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[2015] VSC 127
General information, not legal advice.
Supreme Court of Victoria
2015-04-16
ELLIOTT J
Original judgment source is linked above.
APPEAL - PRACTICE AND PROCEDURE - Pleadings - Application to amend statement of claim - Court's discretion - Amendment to introduce new cause of action - Breach of contract - Delay - Amendment to introduce new head of loss - Issues already raised - Whether leave ought to be granted - Appeal allowed in part - Supreme Court (General Civil Procedure) Rules 2005 (Vic), rr 36.01(1)(a), (b) and (c), 77.06, 77.06.9(2)(b) and (c).
1 This appeal concerns the desire of the plaintiff, Bridge and Marine Engineering Pty Ltd ("Bridge"), to amend its statement of claim, substantively to raise 2 issues. The previous attempts, by various applications (some of the detail of which is set out below), were ultimately partially successful. However, the court, in the exercise of its discretion, refused leave to amend with respect to the matters now raised on appeal. The pleading the subject of the applications for leave to amend was entitled "the proposed third further amended statement of claim" ("the Proposed Statement of Claim").
2 There is no cross-appeal by the defendant, Sharvine Pty Ltd ("Sharvine"), with respect to the matters on which Bridge obtained leave to amend.
3 For the reasons that follow, the appeal from the orders refusing leave to amend will be allowed in part.
4 Before considering the substance of the relevant allegations and the reasons for decision below, it is necessary to refer to the long history of this matter.
B.1 Statements of claim filed 17 January 2003 to 7 November 2014
5 This proceeding was commenced by writ on 17 January 2003. The principal allegations concerned agreements made in 1996 and 1997. It was alleged that Sharvine repudiated an agreement in January 2000. Accordingly, Bridge did not commence this proceeding until approximately 3 years after its causes of action, as originally pleaded, accrued.
6 On 28 September 2006, Bridge filed an amended statement of claim pursuant to leave granted by the court. Broadly speaking, Bridge recast its claim. The structure and substantive allegations made in the amended statement of claim continue to form the basis upon which Bridge seeks presently to advance its case in the Proposed Statement of Claim. By each version of the statement of claim from the amended statement of claim, Bridge has referred to conduct of Sharvine in December 1999 and January 2000. Accordingly, the issues the subject of this proceeding are far from recent.
7 When leave was granted to file the amended statement of claim, the order made by the court on 22 September 2006 was the subject of an appeal. On 7 May 2007, in allowing the appeal in part, Gillard J specifically ordered that further particulars were needed to substantiate certain allegations that were then made.[2]
8 Pursuant to leave, a second further amended statement of claim dated 23 October 2008 was filed by Bridge. This version of the statement of claim withdrew certain allegations, and also reformulated its allegations in relation to a letter sent by Sharvine on 17 January 2000.[3]
9 On 19 July 2011, Bridge filed a summons seeking leave to file a third further amended statement of claim. Pursuant to that summons, leave was granted to file and serve the then proposed pleading by 30 November 2011. However, no such pleading was filed within the time required.
10 On 27 June 2012, Bridge filed and served its lay evidence for the purposes of the trial of this proceeding.
11 On 2 November 2012, the court dismissed an application by Sharvine that the proceeding be dismissed for want of prosecution.
12 On 30 November 2012, Bridge then sought leave to amend its statement of claim to introduce, amongst other things, the amendments that, broadly, are now the subject of this appeal.
13 There were a number of hearings concerning Bridge's proposed amendments. These occurred on 19 December 2012, 20 March 2013 and 10 September 2014. As a result of the court's orders on 19 December 2012 and 20 March 2013, further proposed pleadings were proffered by Bridge.[4] The Proposed Statement of Claim was the subject of the hearing on 10 September 2014, and subsequent orders were made on 30 October 2014.
14 On 7 November 2014, as a result of the orders made on 30 October 2014, a third further amended statement of claim was filed by Bridge ("the Extant Statement of Claim"). This contained the allegations the subject of leave on 30 October 2014, but did not include the further allegations which are now the subject of this appeal.[5] The key allegations in the Extant Statement of Claim still principally concern agreements entered into in 1997. The pleading consists of 39 pages, together with 38 pages of annexures. In these circumstances, I will only give a broad summary.
B.2 Principal allegations in the Extant Statement of Claim
15 As part of a number of contracts entered into on 9 December 1997, Bridge and Sharvine entered into an agreement, pursuant to which Bridge was to provide to Sharvine conceptual civil and structural design services with respect to a port facility in Newcastle, New South Wales ("the Agreement"). Rowe & Thomas (NSW) Pty Ltd ("Rowe & Thomas") was also a party to the Agreement. It was described together with Bridge as "the Consortium". Rowe & Thomas was placed into liquidation. It has taken no active part in this proceeding.
