BUILT ENVIRONS WA PTY LTD -v- PERTH AIRPORT PTY LTD [No 2] [2019] WASC 76 (12 March 2019)

1. The December 2017 orders resolved what had then been an outstanding balance of unresolved issues raised under the chamber summons brought by the defendant on 19 October 2017 ('the defendant's October 2017 chamber summons') then seeking, in effect, greater particularity of some key paragraphs of what was then the plaintiff's current pleading, namely its substituted statement of claim of 4 September 2017 ('the SSOC').
2. By pars 1, 2 and 3 of the defendant's October 2017 chamber summons, it had sought that the plaintiff be required to file and serve expert evidence to support the plaintiff's pleas under pars [11] and [14] of the earlier SSOC as they then presented.
3. The defendant had also sought via par 2 of that chamber summons to require the plaintiff to plead facts establishing the (defective drawing) allegations and the causation of loss pleas as they were then set out in pars [11], [14] and [15] of the SSOC - no later than 14 days after the service of the expert evidence the subject of par 1.
4. In addition, the defendant, by par 3 of that chamber summons, had sought then to be made exempt from itself providing discovery on issues related to matters pleaded under pars [11], [14] and [15] of the SSOC until such time as the plaintiff had both filed the expert evidence and then had amended its pleading under pars 1 and 2, in effect, to add that greater detail.
5. In the alternative, the defendant had also sought in that chamber summons to strike out pars [11], [14] and [15] on the basis that they were embarrassing, in effect, because of alleged detail omission deficiencies. These deficiencies, as specified in the chamber summons, were said to be that the pleas under pars [11], [14] and [15]:

(a) conflate the definition of the General Drawing Deficiencies with the alleged consequences of the General Drawing Deficiencies;

(b) fail to identify the alleged defects that constitute the General Drawing Deficiencies;

(c) fail to demonstrate causation of the alleged loss suffered by reason of the alleged defects; and

(d) as a consequence will prejudice, embarrass or delay the fair trial of the action.

1. It is not necessary to detail the further relief also pursued in the defendant's October 2017 chamber summons.
2. On 26 October 2017, I rejected the alternate strike out basis of the defendant's October 2017 chamber summons as being inappropriate. However, I did then accept the defendant's in principle underlying grievance concerning what was then an obvious lack of reasonable detail and particularity in the three identified SSOC paragraphs in terms of alleged general drawing deficiencies and also by the plaintiff not identifying the specific causative loss consequences of such drawing deficiencies. But the better remedy to fix these detail problems, I had then thought, was a provision of an expert report from the plaintiff (hopefully) encapsulating all the missing details as to drawing deficiencies and what financial loss each defective drawing had then occasioned.
3. To that extent, I was effectively endorsing what had been the first approach of the defendant's October 2017 chamber summons - in terms of such drawing deficiencies likely being addressed by the expert report, and then the plaintiff amending its SSOC pleading to take in that extra detailed information from the expert report as the identifiable particulars.
4. The parties took my October 2017 determinations on board. In due course, on 13 December 2017, the parties submitted to the court a minute of agreed consent orders pursuant to the Rules of the Supreme Court 1971 (WA) O 43 r 16. It is not necessary to set out all of these consent orders. However, orders 3, 4, 5 and 6 need to be canvassed.
5. The terms of the as submitted consent orders, which became my case management direction orders of 13 December 2017, read in the following terms ('the December 2017 orders'):

Balance of the defendant's chamber summons dated 18 October 2017

1. The plaintiff is required to file and serve its expert evidence of the General Drawing Deficiencies referred to in paragraphs 11 and 14 of the substituted statement of claim by 16 April 2018.
2. The plaintiff have leave to plead the facts establishing the allegations and the causation of loss as set out in paragraphs 11, 14 and 15 of the substituted statement of claim no later than 14 days after the service of the expert evidence referred to in Order 3 above.

