BETWEEN : KALGOORLIE CONSOLIDATED GOLD MINES PTY LTD (ACN 009 377 619)

KCGM ENGINEERING SERVICES PTY LTD (ACN 064 920 654)

Practice and procedure - Application for leave to amend statement of claim - Whether proposed misleading conduct claims under Trade Practices Act and Fair Trading Act are statute barred - Power excursions causing physical damage to crushing mechanism - Effect of stoppages on ore processing capacity - Issue as to when loss sustained and cause of action accrues - Turns on own facts

Fair Trading Act 1987, s 10

Sale of Goods Act 1895

Trade Practices Act 1974 (Cth), s 52, s 82

Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR 40-473

Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431

Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (No 2) [1987] FCA 230; (1987) 16 FCR 410

Harris v Western Australian Exim Corporation (1994) 56 FCR 1

Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125

I&L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 192 ALR 1

Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd & Anor (1988) ATPR 40-853

Matheson v Commissioner of Main Roads [2001] WASCA 402; (2001) 25 WAR 269

Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233

SWF Hoists & Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) ATPR 41-045

1 HASLUCK J: The plaintiffs seek leave to amend the writ of summons and consolidated statement of claim herein pursuant to O 21 r 5 of the Rules of the Supreme Court. The application is opposed by the second and third defendants on the grounds that certain of the proposed causes of action are statute barred and it would therefore be futile to allow the amendments. The third defendant contends additionally that certain paragraphs lying within the proposed pleading fail to disclose a cause of action and are embarrassing in that the loss alleged is not recoverable at law or otherwise is not pleaded with sufficient particularity.

2 In order to resolve these pleading issues, I must begin by looking at the nature of the dispute between the parties.

3 The application for leave to amend concerns a lengthy minute dated 11 February 2003 filed on behalf of the plaintiffs which is described as a re-amended minute of proposed substituted statement of claim in consolidated actions CIV 1753 of 2001 and CIV 2413 of 2000 (the "minute of proposed claim").

4 It emerges from the plaintiffs' minute of proposed claim that an open cut gold mine at Fimiston is managed by the first plaintiff, known as KCGM, on behalf of the Fimiston/Paringa Joint Venture and the KMA Joint Venture. Between 1989 and 5 September 1995 ore from the subject tenements was transported to crushers and treatment facilities nearby. In or about 1994, KCGM commenced steps to replace the tertiary crushers with a semi-autogenous grinding mill, or SAG mill, to be established in a position approximately 100 metres to the south east of the existing tertiary crushers.

5 The plaintiffs say that in mid-1994 KCGM engaged the third defendant, known as Minproc, to design and commission the SAG mill. It is pleaded in par 27 of the minute of proposed claim that on or about 3 June 1994, Minproc, on behalf of KCGM, prepared a purchase order directed to the second defendant, known as Fuller, for the design and commissioning of the SAG mill. Minproc and Fuller were allegedly aware of the proposed role of the SAG mill in the context of the overall operations being conducted by KCGM.

6 It is alleged in par 42 of the claim that Fuller represented to Minproc that there was no requirement for a torque limiting coupling, or TLC, to be fitted to the drive train of the SAG mill in order for the SAG mill to operate satisfactorily (the "Fuller/TLC representations").

7 I pause to say that torque is the force causing rotation in a mechanism. The TLC achieves the limiting function by having an element in its construction which is designed to fail (or prevent the transmission of torque) at a predetermined level, thereby protecting the driven equipment, such as the pinion and girth gears.

8 The plaintiffs contend in par 43 of the claim that Minproc, acting in reliance upon the Fuller/TLC representations, represented to KCGM that it was unnecessary for TLCs to be fitted to the SAG mill. This is described in par 44 as "the TLC representations".

9 It is alleged that in reliance upon certain representations (described as the "Fuller and Minproc fitness representations") the SAG mill was handed over. On or about 7 October 1995 KCGM set about permanently decommissioning the tertiary crushers and the conveyor belts which had previously been used in the crushing and treatment of ore.

10 The plaintiffs say that certain power excursions occurring between 2 October and 18 December 1996 resulted in the two synchronous motors driving the SAG mill subjecting braking torque to the SAG mill's pinion and girth gear. This caused damage to the pinion and girth gear and led to stoppages while the pinions were being realigned. Ore could not be processed during these stoppages in late 1996.

