Karpik v Carnival plc

Introduction and background 1 These are my reasons on the respondents' application to amend their defence at the commencement of the trial. There is no dispute as to the applicable principles. With reference to the written submissions of the applicant, they may be summarised as follows. 2 The onus is on the party seeking leave to amend to persuade the court that such leave should be given: Dye v Commonwealth Securities Ltd (No 2) [2010] FCAFC 118 at [17]. An application for leave to amend should not be approached on the basis that a party is entitled to raise an arguable defence, subject to the payment of costs thrown away: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175 at [111]. Limits will be placed upon the ability of parties to effect changes to their pleadings, particularly if litigation is advanced and they have had a sufficient opportunity to identify the issues they seek to agitate: Aon at [112]. Other factors identified in Aon at [5], [30], [71], [93]-[95], [98], [102], [103] and [112]-[114] include: (1) prejudice to another party that cannot be adequately compensated by an award of costs, which would include the inevitable prejudice of unnecessary delay where that exists; (2) inefficiencies in the use of the court as a publicly funded resource arising from the vacation or adjournment of trials and the effects of delay on other litigants; (3) the explanation for any delay in applying for leave to amend; (4) the need to maintain public confidence in the judicial system, which has a potential to be lost where a court is seen to accede to applications made without adequate explanation or justification; (5) the objective of doing justice between the parties and to other litigants; (6) the objective that the pleadings identify the "real" issues between the parties; (7) the overriding purpose of the civil practice and procedure provisions in s 37M of the Federal Court of Australia Act 1976 (Cth), namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible; and (8) the nature and the importance of the amendment to the party that is seeking it. 3 In September 2021, this class action was listed for trial to start on Monday of this week (ie, 10 October 2022) with an estimate of four weeks. The matter has been closely case managed, including a round-table case management conference on 30 August 2022. Although the parties had previously prepared, and I had ordered, a provisional list of common questions, at the conference I asked for, and was promised, a list of issues for the trial. That list was to include not only the common questions, but also the issues arising specifically in relation to the case of the lead applicant, Mrs Karpik. The trial was to proceed on only Mrs Karpik's claim. 4 On 27 September 2022, which is to say less than a week before the trial was due to commence, I urgently listed the matter for case management at the request of the applicant because it was said that the respondents were late with respect to various pre-trial preparatory steps. At that hearing the joint position of the parties was that the commencement of the trial should be delayed to Wednesday, 12 October 2022 in order to make time for the outstanding pre-trial steps on both sides of the case to be taken. I acceded to that position and relisted the trial to commence on that day. 5 The causes of action advanced by the applicant arising out of the round-trip cruise of the Ruby Princess referred to as RU2007 are a common law claim in negligence and claims under the following provisions of the Australian Consumer Law (ACL, being Sch 2 of the Competition and Consumer Act 2010 (Cth)): s 18 (misleading and deceptive conduct), s 60 (the consumer guarantee as to due care and skill), s 61(1) (the consumer guarantee that services are reasonably fit for particular purpose, referred to as the purpose guarantee) and s 61(2) (the consumer guarantee that services will achieve the desired result, referred to as the result guarantee). 6 In respect of the purpose and result guarantee claims, neither the applicant nor the respondents specifically pleaded s 61(3) or s 267(1)(c) of the ACL, whether by citing the provisions or by using the language of the provisions in such a way as to make it clear that the provisions were being referred to. Section 61(3) provides that the purpose and result guarantees do not apply "if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier." Section 267(1)(c) relevantly provides that a consumer may take action against a supplier of services for breach of the purpose and result guarantees if the failure to comply with the guarantee did not occur only because of (i) an act, default or omission of any person other than the supplier, or an agent or employee of the supplier, or (ii) a cause independent of human control that occurred after the services were supplied. 7 The evidence shows that during the process of the parties trying to settle the list of issues it became apparent that the respondents wish to identify those provisions as being issues with respect to the purpose and result guarantees, whereas the applicant takes the position that such issues do not arise on the pleadings and have never been part of the case. The result is that on Friday, 7 October 2022, which is to say three days before the rescheduled commencement of the trial, the respondents served and filed an interlocutory application seeking leave to amend their defence to specifically raise issues relying on the identified provisions. That application was heard on the second day of the trial, after the parties' opening submissions. 