Materials Fabrication Pty Ltd v Baulderstone Pty Ltd [2009] VSC 405

1 In this matter the plaintiff, Materials Fabrication Pty Ltd, seeks the leave of the Court to lift the stay order made 26 February 2009 to enable it to prosecute its claims against the Defendant, Baulderstone Pty Ltd. This proceeding was commenced by Materials Fabrication against Baulderstone by writ filed 19 December 2008.

2 Materials Fabrication claims that on 18 July 2007 it was engaged by Baulderstone to manufacture supply and install structural steel and metal work at the Life Lab project in Digital Harbour Docklands in Melbourne for the sum of $956,167 (the "Structural Steel Subcontract"). It also claims that it was engaged under a second subcontract by Baulderstone made on 27 August 2007 to manufacture, supply and install aluminium windows and doors to the external façade and internal windows and doors to the office suite of the project for the price of $1,545,966 (the "Façade and Glazing Subcontract"). The Structural Steel Subcontract and the Façade and Glazing Subcontract are together referred to as the "subcontracts".

3 Materials Fabrication claims that on or about 14 February 2008 Baulderstone wrongfully terminated both of the subcontracts. On and from 16 January 2009 in correspondence exchanged between the parties Baulderstone relied upon clause 20.3 of the subcontracts which provided that a precondition for commencing proceedings was the payment of 10 per cent of the sum claimed, that sum being required to be paid to Baulderstone's solicitor as security for its costs.

4 Materials Fabrication did not provide the security payment as prescribed by Clause 20.3 of both of the subcontracts, nor does it make any offer or give any undertaking to make any such payment.

5 Baulderstone also relied upon clause 20.1 of the subcontracts which provided that a further precondition for commencing proceedings was the service upon it of a notice which included a statement of the calculation of any amounts of money claimed.

6 By consent orders made on the papers on 26 February 2009 the parties agreed to an order that the proceeding be stayed until further order and that Materials Fabrication would pay the costs of Baulderstone fixed at $2000. That order was made.

7 On 22 June 2009 Baulderstone filed its amended defence and counterclaim in the proceeding. Prior to that time Baulderstone had only filed the defence to the claims of Materials Fabrication. That defence was dated 16 February 2009. It was in a rudimentary form consisting largely of denials.

8 By the counterclaim recently filed, Baulderstone seeks to advance a substantial claim against Materials Fabrication founded upon alleged delay in completion of the works contracted for, defective workmanship and four negative variations. It also claims liquidated damages and it further claims a repudiation on the part of Materials Fabrication of the subcontracts. The total amount claimed by Baulderstone amounts to over $2 million as accrued debts due and damages.

9 Clause 20, which is common to both of the subcontracts, is in the following form, excluding clauses 20.4 and 20.5 which are not here directly relevant:

20.1 Notice of Dispute

If a dispute or difference arises between the Builder and Subcontractor arising out of or in connection with the Works or the Subcontract either party may give the other a written notice specifying the particularised assertion of fact giving rise to the entitlement (including reference to relevant subcontract provisions), the legal basis and cause of action and the relief which the party seeks, showing the calculation of any amounts of money or extensions of time claimed.

The Subcontractor shall not commence proceedings (other than for injunctive or other urgent relief) unless a valid notice strictly complying with this clause has been served and the procedures in clauses 20.2 and 20.4 have been complied with.

Despite the existence of any dispute the parties shall continue to perform their obligations under the Subcontract.

20.2 Meeting of Representatives

Subject to clause 20.5 if a dispute or difference notified under clause 20.1 has not been settled within 5 Business Days of the date of that notice either party may require in writing to the other that the Builder's Representative and the Subcontractor (if a person) or a director or senior manager acceptable to the Builder of the Subcontractor (if a company) meet and undertake genuine and good faith negotiations with a view to resolving the dispute. Each party shall use its best endeavours to ensure that a meeting required under this clause shall take place within 5 Business Days of the receipt of a valid written requirement for the meeting.

20.3 Security for Dispute

The Subcontractor shall not commence any proceedings until it has deposited to the trust account of the Builder's solicitor, as security for the costs of the Builder, an amount equal to 10% of the amount claimed by the Subcontractor in the proceedings. The sum so deposited shall be dealt with in accordance with any agreement of the parties, or in default of agreement, the order of a court or arbitrator. This clause shall not apply to expert determination proceedings under clause 20.4.

Works are defined in the definition clause 1.1 of the subcontracts as follows:

'Works' means the whole of the work to be executed in accordance with the Subcontract including any Variations.

