Conway v Mercedes-Benz Australia / Pacific Pty Ltd ACN 004 411 410

AND: MERCEDES-BENZ AUSTRALIA / PACIFIC PTY LTD ACN 004 411 410

Introduction 1 In the words of Allsop J, as his Honour then was, in White v Overland [2001] FCA 1333 at [4]: Litigation is not a game. It is a costly and stressful, though necessary, evil. … [N]o one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false.

2 On one view, the current dispute turns on whether one party to the litigation is being forced to make assumptions about another party's case because of an insufficiency of particulars. On another, the parties are engaged in a cat and mouse game which does not assist in the expeditious resolution of the matter.

The proceedings 3 The principal proceeding is a claim for damages arising out of the alleged combustion of a motor vehicle when it was parked in the garage of the Applicant's home. The First Respondent is the importer and deemed manufacturer of the vehicle. The Second Respondent is the vendor. The application and statement of claim were filed on 10 September 2009. In its statement of claim the Applicant pleads breaches of the conditions of merchantable quality and fitness for purpose implied under s 71 of the Trade Practices Act 1974 (Cth)and its equivalent provisions under NSW legislationand common law causes of action in negligence and contract. The statement of claim alleges that the combustion caused damage to, or the destruction of, the vehicle, the residence where it was kept and the goods within the residence. However, the nature or extent of the loss or damage is not particularised. 4 On 3 December 2009 the Second Respondent filed a defence but the First Respondent has never done so. The First Respondent has repeatedly sought further and better particulars (most recently on 2 February 2010) and, although the Applicant has supplied answers, it complains that the answers to some of the requests are unsatisfactory. 5 On 8 February 2010 - after two previous approaches to the Court - the First Respondent filed a notice of motion seeking orders that within 14 days the Applicant provide particulars to the outstanding requests for further and better particulars contained in its letter of 2 February 2010. The motion is supported by an affidavit of Larissa Peng sworn 8 February 2010, which does no more than annex the relevant correspondence. The letter of 2 February 2010 is annexure H to that affidavit. Annexure I is the Applicant's response to that letter, which purports to answer the request in its entirety. Still the First Respondent complains.

The requests said to be outstanding 6 After the exchange of correspondence, some of the requests have fallen away and some additional answers have been provided. The motion did not identify the requests that were outstanding. However, at the time of filing of the notice of motion, requests (which I will identify by the numbers that appear in the First Respondent's letter of 2 February 2010) were said to be outstanding. They were requests numbered 17, 25, 31, 32, 33, 42, 43, 44, 45, 46 and 47. Today, the First Respondent informed the Court that it no longer pressed for answers to questions 43, 44 and 46. So the questions that remained of concern to it were the requests contained in questions numbered 17, 25, 31, 32, 33, 43, 45 and 47 of its request.

The function of particulars 7 The function of particulars is essentially twofold. First, they inform the opposing party of the case it has to meet so that it may prepare for trial and avoid the expense in preparing a case that may never be put: Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712; Sims v Wran [1984] 1 NSWLR 317 at 321D-F and the cases referred to there. Secondly, they help to define and limit the issues: Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 110; Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 227. A party is not entitled to seek evidence under the guise of particulars. However, as Hunt J observed in Sims v Wran (above)at 321G, "(t)here is often a fine line between giving particulars of the case which a party proposes to make and disclosing the evidence by which that case is to be proved. It all depends upon what is necessary to guard the other party against surprise". Trial by ambush is not permissible: see, especially, the comments by Heydon JA in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346, 53 NSWLR 116 at [28] and Allsop P in Sydney South West Area Health Service v MD [2009] NSWCA 343, 260 ALR 702.

