Carna Group Pty Ltd v The Griffin Coal Mining Company

16 Carna says that there are no new materials which justify the respondents' proposed withdrawals at this late stage of the proceeding. It also notes that Mr Riordan and Griffin also say there is complexity in the discovered documents. This is said to be because Carna issued the invoice identified in the table above dated 30 January 2014 and Griffin paid it on 31 January 2014, when Carna's case is that the Contract had been terminated by the time of that invoice and payment. Carna says that it has never asserted that the Contract was terminated by 30 January 2014. Rather, Carna's case is, and always has been, that the initial Contract was terminated by Carna's letter of termination to Griffin dated 23 February 2014. Carna says it is unclear why any complexity has arisen for Mr Riordan and Griffin based on the issue of invoice 3581. 17 Carna contends that by sending Griffin the termination letter dated 23 February 2014 (on 24 February 2014), Carna formally communicated its election to terminate the Contract to Griffin. The respondents have not put any evidence on by which Griffin disputes Carna's termination, or in which Griffin asserted that the Contract remained on foot. Upon Griffin's receipt of the letter, the Contract came to an end. The opening line of Carna's second letter to Griffin dated 23 February 2014 confirms Carna's termination of the Contract. At para 10, the letter further states that 'before entry into any new contract, it would be essential to agree the terms of the relevant schedules to the contract'. 18 Carna further argues that as to its own letter dated 14 March 2014, though it purports to 'withdraw' Carna's termination letter dated 23 February 2014, at law the Contract did not re-enliven retrospectively with effect from 23 February 2014: A termination is final and irrevocable. Anything afterwards is a new agreement: Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 per Rich, Dixon, Evatt JJ (at 733); cited with approval in Trevilyan v Donaldson [1997] SASC 6502 per Olsson J. Carna asserts that the respondents have presented no meaningful evidence in support of their proposed new case. 19 As to prejudice, Carna says it will suffer prejudice if the amendments are allowed for the reasons that follow. 20 First, Carna is a company in liquidation. Though funded in this litigation, it must (like all parties) judiciously use its funds. Carna has prepared its case for the last 18 months on the premise that the Contract was terminated, and has defended multiple interlocutory applications and Griffin's cross-claim predicated on that basis in that time. 21 Secondly, Carna will sustain additional costs in preparing its pleadings if the amendments are allowed. For example, Carna may plead that the respondents are estopped from denying the Contract was terminated and the Substituted Contract was formed. 22 Thirdly, Carna will sustain additional costs in discovery. Carna may seek further and better discovery from Griffin for documents on the issue as to why the schedules to the Contract had not been agreed by the parties as at the date of termination. 23 One of the categories of documents previously discovered by Griffin included all correspondence from 1 September 2013 to December 2014 relating to the entry into, and variation of, the Contract and Substituted Contract, and the negotiation, agreement or variations of the Schedules, Mine Plan, Production Requirements and Production Schedules. Another of Griffin's categories of discovery was all documents from March 2014 to December 2014 recording the condition of Griffin's plant and equipment. 24 In light of the proposed amendments, to assist in explaining matters relating to termination in February 2014, Carna may seek further and better discovery from Griffin as to the condition of Griffin's plant and equipment from late 2013 to February 2014, including communications it had (including with third parties) about the quality of the plant and equipment, maintenance records and any documents identifying the reasons for the disrepair from late 2013 to February 2014. The work involved in obtaining the further discovery from Griffin, and reviewing the documents produced, is anticipated to take a further two to four weeks (subject to Griffin producing the required documents within that time frame). 25 Fourthly, Carna will sustain additional costs in the preparation of evidence, as: (a) if termination is a disputed issue, Carna may need to consider leading evidence to justify the termination in February 2014. The respondents may lead evidence as to what they now contend was Carna's non-performance of the Contract in early 2014. This may broaden the scope of lay and documentary evidence. None of that evidence could be finalised until Griffin has provided the further and better discovery identified above; (b) fresh work would be required to specifically interrogate the respondents' existing discovery on matters relating to termination in February 2014, including documents identifying the difficulties that arose in the agreement of the schedules to the Contract prior to Carna's termination of the Contract in February 2014. It is anticipated that this work would take a further one to two weeks; and (c) Carna has briefed its expert witness on the basis that the Contract was terminated, and a Substituted Contract formed. The expert is well-advanced in preparing his report on this basis. Work to revise the expert brief would take a further one to two weeks. The expert has been proceeding on an instruction that the Substituted Contract was formed, and has already spent considerable time on the brief. 26 In contrast, Carna says that the respondents have not identified any prejudice they will suffer if the applications are refused, likely because no relevant prejudice will be suffered by the respondents. It says the proposed case from the respondents appears to be weak at law, or in fact (or both). Moreover, even if the amendments were allowed, the respondents would still need to meet Carna's primary case that the Cash Support Representation and Re-affirmed Warranty induced Carna to enter into the Substituted Contract. This is the case that the respondents have been preparing to meet, and will need to meet regardless of whether leave is granted to amend. 27 Finally, Carna says that the need to ensure efficient use of parties' and the Court's resources supports the refusal of the respondents' applications. It is no small matter to withdraw a fundamental and agreed aspect of Carna's claim and Griffin's cross-claim. The interests of justice are best served by not allowing amendments which are not well supported by the evidence, in circumstances in which Carna will suffer substantial prejudice.