10 Mr Fairweather, who appeared for Materials Fabrication, submitted that two components of the work undertaken by Materials Fabrication were undertaken for the project prior to entering into either of the subcontracts in contention. These components of work are described in the document entitled, "Proposed Reply and Defence to Counterclaim" filed by Materials Fabrication on 27 July 2009. By paragraphs 5 and 47 of that document a sum likely to exceed $60,000 is claimed in respect of the supply of brackets for the project and by paragraphs 14 and 50 a sum in the order of $240,000 is claimed in respect of the manufacture, supply and installation of boxed truss frames and steel works to the eastern elevation of the project. Both components of work were said to be "for the project". The project was the Life Lab project as defined in the amended defence and counterclaim of Baulderstone filed 22 June 2009.

11 The opening words of clause 20.1 of the subcontracts describe disputes and differences which may arise between the builder and the subcontractor which are the subject of the clause in broad terms. Any such dispute or difference which arises out of or in connection with the works as defined, or the relevant subcontract, is subject to the requirements of clause 20.

12 The words, "in connection with" are of wide import. In the context of the construction of a release in Nolan v MBF Investments Pty Ltd,[1] I quoted with approval from the decision of Giles CJ Commercial Division in Elkateb v Lawindi:[2]

The phrase "in connection with" has on many occasions been said to be of considerable width, satisfied by a link or an association (Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153) or a relationship (Our Town FM Pty Ltd v Australian Broadcasting Tribunal [No 1] [1987] FCA 301; (1987) 16 FCR 465; Drayton v Martin (1996) 137 ALR 145) and summed-up in the phrase "having to do with": see the same cases and Nanaimo Community Hotel Ltd v Board of Referees [1945] 3 DLR 225. As with the phrase "in relation to", no doubt the context or the purpose may require that the link, association or relationship be of a particular kind, sometimes described as an appropriate or relevant relationship (Perlman v Perlman [1984] HCA 4; (1984) 155 CLR 474; R v Ross-Jones; Ex parte Green [1984] HCA 82; (1984) 156 CLR 185 and O'Grady v Northern Queensland Co Ltd [1990] HCA 16; (1989) 169 CLR 356), but it should not be read down unless there be compelling reason to do so (Fountain v Alexander [1982] HCA 16; (1982) 150 CLR 615).

13 Further in the context of statutory interpretation the following observations were made about the phrase by the Full Court of the Federal Court in Health Insurance Commission v Freeman:[3]

The words "in connection with" have been accepted as capable of describing a spectrum of relationships between things, one of which is bound up with or involved in another; see Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (11993) 43 FCR 280 at 288. However, as was pointed out by Sackville J in Taciak v Commission of Australian Federal Police (1995) 59 FCR 285 at 295, the question that remains in a particular case is what kind of relationship will suffice to establish the connection contemplated by the statute. That requires a "value judgment about the range of the statute"; see Pozzolanic (at 289).

14 Nevertheless, in spite of the breadth of the phrase, "in connection with", and having regard to the context and subject matter of the subcontracts, I am not in the position to say on the evidence before me whether or not the additional pre-contract works, although they were clearly works "for the project", were also works connected with the work to be executed in accordance with the subcontracts. There is no evidence as to how the cast bracket supply agreement related to the works which were required to be done under either of the subcontracts. As it is presently pleaded in the proposed reply and defence to counterclaim, being particulars to paragraph 5 of that document, the work was agreed to be treated as a variation to the structural steel subcontract. However, the connection with the subcontract is left without evidence to support it.

15 Further, in relation to the boxed truss framing work to the east elevation of the project, it is pleaded that the scope of the works under the structural steel subcontract did not allow for such works. Again, the connection with that subcontract is left without any evidence to support it.

16 Accordingly, on the evidence before me, the additional works undertaken prior to entry into the subcontracts which are pleaded in paragraphs 5 and 47, and 14 and 50 of the proposed reply and defence to counterclaim have not been shown to be the subject of clause 20 of the subcontracts. Thus Materials Fabrication is able to pursue claims in respect of those matters free of the constraints, if any, imposed by clause 20 including the constraints imposed by sub-clauses 20.1 and 20.3.

17 However, in relation to the claims set out in the present statement of claim delivered on the part of Materials Fabrication, these clearly arise in connection with the works and the relevant subcontracts. Clause 20 as a matter of construction therefore applies to these parts of the claims of Materials Fabrication.

Pre-condition Commencing Proceeding - Sub-clause 20.1

18 The second paragraph of clause 20.1 of both subcontracts provides:

The Subcontractor shall not commence proceedings (other than for injunctive or other urgent relief) unless a valid notice strictly complying with this clause has been served and the procedures in clauses 20.2 and 20.4 have been complied with.

19 The notice to be provided under this sub-clause is required to show, amongst other things, the calculation of any amounts of money claimed.

20 In this case the statement of claim issued with the writ on 19 December 2008 claims damages arising from the alleged breach and wrongful repudiation by Baulderstone of the two subcontracts. However, no particulars of loss and damage have been provided.