11 It is alleged that in mid-1998 maintenance technicians were engaged by KCGM to investigate the SAG mill's girth gear with a view to determining whether remedial work was necessary. It is then said that, as a result of the discovery of defects from about 19 June 1998 it was necessary that KCGM operate the SAG mill in a manner which restricted its capacity to process ore.

12 The plaintiffs allege that Fuller and Minproc are liable to the plaintiffs for breach of contract. It is not necessary for present purposes to look at this cause of action in any detail. The minute of proposed claim refers to express terms which are said to be reflected within certain documents and to terms that are said to be implied pursuant to provisions of the Sale of Goods Act 1895 (WA).

13 The plaintiffs say that by supplying, constructing and commissioning the SAG mill without fitting suitable TLCs onto the drive shaft of each motor driving the SAG mill, Fuller was in breach of contract. Claims in negligence are also advanced against Fuller and Minproc. The plaintiffs' minute of proposed claim sets out facts and matters which are said to give rise to a duty of care and matters relevant to an alleged breach of duty.

14 More importantly, for present purposes, the minute of proposed claim at par 76 - 82 sets out facts and matters which are said to support the third plaintiffs' misleading and deceptive conduct claim against Fuller. The plaintiffs say that the Fuller/TLC representations were falsely made by Fuller in that at all material times the SAG mill would not operate over an extended period, as intended, if TLCs were not fitted to the drive train of the SAG mill. There was a real and foreseeable risk that a power excursion would occur, thereby causing braking torque to be generated between the drive shaft of the synchronous motors and the girth gear of the SAG mill. The Fuller fitness representations were said to be made falsely also.

15 The plaintiffs then plead that the making of these representations by Fuller amounted to misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) and s 10 of the Fair Trading Act (WA).

16 A similar claim is advanced against Minproc in par 83 - 91 of the minute of proposed claim. In each case, the third plaintiffs are said to have suffered the loss and damage described in par 104 - 107 of the claim.

17 Put shortly, the plaintiffs allege that they suffered loss and damage in the form of actual expenditure (consequent upon repairs) and loss of profits (consequent upon reduced ore processing capacity). The loss and damage claimed is referable to three periods, namely, between October and December 1996 (when the power excursions occurred and affected the pinion gear); between 9 June 1998 and May 1999 (when fatigue cracking in the girth gear was discovered); and between 9 and 25 May 1999 (when the girth gear was replaced).

18 I will call the claims based upon the statutory provisions the "TPA/FTA claims".

19 Until 26 July 2001, a claim for damages for breach of s 52 of the Trade Practices Act had to be commenced within three years after the day on which the cause of action accrued. Amendments then came into effect which extended the period within which a claim for damages could be commenced to six years.

20 The plaintiffs were conscious that the damage to the pinion gear and pinion bearings became apparent prior to the date of the fifth power excursion. The cause of action with respect to such damage could therefore be said to have accrued prior to 18 December 1996. This meant that legal proceedings had to be commenced within three years, that is to say, by not later than 18 December 1999.

21 It was common ground at the hearing before me that a writ was issued against the third defendant on 20 October 2000 (which included an allegation based on s 52 of the Trade Practices Act). A writ was issued against the second defendant on 5 June 2001 (which to this point, subject to the present application, does not contain any allegation of misleading or deceptive conduct). It seemed to follow that a prospective claim for misleading conduct in respect of damage to the pinion gear and pinion bearings had not been commenced within the prescribed time limit of three years.

22 It was against this background that, at the hearing before me, the plaintiffs abandoned the proposed TPA/FTA claims in relation to the pinion gear damage, being actual expenditure incurred and loss of profit suffered between October and December 1996.

23 However, the stance of the plaintiffs was that they were entitled to commence proceedings and pursue the TPA/FTA claims for loss allegedly arising from the cracked girth gear after 26 July 1998 and for the replacement of the girth gear in May 1999. In other words, if the cause of action did not accrue until the damage became apparent, then a claim for such loss would be within the time period now allowed by s 82(2) of the Trade Practices Act for, on that view of the matter, the limitation period of three years did not commence to run until mid-1998. By the time the three year period expired in mid-2001 the present proceedings had been commenced, and the limitation period had been extended to six years.

