Supreme Court of the ACT|2010-03-16|Before: Butt P, Weinberg J, System J

Canberra Data Centres Pty Limited v Vibe Constructions (ACT) Pty Limited [2010] ACTSC 20 (16 March 2010)

Supreme Court of the Australian Capital Territory

Canberra Data Centres Pty Limited v Vibe Constructions (ACT) Pty Limited [2010] ACTSC 20 (16 March 2010)

CANBERRA DATA CENTRES PTY LTD v VIBE CONSTRUCTIONS (ACT) PTY LTD

[2010] ACTSC 20 (16 March 2010)

PLEADINGS - Importance of pleadings - Ensure a cause of action is adequately pleaded

PLEADINGS - Part 2.3 Court Procedure Rules 2006 - Intelligibility of pleadings - Ambiguous pleadings - use of and/or in pleadings

PLEADINGS - Intelligibility of pleadings - Inadequate pleadings - Improper pleadings - Irrelevant pleadings - Dismiss application to file pleadings

COSTS - Substantial elements of 'hopeless cases principle' and 'abuse of process'

Court Procedures Rules 2006 (ACT), rr 50(2), 505(1)(a), 483(1), 21, 405, 406, 512, 200, 407(1)(d), 417(1)(a), 1900

O 20 r 7 of the pre-1964 English Rules of the Supreme Court 1883

Sir Jacob, Jack 'The Present Importance of Pleadings' (1960) Current Legal Problems 171

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Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 237

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Bradford Third Equitable Benefit Society v Borders [1941] 2 All ER 205

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Broken Hill Proprietary Company Ltd v Fisher [1984] 38 SASR 50

Thompson v Australian Capital Television Pty Ltd & Ors (1997) 129 ACTR 14

Gray v Motor Accident Commission (1998) 196 CLR 1

Cotogno v Lamb (unreported, New South Wales Court of Appeal, CA 547 at 1983, Kirby P, Mahoney and McHugh JJA, 9 August 1985)

Buckley v Bennell Design Construction Pty Ltd (1974) 1 ACLR 301

Southern Cross Exploration NL & Ors v Fire & All Risks Insurance Co Ltd & Ors (1985) 1 NSWLR 114

Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1

FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 156 FLR 116

Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241

Rural & General Insurance Broking Pty Ltd v Australian Prudential Regulation Authority [2004] ACTSC 14

Churchills Ltd v Pilcher (1940) 57 WN(NSW) 109

Beach Petroleum NL v Johnson [1992] FCA 110; (1992) 7 ACSR 203

Ilat Nominees Pty Ltd v Murragong Nominees Pty Ltd [1980] FCA 162; (1980) 48 FLR 385

Master Club Consultants Pty Ltd v Stanbritt Pty Ltd [2000] ACTSC 18

HJA Holdings Pty Ltd v Iliev [2006] ACTSC 8

Smith v Samuels (1976) 12 SASR 573

Payne v Parker [1976] 1 NSWLR 191

Packer v Cameron (1989) 54 SASR 246

Re SCA Properties Pty Ltd (in lid) [1999] QSC 180; (1999) 17 ACLC 1611

Qantas Airways Ltd v Dillingham Corporation (unreported, Supreme Court of New South Wales, Rogers J, 14 May 1987)

Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242

**1. That the application made by Application in Proceedings for leave to file an Amended Statement of Claim dated 17 September 2009 be dismissed.

2. That the application made by Application in Proceedings dated 1 June 2009 for an order that the plaintiff give security for costs be dismissed.**

**1. Before me is an application for leave to file an Amended Statement of Claim and for security for costs. I shall deal with each in turn, but first, briefly describe the proceedings.

2. The present proceedings arise out of the construction of a building (to use as neutral a term as I can) on premises at Hume, an industrial suburb in the Australian Capital Territory. The plaintiff, Canberra Data Centres Pty Ltd (CDC), was the lessee of the premises and the first defendant, Vibe Constructions (ACT) Pty Ltd (Vibe), was contracted to construct the building on them.

3. It appears from the pleadings that the parties initially contracted orally for the building works but that a written document was subsequently executed. Those contracts are referred to in more detail below.

4. The construction work proceeded and, as is customary with such enterprises, Vibe submitted claims for payment (Claims) which were paid, initially in full, but from about June 2008 only in part.