16 The pleaded terms of the Agreement run for approximately 8½ pages. Those terms include certain obligations of good faith, defined as "the Express Good Faith Construction Contract Negotiation Opportunity", "the Express Construction Contract Tender Opportunity" and "the Term of Good Faith". The performance of the Agreement, as between the Consortium and Sharvine, was unconditional. In return for the services specified in the Agreement, Sharvine agreed to pay "the Consortium's payments" in accordance with the terms of the Agreement. Although the Agreement was unconditional in this respect as between Sharvine and the Consortium, pursuant to clause 4.5 of the Agreement, various payments due to the Consortium were conditional upon "Completion" of another agreement.[6]
17 That further agreement ("the Asset Sale Agreement") was an agreement, also entered into on 9 December 1997, pursuant to which Sharvine agreed to purchase a business ("the Business") from 3 companies, which can be loosely described as the Austrack group of companies ("the Vendors"). In other words, it was upon Completion of the sale of the Business that, generally speaking, Bridge was entitled to certain payments from Sharvine.
18 There were terms of the Asset Sale Agreement concerning termination. Those included clause 4.3, which expressly referred to conditions precedent. This clause provided as follows:[7]
If the conditions precedent in clause 4.1 [of the Asset Sale Agreement] are not fulfilled or waived by the Termination Date (that being 1 December 1998 or such other date as may be agreed by the Vendors and [Sharvine] in writing) then the [Asset Sale Agreement] may be terminated within 5 Business Days after the Termination Date by notice given to the other.
(Emphasis added.)
19 It was further alleged by Bridge that, on or about 4 December 1998, the Vendors, Sharvine and its holding company, Brambles Australia Ltd ("Brambles"), varied the Asset Sale Agreement ("the Variation Agreement"). Pursuant to the Variation Agreement, the definition of "Termination Date" was amended to replace "1 December 1998" with "31 December 1999". Further, it was alleged that the Variation Agreement contained a clause, which was to be inserted as a new clause 4.6 in the Asset Sale Agreement, and read as follows:
4.6 Early Termination Date
At any time prior to the Termination Date but after the events described in clause 4.2(a) and (b) have occurred, the board of directors of the Purchaser [ie Sharvine] may resolve that the Purchaser will not proceed with the development and operation of the Port. In this event the Purchaser shall promptly notify the Vendors of the Purchaser's determination and the parties shall during the ensuing 30 days consult in good faith in relation to the implications and implementation of the notice. If, however, at the end of the 30 day period (or such longer period as is agreed) the parties have not reached agreement then either party may by notice to the other bring forward the Termination Date to a date which is not earlier than seven days after the date of service of the notice. If that occurs then the provisions of clause 4.3 shall apply to the new date.
Bridge had no knowledge of the Variation Agreement at the time it was entered into.
20 The Extant Statement of Claim then alleges that, on 20 December 1999, Sharvine informed the Vendors that Sharvine had resolved it would not proceed under the Asset Sale Agreement. It is then alleged that, on 17 January 2000, Sharvine terminated or purported to terminate the Asset Sale Agreement, effective from 21 January 2000.
21 The pleading then makes allegations concerning the relationship between Bridge and Sharvine under the Agreement. It alleges that, by letter to Bridge on 18 January 2000, Sharvine purported to terminate the Agreement. It alleges that this letter was sent after Bridge had completed "the Works and delivered the Works" to Sharvine. It alleges further that the purported termination of the Agreement by the creation and subsequent exercise by Sharvine of the new clause 4.6 termination provision in the Asset Sale Agreement was in breach of the Agreement, including the Term of Good Faith.
22 The foundation for the amendments now sought to be introduced by Bridge is established by paragraph 28 of the Extant Statement of Claim, which reads as follows:
Further:
(a) by clause 4.5 of the Agreement the payments provided by clauses 4.1, 4.2 and 4.4 of the Agreement were conditional upon Completion of the [Asset Sale Agreement (as varied by the Variation Agreement)] occurring; and
(b) by its letter dated 17 January 2000 referred to in paragraph 23, [Sharvine] terminated or purported to terminate the [Asset Sale Agreement (as varied by the Variation Agreement)] prior to Completion and pursuant only to rights created by the subsequent [Variation Agreement] thereby preventing Completion of the [Asset Sale Agreement (as varied by the Variation Agreement)]; and
(c) the termination or purported termination of the [Asset Sale Agreement] (pursuant to rights created by the [Asset Sale Agreement (as varied by the Variation Agreement)]) did not in any way permit [Sharvine] or create any right in [Sharvine] to terminate the Agreement; and
(d) [Sharvine] wrongfully and in breach of the Agreement relied upon the matters set out in subparagraph (b) to purportedly terminate the Agreement.
23 The Extant Statement of Claim continues by making a loss of opportunity claim. This is pleaded on the basis of the alleged loss of opportunity of remuneration pursuant to the commercial and bargained for "opportunities/advantages" provided by various provisions of the Agreement. The pleading then continues with the following, in paragraph 30:
By reason of the matters aforesaid in paragraphs 22 to 29 [Bridge] has suffered loss and damage comprising the loss of the commercial opportunities to be:
Loss of chance quantum 1
(a) remunerated under clause 4.2; alternatively, clause 4.1, and, separately, clause 4.4 of the Agreement the value of which is $9,456,174; alternatively, $6,268,674 (or such other sum as the court determines having regard to all of the possible contingencies and possibilities) as particularised immediately below;[8].