24 As to this facet of the application before me, the opposing stance of the defendants was that the damage to the girth gear should be viewed in the same light as the damage to the pinion gear and pinion bearings. The damage was caused prior to 18 December 1996 even though it may not have been discovered until 18 months later. The claim in respect of the girth gear damage was therefore excluded by the limitation period of three years pursuant to the same line of reasoning that operated to exclude a claim based upon the pinion damage.

25 It will be useful at this point to take a closer look at the provisions and principles bearing upon the power to amend and the operation of limitation periods.

26 Order 21 rule 5 of the Rules of the Supreme Court provides that the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as the Court may direct.

27 Where the amendment is to add a new cause of action for which the limitation period has expired, the general power just mentioned is subject to various qualifications. By O 21 r 5(2) the relevant limitation period must have been current at the date of the issue of the writ. By O 21 r 5(5) the new cause of action must arise out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed by the party applying for leave to make the amendment.

28 I note in passing that a "cause of action" is generally thought to mean the factual situation which will entitle a person to approach the Court for relief. It means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court: Read v Brown (1888) 22 QBD 128 at 131. It follows that in the case of a claim based on negligence or misleading conduct the facts comprising the damage said to arise from the events complained of are constituents of the cause of action.

29 This view was affirmed by the High Court in Wardley Australia Ltd v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514. Mason CJ, Dawson, Gaudron and McHugh JJ said at 525 that by virtue of s 82(2) of the Trade Practices Act, the period of limitation begins to run at the time when the cause of action under s 82(1) accrues. As loss or damage is the gist of the statutory cause of action, the cause of action does not accrue until actual loss or damage is sustained. They said that s 82(1) should be understood as taking up the common law practical or commonsense concept of causation recently discussed by the High Court in March v E&MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506, except in so far as that concept is modified by provisions of the Act.

30 Their Honours went on to say that the concept of loss or damage, like the concept of causation, must be applied in a wide variety of situations because the contraventions of the Act which give rise to causes of action under s 82(1) are diverse. In regard to misleading conduct constituted by misrepresentations, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connection to satisfy the concept of causation. If those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable.

31 They said further that, in determining when a plaintiff first suffers economic loss or damage in an action based on misleading conduct, it is necessary to have regard to the applicable measure of damages. In the case before them it could be safely assumed that the plaintiff was entitled to recover a sum representing the prejudice or disadvantage the plaintiff suffered in consequence of an alteration of position under the inducement of the misleading conduct or the actual damage directly flowing from that conduct.

32 It appears to follow from these observations that in order to determine when a cause of action for economic loss accrues, it may be necessary to consider the precise interest infringed by the act or omission complained of: Blacker v National Australia Bank Ltd [2001] FCA 254; (2001) ATPR 41-817 at 42,968. The nature of the precise interest infringed may depend upon matters of fact, such as the source of the loss, the nature of the loss and when the loss was discoverable, for the time when actual loss or damage is sustained is a matter of fact: Karedis Enterprises Pty Ltd v Antoniou [1995] FCA 1356; (1995) 59 FCR 35 at 40 - 43.

33 Against this background, the plaintiffs in the present case submitted that there may be several distinct losses flowing from conduct in contravention of s 52 of the Trade Practices Act, and the cause of action in respect of each loss is not complete until such loss has occurred. It is not inconsistent with the language of s 82 that where conduct causes several discrete losses which occur at different times that the right to recover the amount of each loss accrues only when the particular loss occurs.

34 The defendants submitted that in the case of a claim for pure economic loss caused by the manifestation of a latent defect, loss and damage is first suffered when the latent defect becomes apparent or should, with reasonable diligence have become apparent: Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424 at 505; Hawkins v Clayton (1988) 164 CLR 539 at 587; Pullen v Gutteridge, Haskins & Davey Pty Ltd [1993] VicRp 4; [1993] 1 VR 27 at 71; Bryan v Maloney (1995) 182 CLR 609 at 617.