8 The principal position taken by the respondents is that it is for the applicant to establish that the identified provisions do not apply such as to cause her purpose and result guarantee claims to fail. That is to say, they say that in respect of s 61(3) she must establish that the circumstances show that she relied on, and that it was not unreasonable for her to rely on, the skill or judgment of the supplier. Also, with reference to s 267(1)(c), she must show that any failure by the respondents to comply with the relevant guarantee did not occur only because of the matters identified at [6] above as (i) and (ii). The applicant, in contrast, says that it is the respondents who bear the onus on those issues and that they therefore bore the responsibility of pleading them. 9 It seems doubtful to me that the applicant bears the onus on these issues. Several cases have decided, or at least accepted, the contrary in respect of s 61(3). See, for example, Rasell v Cavalier Marketing (Australia) Pty Ltd [1991] 2 Qd R 323 at 340 per Cooper J in respect of an earlier analogous provision in relation to the manufacturer's guarantee of fitness for purpose; Moore v Scenic Tours Pty Ltd (No 2) [2017] NSWSC 733 (Moore No 2) at [435] per Garling J although it is not clear that the point was argued; Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; 361 ALR 456 (Moore CA) at [82]-[83] per Sackville AJA by describing s 61(3) as a "defence", [121]-[122] in identifying what the consumer must prove as the elements of the claims, [135] and [140]; Gill v Ethicon Sàrl (No 5) [2019] FCA 1905 at [3526]-[3527] per Katzmann J in respect of the analogous provision in relation to the manufacturer's guarantee of fitness for purpose; Wade v J Daniels and Associates Pty Ltd [2020] FCA 1708 at [332] per O'Bryan J. 10 The position would appear to be the same in respect of s 267(1)(c): Rasell at 340 in respect of earlier analogous provisions in relation to the manufacturer's guarantee of fitness for purpose; Effem Foods Ltd v Nicholls [2004] NSWCA 332; ATPR 42-034 at [11] per Handley JA in respect of earlier analogous provisions in relation to the guarantee of merchantable quality; Moore No 2 at [124] and [127], [137], and [440]-[441] in referring to s 267(1)(c) as a "defence"; Moore CA at [309] also in referring to the provision as providing a "defence"; Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715; 154 ACSR 235 at [741] per Perram J in respect of the guarantee as to acceptable quality and the "defence" in s 271(2) which is relevantly analogous to s 267(1)(c). 11 The respondents' answer to these cases is to submit that in none of them was the point specifically argued and that they are wrong. The respondents refer in that regard to the origins of the provisions in s 14 of the Sale of Goods Act 1893 (UK) (repealed). In particular, they submit that where in s 14(1) it was said that where the buyer makes known to the seller the particular purpose for which the goods are required "so as to show that the buyer relies on the seller's skill and judgment …", it is clear that buyer must establish that reliance. That submission is supported by dicta of Lord Wright in the Privy Council in an appeal from the High Court of Australia dealing with the identical provision in the Sale of Goods Act 1895 (SA) (repealed) in Grant v Australian Knitting Mills Ltd [1936] AC 85 at 99. However, as the applicant points out, s 14(3) of the Sale of Goods Act 1979 (UK) is differently worded, providing for the relevant guarantee to apply "except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill and judgment of the seller". That puts the onus to negative the buyer's reliance onto the seller: Central Regional Council v Uponor Ltd 1996 SLT 645 at 648 per Lord Cameron of Lochbroom. Section 61(3) of the ACL is more closely analogous to s 14(3) of the UK Act of 1979 than it is to s 14(1) of the UK Act of 1893. 12 I agree with the respondents that it is neither necessary nor fruitful at this stage to determine the question of onus, particularly without having heard full argument on the question. The point for the present, however, is that r 16.02(1)(e) of the Federal Court Rules 2011 requires that a pleading "state the provisions of any statute relied on". It has been held that that does not mean that a pleading must necessarily always expressly refer to a specific statutory provision which is sought to be invoked, but that it must be clear from the way in which the matter is pleaded that such an invocation is intended: ALDI Foods Pty Ltd as General Partner of ALDI Stores (a Ltd Partnership) v Transport Workers' Union of Australia [2020] FCA 269; 294 IR 407 at [82] per Flick J. See also Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13]. 13 What is apparent from that is that if the respondents took the view, as apparently they did, that the applicant had to exclude the operation of s 61(3) and bring herself within s 267(1)(c), then her pleading was clearly deficient. She has pleaded no allegations sufficient to satisfy those purported requirements; she makes no mention in her pleading on relying on the skill and judgment of the respondents, or the alleged failure of the guarantees not being only because of one or other of the matters in s 267(1)(c)(i) and (ii). The respondents should then have raised that deficiency at a much earlier stage, pointing out that the applicant's pleading was deficient and that it accordingly did not disclose reasonable causes of action on the purpose and result guarantees. That the responsibility lay on the respondents in this regard is clear from the current state of the case law referred to above. Even if the respondents are ultimately correct in their contention that the applicant bears the onus on these issues (an issue in respect of which I express no concluded view), the current state of the case law and, I might add, commonly referred to commentary (ie, Miller's Australian Competition and Consumer Law Annotated (44th ed, Lawbook Co, 2022) at [ACL.61.40]) is against that contention. The respondents should therefore have appreciated that the applicant may well have been relying on those authorities in not pleading those issues, and they should then have raised the issue and brought it to a head at a much earlier time. In that sense, the explanation for the amendments being sought at such a late stage is inadequate.