24 There are various other allegations, the details of which do not affect the outcome of this appeal. However, it is necessary to refer to paragraphs 38B and 38C of the Extant Statement of Claim, which paragraphs were unreservedly the subject of the leave granted on 30 October 2014:
38B. By [Sharvine]'s unconscionable conduct in breach of section 51AA of the Trade Practices Act 1974 [Bridge] has suffered loss and damage comprising the loss of the chance to be remunerated pursuant to the commercial and bargained for opportunities/advantages provided by:
(a) clauses 4.1, 4.2 and 4.4 of the Agreement totalling $9,456,174; alternatively, $6,268,674 in respect of which [Bridge] refers to and repeats paragraph[s] 29 and 30(a); and
(b) the Express Good Faith Construction Negotiation Opportunity and the Express Construction Contract Tender Opportunity totalling $28,992,493 in respect of which [Bridge] refers to and repeats paragraph[s] 29A and 30(b).[9]
38C. Further, for the purposes of section 82 of the Trade Practices Act 1974 [Bridge] says:
(a) at the time of [Sharvine]'s wrongful exercise of the Termination for Convenience Provision [ie clause 4.6 of the Asset Sale Agreement] in about January 2000 the commercial and bargained for opportunities/advantages identified in paragraph 38B(a) and (b) (above) existed as rights granted by deed by [Sharvine] and vested in [Bridge] under the Agreement since December 1997;
(b) [Bridge] could and would have taken up the opportunities/advantages identified in paragraph 38B in which case the benefits to be derived from the opportunities/advantages identified in paragraph 38B would then have yielded to [Bridge].
B.3 Further allegations for which leave was refused
25 In the Proposed Statement of Claim, essentially Bridge sought to introduce 2 substantive matters. Immediately after paragraph 28, the following additional allegations were sought to be made:
28A. By an invitation to tender dated 4 June 1999 addressed to Austral Constructions Pty Limited (Austral) and received by Austral on about 7 June 1999, Leighton in its capacity as Brambles' strategic partner for the Project invited a tender from Austral for the works constituted by Non-essential Element 2.5 (namely, the Wharf and Elevated Gallery works) (Austral Tender) which works had been costed by [Bridge] at $52,299,470.
PARTICULARS
The Tender comprises a 3 page covering letter dated 4 June 1999 signed by Tony Spink of Leighton and accompanying Schedules 1 to 6 comprising: Schedule 1 (Tender Conditions), Schedule 2 (Scope of Work), Schedule 3 (Schedule of Documents), Schedule 4 (Tenderer Information), Schedule 5 (Lump Sum Tender) and Schedule 6 (Supporting Information).
[Bridge]'s costings for the Wharf and Elevated Gallery of $52,299,470 are described in paragraphs 75 to 82 in Part C.2 of the primary witness statement of John Denis Thomas filed and served herein.
28B. The Consortium was not invited to submit a tender for the works constituted by the Austral Tender.
28C. In the circumstances, the issuing of the Austral Tender constituted a breach of clause 3.1 of the Agreement [the Express Good Faith Construction Contract Negotiation Opportunity] and, additionally, a breach of clause 3.2 of the Agreement [the Express Construction Contract Tender Opportunity].
(These allegations will be referred to as the "Austral Tender Breach Claim".)
26 On 11 December 2014, Bridge sent a letter to the solicitors for Sharvine acknowledging a defect in paragraph 28A as proposed previously. The letter stated that leave would be sought to amend paragraph 28A so it would read as follows:
By an invitation to tender dated 4 June 1999 addressed to Austral Constructions Pty Ltd (Austral) and received by Austral on or about 7 June 1999 Leighton Contractors Pty Ltd (Leighton) acting as agent for and on behalf of [Sharvine] invited a tender from Austral for the works constituted by Non-essential Element 2.5 (namely, the Wharf and Elevated Gallery works) (Austral Tender) which works had been costed by [Bridge] at $52,299,470.
In addition, the letter stated that the particulars to paragraph 28A would be supplemented with the following:
In about April 1999 [Sharvine]/Brambles appointed Leighton as [Sharvine]'s delivery partner for the Project.
27 Subject to the overall objection made by Sharvine, no objection was taken to this course. Accordingly, the appeal will deal with the Austral Tender Breach Claim on the basis of the new proposed paragraph 28A.
28 Further, Bridge sought to allege alternate bases for its contractual loss of opportunity claim by introducing a new paragraph 29A, together with a new subparagraph (b) to paragraph 30, as follows:
29A. As a further result of [Sharvine]'s breaches of the Agreement referred to in paragraph 27 and/or by its preventative conduct referred to in paragraph 28, and/or paragraphs 28A to 28C [Bridge] lost the commercial and bargained for opportunities/advantages constituted by:
(a) the Express Good Faith Construction Contract Negotiation Opportunity; and
(b) the Express Construction Contract Tender Opportunity
which losses were more than negligible.
...
(b) awarded the construction contract contemplated by clauses 3.1 and 3.2 of the Agreement the lost value of which is the profit component of that construction contract which value is $28,992,493 (or such other sum as the Court determines having regard to all of the possible contingencies and possibilities) as particularised immediately below.
The particulars to paragraph 30(b) simply referred to a witness statement filed by Bridge in June 2012.
