does not insist on compliance with the rest of the acceptance criteria set out in the Waste Discharge Permit and which is currently the subject of dispute.

CKB expects that each batch of waste water that will be the subject of testing in accordance with the above criteria:

• is placed in a tank or tanks for testing purposes on the TWM waste water treatment plant site
• that this tank or tanks will be separate and distinct from the evaporation ponds on the TWM waste water treatment plant site.

CKB will accept up to 20 mega litres a year of wastewater into the pond.

The pond will be available for discharge as from 1 January 2008.

20 On 27 October 2008 I gave the plaintiff leave to amend its statement of claim in accordance with its revised minute of re-amended statement of claim dated 9 October 2008. As I have said in its original statement of claim, the plaintiff pleaded that the Permit does not include reasonable acceptance standards in that it includes a condition that all waste must be approved for discharge by the Health Department and the defendant reserves the right to cancel the Permit on the ground stated. In its amended statement of claim the plaintiff added a further plea that the Permit does not include reasonable acceptance standards in that:

The mass load limits stated in the permit are set at 6 kg per day for biochemical oxygen demand (BOD), 12 kg per day for chemical oxygen demand (COD) 6 kg per day for suspended solids (SS), and 1 kg per day for Kjeldahl nitrogen, when reasonable maximum limits would be no less than 60 kg per day for BOD, 120 kg per day of COD, 30 kg per day for SS and 4 kg per day for Kjeldahl nitrogen.

The plaintiff further pleaded that if the notice of 15 November 2007 amounts to the issue of a waste discharge permit within the terms of cl 8.04 of the Lease the defendant breached its obligations under that clause of the Lease in that the commencement date upon which the defendant was prepared to accept treated liquid discharge was not until 17 December 2007 and the waste discharge did not include reasonable acceptance standards in that the mass load limits were not reasonable as earlier pleaded.

21 The defendant amended its defence in accordance with a minute of further re-amended defence dated 10 November 2008. The defendant pleaded that the notice it issued on 15 November 2007 was a further permit (Revised Permit) which would allow discharge into a pond within the sewage treatment plant that had been isolated from the rest of the sewage treatment plant and it has been prepared to accept waste water from the plaintiff's facility to the isolated pond in the sewage treatment plant if the plaintiff complied with the Revised Permit as from 17 December 2007. The defendant said that the mass load limits stated in the Permit are reasonable and denied that the mass load limits claimed by the plaintiff to be reasonable are reasonable.

22 In [14] of its defence the defendant pleaded that the plaintiff is estopped from relying on the plea that the mass load limits specified in the Permit are unreasonable or alleging that the defendant breached its obligations or that it has suffered any loss as from 17 December 2007. The essence of the defendant's plea is that by letters dated 5 January 2005 and 9 January 2009 the plaintiff admitted that the acceptance criteria contained in the Permit, other than as to the conditions pleaded in [7.2(a)] and [7.2(b)], were reasonable and in reliance on those representations the defendant isolated a pond at its sewage treatment plant and issued the Revised Permit permitting the plaintiff to discharge waste water into the isolated pond without the plaintiff having to comply with conditions of the Permit.

23 The defendant also alleges that the plaintiff has failed to mitigate its loss, if any, by discharging waste water into the defendant's sewage treatment plant pursuant to the Revised Permit from 17 December 2007.

24 The plaintiff filed a re-amended reply on 24 December 2008 in which the plaintiff put forward the following contentions. The plaintiff's plant was constructed in accordance with the Expression of Interest submitted by Transpacific including a biological aeration process. By reason of the defendant's conduct, in particular the refusal to accept any waste discharge by the plaintiff between 1 May 2002 and 17 December 2007, the plaintiff has operated its plant in the manner described in [16(a)] and [16(b)] of the amended reply to which I will refer shortly. If the plaintiff had operated its plant so as to produce 'treated liquid discharge' as defined by the defendant, including having the waste undergo biological aeration through a waste water oxidation unit, the discharge so produced would not have been waste that complied with the acceptance criteria contained in the Revised Permit. The plaintiff intends to take such steps as are required to treat the waste water prior to discharge into the defendant's treatment plant in order to comply with the acceptance criteria contained in the Revised Permit and to discharge waste water into the defendant's treatment plant once those steps have been completed. To do that it will be necessary for the plaintiff to commission the construction of an evaporator and a carbon filter prior to discharging waste water in compliance with the acceptable criteria stated in the Revised Permit. It would not be necessary for the plaintiff to commission the carbon filter had the Revised Permit incorporated reasonable acceptance criteria as alleged by the plaintiff.