5. Disputes apparently arose, though the precise nature of them is not clear from the material before me. In any event, it is alleged that Vibe moved equipment from the site in about November 2008 and then, or thereafter, ceased construction work

6. On 3 February 2009, CDC commenced these proceedings against Vibe. A Statement of Claim was, as required by r 50(2) of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules), attached to the Originating Claim. It pleaded claims, to mention them briefly, in contract, breach of duty of care, money paid under a mistake of fact and misleading and deceptive conduct. Other claims were subsequently added as noted below.

7. On 20 February 2009, Vibe filed a Defence and Counter-claim. The defence was in a somewhat curious form as follows:**

The defendant is unable to properly plead to the plaintiff's claim until it is re-pleaded or until further and better particulars have been provided.
The defendant reserves its right to defend the claim if and/or when the plaintiff re-pleads its claim or provides further and better particulars of the claim.

**8. I am not at all clear what "right" Vibe has that it is able to reserve in the circumstances, but the intention is clear. Certainly, it was clear enough to CDC for, on 24 March 2009, it filed an Amended Statement of Claim.

9. CDC also filed a Defence to Counter-claim on the same day. While I would not require that document to be amended on this account, I do note that it has fallen into the regrettably common, and quite inappropriate language of admitting or denying "paragraphs" of the opposite pleading rather than the facts alleged in them. I refer to what fell from Connor J in Inglis v Moore (1981) 51 FLR 293 where (at 296) his Honour said:**

Throughout all five defences the defendants purport to admit or deny paragraphs or sub-paragraphs. What should be admitted or denied or not admitted are the plaintiff's allegations. It is acceptable to deny each allegation in a particular paragraph. It is meaningless to deny a paragraph. All the defences are so riddled with this defect of wholesale general denial of paragraphs or sub-paragraphs that I have come to the conclusion that it will turn out to be simpler in the end to strike them out and give the defendants leave to start again.

**10. The Statement of Claim was amended under r 505(1)(a) of the Court Procedures Rules, which permits a party to amend its pleadings once without the court's leave before the close of pleadings. As there was a Counter-claim, the pleadings are closed at least seven (7) days after the Defence to the Counter-claim is filed: r 483(1). Given that the Amended Statement of Claim was filed on the same day as the Defence to Counter-Claim was filed, rule 505(1)(a) applied.

11. The Amended Statement of Claim made very substantial amendments, also including in it some quite detailed particulars. As well as the claims already made, it added claims, including a claim alleged to arise under s 42 of the Civil Law (Wrongs) Act 2002 (ACT), and claims for interference with economic relations and detinue and conversion. It does not seem to me that s 42 gives a right of action at all and that was one of the bases on which I struck out the Amended Statement of Claim: See [19] below.

12. On 20 April 2009, Vibe's solicitors sought detailed particulars of the Amended Statement of Claim and CDC's solicitors replied, purporting to supply the particulars under cover of a letter dated 30 April 2009.

13. On 1 June 2009, Vibe issued an Application in Proceedings seeking an order that CDC provide further particulars and for security for costs. The affidavit filed in support annexed correspondence showing that there had been communications between the solicitors for the parties with Vibe challenging aspects of the Amended Statement of Claim as well as the sufficiency of the particulars.

14. The application came before the Master who ultimately gave the parties leave to approach the List Clerk for a date for hearing. The application appears to have been listed on 6 July 2009. On that day, Gray J ordered that the application be adjourned generally and that the parties have leave to have the matter relisted. It appears that the parties were negotiating and there was an expectation of a resolution.

15. On 17 July 2009, Vibe, through its solicitors, issued an amended Application in Proceedings. It sought that the Amended Statement of Claim be struck out in full or in part and sought particulars as requested in a different letter. The Application in Proceedings was returnable on 29 July 2009.

16. A document purporting to be CDC's further and better particulars of the Amended Statement of Claim was filed on 22 July 2009.

17. The matter came before Gray J again on 24 July 2009 though whether it was the amended Application in Proceedings mentioned earlier at [15] as well or not, I cannot say. It was again adjourned generally. It was noted that the security for costs aspect had "been resolved" (though, that turned out to be rather optimistic) and that the parties were discussing the issues with respect to the particulars.

18. On 2 September 2009, CDC issued a further Application in Proceedings seeking leave to file a Further Amended Statement of Claim. That application came before me on 3 September 2009.