29 The 3 separate decisions of the associate judge require consideration.
30 On 19 December 2012, in refusing leave to add each of paragraphs 28A, 28B, 28C, 29A and 30(b), the associate judge stated:[10]
[Bridge], without a particularly satisfactory explanation, seeks to introduce a new cause of action [by paragraphs 28A, 28B, 29C and 29A (insofar as it refers to paragraphs 28A, 28B and 29C)], which may or may not be statute barred, and which will, in the circumstances of this case, lead to further delay in the conduct of the proceeding, in circumstances where there has already been substantial delay.
While there is no direct evidence of prejudice ..., it is apparent from the evidence already adduced in this case, including [Bridge]'s own evidence, that the construction and engineering industry is known for its highly mobile, project focussed workforce, and I can infer that [Sharvine] will suffer prejudice which cannot be cured by costs.
In relation to the proposed pleading in relation to the loss of a chance [ie paragraph 30(b)], I agree with counsel for [Sharvine] that while it may well be tenable for [Bridge] to add a further head of damage arising out of breaches already pleaded, it is necessary for [Bridge] to go further, and, consistently with the authorities, plead that a particular opportunity existed, that the relevant opportunity would have been pursued but for the conduct of [Sharvine] and that the opportunity would or might have been realised.
Her Honour also made observations concerning allegations regarding good faith, the detail of which is not relevant to the issues on appeal.
31 On 19 December 2012, the court granted Bridge leave to serve a third further amended statement of claim consistent with the oral reasons given on that day. As a result, the leave granted was subject to a proviso; it was only granted on the basis that Bridge plead the elements identified concerning any loss of opportunity claim, together with how Sharvine breached any obligation of good faith or any other obligation said to arise out of the facts pleaded in the new paragraphs the subject of leave.
32 The associate judge also listed the matter for further directions on 7 March 2013.
33 When the further pleading was provided by Bridge on 4 February 2013, it was the subject of challenge by Sharvine. Then yet another proposed statement of claim was put forward by Bridge. On 7 March 2013, the court ordered that issues concerning Bridge's proposed amendments be heard on 20 March 2013.
34 On 20 March 2013, the associate judge refused leave to introduce a new paragraph 26A to the statement of claim on the basis that the conditions imposed on the previous occasion had not been satisfied. Having refused to allow paragraph 26A to stand, her Honour continued:
Further, upon reflection, it seems to me to be necessary that, for [Sharvine] and the court to know the manner in which [Bridge] puts its case, it is necessary for [Bridge] to plead more fully the content of the implied obligation of good faith as alleged in paragraph 5(k): that is, what [Sharvine] was obliged to do, or not do, by reason of the implied obligation of good faith.[11] I acknowledge that this concern was not raised in my reasons of 19 December 2012.
(Original emphasis.)
35 Her Honour then made the observation that she considered it at least arguable that Bridge could establish that the variation to the Asset Sale Agreement and its subsequent termination pursuant to clause 4.6 was unlawful "vis-à-vis [Bridge], without it being necessary to contend that [Sharvine]'s termination of the [Asset Sale Agreement] was in breach of its obligations under [the Asset Sale Agreement]".
36 Finally, the associate judge addressed the loss of opportunity claim. Her Honour refused leave to introduce the relevant paragraphs for 2 reasons. First, she said the claim fell away by reason of the refusal to give leave to Bridge concerning its new allegations with regard to the alleged duty of good faith. Secondly, her Honour refused the loss of opportunity claim because it did not satisfy the conditions set out in her reasons of 19 December 2012.[12]
37 Upon delivering her Honour's reasons, the associate judge made orders which included that the third further amended statement of claim filed 4 February 2013 was struck out and that the second further amended statement of claim dated 23 October 2008 stood as Bridge's statement of claim in the proceeding. It was also ordered that the further directions hearing be listed for 17 April 2013, and any further application by Sharvine for security for costs be made returnable on that day.[13]
38 On 24 July 2014, Bridge filed a further summons seeking leave to amend the statement of claim, and annexed the Proposed Statement of Claim to the summons. As already stated, that application was heard on 10 September 2014. On 30 October 2014, the associate judge delivered written reasons by which her Honour allowed some amendments, but not others. What was then before the court was described by her Honour as follows:
(a) re-instating a loss of opportunity claim for which leave was refused on 19 December 2012 and 20 March 2013;
(b) re-instating a claim in respect of an alleged breach of contract by [Sharvine] in respect of the [Austral Tender Breach Claim], for which leave was refused on 19 December 2012;
(c) further elaborating upon [Bridge]'s claim that [Sharvine] had breached its obligations of good faith; and
(d) a claim that [Sharvine] had acted unconscionably.
39 As to the allegations referred to in subparagraphs (c) and (d) above, the associate judge granted leave for the statement of claim to be amended as sought. In contrast to the order made on 19 December 2012, the order granting leave was not subject to any proviso.