25 The plaintiff denies that it is estopped from asserting that the Revised Permit does not set reasonable acceptance criteria.

26 In [16(a)] the plaintiff says that the only material alteration made to the operation of its plant from the proposal contained in the Expression of Interest has been the use of evaporation ponds to dispose of treated liquid waste rather than the passing of effluent through an aeration process before discharging to the defendant's sewage treatment plant. In [16(b)] the plaintiff says that owing to the defendant's conduct and in particular its refusal to accept any waste discharge by the plaintiff until 17 December 2007 there was greater utility to be gained by the plaintiff in mitigating the loss caused to it by the actions of the defendant by using evaporation ponds rather than passing effluent through an aeration process and no material benefit to be gained by using a plate separator originally commissioned by the plaintiff to treat oily water and a dissolved air flotation plant originally commissioned by the plaintiff to treat biological waste. The plaintiff says that as a consequence of the issue of the Revised Permit the plaintiff proposes establishing a system of using an evaporator and a carbon filter and to pass effluent through an aeration process before discharging the waste to the defendant's plant. The plaintiff says that it proposes to discharge waste water to the defendant's waste water treatment plant pursuant to the Revised Permit. The plaintiff further says that it was necessary for it to consider appropriate methods of operating the plant so as to meet the acceptance criteria contained in the Revised Permit before discharging waste water. The plaintiff has determined to purchase an evaporator and a carbon filter and that equipment is currently being constructed and supplied by third parties. Finally, the plaintiff says that upon commissioning of the evaporator and the carbon filter it will discharge waste water to the defendant's treatment plant that complies with the criteria contained in the Revised Permit.

27 By chamber summons of 1 February 2010 the plaintiff seeks leave to amend its particulars of loss and damage pleaded in [11.3] of the re-amended statement of claim in terms of the substituted minute of plaintiff's re-amended particulars dated 22 January 2010 (Proposed Particulars).

28 The plaintiff has provided to the defendant a written explanation (Explanation) of the damages calculations contained in the Proposed Particulars. The Explanation is made up of a written commentary together with various annexures referred to in the commentary. The Explanation commences with the following introduction:

In May 2002 the plaintiff (TWM) sought to discharge wastewater to the defendant's (CKB) sewerage facility in accordance with the lease agreement dated 20 January 1999 (the Lease Agreement) but access was refused by CKB. At the time of the refusal, TWM's wastewater storage tanks and ponds were full and it could no longer store liquid waste at the facility and continue with its waste treatment services to customers.

TWM mitigated its losses by disposing of waste using alternate methods to those that would have been used if the CKB had complied with its obligations under the Lease Agreement. The additional costs incurred by TWM using those alternate methods and by altering the methods by which it had to manage its facility are set out in the plaintiff's particulars of loss and damage. An explanation of the calculations contained in those particulars is set out below (note that references to 'Items' below are references to items in the particulars of loss and damage).

The Explanation then proceeds to explain each of the 14 items of loss and damage set out in the Proposed Particulars.

29 The Proposed Particulars include footnotes that explain the basis for the calculations. The particulars, including the footnotes, include:

FURTHER RE-AMENDED PARTICULARS OF LOSS AND DAMAGE

The damages detailed below are calculated with reference to the increased costs (including GST) that have been incurred by the plaintiff as a consequence of the defendant's failure to comply with its obligations [under cl 8.04 of the Lease].

...

Additional costs incurred by the plaintiff due to disposing waste to Cleanaway (Brambles Industries Ltd) from 1 May 2002 to 29 December 20031 [As a consequence of the need for the plaintiff to mitigate its losses and find alternate methods of disposing of its customer's liquid waste due to the inability of the plaintiff to dispose of that waste to the defendant's sewage treatment plant following the defendant's failure to fulfil the obligations on it pleaded in paragraph 4.3 of the re-amended statement of claim.] instead of being able to dispose of that waste to the defendant's sewage treatment plant following treatment of that waste by the plaintiff using:

1.1 an evaporator2 [Which is the method of treatment the plaintiff contends would have been used by it if the defendant had fulfilled the obligations upon it [under cl 8.04 of the Lease]. (As at the date of these particulars the plaintiff has not installed the evaporator that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the evaporator that have been used as part of the basis of calculating this item of damage are estimates.)]:

(a) between 1 May 2002 and 31 December 2002

$53,982.45

(b) between 1 January 2003 and 29 December 2003

$50,450.69

Total $104,433.15

1.2 or, alternatively to 1.1 above, an evaporator plus a carbon filter3 [Which is the method of treatment the plaintiff contends would have been needed to be used by it, and would have been used by it, if it had only been able to discharge to the defendant's sewerage treatment plant in accordance with the criteria set out in the defendant's alleged [Revised Permit]. (As at the date of these particulars the plaintiff has not installed the carbon filter that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the carbon filter that have been used as part of the basis of calculating this item of damage are estimates.)]:

(a) between 1 May 2002 and 31 December 2002

$46,405.61

(b) between 1 January 2003 and 29 December 2003

$41,161.69

Total $87,567.30

The amounts of $104,433.15 in 1.1 above and $87,567.30 in 1.2 above have been calculated as follows:

(a) Between 1 May and 31 December 2002 the plaintiff expended a total of $1,107,580.78 on waste delivered to Cleanaway and between 1 January and 29 December 2003 the plaintiff expended a total of $1,818,604.58 on waste delivered to Cleanaway.

(b) If the plaintiff had been permitted to discharge to the defendant's sewage treatment plant during the periods referred to in (a) above, the plaintiff would not have delivered its waste to Cleanaway but, rather, the plaintiff would have treated that waste at the plaintiff's facility at Kalgoorlie-Boulder (except for biological waste (categories 1 to 4 under the Environmental Protection (Controlled Waste) Regulations 2001) and loads of industrial waste that would have been cheaper to dispose of at Cleanaway than the cost per litre of transporting and treating that waste at the plaintiff's facility).

(c) The amounts paid by the plaintiff to Cleanaway for the delivery to Cleanaway of the waste that the plaintiff would otherwise have treated at its facility at Kalgoorlie-Boulder were, between 1 May and 31 December 2002, $172,938.69 and, between 1 January and 29 December 2003, $191,391.18 (being a total of $364,329.87).

(d) The prices charged by Cleanaway for the delivery to it of waste by the plaintiff that the plaintiff would have otherwise treated at its facility at Kalgoorlie-Boulder ranged from $14.05 to $28.65 per litre for the period 1 May to 31 December 2002 and ranged from $14.67 to $73.42 per litre for the period 1 January to 20 December 2003. If the plaintiff had treated that waste at the plaintiff's facility at Kalgoorlie-Boulder, the cost to the plaintiff of that treatment would have been:

(i) $13.43 per litre for treatment using an evaporator or, alternatively, $14.29 per litre for treatment using an evaporator and a carbon filter, for the period 1 May to 31 December 2002; and

(ii) $12.29 per litre for treatment using an evaporator or, alternatively, $13.10 per litre for treatment using an evaporator and a carbon filter, for the period 1 January to 29 December 2003.

(e) The total cost to the plaintiff of treating the waste that was delivered to Cleanaway that the plaintiff would otherwise have treated at its facility at Kalgoorlie-Boulder, if the plaintiff had treated that waste at the plaintiff's facility at Kalgoorlie-Boulder, would have been:

(i) $118,956.23 for treatment using an evaporator or, alternatively, $126,533.08 for treatment using an evaporator and a carbon filter, for the period 1 May to 31 December 2002; and

(ii) $140,940.49 for treatment using an evaporator or, alternatively, $150,229.49 for treatment using an evaporator and a carbon filter, for the period 1 January to 29 December 2003.

(f) The differences between the amounts paid by the plaintiff to Cleanaway for the delivery to Cleanaway of the waste that the plaintiff would otherwise have treated at its facility at Kalgoorlie-Boulder (set out in (c) above) and the costs that would have been incurred by the plaintiff if it had treated that waste at its facility at Kalgoorlie-Boulder (set out in (e) above), and therefore the additional costs incurred by the plaintiff are:

(i) $53,982.46 if the plaintiff had treated the waste with an evaporator and $46,405.61 if the plaintiff had treated the waste with an evaporator plus a carbon filter, for the period 1 May to 31 December 2002; and

(ii) $50,450.69 if the plaintiff had treated the waste with an evaporator and $41,161.69 if the plaintiff had treated the waste with an evaporator plus a carbon filter, for the period 1 January to 29 December 2003.

