KOOLAN IRON ORE PTY LTD -v- GHD PTY LTD [No 2] [2022] WASC 442 (16 December 2022)

1. In his report of 3 December 2021, Mr Mahler expressed the opinion that Koolan had used flawed methodology, and the appropriate way to calculate the business interruption loss was by a methodology based on the life of the mine. Using that methodology, Mr Mahler calculated the business interruption loss in an indicative range between a loss of about $17.3 million and a gain of $12.9 million.
2. Mr Humphrey's report was filed pursuant to the order for Koolan to file expert evidence in reply. Koolan also prepared further lay witness statements setting out evidence relevant to the opinions expressed by Mr Humphrey in his report. The proposed amended particulars are based on Mr Humphrey's report and the additional lay witness statements.
3. Mr Humphrey advised that he agreed with the life of mine methodology adopted by Mr Mahler. In effect, Koolan has abandoned its previous approach to business interruption losses and substituted particulars based on the life of mine methodology.
4. Koolan seeks to rely on Mr Humphrey's report, and on the further lay evidence. A side issue to the current dispute was the use by Mr Humphrey of information that Koolan says is confidential. An appropriate regime to ensure confidentiality had not then been agreed, and the lay evidence was filed with redactions. The confidentiality issue has now been resolved.
5. Koolan has now amended paragraphs 38, 47 and 52 of its statement of claim to refer to amended particulars of the Business Interruption Claim (Primary and Alternative Claims) dated 14 October 2022. The particulars, and the evidence on which Koolan seeks to rely at trial, result in a recalculation of the Business Interruption Claim to approximately $202 million, alternatively $340 million (plus interest in each case).

1. Koolan submitted that it may amend its pleading without leave, pursuant to O 21 r 3 of the Rules of the Supreme Court 1971 (WA). GHD's procedural remedy, if it has one, is to apply to strike out the amendments.
2. GHD originally contended that Koolan was not simply amending its pleadings, and was required to apply pursuant to O 21 r 7 for an order permitting it to amend. GHD did not maintain that argument, and accepted that, as Koolan has now expressly referred to the particulars in its statement of claim, they may be amended as part of its pleading.
3. On 18 October 2022, GHD applied to strike out Koolan's amended particulars and the corresponding amendments to its statement of claim on three grounds:
   1. The Further Amended Business Interruption Particulars prosecute a new and fundamentally difference case on Business Interruption damages, seemingly in substitution for that which has been advanced since Koolan served its lay witness statements in March 2021.
   2. The Further Amended Business Interruption Particulars are premised upon expert evidence that, although purportedly served by Koolan in reply, is not evidence in reply, but rather, is evidence that should have been served in chief.
   3. GHD will suffer irremediable, unfair prejudice if Koolan is permitted to adduce the expert evidence and prosecute the new case on Business Interruption damages.

1. GHD submitted that the amendment would be likely to result in significant additional delay due to the need for GHD to put on a further report in response, a conclave between the experts, and a joint report. It referred to the time that has already passed: eight years since the collapse of the seawall and seven years since proceedings were commenced. The giving of discovery in tranches, and the exchange of lay and expert evidence on liability and quantum, have already taken years.
2. GHD referred also to the delay from the service of the report by Mr Mahler in December 2021 to the provision of the report by Mr Humphrey in August 2022, and the further delay in preparing particulars.
3. GHD submitted that the reason advanced by Koolan for the amendment is, in effect, error on the part of its lawyers, and is not a sufficient reason to permit an amendment at this time.
4. GHD's primary complaint was that the report of Mr Humphrey, and the supporting lay evidence, were filed pursuant to orders permitting evidence in reply to the report of Mr Mahler. It submitted that the evidence of Mr Humphrey, and the related lay evidence, is not truly evidence in reply to the report of Mr Mahler. The evidence relied on by Koolan embraces Mr Mahler's approach as the basis for a new calculation of business interruption losses, and is an attempt by Koolan to rectify a significant defect in its case that was exposed by GHD's expert evidence.
5. It referred, in particular, to comments of Bond J in Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 4), where his Honour said:

Prima facie the use of that terminology [that is, evidence in reply] flags an intention that the evidence 'in reply' would be limited to evidence rebutting the evidence to which the evidence 'in reply' was addressed. As a general proposition, case management orders permitting of evidence 'in reply' are not intended to provide gateways for evidence merely providing supplementary confirmation of a plaintiff's case. Nor, a fortiori, are they intended to provide a gateway to admit of new or alternative modes of proving the plaintiff's case.[2]

1. GHD submitted that the filing and service of the report by Mr Humphrey and the supporting lay evidence, under cover of the court's leave to serve evidence in reply, constitutes an abuse of the leave. Colloquially, Koolan had not 'played by the rules'.
2. GHD accepted that Koolan would suffer prejudice if it were not permitted to pursue such a substantial part of its claim. But GHD submitted that the prejudice it suffers is different because it is unfair prejudice - the unfairness results from the abuse of the purpose intended to be served by reply evidence. That prejudice is irreparable.