The arguments 8 Both the Applicant and the First Respondent provided me with written outlines of submissions and I have carefully considered the arguments set out in those written submissions. Each party today spoke to those submissions and in the course of argument a number of further objections were abandoned. A document prepared by the solicitor for the Applicant and entitled "Summary of Further and Better Particulars of the Statement of Claim", which was marked MFI-1 and which appears as a schedule to these reasons, helpfully sets out the particular requests that were outstanding or causing concern to the First Respondent at the time the notice of motion was filed and also the first and final answers the Applicant provided to those requests. 9 Let me say at the outset that it seems a great shame that the remaining issues could not also have been resolved informally by the parties. A telephone call between counsel, one would have hoped, might have enabled some of the matters that fell away this morning to have been resolved before it was necessary to take up court time. Commonsense ought to have prevailed but I regret to say that a dearth of commonsense was applied to the determination of the questions that I am now called upon to decide.

The Rules 10 The motion must be considered against the background of the overarching purpose of the Rules, namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: Federal Court of Australia Act 1976 (Cth)s 37M. Any power conferred by the Rules must be exercised in the way that best promotes that purpose: s 37M(3). These provisions may well mean that information should be provided at an early stage notwithstanding that it may in truth amount to evidence, rather than particulars. The Applicant, herself, appears to have appreciated this.

Consideration 11 I now turn to the particulars. 12 Request number 17 invited the Applicant to specify on a diagram of the Applicant's residence the precise location of the vehicle at the time of the incident, marked with the letter B. The Applicant resisted doing so, asserting that this was a request for evidence and not a proper request for particulars. During the hearing this morning, however, Mr Young of counsel, who appeared for the First Respondent, volunteered to provide such a diagram and I expect that the diagram will be provided within seven days of today. I do not think it is necessary for me to make an order to that effect. 13 Request number 25 invited the Applicant to make any photographs of the vehicle taken after the fire available to the First Respondent on its undertaking to pay a reasonable fee for the cost of colour copies. Neither request 17 nor request 25 amounts to a request for particulars. Both requests were entirely reasonable. Mr Young conceded he was in a position to provide both. With respect to the photographs, he argued that the request was, in truth, a request for discovery. While he is technically correct, the object of the Rules is not advanced by the taking of fine technical objections to perfectly reasonable questions. At all events, the Applicant has now agreed to make available to the First Respondent within seven days photographs of the vehicle taken after the fire. 14 I now turn to request number 31. I shall deal with this request in two parts. The first part of the request is in these terms: When is it alleged the chafing of the battery lead by the battery recess commenced? Is it alleged that this "chafing" has occurred, over a period of time? If so, please identify the period of time that this occurred.

15 The response of the Applicant was as follows: As you may appreciate, our client is not in a position to confirm the specific time and date the chafing of the battery lead occurred as she was not aware of the ongoing defect. One would assume that if this issue had come to the attention of our client, then the disastrous repercussions the subject of this matter would not have occurred.

16 In his argument on this question, Mr Lloyd relied on a passage in Hunt J's judgment in Sims v Wran (above) at 321F (references omitted): It is not a question of whether one party has adequate knowledge of the actual facts; it is a question of whether he has adequate knowledge of what the other party alleges are the facts, for that is the case which he must meet: …

17 He argued that the purpose of making these inquiries was to narrow the issues in dispute and to assist the First Respondent to obtain an expert's report that deals with the Applicant's case. At all events, by the conclusion of the argument about this particular, the First Respondent appeared to be content with the answer the Applicant provided in her response of 3 February 2010 because in oral argument, Mr Young made it clear that his client was simply not in a position to answer the question. Indeed, as he points out in his written submissions, the Applicant can only be required to give those particulars that she can, citing Sides Engineering Pty Ltd v Energetech Australia Pty Ltd [2005] FCA 1672 at [7]; Bailey v Federal Commissioner of Taxation (above) at 228 and Allianz Australia Insurance Limited v Newcastle Formwork Constructions Pty Ltd (2007) NSWCA 144 at [29]. 18 The second part of the request was in these terms: Was the vehicle ever presented for service for this problem? Was the applicant aware of this chafing at any time?

