Dib Group Pty Ltd v OHK Pty Ltd

Legislation Cited: Civil Procedure Act 2005 (NSW) ss 56, 57, 58, 140, 146
Uniform Civil Procedure Rules 2005 (NSW) rr 14.28, 15.1, 42.34

Cases Cited: Australian Hardwoods Pty Ltd v Commissioner for Railways [1961] NSWR 25
Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70
McGuirk v The University of New South Wales [2009] NSWSC 1424

Texts Cited: Nil

Category: Costs

Parties: Dib Group Pty Ltd (Plaintiff)
OHK Pty Ltd (Defendant/Cross-claimant)

Representation: Counsel:
C W Robinson (Plaintiff/Cross-Defendant)
S O’Brien (Defendant/Cross-claimant)
Solicitors:
Cambridge Law (Plaintiff/Cross-Defendant)
Harbourside Legal Services Pty Ltd (Defendant/Cross-claimant)

File Number(s): 2020/166484

Publication restriction: Nil

Judgment

1. On 13 May 2025 I made orders in relation to a notice of motion filed by the plaintiff seeking to strike out parts of a cross-claim by the defendant and to transfer the proceedings to the District Court. Although I indicated during the course of submissions my views in relation to the cross-claim and the transfer, I said I would provide some written reasons for the assistance of the parties. The orders I made did not include a determination of the costs of the motion. These are my reasons.

Background

2. The defendant (OHK) was the registered proprietor of land known as 656 Warringah Road, Forestville (“the premises”). The plaintiff (Dib Group) leased the premises from OHK by a lease dated in or about August 2012. The premises are a service station.

3. In or about 2014, a truck collided with a retaining wall at the premises causing it to collapse above an underground fuel tank at the premises known as the E 10 fuel tank.

4. In about June 2017, Dib Group became aware of an unusual level of petrol fumes coming from the site of the wall collapse, and it ascertained that the tank was damaged and required repair. Dib Group alleges that OHK was aware of the failure of the tank in September 2017.

5. In about November 2018, Dib Group decommissioned the tank and commenced using the premium unleaded tank in order to hold E 10 fuel. It alleges that it advised OHK that the tank had been decommissioned and that it required OHK to repair the tank in accordance with the lease. Dib Group alleges that in breach of the terms of the lease OHK failed to repair the tank and maintain the premises for the reasonable use and enjoyment of Dib Group.

The proceedings

6. Dib Group commenced these proceedings by the filing of a statement of claim in the District Court on 4 June 2020 seeking damages for the failure of OHK to carry out the necessary repairs and for consequential loss in operating its business from the premises.

7. In its defence OHK admits that a truck collided with a retaining wall but says that the retaining wall and surrounding infrastructure was repaired following the collision. It says that subsequently it was notified by NSW Fire and Rescue and the Environment Protection Authority that fuel had been found in a nearby creek. OHK says that it caused the tanks to be tested and various repairs were carried out to the tanks. It otherwise denies the allegations that it failed to repair the damage to the tanks.

8. On 23 April 2021 OHK commenced proceedings in this Court against Insurance Australia Group Ltd (“IAG”) (as successor to Lumley General Insurance Ltd with whom OKH was insured) and two companies involved in the inspection and repair of the damaged retaining wall (“the OHK proceedings”).

9. OHK pleaded that in 2018 it ascertained that the E 10 tank had been damaged which resulted in it subsequently being decommissioned. The claim made by OHK against the second and third defendants alleges that the work carried out in relation to the repair of the damaged retaining wall was negligently carried out with the result that damage was caused to the E 10 tank and resultant leaking of petrol into the surrounding soil. The claim against IAG is that it has refused to indemnify OHK for damage associated with the E 10 tank.

10. By a further amended statement of claim filed by OHK on 7 March 2024 a fourth defendant was added. The fourth defendant was a demolition and excavation contractor involved in the work on the retaining wall.

11. On 17 June 2021 an order was made transferring the proceedings commenced by Dib Group from the District Court to this Court. The application was made by OHK and was consented to by Dib Group.

12. Both sets of proceedings have been case managed in this Court, first by the Registrar and then by Chen J.

The cross-claim

13. On 25 October 2024, a cross-claim was filed in the present proceedings by OHK against Dib Group. It is necessary to say something about the circumstances of the filing of the cross-claim.