The proposed amendment to FASOC [176] 29 The second of the amendments sought by the respondents is to elaborate on their denial of FASOC [176]. Correcting an error in the language acknowledged during argument, the respondents seek to plead that: a. the applicant cannot take action under s 267 of the Australian Consumer Law unless the applicant establishes that the failure to comply with guarantees as alleged did not occur only because of: i. an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or ii. a cause independent of human control that occurred after the services were supplied; b. further or alternatively, any failure to comply with guarantees as alleged occurred only because of: i. an act of a person or people other than the respondents, or an agent or employee of the respondents, who introduced the SARS-CoV-2 onto the ship; ii. the act of the Australian Government on 15 March 2020 to close the borders to any cruise ships that were not already en route to Australia. c. further or alternatively, to the extent the applicant claims that there was a failure to comply with the guarantees by reason of: i. people contracting coronavirus on the Voyage; ii. people who had been passengers on the Voyage subsequently dying from coronavirus; iii. the matters pleaded at paragraph 130 - 146 of the further amended statement of claim, these were causes independent of human control that occurred after the services were supplied and were the only causes of the failures. 30 Paragraph (a) seeks to squarely put the onus on the applicant to prove that the pleaded failures of the purpose and result guarantees did not occur only because of the matters identified in s 267(1)(c)(i) and (ii), whereas paragraph (b) pleads "further or alternatively" positively that those matters are the only causes of any failure of the purpose and result guarantees. For the reasons already given, it seems to me unlikely that the onus lies on the applicant on these issues. It would be wrong to determine that point at this stage. The factual and legal point in question, being whether or not any failure of the guarantees occurred only because of the identified matters, is adequately raised by paragraph (b) without the onus question being determined at this stage. I therefore disallow paragraph (a) and refer also to the further discretionary considerations I will come to. 31 There is also the consideration in relation to paragraph (a) in that it seems to plead that certain negative propositions are the applicant's onus to establish, without pleading either that she cannot establish or has not established them. There is accordingly a drafting difficulty although no doubt it could easily be fixed. 32 Turning now to paragraph (b)(i), the point sought to be raised by the respondents is very specific. It is that any failure to comply with the guarantees occurred by reason of the introduction of the Covid virus onto the vessel by someone other than one of their agents or employees. That puts in issue a question of how the virus got onto the vessel. I am satisfied that that is a complex factual issue requiring detailed investigation which has not hitherto been done by the parties. 33 The respondents point to certain of the expert reports to show that there has been an investigation into the question of whether any crew members brought the virus onto the vessel and on that basis they say that the pleading does not raise a new factual issue and will not cause the applicant prejudice. However, the relevant reports of the experts seek to answer the following question: Was the risk of contracting Covid-19 heightened on the Voyage as compared to the risk of contracting coronavirus on a cruise ship to which certain assumptions did not apply as at 8 March 2020? The assumptions referred to set out a number of factual matters with regard to flu-like symptoms experienced by passengers and crew members on the prior voyage and on the voyage in question and influenza and Covid test results. However, there has apparently been no specific inquiry as to how the virus came to be on board the ship. Indeed, the Covid test results of crew members after the voyage ended would appear to be relevant to such an inquiry, yet the respondents denied those results to the applicant during the discovery process on the basis that they were irrelevant. Had the introduction of the virus onto the ship been recognised by the parties as an issue in the case, they may have taken quite different positions in relation to those test results. 34 I therefore accept the submission on behalf of the applicant that to definitively inquire into the introduction of the virus onto the vessel at this stage would be highly disruptive of the trial and would likely require an adjournment. 35 Insofar as paragraph (b)(ii) is concerned, a singular factual matter which is not in contest is sought to be relied on in order to advance an argument. That factual matter is that the Australian government on 15 March 2020 announced the closure of Australia's borders to any cruise ships that were not already en route to Australia. It seems to me that the paragraph seeks to make available to the respondents an argument based on that factual matter. I do not see that it raises any particular prejudice for the applicant. 36 Turning now to paragraph (c), the respondents seek to be able to contend that any failure by them to comply with either the purpose or result guarantee occurred only because of causes that were independent of human control and that occurred after the services were supplied. However, the respondents do not identify any such causes. Rather, they identify the applicant's pleaded consequences of the alleged failures by them to comply with the guarantees. That is to say, the pleading is directed at matters that were caused by failures to comply with the guarantees, rather than at matters that caused the failures to comply with the guarantees. The pleading is accordingly bad in law and discloses no reasonable defence to the pleaded claims. 37 Further, it is common ground, as I understand it, that the services upon which the applicant relies ended when she disembarked from the vessel. The fact that the consequences of the failure of those services are said to extend beyond that point, does not mean that the matters that caused any failure of the services extended beyond that point.

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