19 Those questions were not proper requests for particulars and in the final result, Mr Lloyd did not press for answers to them. 20 The next request was number 32 which was in these terms: What cable wires are alleged to have been exposed? When is it alleged this occurred?

21 The response the Applicant gave to that question was: This is a matter for evidence and not a proper request for particulars. Please also see our response to question 31.

22 In the course of oral argument, Mr Young explained that the cable wires which were alleged to have been exposed were the cable wires coming from the battery. In his written submissions handed to the Court this morning, he describes them as "the battery lead cable wires". That answer is the answer that should have been provided in the Applicant's response of 3 February 2010. At all events, as it was provided orally it is clear that the First Respondent has no need, and does not press, for a written answer to question 32; the answer has been forthcoming. 23 Request number 33 is a request for information about the servicing of the vehicle between the date of purchase and the date of the fire. An answer to that question was given in the Applicant's response of 3 February 2010, despite an earlier response insisting that this was not a proper request for particulars but a request for evidence. 24 Technically, it was not a proper matter for particulars and indeed, in argument this morning, Mr Lloyd conceded this was not a complaint about the insufficiency of particulars. Rather, his complaint turned on an alleged inconsistency between the answer provided in the letter of 3 February 2010 and an earlier answer appearing on page 12 of Ms Peng's affidavit. The question posed in item number 37 on page 8 of Ms Peng's affidavit was: Is it alleged that the:-

(a) battery (b) battery recess (c) battery lead (d) cable wires (e) suspension tower the subject of paragraph 9 each had repairs carried out prior to the incident? If so, please identify the nature of the repair; the date and place where the repairs were undertaken.

25 The question in number 33 relates to the servicing of the vehicle and not the particular parts. Mr Young asserts there is no inconsistency and submits that if there is a perceived inconsistency, then this is a question for cross‑examination and not one for clarification via answers to particulars or in correspondence before the hearing. Mr Lloyd virtually conceded as much, however he indicated that it might shorten the case if he could have an answer at this point. For my own part, I think that the inconsistency is doubtful, but since this is not a proper request for particulars, I do not propose to make any order that the Applicant deal any further with it at this point. 26 The next request is 42. The request is in these terms: Is it alleged the defect was manifest prior to the fire? If so, when is it alleged it was manifest?

27 The answer given in the letter from the Applicant's solicitors dated 3 February 2010 was: It is clear that the defect must have manifested itself prior to the fire, otherwise the fire would not have occurred. With regards to the remainder of question 42, please see paragraph 31.

28 During oral argument, it became clear that counsel for the Applicant and counsel for the First Respondent had a different view of the meaning of "manifest", which contributed to the difficulty in which the parties found themselves. However, by the end of the argument Mr Young made it abundantly clear, both to the Court and to the First Respondent, that it was not his case that the defect was plain or obvious before the fire, merely that it had existed. He explained that the case was one of a latent defect. As I said earlier, the answers to the requests in 43 and 44 are no longer pressed. 29 Request number 45 sought from the Applicant a precise indication of the parts of the Applicant's residence that allegedly caught fire and were damaged and/or destroyed. This request was doubtless generated by the terms of the statement of claim, which in paragraph 10 pleads: As a result of the Combustion, the Mercedes, Residence and the Goods caught fire and were damaged and/or destroyed, causing loss and damage to the applicant.

30 In her response of 3 February 2010, the Applicant said in answer to request 45: This is a request for evidence and is not a proper request for particulars. In any event our client does not make a claim for damage to the residence and, as such, that request does not fall within the ambit of the claim and is not relevant.