1. The parties give general discovery in this matter on or before 15 June 2018, such documents to be provided in accordance with the Document Management Protocol that has been agreed between the Parties.
2. If a Party gives notice of a category of documents that it claimed ought to be excluded from paragraph 5 above:

(a) that Party must give the other Party notice of that category on or before 7 May 2018; and

(b) the other Party is to provide notice to the first Party within seven days as to whether it accepts the exclusion, or part thereof.

The issue on the defendant's present application of 22 November 2018

1. Months on from the December 2017 orders, the parties are busily engaged in providing mutual discovery for what is presenting as a huge number of documents on each side. The discovery task is clearly occupying much time, energy and resources - not to mention the cost. The disputed issue on the present application, however, is more confined. To better understand the disputed issue, I make the following preliminary points.
2. First, it is necessary to have an appreciation of pars [11], [14] and [15] in the SSOC as that pleading had formerly read in September 2017 and then, how those paragraphs were affected by some amendments of 15 June 2018, leading to the current pleading, the plaintiff's further amended SSOC. I discuss the 'before' and 'after' pleading formats in the next section of these reasons.
3. Second, for present purposes, it is sufficient for me to say that orders 3 and 4 of the December 2017 orders whilst made by consent, at the end, had their genesis in the defendant's October 2017 chamber summons as regards relief then sought under pars 1, 2 and 3 of that application.
4. Third, it may be also appreciated, by reference to orders 5 and 6 of the December 2017 orders that at the parties' then behest, I had ordered they give general discovery - which was to be on or before 15 June 2018. It needs to be seen, however, that this was what was then an unusually wide discovery order - the CMC List norm now being only orders for discovery of documents that are directly relevant to issues between the parties (and then, usually confined to an expressly identified limited category of such directly relevant documents).
5. There was, however, some element of a brake against unconstrained 'Peruvian Guano' scope discovery, reflected in order 6 of the December 2017 orders under the capacity for categories of directly relevant documents to be excluded (see Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55). The exclusion policy approach of that order looks to be founded in an expectation or hope that, at that time, there could be a large number of commonly held documents between the parties, to which they clearly both had full access and that might then readily be excluded from the otherwise confronting documentary dimensions of a discovery of the task at hand. Subsequent events have shown that the optimism underlying the carve out potential of order 6 of the December 2017 orders was misplaced.
6. Fourth, and most fundamentally, however, the present application as it is now advanced under the defendant's minute of proposed orders of 22 November 2018 (ie, seeking to exclude for itself categories of documents from discovery) can be seen to be linked to the exclusion concept the subject of order 6 (and, indeed, of orders 7 and 8 which outline the process of conferral and dispute resolution arising out of a notice under order 6) of those December 2017 orders.
7. I can now turn to the SSOC to identify herein pars [11], [14] and [15] as they were originally constructed in the SSOC at the time of the December 2017 orders and then outline how they changed under the plaintiff's pleading amendments of 15 June 2018.

The 'before' and 'after' pleas under pars [11], [14] and [15]

1. In September 2017 the plea in par [11] of the SSOC read in the following terms:

[11] In breach of the terms pleaded in paragraphs [5](f), [6] or [7] above, or alternatively, in breach of the warranty pleaded in [5](g) or [8] above, the Drawings and Specifications did not meet the standard referred to in paragraph [9] above, and as a consequence the Drawings and Specifications required additional work and augmentation by:

(a) the issuing of 7,565 requests for information, under the Contract;

(b) the processing and management of 4,842 requests for information from subcontractors;

(c) the review of 6,723 sketches issued by the Defendant and the Defendant's Designers;

(d) the carrying out of not less than 1,211 Variations;

(e) an increase in resources applied by the plaintiff;

(f) the raising of 709 extensions of time claims; and

(g) the issuing of 7,737 delay notices and requests for extensions of time,

(General Drawing Deficiencies)

1. By amendments made under the further amended SSOC filed on 15 June 2018, par [11] was then adjusted and read in the following terms:

[11] In breach of the terms pleaded in paragraphs [5](f), [6] or [7] above, or alternatively, in breach of the warranty pleaded in [5](g) or [8] above, the Drawings and Specifications did not meet the standard referred to in paragraph [9] above and were deficient (General Drawing Deficiencies), and as a consequence the Drawings and Specifications required additional work and augmentation by:

(a) the issuing of 7,565 requests for information, under the Contract;

(b) the processing and management of 4,842 requests for information from subcontractors;

(c) the review of 6,723 sketches issued by the Defendant and the Defendant's Designers;

(d) the carrying out of not less than 1,211 Variations;

(e) an increase in resources applied by the plaintiff;

(f) the raising of 709 extensions of time claims; and

(g) the issuing of 7,737 delay notices and requests for extensions of time,

(General Drawing Deficiencies).