1. Koolan submitted that the proposed amendment is for the purpose of aligning its case with the most recent evidence it has filed and served in respect of the Business Interruption Claim, including the report of Mr Humphrey. The amendments do not change the cause of action but the method of calculation of its loss. Koolan further submitted that the evidence of Mr Humphrey would remove an issue previously in dispute between the parties regarding the proper methodology to be used in calculating its loss.
2. Koolan submitted that any delay resulting from the amendments must be assessed against the facts that the matter has not yet been listed for trial, and the length of trial has not yet been determined. The trial is likely to last for many weeks. There are pre-trial matters still to be completed which will affect when the matter is ready for trial, including its response to GHD's expert report on the Remediation Claim, and the conclave between experts in relation to the Remediation Claim.
3. Koolan submitted that any additional delay caused by the amendment will be relatively insignificant having regard to the complexity of the action and the time that has been and will be involved in preparing it for trial.
4. Koolan accepted that the evidence on which it now seeks to rely is not evidence in reply. But it submitted that the amendments to its particulars are critical to its case and involve a very significant sum. If not permitted to advance the Business Interruption Claim set out in the proposed amended particulars, it would suffer irreparable prejudice. The refusal of the amendment would result in the court not determining the real questions in controversy between the parties, or promote the just determination of the litigation, or preserve confidence in the administration of justice.
5. Koolan argued that it is not correct to compare the position GHD will be in if the amendments are allowed with the position it will be in if they are struck out. It submitted that the court should compare the position GHD will be in if the amendment is not struck out with the position it would have been in if the expert evidence and particulars had been filed earlier.
6. Koolan submitted that the defendant suffers no prejudice that cannot be remedied by an order for costs. It will have ample opportunity to deal with the changes to the plaintiff's calculation of its losses.

1. The court must order the amendment be struck out if satisfied that, had an application for leave to make the amendment in question been made, leave to amend would have been refused.[3]
2. It is appropriate in this application to have regard to the principles that apply on an application to strike out or disallow an amendment,[4] and also to the principles that apply on an application for leave to amend.[5] In applying those principles, the court must seek to attain the objects set out in O 1 r 4B(1).
3. Authorities dealing with how other judges have exercised their discretion are valuable. The interests of justice are served by consistency in the exercise of judicial discretions. But the decision in each case is a product of the application of principle to particular factual and procedural circumstances. The common thread in considering an amendment is the need to balance the timely and efficient disposal of the business of the court with what is reasonably required for the fair and just determination of the issues between the parties.
4. I would adopt the guidance of Le Miere J, on an application for leave to amend, in De Kauwe v Cohen.[6] A party has no absolute right to amend its case at any time. But, in the absence of substantial prejudice to GHD, it is desirable that the case be decided on its merits so as to do justice between the parties and preserve public confidence in the administration of justice. The following matters, in my opinion, are most relevant.
5. First, the amendment is to particulars of a pleaded loss. It does not alter the nature of the claim.
6. Second, the position advanced by GHD is that Koolan should not be permitted to advance its case on damages using a methodology that GHD contends is the correct one, and that the independent experts engaged by both parties agree should be used.
7. Third, it was reasonable for Koolan to seek advice when Mr Mahler advanced an alternative methodology. The fact that that methodology was first advanced by GHD's expert does not itself make its adoption by Koolan unfair so as to result in irreparable prejudice. Nor, in my opinion, is it an abuse for Koolan to now seek to rely on that methodology, even though it has resulted in a substantial increase in its calculation of loss. Koolan is not seeking a forensic advantage not otherwise available by ordinary pre‑trial processes. It should have applied for leave to file and serve additional expert evidence, not as evidence in reply. But, at this stage of the action, I would have granted leave. The filing of the evidence in reply is not, in my opinion, a sufficient reason to strike out the amendments.
8. Fourth, there is nothing before the court to support a finding that GHD would be prevented by time, or resources, or any other factor, from meeting the case that Koolan has now pleaded in its particulars, or from responding to the expert report of Mr Humphrey.
9. Fifth, I have regard to the explanation advanced by Koolan for the way it initially particularised its case. As Senior Counsel for Koolan submitted, many applications to amend result from the need to correct an earlier error. The error in this case was not so egregious that the court should in some way mark its disapproval by striking out the amendment.
10. Sixth, the amendment has been made seven years after the action commenced, and after the programmed exchange of expert evidence. Koolan's case has been particularised, and its expert evidence filed, approximately 18 months later than it would have been if filed according to the orders made in 2021. The amendments are likely to cause further, unquantified, delay. But the action is not yet ready to be set down for trial. The additional delay must be balanced against the value, importance and complexity of the subject matter of the dispute, and the object of achieving a just determination.
11. Seventh, the importance to Koolan of properly presenting such a substantial claim cannot be denied.
12. Finally, at this stage of the proceedings I am not satisfied that the distinction between evidence in chief and in reply should be given the weight for which GHD contended.
13. In my opinion, the proper exercise of the court's discretion is to allow the amendment.
14. GHD will have the costs thrown away by reason of the amendment. The award of costs is not a panacea, but it must be sufficient in the present circumstances where the alternative would be to shut out the possibility of a just determination of the issues between the parties.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] The current plea by Koolan is a Further Amended Substituted Statement of Claim, filed 14 October 2022.

[2] Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 4) [2019] QSC 199 [17].

[4] Westgem Investments Pty Ltd v Commonwealth Bank of Australia [No 3] [2018] WASC 73 [42] ‑ [49].

[5] See DM Drainage & Constructions Pty Ltd as Trustee for DM Unit Trust Trading as DM Civil v Karara Mining Ltd [No 3] [2018] WASC 398 [15] ‑ [19]; see also Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [52]; and Sino Iron Pty Ltd Ltd v Mineralogy Pty Ltd [2014] WASC 406 [31].

[6] De Kauwe v Cohen [2021] WASC 25 [52].