35 It was said further on behalf of the defendants that in the case of the claim for loss (economic or otherwise) caused by physical damage or injury to property, the cause of action accrues when material damage is first suffered, whether or not the plaintiff was aware, or could with reasonable diligence have become aware, that he had suffered damage: Cartledge v E Jopling & Sons Ltd [1963] AC 758 at 771 and 779; Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1; Hawkins v Clayton (supra) at 588; Wardley Australia Ltd v State of Western Australia (supra) at 540.

36 In looking at the relevant principles I am conscious that a useful review of the decided cases is set out in the judgment of Handley JA of the New South Wales Court of Appeal in Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302 at 306. In that case the claimants alleged that a solicitor had been negligent in failing to conduct title searches when they purchased their property in 1982 to ensure that they had a right of way to a road at the rear of their property. It was not until many years later in 1994 that they discovered that they did not have the right of way after having applied to the local council to subdivide the property into two lots. The Court of Appeal held that the claim was statute barred because time started to run under the Act when the respondent suffered loss at the time of the purchase of their property even if they were unaware of it.

37 Handley JA (with whom Powell JA agreed) held that in those cases dealing with latent defects in buildings, time starts to run when the defects become manifest or otherwise discoverable: Brian v Maloney (supra). He said that this principle has been extended to include latent defects in title where defects were not ordinarily discoverable during a conveyance: Christopoulos v Angelos (1996) 41 NSWLR 700. He concluded, however, as to the case before him, that normal searches conducted when the claimants purchased the property would have revealed the absence of a right of way. There was no latent defect in title. The cause of action was the negligence, not the discovery of it.

38 In the course of his judgment Handley JA observed at par 13 that a cause of action in negligence is not complete until the plaintiff first suffers actual loss or damage. Damage which is prospective or contingent does not qualify as actual damage for this purpose.

39 His Honour went on to say that in order for the plaintiffs' cause of action to be complete, the plaintiffs' actual damage must be "measurable" or in the words of Lord Reid in a personal injuries case (Cartledge v E Jopling & Sons Ltd (supra) at 772) the damage must be "beyond what can be regarded as negligible".

40 Handley JA noted that the action before him was one to recover damages for the plaintiffs' economic loss and the courts have developed special rules for distinguishing between actual and prospective damage in this area. Time commences to run under the Limitation Act when damage accrues, even if the plaintiff is not aware of it.

41 His Honour said further that where an owner suffers loss because of the existence of latent defects in a building, it is now established that such loss accrues when the defects become manifest or are otherwise discovered and not before. What has become orthodox doctrine in much of the common law world concerning the nature of the damage in such a case can be traced to the judgment of Deane J in Sutherland Shire Council v Heyman (supra) at 503 where he concluded that any loss involved in the actual inadequacy of the foundations is sustained only at the time when the inadequacy is first known or manifests. It is only then that the actual diminution in the market value of the premises occurs.

42 Handley JA was of the view that the case before him could not be regarded as a case of latent defect of the kind considered in Christopoulos v Angelos (supra). The contract of sale in question disclosed the existence of a registered easement and the claimants specifically asked their solicitor to confirm the existence of legal access and thus normal conveyancing procedure should have revealed the existence of the defect in title.

43 My review of the relevant legal principles would not be complete without mentioning the general precept reflected in the decided cases that arguable limitation points ought not to be decided on an interlocutory application: Wardley Australia Ltd v State of Western Australia (supra) at 533; Morgan v Banning (1999) 20 WAR 474 at 486; Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd [2001] FCA 1620; (2001) 114 FCR 108 at 118. The High Court has repeatedly warned against resolution of preliminary points before all of the facts are determined: Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at 18 and 55; Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 at 332; Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at 357.

44 According to counsel for the defendants, the case against his clients proceeded from the premise that the SAG mill was defective in that the TLCs were not installed as a result of representations by Fuller that the couplings were not required and that the SAG mill was fit for its intended purpose. The absence of TLCs exposed the SAG mill to a real and foreseeable risk of power excursions occurring.

45 The power excursions that occurred on five separate occasions between 2 October and 18 December 1996 caused the SAG mill drive train (including the pinion and girth gear) to be subjected to braking torque and it was this that caused damage to the pinion and girth gears. The damage included the pinions being pushed out of alignment (which necessitated immediate remedial work) and a physical change in the material properties of the metal alloy from which the girth gear was caste (namely an increase in the effective size of discontinuities in the alloy). The metal alloy changes caused fatigue cracking and an increased susceptibility to fatigue cracking. Counsel for the defendants accepted that the metal alloy changes were not and could not have been discovered until mid-1998. Nonetheless, they were essentially caused by the power excursions complained of. This meant that all of the loss and damage occurred prior to the last of the power excursions on 18 December 1996.