(a) The deficiencies in the electrical building services engineering and vertical transportation drawings are set out in section 6.8 of the Preliminary Expert Report of Gerry Brannigan dated 16 Apil 2018 (Brannigan Report) at pages 30 to 39;

(b) The deficiencies in the mechanical building services engineering drawings are set out in section 7.7 of the Brannigan Report at pages 45 to 49;

(c) The deficiencies in the hydraulic building services engineering drawings are set out in section 8.7 of the Brannigan Report at pages 54 to 58;

(d) The deficiencies in the mechanical fire protection engineering drawings are set out in section 9.7 of the Brannigan Report at pages 63 to 65;

(e) The deficiencies in the architectural drawings are set out in section 10.7 of the Brannigan Report at pages 76 to 96; and

(f) The deficiencies in the facade engineering drawings are set out in section 11.7 of the Brannigan Report at pages 105 to 110.

1. Paragraph [14] did not alter between September 2017 and June 2018. It continues to plead (in the further amended SSOC):

[14] By reason of the General Drawing Deficiencies, it was necessary for the Plaintiff to:

(a) issue 7,565 requests for information, under the Contract;

(b) process and manage 4,842 requests for information from subcontractors;

(c) review 6,723 sketches issued by the Defendant and the Defendant's Designers;

(d) carry out not less than 1,211 Variations;

(e) increase its resources;

(f) raise 709 extension of time claims; and

(g) issue 7,737 delay notices and requests for extensions of time.

1. As now seen, par [14](a) to (g) of the further amended SSOC replicated (a) to (g) of the former par [11]. To that extent, there was, in the SSOC, a duplication as between the respective subparagraph pleas.
2. The defendant's grievances as outlined in the October 2017 chamber summons concerned a lack of any proper detail concerning the nature of the actual drawing deficiencies. This was sought to be addressed by the particulars to par [11] at (a) through to (f) of the further amended SSOC. These additional subparagraph particulars make reference to deficiencies in various subcategories of drawings, including in the electrical building services, engineering and vertical transportation drawings, the mechanical building services engineering drawings, the hydraulic building services engineering drawings, the mechanical fire protection engineering drawings, the architectural drawings and, finally, in the facade engineering drawings. An attempt at providing greater detail was given by the references to various paragraphs and pages of the plaintiff's expert Mr Gerry Brannigan's preliminary expert report of 16 April 2018 (the 'Brannigan report').
3. Importantly, par [15] of the SSOC formerly read (at the time the December 2017 orders were made):

[15] The Plaintiff suffered loss and damage for its costs of project preliminaries as follows:

(a) $4,662,759.01 (excluding GST); or

(b) alternatively, if the daily delay cost cap applies (as to which the Plaintiff relevantly pleads in paragraphs [65] to [67] below), $8,797,309.06 (excluding GST) for costs of preliminaries,

the particulars of which are provided in Schedule V to this Statement of Claim.

1. The June 2018 amendments to par [15] in the further amended SSOC then added a preface to this paragraph, in terms 'By reason of the matters referred to in paragraphs 11 and 14'. Hence, [15] now reads:

[15] By reason of the matters pleaded in paragraphs 11 and 14, the Plaintiff suffered loss and damage for its costs of project preliminaries as follows:

(a) $4,662,759.01 (excluding GST); or

(b) alternatively, if the daily delay cost cap applies (as to which the Plaintiff relevantly pleads in paragraphs [65] to [67] below), $8,797,309.06 (excluding GST) for costs of preliminaries,

the particulars of which are provided in Schedule V to this Statement of Claim.