1. Costs Associated with 2003 Application by Plaintiff to Department of Environment for Extra Pond

1. Court of Petty Sessions Fine and Legal Fees Relating to Prosecution of Plaintiff for Odour Emission Incident in December 2003/January 2004

1. Expert Advice to Avoid Repeat of Odour Emission Incident

1. Costs in Attempting to Avoid Odour Emission Problems by Use of Filter Press in 2002/2003

1. Costs Incurred Due to Need to Fixate Additional Waste

Additional costs4 [As a consequence of the failure of the defendant to fulfil the obligations on it [under cl 8.04 of the Lease] the plaintiff was unable to treat liquid waste at its Kalgoorlie facility in the manner it would have otherwise (that is, by using an evaporator or, alternatively, an evaporator and a carbon filter, and discharging to the defendant's sewage treatment plant) and, in order to mitigate its losses, has had to treat liquid waste by fixating that waste and disposing it to landfill. The additional costs of fixating and disposing to landfill compared to treatment using an evaporator or, alternatively, an evaporator plus a carbon filter are set out at 12.1 and 12.2 above.] incurred by plaintiff from 1 July 2002 to 30 June 2008 due to need to fixate waste and dispose to landfill instead of being able to dispose of that waste to the defendant's sewage treatment plant following treatment of that waste by the plaintiff using:

12.1 an evaporator5 [Which is the method of treatment the plaintiff contends would have been used by it if the defendant had fulfilled the obligations upon it [under cl 8.04 of the Lease] (As at the date of these particulars the plaintiff has not installed the evaporator that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the evaporator that have been used as part of the basis of calculating this item of damage are estimates.)]

$9,609,579.00

12.2 or, alternatively to 12.1 above, an evaporator plus a carbon filter6 [Which is the method of treatment the plaintiff contends would have been needed to be used by it, and would have been used by it, if it had only been able to discharge to the defendant's sewerage treatment plant in accordance with the criteria set out in the defendant's alleged [Revised Permit]. (As at the date of these particulars the plaintiff has not installed the carbon filter that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the carbon filter that have been used as part of the basis of calculating this item of damage are estimates.)]

$9,258,072.00

The amounts of $9,609,579.00 in 12.1 above and $9,259,702.00 in 12.2 above have been calculated as follows:

(a) Between 1 July 2002 and 30 June 2008 the plaintiff expended a total of $13,875,860.00 on fixating waste at its Kalgoorlie-Boulder facility and disposing of that waste to landfill.

(b) If the plaintiff had been able to dispose of waste to the defendant's sewage treatment plant as a consequence of the fulfilment of the obligations on the defendant pleaded in paragraph 4.3 of the re-amended statement of claim, its costs during the period 1 July 2002 to 30 June 2008 using an evaporator to treat the waste referred to in (a) above would have been $4,266,281.00

(c) If the plaintiff had been able to dispose of waste to the defendant's sewage treatment plant as a consequence of the fulfilment of the obligations on the defendant [under cl 8.04 of the Lease] its costs during the period 1 July 2002 to 30 June 2008 using an evaporator plus a carbon filter to treat the waste referred to in (a) above would have been $4,616,788.00.

(d) The difference between the amount expended by the plaintiff in fixating waste at its Kalgoorlie-Boulder facility and disposing of that waste to landfill (set out in (a) above) and the costs that would have been incurred by the plaintiff if it had been able to discharge to the defendant's sewage treatment plant, and therefore the additional costs incurred by the plaintiff, are:

(i) $9,609,579.00, if the plaintiff had treated the waste with an evaporator; or

(ii) alternatively to (i) above $9,259,072.00, if the plaintiff had treated the waste with an evaporator plus a carbon filter.

13. Loss and Damage Since 1 July 2008 and Future Loss and Damage

Additional costs7 [As a consequence of the failure of the defendant to fulfil the obligations on it [under cl 8.04 of the Lease] the plaintiff was unable to treat liquid waste at its Kalgoorlie facility in the manner it would have otherwise (that is, by using an evaporator or, alternatively, an evaporator and a carbon filter, and discharging to the defendant's sewage treatment plant) and, in order to mitigate its losses, has had to treat liquid waste by fixating that waste and disposing it to landfill. The additional continuing costs of fixating and disposing to landfill compared to treatment using an evaporator or, alternatively, and evaporator plus a carbon filter that have been (or will be) incurred from 1 July 2008 are set out at 13.1 and 13.2 above. Further, the costs incurred by the plaintiff set out in paragraphs 11.9, 11.14, 11.15, 11.18 and 11.19 (that have been incurred due to the need for the plaintiff to avoid odour emissions from its ponds at its Kalgoorlie-Boulder facility that potentially arise due to the inability of the plaintiff to discharge waste to the defendant's sewage treatment plant and thereby manage its ponds without incurring those costs) have continued following 1 July 2008. Those continuing costs are set out at 13.3] incurred by plaintiff from 1 July 2008 to the date of the commissioning of an evaporator and carbon filter (which date is unknown as at the date of these particulars) due to:

13.1 an evaporator8 [Which is the method of treatment the plaintiff contends would have been used by it if the defendant had fulfilled the obligations upon it [under cl 8.04 of the Lease]. (As at the date of these particulars the plaintiff has not installed the evaporator that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the evaporator that have been used as part of the basis of calculating this item of damage are estimates.)] $90,780.00 per month

13.2 or alternatively to 13.1 above, an evaporator plus a carbon filter9 [Which is the method of treatment the plaintiff contends would have been needed to be used by it, and would have been used by it, if it had only been able to discharge to the defendant's sewerage treatment plant in accordance with the criteria set out in the defendant's alleged [Revised Permit]. (As at the date of these particulars the plaintiff has not installed the carbon filter that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the carbon filter that have been used as part of the basis of calculating this item of damage are estimates.)]

$85,911.83 per month

13.3 Further, the need to take additional steps to manage odour in the plaintiff's evaporation ponds that would not have been necessary if the plaintiff has been able to dispose of that waste to the defendant's sewage treatment plant following treatment of that waste by the plaintiff (being purchase of salt, purchase of hydrogen peroxide, purchase of calcium hypochlorite, purchase of diesel fuel for aeration pump and labour to apply hydrogen peroxide and calcium hypochlorite to ponds and to fuel aeration pump).

$3,826.26 per month

The amounts of $90,780.0 per month in 13.1 above and $85,911.83 per month in 13.2 above have been calculated as follows:

(a) Between 1 January and 30 June 2008 the plaintiff expended a total of $783,018.00 on fixating waste at its Kalgoorlie-Boulder facility and disposing of that waste to landfill.

(b) If the plaintiff had been able to dispose of waste to the defendant's sewage treatment plant as a consequence of the fulfilment of the obligations on the defendant [under cl 8.04 of the Lease], its costs during the period 1 January to 30 June 2008 using an evaporator to treat the waste referred to in (a) above would have been $238,338.00.

(c) If the plaintiff had been able to dispose of waste to the defendant's sewage treatment plant as a consequence of the fulfilment of the obligations on the defendant [under cl 8.04 of the Lease], its costs during the period 1 January to 30 June 2008 using an evaporator plus a carbon filter to treat the waste referred to in (a) above would have been $267,547.00

(d) The difference between the amount expended by the plaintiff in fixating waste at its Kalgoorlie-Boulder facility and disposing of that waste to landfill (set out in (a) above) and the costs that would have been incurred by the plaintiff if it had been able to discharge to the defendant's sewage treatment plant between 1 January and 30 June 2008 are:

(i) $544,680.00 (an average of $90,780.00 per month), if the plaintiff had treated the waste with an evaporator; and

(ii) $515,471.00 (an average of $85,911.83 per month), if the plaintiff had treated the waste with an evaporator plus a carbon filter.

(e) The averages of $90,780.00 and $85,911.83 per month referred to in (d)(i) and (ii) above have been used by the plaintiff to calculate the continuing additional costs that it has incurred (and will incur) from July 2008 until the date of the commissioning of an evaporator and carbon filter, due to the need for it to continue to fixate waste at the Kalgoorlie-Boulder facility and disposing of that waste to landfill.

The amount of $3,826.26 per month in 13.3 above has been calculated by the plaintiff determining the average costs it has incurred in 2006/2007 and 2007/2008 for the purchase of salt, purchase of hydrogen peroxide, purchase of calcium hypochlorite, purchase of diesel fuel for the aeration pump and labour to apply the chemicals and fuel the pump. Those averages have been used by the plaintiff to calculate the continuing additional costs that have been incurred (and will occur) from July 2008 until the date of the commissioning of an evaporator and carbon filter, due to the need for the plaintiff to use those methods to avoid odour emissions.

1. Additional costs that will be incurred by the plaintiff after the date of the commissioning of the evaporator and carbon filter due to the plaintiff needing to purchase and install a carbon filter, being an expense that the plaintiff would not have incurred if the defendant had fulfilled the obligations [under cl 8.04 of the Lease] and if the defendant had not issued the alleged [Revised Permit] that breached the defendant's obligations in the manner referred to in paragraph 8 of the re-amended statement of claim.10 [As at the date of these particulars the plaintiff has not installed the evaporator and carbon filter that will ultimately be used to treat its waste before discharge is made to the defendant's sewage treatment plant. As such, the installation costs for the evaporator and carbon filter that have been used as part of the basis of calculating this item of damage are estimates.)]

