Colmar Engineering Pty Ltd v Avopiling Pty Ltd

LEGISLATION CITED: Civil Procedure Act 2005, ss 56 - 69 Uniform Civil Procedure Rules 2005, Pts 2.1; 10.2; 31.18; 31.28 & 35.9

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Bi v Mourad [2010] NSWCA 17 CJD Equipment v A & C Construction [2009] NSWSC 1085 Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 CASES CITED: Hardy Bros (Earthmoving) Pty Ltd (in liq) & Anor v Hardy Bros Civil Constructions Pty Ltd & Ors [2008] NSWSC 1313 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 Sharples v Minister for Local Government [2010] NSWCA 36 Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290

PARTIES: Colmar Engineering Pty Ltd (Plaintiff) Avopiling Pty Limited (Defendant)

COUNSEL: Ms A Seward (Plaintiff) Mr C Mobellan (Defendant)

SOLICITORS: Bridges (Plaintiff) Gillis Delaney (Defendant)

At the commencement of the trial, which was scheduled to proceed for 4 days, the defendant filed a notice of motion in court seeking leave to rely upon affidavit evidence obtained by the defendant from 5 additional witnesses who were referred to in paragraphs 4 to 9 of the defendant's notice of motion. The additional evidence upon which the defendant sought to rely was essentially technical expert evidence in the fields of metallurgy, welding and steel fabrication. The defendant variously sought to invoke UCPR rr 35.9, 31.28, 2.1, and 10.2 as the evidence was served outside the terms of a case management timetable.

In the alternative, in the event of refusal of the defendant's application concerning additional evidence, the defendant's application was for an adjournment.

In the course of opposing the defendant's applications, counsel for the plaintiff observed that some of the evidence in question was "served" during the course of Sunday 16 May 2010, the day before the trial was due to commence. As a consequence, unsurprisingly, the plaintiff's legal representatives were not in a position to meet this new material.

A reason proffered by the defendant for the late service of evidence was a change of legal representation. That change, for reasons that were not explained, occurred on 8 March 2010, which was almost 8 weeks before the already scheduled hearing date.

Whilst it was not explicitly stated, it appears that the defendant's new legal representatives were seeking to revisit and negate some of the forensic decisions made at a time in the litigation when the defendant was represented by its former legal representatives.

The proceedings involve a contractual dispute in which the plaintiff claims damages of $166,347.90 plus interest arising out of an alleged failure on the part of the defendant to honour in full, the terms of an agreement concerning the fabrication and sale by the plaintiff to the defendant of heavy earthworks equipment. The plaintiff had specifically manufactured the equipment according to design specifications provided by the defendant. The goods were delivered to the defendant on 16 August 2006.

The plaintiff had filed its proceedings on 20 November 2007. The plaintiff subsequently filed an amended statement of claim on 11 July 2008. The defendant filed its defence on 17 July 2008. That defence raised allegations concerning the merchantable quality of the goods and the fitness of the goods for the intended purpose of use. The defendant seeks to raise matters concerning compliance with the relevant Australian Standard for welding work with respect to the goods.

The defendant seeks to pursue an amended defence and an amended cross claim against the plaintiff. That course requires that the defendant seek leave to rely upon the affidavit evidence of 5 additional witnesses. There was no objection to the amended defence or amended cross-claim being filed in court when the matter was called on for hearing from the reserve list. The issue was the defendant's reliance on evidence served outside the case management timetable.

In support of the application, the defendant read an affidavit sworn on 16 May 2010 by Mr Nicholas Dale, the present solicitor for the defendant. That affidavit exhibited a compendious annexure numbering some 173 pages, incorporating the 5 affidavits referred to, including complex technical annexures to those affidavits.

For the purpose of ruling on the applications, it is necessary to review the procedural history of the litigation. The relevant chronology is as follows:

04.07.2008 First directions hearing. Consent orders filed regarding preparation timetable. 17.09.2009 Second directions hearing. Further consent orders filed regarding preparation timetable. Status Conference appointed for 18.02.2009 18.02.2009 Third directions hearing. Further consent orders filed regarding preparation timetable. Stood over to case management listing hearing for directions on 11.05.2009. 11.05.2009 Fourth directions hearing. Further consent orders filed regarding preparation timetable. Stood over to case management listing hearing for directions on 17.08.2009. 17.08.2009 Fifth directions hearing. Further consent orders filed regarding preparation timetable. Plaintiff ordered to amend its pleadings within 7 days. Hearing date fixed for 12.10.2009 with an estimate of 4 days plus. Parties ordered to conduct a settlement conference within 14 days. 29.09.2009 Hearing date for 12.12.2009 vacated by the List Judge, his Honour Judge Garling, on the application of the defendant on grounds that the defendant was unable to meet evidence recently served by the plaintiff. Further consent orders filed regarding preparation timetable. Mediation ordered to take place before 09.12.2009. Further consent orders filed regarding preparation timetable. Stood over to case management listing hearing for directions on 15.12.2009. 15.12.2009 Mention before the Assistant Registrar. It was noted that because the defendant had not complied with the timetable and a mediation had not been conducted by the date specified in the previous order. Further consent orders filed regarding preparation timetable. Stood over to case management listing hearing for directions on 16.02.2009. 16.02.2010 Sixth directions hearing. Notation on court file that mediation had taken place on 04.02.2010. Stood over for further directions hearing to 02.03.2010. 02.03.2010 Hearing date fixed for 17.05.2010 with a 4 day estimate. Direction for plaintiff to complete service of evidence by 19.03.2010. Direction that defendant serve evidence in reply by 19.04.2010. 07.05.2010 Application by defendant to vacate hearing date of 17.05.2010 refused by her Honour Judge Balla. Order that subject to orders made by Trial Judge, defendant not permitted to rely on any evidence not served in compliance with timetable. Hearing date for 17.05.2010 confirmed, with an estimate of 4 days. 17.05.2010 Application by defendant at the commencement of trial seeking to rely upon additional affidavit evidence from 5 experts.