14. On 18 June 2024 the present proceedings came before Chen J as did the OHK proceedings. Orders were proposed by OHK, not opposed by Dib Group, for the service by OHK of any cross-claim by 17 July 2024. Time was given for Dib Group to consent or oppose its filing. Those orders were made, as was an order that these proceedings be case managed and heard at the same time as the OHK proceedings.

15. No cross-claim was served, and on 9 August 2024 an order was made for service of the cross-claim by 1 September 2024 with further time for Dib Group to indicate its attitude. The cross-claim was served in the week commencing 20 September 2024, and on 27 September 2024 further time was given to Dib Group to indicate if it consented.

16. On 25 October 2024 Chen J made orders by consent for the filing of the cross-claim, a request for particulars of the cross-claim and answers to those particulars. The cross-claim was filed on 25 October 2024 but no particulars were requested. Instead, Dib Group filed a notice of motion on 17 January 2025 seeking orders that the cross-claim be struck out in whole or in part under r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) and that the proceedings be transferred to the District Court under s 146 of the Civil Procedure Act 2005 (NSW) (“CPA”).

17. On 11 April 2025 Chen J made orders including a further order that both proceedings be case managed and heard together with the evidence in one matter being evidence in the other. The matters were fixed for hearing on 10 November 2025 for 15 days.

18. In its written submissions, Dib Group submits that paras 5(b)-(e) and paras 6-8 of the cross-claim should be struck out. Paras 5 to 8 are as follows:

5. They were terms of the lease that:

(a) the Cross Defendant would, at its own cost and expense, restore the Leased Premises to a standard in compliance with the NSW Environment Protection Authority Guidelines: Service Station Sites: Assessment and Remediation dated August 2002, as updated or amended from time to time, and to the reasonable satisfaction of the Cross Claimant, and in any event to a standard no less satisfactory than that existing at the date of commencement of the lease;

Particulars

Clause 24A(1), (2)

(b) the cross defendant would not permit any petroleum product, oil, grease or any noxious, dangerous or poisonous chemical or substance to be discharged into any nearby stream or river or into or under the soil, and would discharge them only as permitted by the relevant statutory authorities, as required by law and in accordance with any conditions imposed by those authorities;

Particulars

Clause 24A(2)(a)(ii)

(c) the Cross Defendant indemnified the Cross Claimant against any liability, loss, damage, expense or claim which the Cross Claimant may incur as a consequence of the breach by the Cross Defendant of the obligations referred to in the preceding subparagraphs, including fines, legal costs, consultants' fees and remediation costs;

Particulars

Clause 24A(2)(b)

(d) the Cross Defendant indemnified the Cross Claimant against all claims, suits, actions, liability or losses whatsoever which it may suffer or incur arising directly or indirectly from any breaches by the Cross Defendant of any environmental laws in respect of the Leased Premises, or the presence of any contaminant on the Leased Premises or any adjoining land arising out of the Cross Defendant's use and occupation of the Leased Premises during the term of the lease; and

Particulars

Clause 24C.5

(e) the Cross Defendant indemnified the Cross Claimant against any liability, loss, damage, expense or claim which the Cross Claimant may incur, including to a third party, during or after the term of the lease, in respect of or arising from:

i. the negligent use or misuse by the cross defendant, its agents call or employees, of any Services or Facilities in the Building, as those terms are defined under the lease, or in the Leased Premises; and/or

ii. the overflow, leakage or escape of water, gas, electricity, fire, or other materials or substances in or from the Leased Premises, caused or contributed to by the negligence of the cross defendant, its agents or employees.

Particulars

Clause 38(1)(b), (c)

6. An environmental site assessment of the Leased Premises and neighbouring properties commissioned by the Cross Claimant revealed to the Cross Claimant that:

(a) petroleum hydrocarbon contaminants were detected at concentrations exceeding the applicable guideline criteria in groundwater samples, and were shown by "fingerprinting" and "ageing analysis" to have been released into the environment during the period of the Cross Defendant's tenancy of the Leased Premises;

(b) dissolved heavy metals were detected at concentrations exceeding the applicable guideline criteria; and

(c) various volatile organic compounds and hydrocarbon compounds were reported at concentrations exceeding the applicable criteria for residential land use at a soil vapour monitoring well installed at the residential property on the Leased Premises.

Particulars

Environmental site assessment report dated 21 August 2024 prepared by Trace Environmental, a copy of which has been served on the Cross Defendant.