46 It followed from this view of the matter, counsel for the defendants submitted, that the various categories of loss claimed by the plaintiffs were referable to events occurring prior to 18 December 1996 with the result that the limitation period in respect of the claim for misleading conduct expired three years later on 18 December 1999, that is to say, prior to the commencement of legal proceedings in the year 2000. In this case, it did not matter whether the claim was characterised as a claim for pure economic loss arising from the manifestation of a latent defect (ie the absence of TLCs designed to protect the drive train) or a claim based on physical injury or damage to the drive train caused by the absence of TLCs. On any view of the matter, loss and damage occurred and the cause of action in respect of all TPA/FTA claims were complete prior to 18 December 1996, notwithstanding that, as to the girth gear, the plaintiffs only discovered the full extent of the loss and damage in mid-1998.

47 Counsel for the plaintiffs acknowledged that the substance of the alleged misrepresentations was that the SAG mill did not require TLCs to be fitted to its drive train in order to operate satisfactorily, and that the SAG mill was capable of operation without a TLC being fitted. However, counsel for the plaintiffs contended, that the cause of action in respect of loss referable to the girth gear situation was not complete until the metal alloy changes were identified in mid-1998 and the loss crystallised. If the matter was viewed in that light then the operative limitation period of three years was still current at the time the two actions now comprising the consolidated action were commenced. The claim based upon misleading conduct was specifically adverted to in the writ of summons issued against the third defendant on 20 October 2000. Further, and in any event, within the language of O 21 r 5(5) the proposed TPA/FTA claims concerning misleading conduct arose out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed. The relevant rule allows for an amendment to be made which will permit the plaintiffs to advance a claim for loss and damage referable to the defective girth gear.

48 The decided cases establish that as loss and damage is the gist of the statutory cause of action, the cause of action does not accrue until actual loss or damage is sustained. Generally, time commences to run when the defects complained of become manifest or otherwise discoverable. However, in order to determine when a cause of action for economic loss accrues it may be necessary to consider the precise interest infringed and to have regard to the applicable measure of damages.

49 These principles suggest that in the present case it is open to the plaintiffs to contend in regard to the proposed TPA/FTA claims concerning the girth gear that the cause of action did not accrue until mid-1998. It was only then, on the plaintiffs' case, that the metal alloy changes were discovered or could have been discovered and the adverse impact of the earlier power excursions upon the girth gear led to financial loss in the form of actual expenditure on remedial work and losses flowing from reduced ore processing capacity. A constant refrain in the decided cases is that the cause of action only becomes complete when the loss is suffered, and that will often be governed by the circumstances of the case including the knowledge of the parties.

50 I therefore see considerable force in the plaintiffs' submissions that the proposed amendments concerning the TPA/FTA claims in respect of the girth gear should be allowed upon the basis that the losses flowing from the misrepresentations complained of did not become manifest in regard to the girth gear until mid-1998.

51 It will, of course, on this view, be a matter of evidence at the trial of the action as to whether the physical damage was in fact discovered or could have been discovered when the power excursions occurred prior to 18 December 1996. I noted earlier that limitation points generally ought not to be decided on interlocutory application. Further, having regard to earlier discussion and the terms of O 21 r 5(5) I accept that the proposed amendments arise out of substantially the same facts as causes of action in respect of which relief has been claimed and that, if it be accepted that time commenced to run in mid-1998, the relevant limitation period was still current when the relevant legal proceedings were commenced.

52 It follows from earlier discussion that there are certain decided cases weighing against the prima facie position I have just described. The defendants have said that in the case of a claim for loss caused by or arising essentially from physical damage the cause of action arises when the damage is first suffered, whether or not the plaintiff was aware, or could with reasonable diligence have become aware, that he had suffered damage.