In the context of the above chronology, it is noteworthy that the defendant offered no evidence as to why it had changed its legal representation from the former solicitors and counsel leading to the retainer of the present legal representatives. In the absence of such an explanation, I will not speculate upon the reasons for the change of representation.

The documents tendered on the application show that after the change in legal representation, correspondence and discussions flowed between the representatives of the parties. Included in those discussions was an arrangement for the earthmoving equipment in question to be examined in situ. Until that time, the equipment had been left outside subject to the elements. I was informed that is it now covered with surface rust.

On 20 April 2010 the solicitor for the plaintiff wrote to the solicitor now acting for the defendant, pointing out that orders had been made on 2 March 2010 concerning the conduct of the proceedings. In that letter, the solicitor for the plaintiff noted that the defendant's evidence in reply was due to have been served on the previous day, namely, 19 April 2010. The letter concluded with the observation that in the circumstances, the plaintiff was assuming that the defendant did not seek to rely upon any evidence in reply to that served by the plaintiff. It is common ground that there was no reply sent to the plaintiff's solicitor's letter dated 20 April 2010.

It has been made clear by subsequent events that the defendant's legal team had been significantly occupied in arranging for further evidence to be obtained from the experts who have now been identified. It appears that for forensic reasons, that course was not intimated to the plaintiff. It was that course of preparation which led to the unsuccessful application on 7 May 2010 for the hearing date to be vacated.

A perusal of the affidavit of the defendant's solicitor, Mr Dale, and a perusal of the documents exhibited to that affidavit makes it clear that the proposed evidence on the amended cross-claim, if permitted, will raise considerable factual, technical, expert and legal questions. These questions will principally relate to the applicability of the relevant Australian welding standard, and the interpretation of the factual circumstances of the case concerning the applicability of relevant portions of that standard.

It has been conceded that if the orders sought by the defendant were granted, one of the effects of this would be to require a significant additional number of hearing days beyond the existing 4 days that had beforehand been estimated and agreed upon by the parties.

In support of its application, the defendant conceded an adjournment of the proceedings would be necessary and that it would have to bear the plaintiff's costs wasted by reason of the adjournment, including an interim assessment of those costs.

The defendant initially submitted there were exceptional circumstances that justified such a course.

On behalf of the plaintiff, it was submitted that an adjournment should not be granted because the matter really involved a relatively simple contractual dispute with the evidence being within a relatively short compass, with limited expert evidence on either side, where the reports of those experts have been served in accordance with the agreed timetables.

In these circumstances the plaintiff opposed the application, claiming that if it were required to meet the expert evidence now sought to be relied upon by the defendant, this would involve an entirely different case, thus wasting significant costs incurred to date. The plaintiff submitted that it had complied with the court's procedural requirements and it was therefore entitled to have its case heard and determine without further delay.

The plaintiff claimed that if the orders now sought by the defendant were made, this would cause the plaintiff to suffer significant prejudice in having to restructure its case in order to meet the expert evidence now sought to be relied upon by the defendant. The defendant responded by submitting that any such prejudice could be adequately met with an appropriately framed order for costs. The plaintiff further submitted there were no exceptional circumstances for making the orders sought by the defendant.

The defendant frankly conceded it could not point to any explanation which could serve to explain the change of tack of the defence case. There are several inferences arising from the affidavit of Mr Dale concerning the change of forensic tack on the part of the defendant. However, in the absence of evidence on those matters, it is not necessary to decide the reasons as to why this was so.

UCPR r 10.2 requires that a party intending to use an affidavit in proceedings must serve the affidavit on the opposing side within a reasonable time. Affidavits served on the weekend on the day before the trial is due to commence, in a case such as this, are not served within a reasonable time.

UCPR r 2.1 enables orders to be made at any time, even if inconsistent with the rules for a just, quick and cheap disposal of the proceedings. The emphasis of that rule, like the requirements of s 56 of the Civil Procedure Act 2005, is that the orders so made be just. In this context, justice requires a reasonable opportunity for the opposing side to consider, analyse and take steps to meet the evidence that might be so served. In my view it would be unjust to the plaintiff to make such an order at this late stage which would have the inevitable effect of causing significant delay and cost to the plaintiff so as to amount to significant prejudice. In this regard I accept the plaintiff's submission that it would be necessary to reformulate the forensic decisions already made in the case such as to amount to an irremediable prejudice both in terms of cost and delay.