40 Leave was refused with respect to the allegations concerning subparagraphs (a) and (b) above.
41 In refusing leave with respect to the loss of opportunity claim and the Austral Tender Breach Claim, the associate judge not only addressed matters then before her Honour, but also revisited what had occurred previously. Her reasons included the following:
A controversial aspect of this application is that in respect of the proposed amendments seeking to include the loss of opportunity claim, and the [Austral Tender Breach Claim], is that I have been invited to reconsider my rulings of 19 December 2012 and 20 March 2013. Counsel for [Bridge] submitted that in relation to the pleading in respect of the loss of opportunity claim, I proceeded on an erroneous understanding of what a plaintiff seeking to claim damages in respect of a loss of an opportunity arising out of a breach of contract is required to establish in order to make good its cause of action. In relation to the [Austral Tender Breach Claim], counsel for [Bridge] submitted that, based upon the evidence before me at the time, I had wrongfully exercised the discretion to refuse leave to amend to include this claim.
[Sharvine], quite understandably, resisted the application to amend to include the loss of opportunity claim and the [Austral Tender Breach Claim] on the basis that the application is an abuse of process. [Sharvine] submitted that to re-agitate the same claims before the court on the asserted basis that my previous decisions were wrong brings the administration of justice into disrepute, and is oppressive to [Sharvine].
In principle, I agree. The same arguments advanced by [Bridge] in respect of both of these proposed amendments could have been advanced before me at the hearings on 19 December 2012 and 20 March 2013 (noting that counsel appearing before me on this application was not briefed to appear for [Bridge] on either of the earlier occasions). Even if it were in fact permissible for me to revisit my previous rulings, to do so would set an extremely undesirable precedent.
42 Having made these observations, her Honour then stated that she considered it was arguable that her decisions concerning the loss of opportunity claim made on 19 December 2012 and 20 March 2013 were based on an incorrect assumption as to the applicable principles. Accordingly, on the court's own motion (without any application by either party), Bridge was granted leave to appeal out of time from the orders made on 19 December 2012 and 20 March 2013 "insofar as the orders refuse leave to [Bridge] to put forward its loss of opportunity claim arising out of [Sharvine]'s alleged breach of contract".
43 Leave was granted until 13 November 2014 for a notice of appeal to be filed and served. Bridge failed to file or serve a notice of appeal within the stipulated time.
44 In contrast to the leave granted with respect to the loss of opportunity claim, in relation to the Austral Tender Breach Claim, the associate judge said she would not grant leave to appeal out of time. In so doing, the following was stated:
I do not see my decision to have been attended by sufficient doubt to justify the grant of leave, particularly given that the decision to allow an amendment is discretionary in nature, and there are no special circumstances of a similar nature to those referred to above [with respect to the loss of opportunity claim]. [Bridge] simply seeks that I exercise my discretion in a different way than I did nearly two years ago. Given that my written reasons of 19 December 2012 indicate that I refused leave at least in part because of the prejudice to [Sharvine] of bringing a new, discrete claim after such a long period of time, I doubt that the strength of [Bridge]'s position in that regard has improved in the intervening period. In any event, the proposed pleading is inadequate, in that apart from referring to Leighton as being [Sharvine]'s "strategic partner", there is no pleading of any material facts to provide a foundation for imputing any liability to [Sharvine] for Leighton's conduct.
45 This proceeding first came before me on 28 November 2014. On that occasion, senior counsel for Sharvine urged the court to list this matter urgently as the proceeding was "in desperate need of a trial date". The court was informed that the argument "would be an hour or less". Further, it was said Sharvine would take no issue with any need for leave to be granted to file a notice of appeal out of time. The court was informed that it only need address "the appeal itself" and that it was "a very short point".
46 As a result of the position adopted by Sharvine, the matter was listed before me on 16 December 2014. Also consequent on Sharvine's approach, on 16 December 2014, without any adjudication on the merits, the following orders were made by consent:
E. The approach to be taken on an appeal from an associate judge
47 Ordinarily, the nature of an appeal from an associate judge to a judge of the trial division is by way of a rehearing which requires the appellant to show error before appellate power may be exercised.[16] Further, if the orders the subject of the appeal relate to practice and procedure, particular caution must be exercised in reviewing the decision.[17] The judge has the power to give any judgment and make any order which ought to have been given or made and make any further or other order as the case may require.[18]
48 In this case, the approach to be taken on this appeal may be affected by the fact that the associate judge has expressly recorded that it is "arguable" that her original orders concerning the loss of opportunity claim were wrong. In contrast, with the Austral Tender Breach Claim, no such view has been expressed.
49 As to the subject matter of the appeal generally, r 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) provides that a court may order that a document be amended or order that any party may have leave to amend any document for the purpose of:
(a) determining the real question in controversy between the parties;
(b) correcting any defect or error in any proceeding; or
F. Initial approach taken by Sharvine on appeal
50 Senior counsel for Sharvine adopted an unusual course at the commencement of the appeal. Notwithstanding Sharvine is the respondent to the appeal, he said Sharvine should go first in submissions as Sharvine had "condensed [its] position to a single point". Bridge did not resist this course.
51 As this submission was developed by Sharvine, it became apparent that it was premised on an understanding that it was common ground between the parties that the conditions precedent the subject of the Asset Sale Agreement[19] were not satisfied on or before the Termination Date. Accordingly, so the submission went, Sharvine's obligation to complete the Asset Sale Agreement never came into force. It was contended that, on this basis, there was a fundamental flaw to both the Austral Tender Breach Claim and the loss of opportunity claim the subject of the appeal.