53 It appears to me, however, that a proposition of the kind contended for by the defendants must be viewed with caution in the circumstances of the present case. The proposition has been under discussion in a number of previously decided cases, such as Pirelli (supra) and Sutherland Shire Council v Heyman (supra) and it appears that the presence of policy considerations concerning the responsibility of builders and local government bodies have had and may continue to have an effect upon the issue: Invercargill City Council v Hamlin [1996] AC 624.

54 Further, when one looks at the reasoning of Deane J in Hawkins v Clayton (supra) at 588 and Wardley (supra) at 540 it is apparent that qualifications affecting the prima facie position that a cause of action is complete when the damage is sustained are still evolving and have to be expressed with care. I take this to be a reflection of the approach recognised by the Full Court of the Federal Court in Karedis (supra) and by Handley JA in Scarcella (supra) that ultimately, for the purpose of a claim under the statutory provisions, the time when loss or damage is suffered is a question of fact to be resolved in the context of the particular circumstances. Relief under s 82(1) of the Trade Practices Act is not necessarily to be confined to analogy either with actions in contract or tort: Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494.

55 Against this background, I am not persuaded that the proposition contended for by the defendants should be applied so as to have a decisive effect upon the outcome of an interlocutory application of the present kind. To my mind, it is not inconsistent with the language of s 82 of the Trade Practices Act that when the conduct complained of arguably causes several discrete losses which occur at different times then the right to recover the amount of each loss accrues only when the particular loss accrues. In a case of the present kind, when the misleading conduct complained of arguably has a range of effects upon a complex mining operation, and the nature of the physical damage to property is subtle and scarcely visible, it seems to me that care must be exercised in holding that the question of whether loss has been sustained depends essentially on the moment at which there was physical damage or injury to the plaintiffs' property.

56 In summary, then, leave will be allowed to the plaintiffs to amend the writ of summons in action CIV 1753 of 2001 in the manner proposed by introducing into the indorsement of claim the TPA/FTA claim concerning the girth gear. Leave will be allowed to amend the statement of claim in the consolidated action in the terms of the minute of proposed claim save for any amendments whereby TPA/FTA claims are sought to be advanced in respect of the alleged damage to the pinion gear or pinion bearings. Having regard to the concessions made by the plaintiffs as to the TPA/FTA claims concerning the pinion gear and pinion bearings, I will hear from the parties as to whether any directions are required for repleading or some adjustment of the minute of proposed claim in that regard.

57 The third defendant, Minproc, joined with the second defendant Fuller in opposing the proposed amendment concerning the claim for misleading conduct and generally endorsed the submissions of counsel for the second defendant in regard to that issue. However, in addition, the third defendant objected that par 106 and par 107 of the minute of proposed claim failed to disclose a cause of action and were embarrassing.

58 Counsel for the third defendant submitted that the loss alleged in those paragraphs was not recoverable at law or, alternatively, by failing to provide any particulars of the financial effect of the third plaintiffs' loss of opportunity to earn the gross profit described in sub-par (4) of the particulars to par 106 and par 107, the third defendant was embarrassed.

59 The nature of the third defendant's objections are set out more particularly in the following paragraphs of its written submissions:

"14. Effectively, the third plaintiffs allege their opportunity to earn a gross profit has been deferred until 2025 as a result of the various stoppages or reduced capacity of the SAG Mill. 2025 is the year the third plaintiffs allege the ore bodies on their tenements will be exhausted.

15. The assessment of damages arising from the fact that ore processed six years ago is more valuable than ore processed twenty two years from now is hopelessly uncertain and therefore not recoverable. It requires reasonable certainty at the very least of:

(a) The fact that ore processed in the future will be the same value or a lower value in present day terms.

(b) The fact that costs in the future will be the same or lower in present day terms.

(c) The fact there will be no, or a low probability of, significant changes in circumstances over the next 22 years (and having been none over the last six).

No particulars of these factors or the manner in which they might be assessed have been pleaded. Unless and until they are provided, the pleading is embarrassing and should be struck out.

16. The purpose of damages is to put the party in the position they would be in had the wrong not occurred. The plaintiffs' method for assessing damages would put it in a substantially better position than if the alleged wrong had not occurred. Compare Hungerford v Walker [1989] HCA 8; [1988] 171 CLR 125 where the loss of use of money had occurred and that money had been recovered before the claim was brought.