19. I considered the proceedings more generally including the challenge to the pleadings and the application for security for costs and, having perused the Amended Statement of Claim, read relevant correspondence and heard counsel for the parties, made the following directions:**

The plaintiff have leave to amend the Originating Claim within seven (7) days by adding Mr Ian Davies as the Second Defendant.
The plaintiff serve Mr Davies with the Amended Originating Claim within three (3) days of the amendment.
The Amended Statement of Claim be struck out.
The plaintiff have leave to apply to file an Amended Statement of Claim within fourteen (14) days.
Any application for leave to file an Amended Statement of Claim be filed together with a draft of the Statement of Claim sought to be filed which should be lodged by 17 September 2009.
The matter be adjourned to 9.30 am on 21 September 2009.

**20. I also reserved my decision on the application by Vibe for security for costs.

21. In accordance with these directions, an Application in Proceedings seeking an order permitting the filing of an Amended Statement of Claim was issued by CDC on 17 September 2009, returnable on 21 September 2009. An affidavit of a solicitor for CDC was also filed to which was annexed a draft Amended Statement of Claim.

22. On 21 September 2009, I adjourned the hearing of the application to 7 October 2009 and on that date gave further directions.

23. The matter was ultimately heard on 21 October 2009 when I reserved my decision on the application for leave to file an Amended Statement of Claim.

24. The system of pleadings which underpins the common law form of litigation as generally practised in the higher courts in Australia is not immune from criticism, even from distinguished jurists. Thus, Weinberg J (as his Honour then was), speaking extra-curially, said in a paper to the National Judicial College of Australia on 25 October 2008:**

A number of my colleagues see great virtue in retaining formal pleadings. I see none.

25. Nevertheless, lest this comment suggest an anarchic approach to litigation, his Honour continued:

I would much rather see us move to a system of narrative pleadings, whereby each side provides the other, and the court, with a detailed outline of the nature of its case. The test should be: does each party know with reasonable precision the case that it has to meet.

**26. Indeed, his Honour in Mckellar & Anor v Container Terminal Management Services Ltd & Ors [1999] FCA 1101; (1999) 165 ALR 409 set out (at 417-421) concisely and clearly the advantages of pleadings and the interests they serve.

27. As Hill J helpfully summarised them in Ting v Blanche [1993] FCA 524; (1993) 118 ALR 543 (at 551 [4]):**

Although in modern litigation pleadings are often perceived as a technicality they retain their significance as defining the issues between the parties. (footnotes omitted).

**At issue may be the way the identification of issues occurs, not whether it occurs at all.

28. Whatever the result of this controversy, the system of formal pleadings is currently the way each party is given notice, reasonably precisely, of the case that it has to meet. Further, however, the pleadings do more, much more, than merely give notice of the case of the other party. Secondly, and equally importantly, they apprise the court of the issues so that it can manage the trial and all pre-trial interlocutory proceedings.

29. Sir Jack Jacob, doyen of litigation proceduralists, set out the importance of pleadings in this second sense particularly in, "The Present Importance of Pleadings" (1960) Current Legal Problems 171 (at 174-5) as follows:**

Pleadings do not only define the issues between the parties for the final decision of the court at the trial; they manifest and exert their importance throughout the whole process of the litigation. They contain the particulars or the allegations of which further and better particulars may be requested or ordered, which help still further to narrow the issues or reveal more clearly what case each party is making. They limit the ambit and range of the discovery of documents and the interrogatories that may be ordered. They show on their face whether a reasonable cause of action or defence is disclosed. They provide a guide for the proper mode of trial and particularly for the trial of preliminary issues of law or of fact. They demonstrate upon which party the burden of proof lies, and who has the right to open the case. They act as a measure for comparing the evidence of a party with the case which he has pleaded. They determine the range of admissible evidence which the parties should be prepared to adduce at the trial. They delimit the relief which the court can award. They provide the basis for the defence of res judicata in subsequent proceedings by reference to the record in the earlier proceedings.

**30. I am mindful of the need to avoid arid technical disputes which do not advance any litigation but only cause delay and expense, contrary to the obligation imposed by r 21 of the Court Procedures Rules. See Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 258 ALR 14. Nevertheless, it is important to ensure that the legitimate objectives of pleadings are met by ensuring that a cause of action is (or causes of action are) adequately pleaded and that the parties and the court can manage the litigation efficiently and cost-effectively as a result of the definition of the issues thereby achieved. Intelligibility is crucial to this.

31. In order to evaluate the pleading of the Statement of Claim, it is worth noting briefly the rules of pleading. They are generally set out in Pt 2.6 of the Court Procedures Rules, especially rr 405 and 406. The principal rules may conveniently be summarised as follows:

1. The pleading must be divided into consecutively numbered paragraphs, each of which should desirably deal with only one matter.