52 In order to seek to establish the "common ground", Sharvine referred to the reply filed 28 January 2005, in which Bridge admitted an allegation in the defence of Sharvine that Completion had not and, in light of certain facts pleaded, could not take place.[20] Further, Sharvine referred to the combined fact that, in 2008, Bridge had alleged that the conditions precedent had been satisfied prior to Completion, and that Bridge had subsequently withdrawn that allegation.
53 In submissions in response, Bridge stated that it was not common ground that the conditions precedent had not been met at the time of termination of the Asset Sale Agreement. It was explained that the withdrawal of the previous allegation that conditions precedent were satisfied on or before the Termination Date was only because of an inability to provide particulars of that allegation (such matters being only within the knowledge of Sharvine and the Vendors).[21]
54 In short, it was not common ground between the parties that the conditions precedent were never satisfied under the Asset Sale Agreement. Accordingly, the "single point" approach of Sharvine to the resolution of the issues on appeal necessarily fell away.
55 In oral submissions in reply, Sharvine sought to retrieve the submission by stating that, regardless of whether or not there was common ground as previously submitted, the necessary causal link had not been pleaded. For reasons stated below,[22] I do not accept this submission.
56 Further, to the extent that Sharvine sought to suggest there was a fundamental inconsistency in Bridge's case, I also reject this submission. The fact that Bridge acknowledges Sharvine abandoned the project, does not preclude it from making a claim on the basis that the project might have been pursued. Furthermore, as already acknowledged by the associate judge,[23] it is not essential for Bridge to necessarily establish the Asset Sale Agreement would have proceeded to Completion in order for there to be a possible case for breach under the Agreement.[24]
G. Austral Tender Breach Claim - proposed paragraphs 28A, 28B and 28C
57 As may be seen from paragraphs 25 and 26 above, by the introduction of the proposed paragraphs 28A, 28B and 28C, Bridge seeks to introduce allegations based on a letter that was sent on 4 June 1999 by an alleged agent of Sharvine to Austral. The fact that the letter was sent does not form part of any of the other causes of action pleaded. Thus, the sending of that letter, together with the fact that the Consortium was not included in the proposed tender, is the basis for entirely new allegations to found a further breach of the Agreement.
59 Although any significance in relation to the letter dated 4 June 1999 apparently was not appreciated by the lawyers acting for Bridge until the process of preparing evidence for trial was undertaken in 2012, this does not explain why it is that Bridge, with full knowledge of the relevant facts in 1999,[27] failed to act upon the letter for as long as it has. In short, the associate judge was correct in forming the view that no satisfactory explanation had been given for the extraordinary delay in this claim being made.[28]
60 Notwithstanding this delay, Bridge submitted that leave should be granted as there was no evidence that Sharvine would suffer any prejudice if leave were granted. Given the age and nature of the allegations, evidence is hardly necessary. If leave were granted, Sharvine would need to seek instructions regarding events over 15 years ago, including from someone allegedly acting as an agent for Sharvine. Although an evidentiary onus may rest with Sharvine to satisfy the court that it would suffer prejudice,[29] the inference drawn by the associate judge was clearly open.
61 The fact that a witness statement filed by Bridge in 2012 includes circumstances relating to the letter dated 4 June 1999 does not alter the issues concerning delay and prejudice.[30] Ordinarily, it is the pleadings that determine the issues in the case, not what a party seeks to advance in a witness statement.[31]
62 Further, the facts of this case are markedly different to cases such as Leotta v Public Transport Commission (NSW),[32] which was relied upon by Bridge. There was no suggestion in that case that the introduction of facts during the trial, to found a different basis for a claim than that pleaded, caused any relevant prejudice to the defendant.[33]
63 In circumstances where a loss of opportunity claim coupled with this Austral Tender Breach Claim relies upon "all of the possible contingencies and possibilities" in 1999, it would be oppressive to allow Bridge to allege an entirely new and distinct breach of contract and then expect Sharvine to obtain instructions in order to ascertain what defences it might have to this further claim for breach. This pertains regardless of whether or not the loss of opportunity allegations are the subject of leave. Further, for reasons discussed below,[34] there is a fundamental difference between a cause of action for loss of opportunity based on breach of contract and for a cause of action for such loss where damage is the gist of the action.
64 As was stated by McHugh J in Brisbane South Regional Health Authority v Taylor,[35] in the context of considering legislation concerning limitation periods, delay can mean that it is "oppressive, even 'cruel', to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed".[36]
65 Finally, I do not accept the submission of Bridge that the associate judge failed to consider the prejudice to Bridge in refusing leave to amend. Her Honour expressly referred to the relevant paragraphs in her reasons.[37] It must have been self-evident that refusal to grant leave would have shut out Bridge from advancing a claim allegedly worth a significant amount.
66 In summary, the associate judge refused leave in relation to the Austral Tender Breach Claim because of the absence of a satisfactory explanation for the delay, the substantial delay itself and the real likelihood of prejudice to Sharvine. Given the matters set out above, it was a perfectly proper exercise of the court's discretion to decline to grant leave. Nothing in the new proposed paragraph 28A[38] alters the position. This part of the appeal must be dismissed.