31 Today Mr Young again pointed out that his client does not seek compensation for damage and/or destruction of the residence, in spite of the fact that the statement of claim alleges the residence was damaged and/or destroyed. Mr Lloyd argued that it was in order to understand the Applicant's case on damages and to work out whether the First Respondent would concede some of the claims that it was important for it to know where the chattels were situated and what parts of the residence were damaged. On page 13 and following of Ms Peng's affidavit in annexure B there is a detailed schedule specifying the items of damage and the items are set out under headings denoting, on the face of the document, the location of the damaged items. The locations appear to be rooms in the residence and also the garage. The only qualification to that statement is with respect to certain items of clothing and linen. 32 In circumstances where no claim is made for damage to the residence and where the schedule already provided sets out, for the most part at least, the location of the goods that were said to have been damaged or destroyed, I do not propose to order the Applicant to answer the request in 45, save with respect to the items of clothing and linen to which I earlier referred. In that regard I order that the Applicant inform the First Respondent of the location of those items at the time the vehicle caught fire. I do not propose to order that the parts of the residence that allegedly caught fire and were damaged and/or destroyed be identified. In the circumstances, it seems to me that this request is more in the nature of an interrogatory than a request for particulars. 33 Request number 46 is no longer pressed. 34 That leaves request number 47, which called upon the Applicant to provide a complete list of the items it is alleged were damaged as a result of the combustion of the vehicle, together with particulars of the value and the location of the goods at the time of the combustion. The list of items and particulars of the location of the goods (with the qualification to which I earlier referred) have already been provided in the schedule that appears as an annexure to Ms Peng's affidavit. What remains to be provided are particulars of the value of the items. 35 In resisting this request Mr Young relied on the terms of O 12 r 5(3). He further submitted that if a defence had been filed in the ordinary course of events in November of last year, the Applicant, in all likelihood, would by now have put on her evidence of the costs; that is, she would have served her expert report. He indicated that it was his client's desire to have separate hearings on liability and quantum, although, as yet, no formal request of this kind has been made. He maintained that the filing of a defence should not be held up by the need to provide such detailed particulars. Mr Lloyd conceded that he did not need an answer in order to enable his client to plead to the statement of claim. However, he pointed out that its provision would assist the early resolution of the case - so much so that there may be no need for a trial on quantum at all. 36 In his written submissions Mr Young argued that "(t)he only conceivable utility in providing this detail ahead of the service of the Applicant's evidence … would be to promote a settlement of the action in the intervening period". 37 Order 12 r 4 of the Federal Court Rules provides that the party claiming damages in its pleading must give particulars of any moneys he has paid or is liable to pay. Order 12 r 5 permits the Court to make orders requiring such particulars to be given, but the general rule is that no such order should be made before the filing of the defence "unless, in the opinion of the Court, the order is necessary or desirable to enable the respondent to plead or for some other special reason". The Applicant relies on the general rule, the First Respondent on the qualification. 38 It is apparent that the overarching purpose of the Rules would be served by the provision of such particulars at the earliest opportunity and accordingly, I intend to order the Applicant to file and serve a statement of particulars itemising the out-of-pocket expenses or the value of each of the items in the schedule presently annexed at page 13 and following of Ms Peng's affidavit.

Costs 39 Both parties seek a proportion of their costs of today's motion. Neither party was a clear winner on the issues that it brought before the Court today. Likewise, it is unlikely that one party bears sole responsibility for the fact that these matters were resolved in Court and only after the First Respondent invoked the coercive powers of the Court. For these reasons, it is appropriate that each party pay her or its own costs of the motion.

Order 40 I therefore order that: 1. The Applicant provide the outstanding particulars requested in request number 45 within seven days. 2. The First Respondent file and serve its defence within 14 days of the provision of those particulars. 3. The Applicant file and serve a statement of particulars setting out the out-of-pocket expenses incurred as a result of the fire and the value or cost of any items not yet replaced no later than 14 days after the filing of the defence. 4. Each party is to bear her or its own costs of today's motion. 5. Within seven days, the parties are to provide short minutes setting down a timetable for discovery. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.