1. As seen, the plea in par [15] of the further amended SSOC added a causation plea preface (ie, 'By reason of'). The balance of the par [15] plea itemises alleged financial loss down to the last cent(s) as regards asserted costs of project preliminaries. But precisely how that position is reached is not explained. Nor is there any answer to that question in Schedule V.

Consequences of the June 2018 amendments to the SSOC

1. The June 2018 amendments to the SSOC (resulting in the further amended SSOC) removed what was formerly the plea of causation of loss under par [11] through the excision of the words 'and as a consequence the Drawings and Specifications required additional work and augmentation by ... '.
2. The new preface to par [15], 'By reason of the matters', effectively added into that plea (or, more correctly, shifted there from par [11]) the former causation of financial loss plea from par [11].
3. But these movement alterations were essentially only cosmetic. The need for the ordered details as to causation of loss did not go away. Whether it arises from par [11] as it once did, or from par [15] as it now does, that detail is still needed and it is still missing.

1. The defendant's detail grievance underlying the present application is longstanding. The December 2017 orders required the plaintiff to provide further detail not only as to the specific general drawing deficiencies, but also as to the causation of loss pleas concerning how it is said by the plaintiff that any such as alleged deficiencies in the various plans and drawings had then generated the loss and damage -seen pleaded as being caused and identified down to the nearest cent formerly by par [11] and now by par [15].
2. Material put before the court on the present application is mainly found within the affidavit of Ms Juliana Nicole Jorissen sworn on 21 November 2018 - effectively sworn as the supervising litigation partner over her team of personnel working on the ongoing discovery process (Ms Jorissen's November 2018 affidavit). Ms Jorissen then swore a subsequent affidavit on 12 February 2019 to deal with multiple technical objections taken against her first affidavit. I am satisfied that Ms Jorissen can provide reliable information as the superior of her team. I found that other objections raised against Ms Jorissen's November 2018 affidavit which concerned her attempts at summarising (whilst appending) some of the various interchanged solicitor communications passing between the rival lawyers were unduly technical and a distraction from the major issue to be addressed on the present application which is the abiding lack of details problem.
3. Ms Jorissen's November 2018 affidavit appends a copy of the Brannigan report as JNJ7, commencing at page 235 of her affidavit.
4. During the course of submissions, I was taken to various parts of the Brannigan report by senior counsel for the defendant by reference to the pagination of Ms Jorrison's November 2018 affidavit. These included page 239 (see par 1.3.1.1), page 242 (see par 3.3.1.2), pages 247 - 248 (see par 4.4.2.4), page 252 (par 4.5.2.4), page 256 (par 6.2.1.1), page 258 (par 6.4), page 260 (par 6.5.1.1) and pages 261 - 263 (particularly red box comments at pages 261 and 262). For instance, see at page 262 a red box comment, in reference to a plan:

This area is heavily congested. A cross section is required to show how systems fit together.

See also page 263 and the square box notation in reference to the plan:

See also items 15 and 16 at page 264 under the table headed 'Electrical Building Services Document Review Comments'.

1. In short, the position submitted on the part of the defendant is that the Brannigan report was largely inadequate in terms of properly identifying the nature of specific general drawing deficiencies. The ongoing history had led to the December 2017 orders effectively allowing the plaintiff to particularise the then undetailed pleas by reference to a forthcoming expert report. That unfolded.
2. But the Brannigan report, it is said, is threadbare. Hence, it is said the plaintiff, who has had more than ample opportunity to identify all alleged deficiencies in the drawings, should be held to that Brannigan position for the forthcoming trial. Correlatively, it is put that the defendant ought to have no obligation itself to give discovery on the general drawings deficiency issue because this is wholly the plaintiff's case to make good.
3. Furthermore, it was said by the defendant to be obvious - and there appears to be no argument over this - that the Brannigan report provides no details at all concerning causation of financial loss. Thus the Brannigan report does nothing to unlock the continuing mystery (for the defendant) of how the financial loss and damage the subject of par [15], aggregated down to the nearest cent, and exceeding $13 million, comes about.
4. It is contended by the defendant that the December 2017 orders explicitly contemplated that further details be provided not merely in terms of giving more general drawing deficiencies details - but also as regards missing 'causation of loss' details. Amendments to pars [11] and [15] seen under the further amended SSOC changed nothing in that regard - a causation plea is still manifest under par [15] of the current pleading. That remains the case notwithstanding some tinkering excisions seen in par [11]. The par [15] plea, however, remains deficient in causation of loss detail.