67 The first issue to address is whether the associate judge was in error in the reasons given on 19 December 2012 as to what it was necessary for a plaintiff to plead when seeking loss and damage for a loss of opportunity arising out of a breach of contract.
69 The relevant distinction was concisely identified by Brennan J in Sellars v Adelaide Petroleum NL,[41] where his Honour said:
The cases where a plaintiff seeks damages only for breach of a contractual promise to afford the plaintiff an opportunity to acquire a benefit are in a different category from cases under s 82(1) [of the Trade Practices Act 1974 (Cth)] and cases in tort where damage is the gist of the cause of action. In a case like Chaplin v Hicks,[42] the relevant loss is identified by the contractual promise to afford the plaintiff an opportunity to acquire a benefit or to avoid a detriment.[43] A breach of the promise to afford that opportunity necessarily establishes that the loss flows from the breach. In contract cases, a plaintiff may be entitled to nominal damages for loss of the opportunity promised even though the plaintiff fails to prove what, if any, value performance of the unfulfilled promise would have had.[44] But in cases arising under s 82(1) of the Act, as in cases of tort where damage is the gist of the action, a lost opportunity may or may not constitute compensable loss or damage. In such cases, the existence and causation of a compensable loss cannot be proved by reference to an antecedent promise to afford an opportunity. The plaintiff, who bears the onus of proving a loss suffered as the result of the defendant's contravening or tortious conduct, must prove the existence and causation of the alleged loss in some other way.
(Emphasis added.)
Accordingly, for a breach of contract alleged to give rise to a loss of opportunity, only the breach and the opportunity contracted for which was lost by reason of the alleged breach need to be pleaded to establish a valid cause of action. Of course, to obtain more than nominal damages, actual loss must be established;[45] but that is a matter for trial.
70 Given the error in the associate judge's approach, the jurisdiction is enlivened to reconsider the matter.[46] Naturally, the facts to take into account include the delay in the application to amend already discussed,[47] which must be considered in the context of other factors relevant to the exercise of the court's discretion.
71 In exercising its discretion afresh, the parties sensibly accepted the court should do so on the proposed pleading as presented to it at the time of the appeal. The proposed pleading must be considered in the context of the pleading already filed with the court, namely the Extant Statement of Claim.
72 The material circumstances that presently prevail are fundamentally different to those that were before her Honour in December 2012 and, for that matter, March 2013. The orders made on 30 October 2014 granted leave to Bridge to substantially amend the statement of claim. The new allegations the subject of that leave, which leave has not been challenged on appeal, included allegations that Bridge had suffered a loss of opportunity by reason of the unconscionable conduct of Sharvine. The loss of opportunity claim for the alleged unconscionable conduct is quantified in precisely the same manner as the loss of opportunity claim sought to be alleged in paragraph 30(b).[48]
73 Furthermore, consistent with the observations made by the associate judge on 19 December 2012,[49] with respect to the claim based on unconscionable conduct, Bridge has now positively pleaded that it "could and would have taken up the opportunities/advantages ... in which case the benefits to be derived from the opportunities/advantages ... would then have yielded to [Bridge].[50]
74 In light of the above, I now turn to paragraphs 29A and 30(b) of the Proposed Statement of Claim.
75 Paragraph 29A, assuming the deletion of the references to paragraphs 28A to 28C,[51] does no more than allege that the breaches already pleaded in paragraphs 27 and 28 of the Extant Statement of Claim caused Bridge to lose the opportunities for which it had bargained under the Agreement. Given the law concerning loss for breach of contract, the allegations properly plead the elements of the cause of action. Further, and in any event, no point can be made that, on the pleading, Bridge has failed to properly allege some loss. Loss claimed is already provided in paragraph 30(a) of the Extant Statement of Claim.
76 In circumstances where paragraph 29A does no more than refer to existing allegations already the subject of the Extant Statement of Claim, leave ought to be granted to include this paragraph.
77 Also, in relation to paragraph 30(b) leave ought to be granted. Although the application for leave to introduce the paragraph was very late, the substance of the paragraph has already been the subject of leave to amend. As already noted,[52] the issues pleaded in that paragraph will arise in any event by reason of the allegations contained in paragraphs 38B and 38C of the Extant Statement of Claim. Further, if paragraph 30(b) is included it will do no more than provide another head of loss to contractual causes of action already pleaded (which head of loss will be the subject of evidence in any event).
78 Accordingly, I intend to make the following orders:
79 I will hear the parties on the question of costs.
80 As submitted by Sharvine, this matter is long overdue for trial. Unfortunately, this judgment has taken some time to deliver in light of the manner in which it was brought before the court.[53] It is imperative that the matter now proceed to trial as efficiently as reasonably possible. Given the significant amount of time that has been spent in getting across the issues for the purposes of determining this appeal, it is appropriate the matter be listed for trial before me as soon as practicable.
81 I will invite the parties to provide appropriate directions to set the matter down for trial. Hopefully this will avoid yet further costs being added to the already significant costs incurred to date on interlocutory steps in this proceeding.[54]
[6] There was a minor exception to this with respect to a payment of $150,000, which payment was not conditional on Completion: cl 4.3 of the Agreement.