30 The defendant submits that the plaintiff should not be granted leave to amend its particulars of loss and damage in the form of the Proposed Particulars because:

1. they raise fresh substantive issues and include material facts which should properly be pleaded in an amended statement of claim;
2. the material facts which are included in the Proposed Particulars cannot be pleaded by the defendant;
3. in some instances, the Proposed Particulars fail to adequately identify, or identify at all, how the damages claimed are said to arise from the alleged breach;
4. the Proposed Particulars are overly complicated, prolix and difficult to follow so as to be embarrassing and vexatious.

31 The general principle governing the measure of damages for breach of contract is that where a party sustains a loss by reason of such a breach that party is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed: Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64. If the innocent party can establish expenditures which would not have been sustained but for the breach damages for those losses will be recoverable subject to the remoteness rule: Amann Aviation (128); GEC Marconi Systems v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1, [937] (Finn J). Loss or damage will not be recoverable if it is too remote, the tests of remoteness being those stated in what are described as the two limbs of Hadley v Baxendale (1854) 156 ER 145, 354. For present purposes those tests can be expressed in the statement of principle formulated by Lord Reid in Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350, 385 and which has been adopted in this country: see GEC Marconi Systems [938]; Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344, 368:

The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.

32 The question whether a loss was of a kind that should have been within the contemplation of the party in breach commonly arises where services the subject of a contract are being acquired for a particular use and loss is suffered because that use is prevented or can only reasonably be secured by substituted performance. In such cases the contract can give rise to two separate expectations, the one being receipt of the promised performance, the other being the putting of that performance to some particular use: see GEC Marconi Systems [939].

33 The plaintiff's case is that it incurred additional costs by disposing of waste to Cleanaway and the Water Corporation instead of being able to dispose of that waste to the defendant's waste water treatment plant. In principle the plaintiff may recover those additional costs as damages for breach of the defendant's obligations under cl 8.04 of the Lease. In its Proposed Particulars the plaintiff also claims a number of additional costs.

34 Order 20 r 8(1) provides that subject to the provisions of rules 11, 12 and 13 every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence and the statement must be as brief as the nature of the case admits. Order 20 r 2(1) provides that a statement of claim must state specifically the relief or remedy which the plaintiff claims. Order 20 r 13(1) provides relevantly that subject to [(2)] every pleading must contain the necessary particulars of any claim. Paragraph (2) provides relevantly that where it is necessary to give particulars of damages and those particulars exceed three folios they must be set out in a separate document referred to in the pleading and the pleading must state whether the document has already been served and, if so, when, or is to be served with the pleading.

35 In Perestrello E Companhia Limitada v United Paint Co Ltd [1969] 1 WLR 570 Lord Donovan considered what a plaintiff is required to plead. After referring to the rules of the court Lord Donovan continued:

Accordingly, if a plaintiff has suffered damage of a kind which is not the necessary and immediate consequence of the wrongful act, he must warn the defendant in the pleadings that the compensation claimed will extend to this damage, thus showing the defendant the case he has to meet and assisting him in computing a payment into court.

The limits of this requirement are not dictated by any preconceived notions of what is general or special damage but by the circumstances of the particular case. 'The question to be decided does not depend on words, but is one of substance' (per Bowen LJ in Ratcliffe v Evans [1892] 2 QB 524, 529.)

The same principle gives rise to a plaintiff's undoubted obligation to plead and particularise any item of damage which represents out-of-pocket expenses, or loss of earnings, incurred prior to the trial, and which is capable of substantially exact calculation. Such damage is commonly referred to as special damage or special damages but is no more than an example of damage which is 'special' in the sense that fairness to the defendant requires that it be pleaded.

The obligation to particularise in this latter case arises not because the nature of the loss is necessarily unusual, but because a plaintiff who has the advantage of being able to base his claim upon a precise calculation must give the defendant access to the facts which make such calculation possible.

...

... if the claim is one which cannot with justice be sprung upon the defendants at the trial it requires to be pleaded so that the nature of that claim is disclosed. As Lord Dunedin said in The Susquehanna [1926] AC 655, at p 661: 'If the damage be general, then it must be averred that such damage has been suffered, but the quantification of such damage is a jury question.'

What amounts to a sufficient averment for this purpose will depend on the facts of the particular case, but a mere statement that the plaintiff claims 'damages' is not sufficient to let in evidence of a particular kind of loss which is not a necessary consequence of the wrongful act and of which the defendant is entitled to fair warning (579 - 580).