7. In breach of the terms of the lease, the Cross Defendant:

(a) failed to restore the Leased Premises to the standard required by terms of the lease, at the termination of the lease; and

(b) permitted petroleum product and oil to be discharged into or under the soil on the Leased Premises and on neighbouring properties, and otherwise than as required by law,

as a result of which the Cross Claimant has suffered, or will suffer, loss and damage.

Particulars

i. The cost of commissioning environmental assessment reports, and of carrying out any necessary remediation or other steps to address contamination of the Leased Premises and any neighbouring properties, and any fines, penalties or the like that may be imposed by the EPA, Council or any other government body.

ii. The loss, damage and expense will be further particularised in the evidence to be relied upon by the Cross Claimant.

8. Further, the Cross Defendant is liable to, but has failed to, indemnify the Cross Claimant against the liability, loss, damage and expense described in the preceding paragraph, and any other loss and damage arising from the contamination of the Leased Premises and/or any neighbouring properties.

Should the cross-claim be struck out?

19. Both parties filed written submissions. I have had regard to those submissions and will not set them out here. It is sufficient to note that the main complaint of Dib Group was the lack of particulars in the pleading, whereas OHK’s answer was that the particulars were effectively to be found in the Trace Environmental Report dated 21 August 2024 (referred to in para 6 of the cross-claim), portions of which had been served on Dib Group.

20. In McGuirk v The University of New South Wales [2009] NSWSC 1424 Johnson J said at [29]-[35]:

[29] In Gunns Limited v Marr [2005] VSC 251, Bongiorno J observed at [57]:

“Not only must the pleading inform the defendants of the case they must meet now, but it must clearly set out the facts which the plaintiffs must assert to make good their claim with sufficient particularity to enable any eventual trial to be conducted fairly to all parties. Vague allegations on very significant matters may conceal claims which are merely speculative. If this be not the case, the plaintiffs must put their allegations clearly.”

Embarrassing Pleadings

[30] A pleading is embarrassing where it is “unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him”: Meckiff v Simpson [1968] VR 62 at 70; Gunns Limited v Marr at [14]-[15].

[31] In Shelton v National Roads & Motorists Association Limited [2004] FCA 1393 at [18], Tamberlin J explained the concept of “embarrassment” with respect to pleadings:

“Embarrassment in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. This is not an exhaustive list of situations in which a pleading may be embarrassing: see Bartlett v Swan Television & Radio Broadcasters Pty Ltd (1995) ATPR 41-434.”

[32] A pleading may be embarrassing even though it contains allegations of material facts sufficient to constitute a cause of action, if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Limited (Bryson J, 7 March 1995, BC9504276 at 5-6).

[33] Although the pleading of a conclusion may, in some circumstances constitute a material fact, nevertheless, the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet: Charlie Carter Pty Limited v Shop Distributive and Allied Employees Association (1987) 13 FCR 413 at 417-418. In such a case, the appropriate remedy is to strike out the pleading rather than to order the provision of particulars, as it is not the function of particulars to take the place of the necessary averments in a pleading: Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 at 112-114.

[34] Rule 14.28 UCPR provides that pleadings that involve non-compliance are liable to be struck out as an embarrassment. However, generally the Courts recognise that a wide range of discretionary considerations arise where there is a failure to comply with the technical requirements of the pleading rules: Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466. In many instances, the appropriate order may be to strike out the offending pleading, but grant leave to amend: Rubenstein v Truth & Sportsman Limited [1960] VR 473 at 476; H 1976 Nominees Pty Limited v Galli (1979) 30 ALR 181 at 186.

[35] It is not the function of the Court to draw or settle a party’s pleading. The Court is confined to the function of ensuring that pleadings are within the rules and fulfil the functions for which they exist. Objectionable matter that is so mingled with other matter may lead to the conclusion that the pleading as a whole would tend to embarrass the fair trial of the action ought be struck out: Turner v Bulletin Newspapers Co Pty Limited (1974) 131 CLR 69 at 72, 87-88, 97-98; Gunns Limited v Marr at [57]-[58]; Fleet v Royal Society for the Prevention of Cruelty to Animals NSW and Ors [2005] NSWSC 926 at [55].

21. In Dare v Pulham (1982) 148 CLR 658, the High Court said at 664:

Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 at 517); they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v Cameron (1936) 54 CLR 572 at 576–7); and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings (Gould and Birbeck and Bacon, supra, at 517–8; Sri Mahant Govind Rao v Sita Ram Kesho (1898) LR 25 Ind App 195 at 207.

