HAMPTON TRANSPORT SERVICES PTY LTD -v- CRUSHING SERVICES INTERNATIONAL PTY LTD [2018] WASC 54 (22 February 2018)

2 The plaintiff commenced these proceedings on 22 April 2016 by writ, with an indorsement of claim. Under O 6 r 1, the indorsement must set out a concise statement of the nature of the claim made, and of the relief or remedy required in the action.

(1) sets out that the plaintiff provided services to the defendant in relation to the Carina Iron Ore Rail Loop and Haul Road Earthworks pursuant to a General Services Agreement (GSA);

(a) relief as to the proper construction of the GSA and in relation to the defendant's misleading or deceptive conduct in negotiations in 2010 and 2011 in relation to:

(i) whether the GSA was a lump sum contract or schedule of rates contract;

(ii) the scope of work to be done and services to be provided under the then proposed GSA; and

(iii) the circumstances in which and the basis on which the defendant may charge Slippage to the plaintiff;

(b) reimbursement of moneys had and received by the defendant or retained by the defendant by reason of the defendant wrongly charging amounts as Slippage under the GSA;

(c) payment of amounts invoiced by the plaintiff for work done as originally contemplated by the GSA and as a result of the defendant's revisions of the works programme and the defendant requesting the plaintiff to perform additional works;

(d), (e) damages under the Trade Practices Act or an order under s 87(2) of that Act for misleading or deceptive conduct during the negotiation of the GSA in 2010 and 2011; and

(f), (g) damages under the Australian Consumer Law, alternatively an order under s 237 of the Law, for misleading or deceptive conduct during the negotiation of the GSA.

4 A statement of claim must not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, facts giving rise to a cause of action so mentioned: O 20 r 2(2). Subject to subrule (2), a plaintiff may in the statement of claim alter, modify or extend any claim made in the indorsement of the writ without amending the indorsement: O 20 r 2(3).

5 The plaintiff filed a statement of claim which it amended with leave in 2016, and reamended without leave pursuant to O 21 r 3(1) of the Rules of the Supreme Court. The reamended statement of claim was filed on 30 June 2017, and is the subject of this application.

6 Before the most recent amendments, the plaintiff pleaded its claim in contract and for misleading or deceptive conduct.

7 In par 4, the plaintiff pleaded the terms of the GSA, including:

(a) the Fee payable by the defendant to the plaintiff for the Services under the GSA, and how the Fee was to be calculated: par 4(b);

(b) that the Fee was an estimate and not a fixed fee, and the estimated Fee for various components of the project: par 4(c) (d);

(c) that the defendant would pay for Additional Works it requested at the rates set out in sch 4: par 4(e);

(e) for the defendant to direct action to ensure the Services were completed by the date for completion and when it would be at the plaintiff's cost (Slippage): par 4(n).

8 The plaintiff pleaded the invoices sent between 30 April 2011 and 31 October 2011: par 5. And in par 6, the plaintiff pleaded the amount paid by the defendant, the amount the defendant deducted under the Slippage Clause, and an amount not accounted for: par 6.

9 In pars 6A and 7, the plaintiff pleaded the negotiation of the GSA in the period January 2010 to March 2011, including representations made by the defendant. Relevantly to this application, the plaintiff pleaded a representation that the defendant would make fill available for the Haul Road Works from borrow pits located at a maximum travel distance of 5 km from any site where the plaintiff was providing Haul Road Works Services under the GSA: par 7(d). The plaintiff pleaded that the representations were made in trade or commerce, and that, in reliance on and induced by them, it entered the GSA on its terms and limited the equipment and personnel it provided to those in Sch 4 of the GSA: par 7A, par 8A.

10 In par 12A, the plaintiff pleaded that, contrary to the Fill Representation, fill was not available at a maximum distance of 5 km: par 12A. The plaintiff pleaded breach of other pleaded representations.

11 Paragraph 17 pleads misleading or deceptive conduct. It initially pleaded that the misleading or deceptive conduct was by representations. It has now deleted the reference to representations and alleges 'in the premises pleaded in pars 7 to 16 above, the defendant engaged in misleading or deceptive conduct'. The balance of the paragraph is confused, in still referring to 'when [the representations] were made' despite the deletion of reference to the representations.

12 In par 18, the plaintiff pleaded that the defendant sent it three Slippage Notices in May and August 2011, asserting that the plaintiff had fallen behind program and requiring it to bring the supply of services back within the programme schedule.

13 The plaintiff pleaded that the defendant has refused to pay amounts for Services supplied: par 21, par 26. It further pleaded loss and damage as a result of the defendant's misleading or deceptive conduct. The pleaded loss and damage included loss and damage by the defendant invoking the Slippage Clause: par 22, par 22(c), (d) and (e).