36 In this case the plaintiff is required to give the defendant proper notice of all the heads of loss that it is claiming. The plaintiff must give the defendant notice of the additional costs which it claims to have incurred as a result of the alleged breach of the Lease and any other losses which the plaintiff claims.

37 It is sometimes not easy to distinguish between facts which should be given as particulars and those which should be pleaded as material facts in a statement of claim.

38 The distinction between material facts and particulars is described in the well-known passage from the judgment of Scott LJ in the decision of the England and Wales Court of Appeal in Bruce v Odhams Press Ltd [1936] 1 KB 697:

The cardinal provision in r 4 is that the statement of claim must state the material facts. The word 'material' means necessary for the purpose of formulating a complete cause of action; and if any one 'material' fact is omitted, the statement of claim is bad; it is 'demurrable' in the old phraseology, and in the new is liable to be 'struck out' under Order XXV, r 4: see Philipps v Philipps 4 QBD 127; or 'a further and better statement of claim' may be ordered under Order XIX, r 7.

The function of 'particulars' under r 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim-- gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a 'material fact' and a 'particular' piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them (712 - 713).

39 In Bruce v Odhams Press Ltd the statement of claim alleged a libel but did not state the facts on which the plaintiff, not being actually named in the libel, relied to show that she would have been identified in the minds of some people reasonably reading the libel as the person defamed. On the application of the defendant an order was made that the plaintiff give particulars of those facts. The Court of Appeal held that this order was correct. It was unanimously held that such facts were material facts and should have been included in the statement of claim but that as the defendant was content to have the facts by way of particulars the order was rightly made. It was made clear that the defendant might have sought the more drastic remedy of seeking to have the statement of claim struck out.

40 The question of whether material facts which should be pleaded in the statement of claim may be given by way of particulars was discussed by Waddell J in Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 2 NSWLR 340. Waddell J said:

In my opinion the authorities cited make it clear that a party is not entitled, in effect, to amend a pleading by giving particulars of further material facts. To permit a party to do so would be to allow amendment contrary to the rules which require, in various circumstances, the filing of an amended pleading, the consent of other parties, or the leave of the court. But it is possible that particulars in effect amending a pleading might be accepted by the opposite party and a proceeding might be conducted on that basis. In Bruce v Odhams Press Ltd and Milbank the parties seeking the particulars ordered could hardly afterwards complain of a deficiency in the pleading. Similarly, a party to whom particulars have been given which, in effect, amended a pleading, might have so conducted himself as to represent to the party giving the particulars that no objection would be taken to the case being conducted on the basis of them even though, strictly speaking, there should have been an amendment. In such circumstances any objection taken later might be cured by the granting of the necessary amendment (351).

41 The statement of claim pleads that the defendant breached its obligations under the Lease. One of the pleaded breaches is that the defendant has refused to accept treated liquid discharge from the plaintiff's waste facility to the defendant's waste water treatment plant. The statement of claim does not give any details of the claim for damages. It is pleaded that as a consequence of the pleaded breaches cl 8.04 of the Lease the plaintiff has suffered loss and damage 'full particulars of which will be provided prior to trial'. Further details of the plaintiff's case are pleaded in the reply. The defendant has not objected to those facts being pleaded in the reply rather than in the statement of claim. It is arguable that the statement of claim and reply are not defective by reason of any omission to plead material facts constituting or giving rise to the loss and damage claimed to have been suffered by the plaintiff. It is arguable that it is sufficient for the plaintiff to plead that it suffered damage as a result of the defendant's breaches of the Lease and then to give particulars of that damage.

42 In any event, the defendant did not apply to strike out the statement of claim after the plaintiff delivered particulars of loss and damage on 21 August 2005 and amended particulars of loss and damage on 7 September 2006 or object to the particulars. The particulars set out eight heads of damage. The first head of damage is the costs of alternate disposal of waste. The particulars state the plaintiff's damage under that head to be the cost of payments to Cleanaway and the Water Corporation for alternate disposal of waste less costs the plaintiff would have incurred if the plaintiff had been permitted to discharge that waste to the defendant. The defendant in effect accepted that the facts or particulars constituting or giving rise to the claimed loss and damage were those set out in the plaintiff's particulars and the action has been conducted on that basis.

43 The plaintiff amended its statement of claim in October 2008 as a result of the Revised Permit issued by the defendant on 15 November 2007. The plaintiff now seeks to amend its particulars of loss and damage. The heads of damage relating to the costs of alternate disposal of waste are essentially the same and made on the same basis as the particulars of 7 September 2006 except that the proposed particulars are calculated on two alternative bases. The first basis is that the mass load limits stated in the Permit and the Revised Permit are not reasonable acceptance standards. The second alternative basis is that the mass load limits stated in the Permit and the Revised Permit are reasonable acceptance standards.