22. Of particular relevance to the present dispute is what was said by Richardson J in Australian Hardwoods Pty Ltd v Commissioner for Railways [1961] NSWR 25 at 26:

I am of the opinion that it is not an answer to a summons for further and better particulars to say that the other party could have informed himself by perusing documents at a particular place. Particulars are necessary in order that a party may know the case he has to meet and if so entitled…they must be delivered to him or to his solicitor, otherwise the documents so inspected may not be identifiable at the trial.

23. There are a number of problems with the impugned paragraphs in the cross-claim. First, although para 7 pleads breaches of paras 5(a) and (b) of the cross-claim, no breaches of paras 5(c), (d) and (e) are pleaded. Although it is accepted that the word “indemnified” in those sub-paragraphs should read “would indemnify” the cross-claim nowhere asserts that the cross-claimant has sought indemnification from the cross-defendant for those or any other matters.

24. Secondly, para 5(c) refers to an obligation on the part of the cross-defendant to indemnify the cross-claimant against liability for a breach of the cross-defendant's obligations in the “preceding sub-paragraphs”. Those words were clarified by counsel for OHK as referring to paras 5(a) and (b). However, OHK nowhere pleads that it has incurred fines, legal costs, consultants’ fees or remediation costs. If it has, they would be material facts which would need to be pleaded and it would not be sufficient to include them simply in particulars in para 7.

25. Thirdly, in para 5(b) there is no identification of the “relevant statutory authorities” or what was “required by law” or what “conditions [were] imposed by those authorities”.

26. Fourthly, in addition to the problems already identified in relation to para 5(d) and the absence of a pleaded breach in para 7, the “environmental laws” referred to are not identified, nor is it said what liability OHK has sustained or what “claims, suits, actions” have been brought for which indemnity must be paid by Dib Group.

27. Fifthly, in addition to the other matter referred to in relation to para 5(e) and the absence of any breach pleaded in para 7, the indemnity pleaded is said to be one that arises from “the negligent use or misuse” by Dib Group, yet no negligence or misuse is pleaded in para 7 or elsewhere to make para 5(e) relevant.

28. Sixthly, the thrust of what appears in paras 6 and 7(b) is that contaminants from Dib Group had been released into the environment “during the period of the cross-defendant’s tenancy”. That tenancy extended over 10 years from August 2012 to July 2022. Since limitation questions might arise in circumstances where the cross-claim was only filed on 25 October 2024 the pleading in para 6 is embarrassing.

29. Seventhly, para 6 refers to “applicable guideline criteria” and “applicable criteria for residential land” without particularising what those criteria were.

30. Eighthly, particulars of the petroleum hydrocarbon contaminants, the dissolved heavy metals and the various volatile organic compounds and hydrocarbon compounds in para 6 were not particularised. The only particular given of that paragraph was a general reference to the Trace Environmental report to which I have already made reference.

31. Ninthly, para 7 refers to “neighbouring properties” without specification.

32. Finally, picking up what I said at [23] above, although para 8 pleads that Dib Group has failed to indemnify OHK, it is nowhere pleaded that any indemnity had been sought. Nor could counsel advise me if such a demand had in fact been made.

33. This is not an exhaustive list of defects in the pleading but it is sufficient to concluded that the cross-claim in the impugned paragraphs is neither properly pleaded nor particularised. Nor is it any answer for OHK to point to the Trace Environmental Report or to the portions of it that it has served. Particulars are not provided by reliance on, or a reference to, evidence which will be relied upon even if that evidence has been served. Rule 15.1 of the UCPR is clear that a party,

“must give such particulars…as are necessary to enable the opposite party to identify the case that the pleading requires him or her to meet”.

Transfer to District Court

34. Dib Group put forward two bases upon which it was said that the proceedings should be transferred to the District Court. The first was the relatively confined dispute between it and OHK compared with the broader claim OHK made against four other defendants, none of whom has claimed against Dib Group. It was submitted that the proceedings between Dib Group and OHK could probably be heard within a three day period whereas under the present arrangements Dib Group would be forced to take part in a hearing which is set down to last somewhere between 10 and 15 days.

35. The second concern was that the damages likely to be recovered by Dib Group against OHK would fall well below the $500,000 threshold referred to in r 42.34 of the UCPR. It was submitted that Dib Group might thereby be deprived of a costs order if it was successful in its claim.