1. Senior counsel for the defendant points out that, at a deeper level, as framed, the claim pleaded by the plaintiff still presents without requisite detail in areas - manifesting almost certainly a claim that would fall under the rubric of global (or more correctly, a modified total costs) claim within the context of breached construction contracts and claims for breach damages.
2. A key legal distinction in this sphere of construction law was explained in the reasons of Beech J (as his Honour then was) in DM Drainage & Constructions Pty Ltd as Trustee for the DM Unit Trust t/as DM Civil v Karara Mining Ltd [2014] WASC 170 at [36] - [38]. Striking out a plaintiff's pleading in that case, his Honour evaluated the claims there advanced as being 'global' in nature. That was because there had been no attempt to draw any causal links as between particular items and any particular consequences in relation to any particular part of the impugned works.
3. To that taxonomical end, his Honour explained at [40] - [43]:

For the reasons that follow, I am satisfied that DM Civil's claims are global claims, and modified total costs claims.

The claims are global in nature because nothing in the statement of claim or schedules attempts to draw any causal link between any particular items in sch A (the giving of access or approval), sch B (the sequencing directions), or sch F(the issue of IFC drawings) and any particular consequence in relation to any particular part of the work identified in sch C, or to the incurring of any particular cost referred to [in] sch C. That proposition was not seriously contested by DM Civil. Rather, DM Civil contended that Karara's complaint in this respect failed to appreciate the nature of the case being put by DM Civil.

DM Civil denies that its claims are in the nature of a total costs claim or a modified total costs claim. Counsel submits that DM does not claim all of the costs of the Affected Works, but only those additional costs of the Affected Works that were caused by the redesign, or the resequencing, or the combined effect of those two matters.

For the reasons that follow, I do not accept DM Civil's submission as to the effect of its pleaded case.

1. Where a pleading is either a global claim or a modified total costs claim, then certain associated further pleading obligations follow. Beech J in the DM Drainage decision also traversed the law across that field, by reference to leading case authorities including John Holland Pty Ltd v Kvaerner R J Brown Pty Ltd (1996) 8 VR 681, John Doyle Construction Ltd v Laing Management (Scotland) Ltd [2004] ScotCS 141; [2004] SC 713 and McGrath Corporation Pty Ltd v Global Construction Management (Qld) Pty Ltd [2011] QSC 178. See his Honour's citations of various paragraphs from those decisions at [54] - [55] of the decision.
2. Beech J summarised that line of case authority down to the following propositions at [56]:

1. A global claim is permissible where it is impractical to disentangle that part of the loss which is attributable to each head of claim, and where that situation has not been brought about by delay or other conduct of the claimant;
2. A total cost claim involves four propositions:

(a) the contractor might reasonably have been expected to perform the work for a particular sum, usually the contract price;

(b) the proprietor committed breaches of contract;

(c) the actual reasonable cost of the work was a sum greater than the expected cost;

(d) the proprietor's breaches are the only cause of any significance for the difference between the expected cost and the actual cost.

These authorities firmly establish that in order for a total costs claim to succeed, the contractor must establish that there were no operative causes of its loss and expense apart from matters that were the responsibility of the principal. Further, I agree, with respect, with Byrne J [referring to John Holland Pty Ltd v Kvaerner] that this proposition is necessary, as a matter of logic, in order for the contractor to sustain an inference that the difference between the expected cost and actual cost was caused by the principal's breaches, variations or other relevant conduct. Without demonstrating that alternative causes are excluded, the inference of causation cannot be drawn. The same is true, in my opinion, in respect of a modified total costs claim, within the sphere(s) in which the contractor claims the whole of its actual costs less what it has been paid.