2. The pleading should set out all the material facts on which the party relies to establish the claim or defence sought to be advanced.

3. While facts not strictly material can be included where it is necessary or desirable to make the pleading comprehensible, these should be kept to a minimum as it is preferable to include only material facts.

4. Only facts should be pleaded, not the evidence by which the facts may be proven or matters of law.

5. Subject to specific rules of pleading (such as those relating to conditions precedent in r 512 and so on), the pleading should ensure that all facts are stated which, if not included, may take the other party by surprise.

32. In these rules, "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": Bruce v Odhams Press Ltd [1936]1 KB 697 per Scott LJ (at 711-13].

33. These rules are, of course, designed to achieve the function of pleadings which has been helpfully and authoritatively set out in the statement of Mason and Gaudron JJ in Banque Commerciale SA En Liquidation v Akhil Holdings Pty Limited [1990] HCA 11; (1990) 169 CLR 279 where (at 286) their Honours said:**

The function of pleadings is to state with sufficient clarity the case that must be met: [Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In Liq) per Isaacs and Rich JJ.] In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness.

34. There have been many other statements in the cases which have refined or nuanced this. The threads have been helpfully drawn together in Multigroup Distribution Services Pty Limited v TNT Australia Pty Limited [1996] FCA 1758; [1996] ATPR 41-522. Burchett J said (at 42,679):

The primary function (of a statement of claim) is to tell the defending party what the claim is that he has to meet. That is a matter of elementary and natural justice; the claim cannot be answered until it is known. When a sufficient defence has been filed to a sufficient statement of claim, a further function will generally have been performed - that of defining the question or questions for decision. This definition is required, of course, from an early stage, or else discovery and other interlocutory procedures are likely to prove misdirected, wasteful and unproductive. In order to achieve these fundamentals, a statement of claim must set out clearly, not just the bare claim that is made, but also 'the material facts on which it is based', including facts that, if not specifically pleaded might take the other party by surprise.

35. Given the extensive reference in this case to particulars, it is also worth repeating what is trite law but necessary to be emphasised, namely the difference between pleadings and particulars and, especially, the role of each. I refer to the often cited observation of Scott J in Bruce v Odhams Press Ltd where his Honour said (at 711-3):

... but it is beyond question that there is a radical distinction [between a statement of material facts and particulars] and none the less so that in cases near the dividing line there is a penumbra where the two may and often do overlap, just as between night and day there is a zone of doubt which we call dusk ...

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' ...

The function of 'particulars' under r 6 is quite different. They are not to be used in order to fill materials 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.

36. The proposed Amended Statement of Claim (the proposed pleading) which the CDC sought leave to file was annexed to the affidavit of the solicitor for CDC sworn on 15 September 2009. It followed the prescribed form, Form 2.6 (AF 2006-447), which is slightly different in layout to the traditional form of the Statement of Claim. For instance, it requires a statement of the plaintiff's claims at the beginning of the document.

37. Because of the multiplicity of claims and causes of action made by CDC, particular care is necessary to see that intelligibility is maintained. This is particularly so when alternative claims, which may be inconsistent with each other, are pleaded. This is permitted: Chapman v Lumunis (1998) 86 FCR 513 (at 522). It calls, however, for careful drafting of the pleading and it must be made clear that the claims are made in the alternative and that separate facts are distinctly stated: Davey v Garrett (1878) 7 Ch D 473 (at 489).

38. In addressing a pleading, it is sometimes easy to make what might be regarded as stylistic comments, rather than comments addressing the substance of the pleading.

39. As Master Staples said in The WA Teachers' Financial Society Ltd v Gorey, Middleton & Forbes (unreported, Supreme Court of Western Australia, 1229 of 1988, Staples M, 28 October 1988):**

It must be accepted, I think, that within certain broad limits, a party is allowed to formulate his case in his own way and that his opponent should not be too ready to find himself embarrassed. The question is not whether the pleading could be better expressed ... the question is whether [the pleading] is so lacking in clarity that it is embarrassing and should be struck out.

40. To similar effect is the comment of Burchett J in Carr v McDonalds' Australia Ltd & Ors (1994) 63 FCR 358 (at 367) that

Canberra Data Centres Pty Limited v Vibe Constructions

At a glance

Court

Decision date

Before

Source

Judgment (466 paragraphs)

Canberra Data Centres Pty Limited v Vibe Constructions (ACT) Pty Limited [2010] ACTSC 20 (16 March 2010)