36. It was perhaps no surprise that OHK sought that the present proceedings should be removed into this Court from the District Court after OHK commenced its proceedings in this Court. Both proceedings arise largely from the same factual matrix which was the collision with the retaining wall by the truck and the subsequent damage to the tank which, on the pleadings, appears to have been brought about either by that accident or more likely the way the repairs to the retaining wall were carried out. Although the jurisdiction to transfer proceedings between courts under the CPA is not part of the consent jurisdiction, it is significant that the Dib Group consented to the transfer.

37. Nothing of any significance has happened in either set of proceedings since the transfer to suggest that circumstances justify transferring the Dib Group proceedings back to the District Court. Indeed, everything points the opposite way, especially the filing of the cross-claim which more closely links the issue of the damage to the wall and the escaping substances from the tank.

38. Justice Chen made the order that the proceedings should travel together with evidence in one being evidence in the other, and that was done by the agreement of the parties, although his Honour noted that such an order was not to prevent Dib Group seeking a transfer by the present motion. The matter has now been fixed for hearing. There is no indication when a hearing would take place in the District Court but that is a subsidiary consideration in any event when the factual matrix giving rise to both sets of proceedings is largely the same.

39. Even if Dib Group had not consented to the transfer to this Court, there would be a strong argument to justify such transfer because the OHK proceedings are, in substance, third party proceedings that have arisen as a result of the matters raised in the first instance in the present proceedings. The judge who made the order for transfer clearly thought the order was appropriate.

40. As to the second matter raised by Dib Group, the present proceedings were transferred by order of a judge of this Court. Although Dib Group consented to the application made in that regard by OHK, an order for transfer does not fall within the consent jurisdiction of the Court. It is necessary for the judge to be satisfied pursuant to s 140(4) of the CPA. If it was considered appropriate to transfer the proceedings to this Court in the first place it is almost inconceivable that the respondent to such an application (Dib Group), even though consenting, could subsequently be punished by not obtaining a costs order because the damages that party recovered fell below the threshold.

Costs

41. Dib Group submitted that it had been successful in relation to its objections to the form of the cross-claim and, accordingly, should have costs of the motion. OHK submitted that “given the motion was filed without objection, although such an opportunity was provided”, OHK should have its costs of the motion. It submitted in the alternative that because OHK had had some success in resisting the transfer the appropriate order should be costs in the cause. I do not understand the principal submission.

42. A number of matters cause me to think that neither party should have a costs order. First, Dib Group has only been partly successful on its motion. Secondly, it had the opportunity which it failed to take to resist the filing of the cross-claim in 2024. It could have raised with OHK the difficulties with the draft cross-claim that was served. It did not do that, nor did it oppose the filing of the cross-claim for the reasons it now puts forward on this motion.

43. Thirdly, despite having a direction from the Court which enabled it to seek particulars, no such particulars were sought. A number of the matters now complained about might easily have been clarified by such a request.

44. Fourthly, and related to the third point, four days after filing of the cross-claim, the solicitors for Dib Group wrote to the solicitors for OHK saying this:

We confirm that this is not intended to be our request for further and better particulars, rather, a request for information which appears to be not contained as part of the draft report you have served with the Statement of Cross-Claim…

[Particular documents were specified]

Our client will require the above to accurately assess and understand what is being alleged as against it within the Statement of Claim.

45. Nowhere in that letter was complaint made about inadequate pleading or lack of particularisation. Such a complaint was made in general terms in a letter of 17 January 2025 served after the Motion had been filed, as the letter makes clear.

46. On the other hand, the pleading and particularisation of the cross-claim leaves much to be desired and does not comply with the UCPR. OHK had an extended period of time to plead its claim properly.

47. In my opinion, neither party has conducted the litigation as it concerns the cross-claim as they ought to have, especially bearing in mind ss 56 to 58 of the CPA. In the circumstances, there should be no order for costs on the notice of motion to the intent that each party should bear its own costs.

Conclusion

48. The orders of the Court are these:

49. Paragraphs 5(b)-(e) and paras 6-8 of cross-claim struck out.

50. Cross-claimant has leave to replead the cross-claim.

51. Amended cross-claim to be filed and served by 11 June 2025.

52. Application to transfer to the District Court is refused.

53. No order as to costs of the motion.

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