The admission 28 Although the question of termination may be a mixed question of fact and law, it is primarily the admission of a legal conclusion, not a material fact that the respondents seek to withdraw. As such, the admission would not bind the Court: Federal Commissioner of Taxation v Travelex Ltd [2020] FCAFC 10 per Derrington J (at [88]) (Kenny J agreeing (at [1]) and Steward J agreeing (at [158])); Awap Sgt 26 Investment Ltd v CN 2000 Holdings Ltd [2020] WASCA 74 per Buss P, Mitchell JA, Hill J (at [181]-[189]). 29 It is unclear what role the voluminous discovery has played in the proposed withdrawal but it is clear that the withdrawal of the admission arises from further consideration of what is thought to be the correct legal characterisation of the conduct of Carna and Griffin. 30 It does seem, at least provisionally, to be the case, as it often is in commerce, that the proposed withdrawal of the admission is set against a factual background which does not readily lend itself to conventional textbook contractual analysis. 31 Although Griffin purported to terminate the Contract by letter dated 23 February 2014 in circumstances where the conditions precedent to performance of the Contract had not been satisfied, Carna and Griffin thereafter continued to negotiate regarding the schedules to the Contract, leading to Carna by letter dated 14 March 2014 'formally withdraw[ing]' the purported termination and confirming that the conditions precedent of the Contract had been satisfied on 13 March 2014. 32 The summary of relevant matters to be considered in relation to the withdrawal of admissions are accurately set out by Carna (and adopted at [11] above) and have been conveniently identified in Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 (at [4]) and Juno (at [38]). The overriding consideration is the interests of justice. 33 With a little reluctance I do accept the respondents' contention that in this case the amendment is of a legal conclusion arising from muddled background facts and is arguably, or at least not unarguably, consistent with a reasonable assessment of those facts, and that it is sought to be made some nine months before the trial and well before any witness statements are to be exchanged. As such, even if the amendment is capable of giving rise to any detriment or prejudice to Carna, that prejudice should be addressed by an order for cost thrown away by reason of the amendment. Those may be considerable.

CONCLUSION 34 The interests of justice in proceeding upon what the respondents contend is the proper construction to be placed on the facts and circumstances is better satisfied than refusing leave to amend so as to proceed upon a premise which is not adopted by way of defence. In any event, the respondents will still have to meet the case for Carna based on the representations. Carna will still rely on that part of its case, which it describes as its primary case. That description also accords with my understanding to date. The application will be granted. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.