17.(a) Here, if the plaintiffs succeed, they will recover a sum now calculated by taking the profit lost in 1996 and measuring the return which could have been earned on that profit for the following 29 years. Alternatively, they would deduct the estimated profit earned in 2025 discounted to its present value (subpara (4) of particulars to paras 106 and 107).

(b) In the event they recover the first measure (without the deduction), they will receive the return on the lost profit for 29 years. However, they will receive it today. They will then earn a further return on that sum. Thus, by the time 2025 comes, they will have many multiples more than if they had earned the profit in 1996 at the very least, the work "alternatively" in subparagraph (14) of the particulars to paragraphs 1 and 6 and 1 and 7 ought be struck out.

18. Even if the present value of the profit they will earn in 2025 is deducted from the sum now to be paid the manner in which that is calculated, the rates to be applied and, ultimately, the quantum claimed are not particularised. The plaintiff is in a position to obtain sufficient expert assistance at least to particularise its claim more thoroughly. Until it does so, the pleading should not survive."

60 The plaintiffs submitted in answer to these objections that the loss of profits complained of constitutes actual and immediate loss or damage, not contingent or prospective loss or damage. In contract, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the contract been performed. In tort, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the tort not been committed: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1.

61 The plaintiffs contended that the nature of the claim referable to loss of profits was sufficiently disclosed by the pleading for the third defendant to formulate a defence. Further and better particulars could be sought if necessary. Even if the Court were ultimately to hold after a trial of the issues that, on the balance of probabilities, the value in 1998/1999 dollars of the relevant quantity of gold metal at the end of the operational life of the mine would not be materially less than the value of the sales of gold metal which did not occur in 1998/1999, the plaintiffs would still have lost the use of that money during the period between 1998/1999 and the end of the operational life of the mine.

62 The plaintiffs appear to recognise that if the value of the relevant quantity of gold metal were to increase between about 1998/1999 and the end of the operational life of the mine by an amount greater than the rate of inflation then the plaintiffs would, to that extent, be compensated. However, it would still be necessary to determine whether the rate of return from the investment or use of the money from 1998/1999 would have yielded a greater return.

63 It was contended that the plaintiffs' loss or damages be measured in terms of its loss of profits in 1998/1999 (subject to adjustments for variable costs which were saved) and/or its loss of use of the money which otherwise would have been received in 1998/1999.

64 The plaintiffs' loss of profits in 1998/1999, being an actual and immediate loss (as distinct from a contingent or prospective loss) is capable of quantification. If that loss is capable of being diminished or avoided to any extent (for example, by subsequent sales of gold metal), then these are matters which are relevant to the mitigation of the plaintiffs' actual loss. However, in that regard, the burden is upon the third defendant to plead and prove matters relating to mitigation: Munce v Vinidex Tubemakers Pty Ltd [1974] 2 NSWLR 235 at 237 and 239; Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VicRp 52; [1986] VR 507 at 509.

65 I am of the view that the plea in par 106 and par 107 is in a sufficient form and leave to amend should be allowed to the plaintiffs in the manner proposed by the minute of proposed claim. I recognise that this area of the dispute between the parties raises issues of considerable complexity. However, these are issues which are likely to be addressed by expert evidence and that in turn is likely to give rise to exchanges of particulars which will have the effect of refining the pleaded case so that each party is acquainted with the case to be dealt with at trial. I am persuaded by the plaintiffs' submission that if issues concerning mitigation of the alleged loss are to be raised then this will be a matter for the defendants. Accordingly, I am not persuaded that this part of the minute of proposed claim should be struck out.

66 In summary, then, leave will be allowed to the plaintiffs to amend the writ of summons in action CIV 1753 of 2001 in the manner proposed by introducing into the indorsement of claim the TPA/FTA claim concerning the girth gear. Leave will be allowed to amend the statement of claim in the consolidated action in the terms of the minute of proposed claim save for any amendments whereby TPA/FTA claims are sought to be advanced in respect of the alleged damage to the pinion gear or pinion bearings. Having regard to the concessions made by the plaintiffs as to the TPA/FTA claims concerning the pinion gear and pinion bearings, I will hear from the parties as to whether any directions are required for repleading or some adjustment of the minute of proposed claim in that regard.