In this regard, the plaintiff would also have to re-engage with its experts or retain additional experts to meet the case the defendant now seeks to make. This would create an additional cost burden. The defendant concedes that if it were to be granted the leave sought, the case would require a much longer hearing than the 4 day estimate. The plaintiff suggests that the length of a trial on that footing would require re-preparation of issues on its part with significant wastage of costs. At the end of the day, whilst the amount in dispute is of significance to the parties, costs should not be permitted to become disproportionate to the subject matter of the litigation.

The defendant submitted that the course it seeks to pursue was, for example, permitted by Brereton J in Hardy Bros (Earthmoving) Pty Ltd (in liq) & Anor v Hardy Bros Civil Constructions Pty Ltd & Ors [2008] NSWSC 1313. In that case his Honour exercised his discretion under UCPR r 31.28 to permit reliance on late served affidavits from experts where exceptional circumstances were shown. There is no doubt that there is power for such an order to be made. The requirement on the party seeking the benefit of such an order is to demonstrate the existence of exceptional circumstances. The reason for the change in legal representation in this case remains unexplained and the reasons for revisiting the forensic decisions made by the former legal representatives also remains unexplained. In these events, I consider that no relevant exceptional circumstances have been shown to exist within the scheme of s 56-59 of the Civil Procedure Act 2005 : Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290 per Tobias JA at [67].

If the defendant were to be permitted to rely upon the recently served contentious affidavits from experts, a logistic problem emerges concerning ex post facto acknowledgment of the Code of Conduct for expert witnesses. There are some cases where, whilst otherwise undesirable, that course would be permitted as a departure from the ordinary and well known requirements of UCPR r 31.23. In my view, barring urgencies such as taking evidence whilst it still exists, such a course should be reserved for cases where there was complete transparency in the process by which the expert opinions were procured, so that the party disadvantaged by the departure from the rule could at once see and understand the process by which the experts had formed their views and be in a position to test these views if need be: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705.

In my view, the present circumstances are quite different to those considered by McDougall J in CJD Equipment v A & C Construction [2009] NSWSC 1085 where his Honour made such an order on the basis that it appeared that the solicitors who were involved in non-compliance of the rule, had acted in apparent ignorance of the requirements of the rule. In contrast, in the present case, it could not be reasonably said that the former solicitors were unaware of the requirements of UCPR r 31.23. Special circumstances apart, it is noteworthy that in CJD at [17], McDougall J indicated that he was not to be taken to be condoning of any practice of ex post facto adoption of the requirements of the Code of Conduct. I respectfully adopt that view.

Overriding all of these considerations are the requirements of s 56 of the Civil Procedure Act 2005. In my view, the orders sought by the defendant would not facilitate a just, quick and cheap disposal of the proceedings. The facilitation of those requirements is a mandatory consideration for the Court. Whereas the course sought by the defendant may have been permitted when the prevailing authority was Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, that is no longer the case since the advent of s 56 of the Civil Procedure Act 2005: Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 per Spigelman CJ at [28] - [29] and subsequent authorities.

This case has been through extensive case management listings, including a hearing date that was vacated at the request of the defendant. Along that pathway, the litigation and the issues, as well as the evidence to be called, has been shaped by the forensic decisions made by the parties. In my view, the unexplained reasons behind the defendant's change of tack in the litigation is a circumstance that is inimical to the defendant invoking leave in this instance. It has been authoritatively determined that in the absence of a proper explanation for delay in seeking amendments or similar indulgences, there are limits to the extent to which a party in procedural default may use court resources to further its interests : Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [111].

Furthermore, what the defendant seeks in these applications will inevitably cause significant delay and prejudice to the plaintiff, with attendant cost, where an order for costs could not provide an adequate remedy for such delay.

I consider that when the dictates of justice are given proper focus in the circumstances of these applications, in the absence of an explanation of the kind contemplated in Aon, and which is absent here, in my view the course sought by the defendant does not represent an appropriate use of court resources for the efficient disposal of the proceedings, according to the dictates of justice required to be achieved between the parties, and at an affordable cost proportional to the subject matter of the litigation : s 58 of the Civil Procedure Act 2005; Sharples v Minister for Local Government [2010] NSWCA 36 per Tobias JA, also citing Bi v Mourad [2010] NSWCA 17 per Allsop P at [47].

In my view the defendant has not made out any special circumstances justifying the relief sought. I therefore decline to make the orders seeking to admit the 5 affidavits in question. I also refuse the defendant's application for an adjournment of the hearing.

I make the following orders: (a) The application by the defendant to rely upon additional evidence served outside the case management timetable fixed for the service of evidence is refused;

(b) The application by the defendant for an adjournment is refused;

(c) The defendant is to pay the costs of the plaintiff in connection with the refused applications;

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