14 Paragraph 23 pleaded a claim for rectification of the GSA based on the parties' common intention.

15 Paragraphs 24 and 25 pleaded that the defendant made deductions under the Slippage Clause in breach of the GSA.

16 The further amendments, taken together, substantially alter the plaintiff's claim, including by adding the following claims:

(a) on a proper construction of the GSA, the Fee could increase and the defendant be liable to pay amounts in addition to the rates in sch 4 to the GSA: par 4(c)(ii) to (iv);

(b) the defendant would make fill available to the plaintiff for the Haul Road Works at a maximum return trip travel distance of 10 km, and would pay for additional work required to travel the extra distance (Overhaul): par 4(ec) and (ee);

(c) a notice or communication under the GSA could not be served by email: par 4(o);

(d) the plaintiff, at the defendant's request, undertook additional Culvert Work, additional Topsoil Work, and additional Overhaul and claimed payment for that work: pars 5A to 5F, including (in par 5F) on a quantum meruit;

(e) the defendant claimed it was entitled to deduct and did deduct amounts in relation to the Culvert Work, Topsoil Work and Overhaul: par 6(b).

17 The plea in par 7(d) of the statement of claim has been replaced by an allegation that the defendant represented that it would pay compensation for each trip of more than 5 km if borrow pits were not located within 5 km. Paragraph 12A now alleges a failure to pay amounts to compensate for each trip of more than 5 km.

18 The amendment adds pars 17A to 17E, pleading breach of terms of the GSA, including terms relating to payment for additional work.

19 Paragraph 18A introduces an allegation that the Slippage Notices were not effective because sent by email, and par 22 pleads loss and damage, as a result of the pleaded misleading or deceptive conduct, by the defendant purporting to invoke the Slippage Clause.

20 A new par 25A pleads that in the circumstances pleaded in pars 4 to 5E, 7, 8A to 25, the defendant has engaged in unconscionable conduct in connection with the acquisition of services in breach of s 22(1)(b) of the Australian Consumer Law. The amendment omitted to amend the prayer for relief consequential on this plea, but the plaintiff has given notice that its claim is for damages and par C of the prayer for relief, claiming damages pursuant to the Australian Consumer Law, would be amended.

21 The plaintiff amended the statement of claim, without leave, under O 21 r 3(1). The defendant applies under O 21 r 3(3) for the amendment to be struck out. By sub-rule (5), the court must order the amendment be struck out, in whole or in part, if an application for leave to amend would have been refused.

22 In summary, the defendant submits that pars 7(d) and 12A, 5A, 5C, 5E, 5F(b), 18A, and 22(c), as amended, and 25A should be struck out. In submissions, the defendant identifies the following 'primary' reasons to strike out:

(1) paragraph 25A introduces a new cause of action for unconscionable conduct which is time barred;

(2) the new misleading or deceptive conduct claim regarding 'fill material' (pars 7(d) and 12A) is a wholly new allegations and is time barred; and

(3) the quantum meruit claim in par 5F does not plead sufficient material facts to be capable of constituting a cause of action.

23 Alternatively, the defendant applies to have those paragraphs struck out under O 20 r 19(1), as disclosing no reasonable cause of action or because they may prejudice, embarrass or delay the fair trial of the action; or by reason of failure to provide necessary particulars in contravention of O 20 r 13(1).

24 As a preliminary issue the defendant submits that the plaintiff had not explained the basis or reason for late amendments, and prejudice to the defendant by reason of the ongoing delay to the action against it ought to weigh against the grant of leave to amend.

25 The defendant submits that this is the third attempt by the plaintiff to plead its case, and was filed 12 months after the action commenced; it refers to the extent of the amendments, adopting a gross numerical measure that there are 14 new paragraphs and 17 subparagraphs. The defendant relies on the observations made in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 in relation to a court's discretionary power to allow or refuse amendment of a pleading. The principles reflected in those observations have been applied in an application to disallow an amendment made without leave: see Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [54] (Beech J). In Hightime Investments, Beech J summarised the observations of the court in Aon Risk Services, at [52]: it is unnecessary to repeat them here. As a preliminary point, the defendant relies on the observations that where a discretion is sought to be exercised in favour of a party, an explanation will be called for; and that the point can be reached where a party has had sufficient opportunity to put its case.

26 There will be cases where an amendment 12 months after the issue of the writ will be properly characterised as late, or delaying, or prejudicial. This is not one of them. The present matter came into the CMC list on the defendant's application to strike out the amendments. Although the plaintiff's case had then been pleaded, and the defendant had filed a defence, discovery was not complete and pretrial programming was at a very early stage. Apart from the delay caused by hearing and determining the defendant's application to strike out the proposed amendments, the changes to the statement of claim would not, at this point in the action, delay the progress of this matter to trial.