1. Those observations by Beech J at [59], in my view, state the law in this field for Western Australia.

1. Given that premise, the abiding structural difficulty for the further amended SSOC, as regards the spheres which the plaintiff claims the whole of its actual costs, is that it has still given no indication that it accepts or would seek to establish that alternative possible causes are excluded as required for a global claim of a modified nature.
2. Current arguments on the present application intersected with and resonated with arguments which were previously run over the true legal foundations of the plaintiff's claim and a continuing refusal of this plaintiff to 'nail its colours to the mast' over whether or not it is advancing a global (ie, modified) costs claim.
3. Notwithstanding the time which has passed since the October 2017 chamber summons, culminating in the December 2017 orders, the position over this issue still remains impermissibly unclear. Even at the hearing of the present application, the plaintiff, by senior counsel, would not or could not commit to a clear position as regards it advancing a modified total costs claim or not, asserting that it should not yet be asked to commit itself, in effect, forensically at this stage about what its position is. In my view, the continuing uncertainty on these core questions has endured long enough. It is no longer tolerable.
4. Arguments which have been submitted by way of opposition from the plaintiff against the present application, sought to draw my attention to various side issues which, with respect, ultimately do not go to the key problem. The issue still to be confronted is the viability of running a trial in the future in circumstances where the Brannigan report has only provided the barest of details towards the nature of the drawing deficiencies - and worse, where no detail at all about causation of financial damage is given. That is notwithstanding the clear intent to the end of order 4 of the December 2017 orders.
5. The present application was advanced initially as a basis to relieve the defendant of further discovery obligations towards pars [11], [14] and [15] of the further amended SSOC. I would accede to the present application. But it is now apparent to me that the underlying cause of the problem is deeper and fundamentally structural. It now needs to be squarely confronted.
6. I am of the view that pars [14] and [15] of the further amended SSOC must be struck out as embarrassing. That was not appropriate in October 2017. But it is now. When moved, I would give leave to the defendant to amend the present application to pursue that extra strike out relief and then, grant such an application.
7. I am still inclined, in principle, to allow the plaintiff in the future to amend its pleadings to correct the current deficiencies - but on terms. My terms would require the plaintiff to explicitly commit within a reasonable period to plead in unmistakeable terms as to whether or not it is running a modified total costs claim in this sphere. The necessary accompanying pleas concerning an exclusion of alternate causes for its loss would need to follow. However, if the plaintiff takes a position contending it is running a total costs claim and without modification, then it would need then to provide the proper particulars of causation of financial loss as a condition of obtaining leave to amend in future. If leave is sought then the plaintiff should submit a minute of an amended pleading to obtain leave in those respects.
8. During the course of arguments, a suggestion was made that a further expert be engaged by the plaintiff in due course to provide the extra causative financial loss information towards the effects of the drawing deficiencies. However, that is inconsistent with order 4 of the December 2017 orders where it was recorded that what was to emerge as the plaintiff's Brannigan report would provide this required financial loss detail. It did not. Manifestly, the plaintiff has still not provided the financial details. Further, the sparse detail that has been provided as regards the drawing deficiencies by the Brannigan report is threadbare at best.
9. In the end then, I am persuaded to accede to the present application to relieve the defendant of discovery obligations in respect of pars [11], [14] and [15] of the further amended SSOC. But further, when moved, I would strike out pars [14] and [15] of the further amended SSOC, on the basis that they are embarrassing. They still do not provide requisite detail, or meet the prerequisites of clarity as regards a position concerning what is strongly suspected to be a modified total costs claim but, if so, is presented in inadequately pleaded fashion.
10. There should be orders accordingly.
11. In addition, the defendant, as the successful party, should have its taxed costs of the present application with all applicable scale limits removed, given the scale and importance of the application.
12. The parties are to confer over and present a minute to the court giving effect to these reasons within 21 days of publication.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

Research Associate to the Honourable Justice Martin