44 Pleadings are required to mark out the parameters of the case that is being advanced by the plaintiff. They are important to identify the issues and the extent of the dispute between the parties. It is important that the pleadings should make clear the general nature of the case of the plaintiff. Furthermore, the defendant must be informed of the plaintiff's case in sufficient detail to avoid being taken by surprise. All of those functions are sufficiently fulfilled by the plaintiff's case in relation to damages set out in its Proposed Particulars. Having regard to the history of the matter an amendment to the particulars should not be refused on the ground that the matters set out in the particulars should be pleaded in the statement of claim.

45 The defendant says that the Proposed Particulars contain facts that are material facts and which are required to be pleaded in the statement of claim and cannot be pleaded as particulars. The Proposed Particulars inform the defendant of the material facts which together constitute the plaintiff's claim for damages. Having regard to the history of the action the particulars should not be disallowed on the ground that they plead facts which should not be pleaded in particulars.

Are the particulars deficient for lack of particularity?

46 The defendant submits that in some instances the Proposed Particulars fail to adequately identify, or identify at all, how the damages claim is said to arise from the alleged breach. The Proposed Particulars set out the plaintiff's case as to damages in considerable detail. Insofar as the defendant considers it is entitled to further particulars then the defendant should request further and better particulars of the plaintiff's claim for damages by identifying those aspects of the plaintiff's claim which it says are not adequately particularised and seek those particulars.

Are the particulars overly complicated or prolix?

47 The defendant says that the Proposed Particulars are overly complicated, prolix and difficult to follow so as to be embarrassing and vexatious. The Proposed Particulars are extensive. They are detailed. That is a consequence of the nature of the loss and damage which the plaintiff claims to have incurred. I will not disallow the Proposed Particulars on the grounds that they are overly complicated, prolix or difficult to follow so as to be embarrassing and vexatious.

48 The defendant makes a number of objections to specific parts of the particulars. The defendant refers, by way of example, to the alternative claims made for costs associated with the use of an evaporator (item 1.1) or an evaporator plus a carbon filter (item 1.2). The defendant says that footnotes 2 and 3 purport to identify relevant facts and matters relating to each alternative claim, but submits that 'one is left confused by the references to each and when and how the plaintiff alleges each or the other should or should not apply'. As I set out earlier in these reasons the plaintiff particularises its alleged loss and damage from having to dispose of waste other than by discharge into the defendant's facility on two alternative bases. The first basis is that the mass load limits stated in the Permit and the Revised Permit are not reasonable acceptance standards. If that is made out then the plaintiff would have been entitled to discharge waste to the defendant's facility following treatment of that waste by using an evaporator alone. The second alternative basis is that the mass load limits stated in the Permit and the Revised Permit are reasonable acceptance standards. If that is found to be so then the plaintiff would only be entitled to discharge waste to the defendant's facility following treatment of that waste by using an evaporator and a carbon filter. The plaintiff's case on that aspect of its alleged loss and damage is intelligible and reasonably and sufficiently disclosed by the Proposed Particulars.

49 The defendant makes the same complaints about items 12 and 13 of the Proposed Particulars. I reject those objections for the same reasons as in relation to item 1.

50 The defendant further argues that the method employed by the defendant in calculating the loss and damage in item 12 is incorrect. That is an argument for trial.

51 The defendant submits that no factual foundation is given for the heads of damages claimed at items 2, 3, 4, 5, 6, 7, 8, 9, 10 or 11 of the Proposed Particulars. The defendant says that it impossible to understand how or why it is said that the plaintiff is entitled to these various sums and that a brief description of the nature of the item claimed, and the amount, is insufficient.

52 Item 2 is the costs paid by the plaintiff to the Water Corporation due to the plaintiff disposing of waste to the Water Corporation between 1 July 2002 and 17 October 2003. This is a rewording of item 1.2 of the existing particulars. The basis of the claim is sufficiently clear from the Proposed Particulars.

53 Items 3 - 6 are existing particulars. There is no relevant amendment to those particulars. The Explanation explains the basis of the damages claimed. It is too late now to object to these particulars.

54 Items 7 - 11 are heads of loss and damage that are in the existing particulars with relatively insubstantial amendments or additions. The loss and damage is sufficiently explained in the Explanation and it is too late now to complain of them in the particulars.

55 The plaintiff will be given leave to amend its particulars in accordance with the Proposed Particulars.