27 Nor do I believe it necessary that every amendment to a pleading, made without leave, be supported by evidence as to the basis for the change. In this case, the plaintiff filed an affidavit of Neale Douglas Billington, the solicitor for the plaintiff, in which he sets out the progress of the matter including the review of the statement of claim by counsel and the obtaining of further instructions following the filing of the defence. There has certainly been no urgency in the plaintiff's approach, but the matter is still in its early stages and I can discern no prejudice to the defendant which could not be met by the order that the plaintiff pay the costs thrown away by reason of the amendment.

28 The defendant submits that par 25A contains a new cause of action in unconscionable conduct. It further submits that the plea of unconscionable conduct is based on facts not included in the indorsement or previous statement of claim, relying as it does on 11 entirely new paragraphs and 12 entirely new subparagraphs. The defendant submits this is evidence that the plea of unconscionable conduct relies on facts not within the basket of facts in the indorsement.

29 The defendant further submits that no specific conduct is pleaded in relation to the claim in par 25A, and the nature of the plea makes it difficult to identify the conduct in question and the accrual of any loss or damage. The defendant submits that, even if the pleading is not time barred, the court should disallow it on the ground that it is liable to strike out as embarrassing.

30 The plaintiff submits that the claim in par 25A falls within the ambit of the indorsement by reference to the facts asserted.

31 The content of the notion of unconscionable conduct in the Australian Consumer Law has been described as 'open-textured'. In Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; (2016) 249 FCR 421, Edelman J said:

Like other instances of open-textured criteria, there is no unitary test for the application of a statutory proscription of unconscionability [86].

But the concept of unconscionability in the Trade Practices Act and its successor, the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)), is not determined solely by reference to the circumstances of each particular case. The assessment of conscience in those circumstances will have regard to underlying principles governing the concept of unconscionability in its particular statutory context, including the list of factors prescribed for consideration.

It is difficult to identify in the abstract the defining features or characteristics of unconscionable conduct under the statute. In equity, there is the requirement of a special disability or disadvantage (Kakavas v Crown Melbourne Limited [2013] HCA 25; (2013) 250 CLR 392 ('Kakavas')) and what Finn J described in Australian Competition and Consumer Commission v Radio Rentals Ltd [2005] FCA 1133; (2005) 146 FCR 292 ('Radio Rentals') at [17] as central to the purpose of the doctrine being the abuse of power possessed by one party over the other by virtue of the other's position of special advantage. Unconscionable conduct under a statute such as the Trade Practices Act (now the Competition and Consumer Act 2010 (Cth)) extends beyond that in equity, is to be determined by reference to all the circumstances and is informed, and will continue to be informed, by the factors identified by Parliament in the statute [72].

32 Relevantly, s 22(3) of the Australian Consumer Law, without limiting the matters to which the court may have regard for the purpose of determining whether a person acquiring goods or services has contravened s 22(1), sets out 12 factors to which the court may have regard.

33 A statement of claim should define with clarity and precision the issues or questions which are in dispute between the parties and fall to be determined by the court: Nyoni v Patterson [2012] WASCA 171 [36] [38]. Pleadings ensure a basic requirement of procedural fairness, and, to do so, must state the case sufficiently clearly to allow the other party a fair opportunity to meet it: Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 286 287; Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 [26]. What is needed to satisfy the requirement for a clear statement of the case will depend upon the nature of the allegation. In my opinion, where the plaintiff is relying on the statutory proscription of unconscionable conduct, having regard to the nature of that claim, the statement of claim must state clearly the material facts and identify what in the defendant's conduct was unconscionable. The plea in par 25A wholly fails to do that. The plea may prejudice, embarrass or delay the fair trial of the action and is liable to be struck out under O 20 r 19(1)(c).

34 Until the claim of unconscionable conduct has been properly formulated, it is not possible to say whether the claim relies upon facts which are the same as, or include or form part of, facts giving rise to a cause of action mentioned in the writ, and may be pleaded without amendment of the writ.

35 Paragraph 25A should be struck out on that basis.

The modifications to the plea of misleading or deceptive conduct: pars 7(d), 12A

36 In summary, the plaintiff has changed the nature of its case from an allegation that the defendant represented that fill would be available within 5 km of any site where it was supplying particular services, to a representation that the defendant would compensate the plaintiff for each trip of more than 5 km.

37 The defendant submits that this is a different representation which alleges a different obligation on the part of the defendant. The claim has changed from one asserting a right to damages for breach of the representation, to a claim for payment (and for damages for breach of the obligation to pay).