[7] This is the clause as pleaded. The actual wording in the Asset Sale Agreement is slightly different, but nothing turns on this.
[9] The Extant Statement of Claim only refers to pars 29A and 30(b), rather than setting out the substantive allegations in full. This is an error on the face of the pleading, given that pars 29A and 30(b) were not the subject of leave. The pleading should have set out the substantive allegations.
[10] The reasons were delivered orally.
[13] In fact, security for costs was awarded on 2 May 2013 in the sum of $640,000. The order required payments to be made in 4 instalments, the last of which was on 2 September 2013. The security for costs was duly paid on or about the dates as ordered, but this left Bridge with little funds to prosecute the proceeding. This was part of the cause for some delay; another being extensive correspondence between the parties as to the issues arising from the proposed amendments.
[14] That is, the order that gave leave to file and serve a notice of appeal in relation to the loss of opportunity claim.
[15] That is, the order refusing leave to add paragraphs 28A, 28B and 28C.
[16] The appeal is pursuant to r 77.06 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). See also Oswal v Carson [2013] VSC 355, [11] (Ferguson J).
[20] Defence filed 4 March 2004, par 15(c).
[24] In this regard, although a series of submissions made by Sharvine may ultimately succeed at trial, it is not the occasion to consider such matters on this appeal: see, for example, Matthews v SPI Electricity Pty Ltd (Ruling No 6) [2012] VSC 70, [33]-[34] (J Forrest J); cf Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158, [31]-[32], [35] (Warren CJ and Nettle JA), [40]-[42] (Neave JA).
[26] If the Austral Tender Breach Claim were the subject of leave, Bridge would rely upon it to found an additional basis to make the alternate loss of opportunity claim sought to be advanced pursuant to paragraph 30(b) of the Proposed Statement of Claim.
[28] See par 30 above, first quoted paragraph. Cf Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 182 [5] (French CJ).
[29] Cf ACN 002693843 Box Pty Ltd v Australian Corrugated Box Co Pty Ltd [2013] VSCA 223, [65] (Hansen and Tate JJA).
[30] A witness statement filed on behalf of Bridge in this proceeding indicated that Bridge received a copy of the letter dated 4 June 1999, together with information indicating Austral had been invited to tender for the works the subject of the letter dated 4 June 1999.
[31] Banque Commerciale SA, In Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 286.9-287.2 (Mason CJ and Gaudron J), 288.2 (Brennan J), 302.9 (Toohey J); cf 297.02 (Dawson J); Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658, 664.6 (Murphy, Wilson, Brennan Deane and Dawson JJ). See also fn 33 below.
[32] (1976) 9 ALR 437, 446.3 (Stephen, Mason and Jacobs JJ).
[33] See esp at 447.2. A like observation may be made in relation to the other cases referred to: Donis v Donis [2007] VSCA 89; (2007) 19 VR 577, 595-596 [60]-[64] (Nettle JA, with whom Maxwell ACJ and Ashley JA agreed); Wong v Mura [2001] NSWCA 366, a case in which an appeal was allowed on the merits, and observations were made about the need for the pleadings to reflect the case presented in order to avoid confusion: [4] (Priestley JA), [6]-[7] (Fitzgerald AJA, with whom Priestley JA and Rolfe AJA agreed).
[35] [1996] HCA 25; (1996) 186 CLR 541, 552.4.
[36] Quoting RB Policies at Lloyd's v Butler [1950] 1 KB 76, 81-82.
[40] In fairness, the court was only taken to 1 authority on the issue, and no countervailing submission was made by Bridge at the time.
[41] [1994] HCA 4; (1994) 179 CLR 332, 359.4. See also at 349.3 (Mason CJ, Dawson, Toohey and Gaudron JJ).
[43] McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377, 412.
[44] Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, 301, 312.
[45] See, for example, Seddon, Bigwood and Ellinghaus, Cheshire & Fifoot Law of Contract (2012, 10th ed) 1140 [23.16].
[46] House v The King [1936] HCA 40; (1936) 55 CLR 499, 505.2 (Dixon, Evatt and McTiernan JJ).
[53] I refer to the matters stated to the court on 28 November 2014: see par 45 above. On that basis, I agreed to list the appeal on 16 December 2014 on a day I had free during the course of a long running trial (which did not finish until March 2015). Notwithstanding the estimate given of an hour or less, a 3 volume appeal book was filed consisting of 823 pages. I was also provided with 2 folders of documents during the course of argument. In addition, the written submissions collectively ran for 34 pages. The oral argument of the appeal lasted a full day.
[54] Cf Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303, 323 [56]-[57] (French CJ, Kiefel, Bell, Gageler and Keane JJ).
Bridge and Marine Engineering Pty Ltd
Sharvine Pty Ltd [2015] VSC 127
(2006) 68 NSWLR 531
(2009) 239 CLR 175
(1990) 169 CLR 279
(1982) 148 CLR 658
(1976) 9 ALR 437
(2007) 19 VR 577
(1996) 186 CLR 541
(1994) 179 CLR 332
(1951) 84 CLR 377
(1938) 61 CLR 286
(1936) 55 CLR 499
(2013) 250 CLR 303