38 The plaintiff submits that the allegations fall within the indorsement on the writ, and that indorsements should be read not narrowly, but generously: Stone James v Pioneer Concrete (WA) Pty Ltd [1984] WASC 460; [1985] WAR 233, 239.

39 In my opinion, the plaintiff's submission is correct. The allegation now found in par 7(d) and par 12A, falls within the claims in the indorsement for relief:

(1) as to the proper construction of the GSA and in relation to misleading or deceptive conduct in its negotiation as to the scope of work to be done and services to be provided: par 2(a)(ii);

(2) payment of amounts invoiced by the plaintiff under the GSA for work done: par 2(c); and

(3) damages for loss and damage by reason of misleading or deceptive conduct as to the scope of work and the availability of fill: par 2(d)(ii) and (iv) and 2(f)(ii) and (iv).

40 I dismiss the application in relation to these paragraphs.

41 The plaintiff in par 4(o) pleads a term of the GSA by which a notice or other communication between the parties could not be served by email. In the new par 18A, the plaintiff pleads that none of the three Slippage Notices sent to it were effective as each was sent by email.

42 The plaintiff submits that the defendant's right to rely on the Slippage Notices has always been in issue. I am satisfied that the claim now pleaded comes within par 2(a) and (b) of the indorsement and there is no reason to strike out par 4(o) or par 18A.

43 While I would not strike out the allegation relating to the effectiveness of the Slippage Notices, I think it is appropriate to comment on the corresponding amendment to par 22. Paragraph 22 pleads, in its introductory words:

As a result of the Misleading or Deceptive conduct [defined par 17, by reference to 'the premises pleaded in paragraphs 7 to 16'], Hampton has suffered loss and damage in that:

This is followed by six paragraphs. Subparagraph 22(c) now alleges that the defendant asserted and asserts that the plaintiff's supply of services fell behind program and 'purported to invoke the Slippage Clause'. It ties in with par 22(d), which now pleads that in purporting to invoke the Slippage Clause the defendant has asserted that it is entitled to deduct $3.6 million (approximately) from the plaintiff's payment claim, and with par 22(e) which pleads that the defendant has wrongfully deducted that amount. Paragraph 22(e) has not been amended.

44 The present plea is confusing, both in par 17 and par 22. I cannot ascertain, from this plea, how the purported invoking of the Slippage Clause is related to the pleaded misleading or deceptive conduct and loss or damage caused by that conduct. This confusion is not the subject of an application to strike out, and such an application would be well out of time. But the plaintiff needs to attend to its plea in par 22 and in par 17.

45 These paragraphs were all added by the amendment. Each alleges that the plaintiff undertook additional work at the defendant's request, par 5A referring to Culvert Work, 5C to Topsoil Work, and 5E to Additional Overhaul. Paragraphs 5B, 5D and 5F specify the payment claimed by the plaintiff for the work in each case.

46 For the allegations regarding the Culvert Work and the Topsoil Work (pars 5A to 5D), the plaintiff claims for rates in terms of the GSA pleaded as the Culvert Term and the Topsoil Term.

47 The defendant submits that these paragraphs are devoid of appropriate particulars of the Additional Work, including when the request for Additional Work was made.

48 The plaintiff submits that the plea is sufficiently pleaded as to the work done, the amount claimed and how it is calculated, the reasonableness of the amount claimed, and the invoice.

49 Without knowing how each invoice is particularised, it is not possible to say that a plea that the amount claimed was 'calculated under the Culvert Term' or 'calculated under the Topsoil Term' does give sufficient information. If there is a deficiency, it should be remedied by particulars.

50 The plea for Overhaul is claimed as a reasonable amount, 'on a quantum meruit': par 5F. The plaintiff pleads, however, that on its proper construction the GSA provided that the defendant would pay for Overhaul, and pleads a schedule of rates: par 4(ee).

51 The law may impose an obligation on the defendant to make restitution on a quantum meruit basis, where the plaintiff proves that it provided goods or services at the defendant's request: Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635, 666 667 [89] [90]. On the present pleading, I am unsure whether the contractual framework pleaded by the plaintiff leaves room for the claim based on restitution. I am not satisfied, however, that it is a basis to strike the claim out. It was not the basis argued.

52 I do not accept the defendant's submission that the claim for restitution, or the claims for additional Topsoil Work and Culvert Work are outside the indorsement on the writ. The claims pleaded in pars 5A to 5F fall within par 2(c) of the indorsement.

53 The result is that par 25A should be struck out under O20 r 19(1)(c). Particulars may be required of the allegations in par 5A to par 5D. The defendant's application to strike out should otherwise be dismissed. I would, however, urge some attention to pars 17 and 22 which are confusing.