21 A pleading which properly provides the particulars of loss and damage is likely to involve the calculation of amounts of money said to have been lost by Materials Fabrication. This is not a case where damages are likely to be the product of an assessment of value, as for example where an assessment of the value of goods lost is to be determined, or where an assessment of pain and suffering is to be undertaken in a personal injuries case, where an award is made founded upon the court's determination as to what would be reasonable compensation for the relevant disability suffered by a plaintiff.

22 Here, the damages are likely to be wholly, or in large part, calculable by reference to a monetary sum or sums. In those circumstances, sub-clause 20.1 creates an obligation to specify the calculation of the money claimed. This exercise in part is intended as an aid to the operation of the dispute resolution clause contained in sub-clause 20.2 of the subcontracts.

23 It was conceded by Mr Roberts, who appeared for the defendant Baulderstone, that if the plaintiff Materials Fabrication was to particularise its loss and damage in monetary terms in its pleading, the requirement under sub-clause 20.1 would be satisfied.

24 Further, the provision of such particulars would accord with the requirements of the Technology, Engineering and Construction List which incorporates the practice notes applicable to the Commercial Court called, "Guide to Commercial List Practice". In this regard reference is made to paragraph D.3.05 of the Guide to Commercial List Practice, which is in the following terms:

D.3.05 PARTICULARS: It is expected that pleadings will either include or append all necessary particulars of a party's case. Times fixed for pleadings will not usually allow for the provision of particulars before defence, or any other pleading, but exceptions may be made, e.g., where the relevant pleading has no particulars at all or the defendant could not reasonably know the basis of the plaintiff's claim.

25 A central objective of the TEC List is the early identification of the substantial questions in controversy. Without clarification of the damages claimed and a statement as to the basis for the calculation of those damages provided at the commencement of a TEC proceeding, the questions in controversy cannot be fully identified. This is essential for the effective management of the proceeding. It is also essential for the conduct of processes designed to assist in settlement of the dispute. Without proper particulars, including particulars as to quantum, provided at the outset, opportunity for resolution of the matter, in whole or in part, within a reasonable time before costs for both parties escalate, will be impaired. It is a requirement which should not be dispensed with, save in exceptional cases.

26 Accordingly I would propose making orders to reflect these considerations by directing that an amended statement of claim be delivered incorporating particulars as to the calculation of the money sums claimed as damages.

27 Such a course would also materially satisfy the prerequisite for proceeding with the plaintiff's case provided for in sub-clause 20.1 of the subcontracts.

Pre-condition to Commencing Proceeding - Sub-clause 20.3

28 As to sub-clause 20.3 of the subcontracts, no case was cited to the Court which dealt with a contractual provision having a similar effect.

29 Sub-clause 20.3 has some arbitrary features. It provides for the deposit of a sum equivalent to ten per cent of the sum claimed by the subcontractor to be lodged with the builder's solicitor as security for the costs of the builder. The security it may be inferred, is to cover the builder's costs of the proceeding in the event that it is successful in its defence of the subcontractor's claim and it achieves an order for costs in its favour.

30 However, the formula may, and in all likelihood will, produce a payment figure which bears little or no relationship to the costs actually incurred by the builder in the proceeding. A very high figure may be produced if the amount claimed by the subcontractor is high even if the claim is simple and indeed, if there is no defence to it. On the other hand, a very low figure may be produced if the sum claimed is low, even if the basis of the claim involves difficult questions of proof and where the defence to it involves matters of some complexity.

31 Further, the percentage of ten per cent appears to be a totally arbitrary figure, not formulated by reference to the actual risk of non payment of costs to the builder if it was to be successful. Furthermore, no reference is made in a formula as to whether the subcontractor has adequate financial resources to bear the builder's costs should those costs ultimately be awarded against it in the proceeding.

32 A clear object of sub-clause 20.3 is to provide a method for obtaining security for the builder which bypasses the requirement to make application to the Court for security for costs, either pursuant to either Order 62 of the Rules of Court or the inherent jurisdiction of the Court. Also avoided is the requirement to satisfy the various discretionary criteria for the grant of security for costs, including the quantum of such security.

33 In its consideration of an application for security for costs, the Court is placed in the position of regulating its own process in the proceeding before it. The discretion is to be exercised on the basis of well accepted factors. For example, the plaintiff's prospects of success in the action; whether the plaintiff's impecuniosity was caused by the defendant; and whether a security order would stultify pursuit of a legitimate claim and the like. In this regard, reference may be made to the factors comprehensively outlined by Smart J in Sydmar v Statewise.[4]

34 By judicious application of these principles, the Court is able to exercise supervision over the grant of security for costs. However, in this case the application of sub-clause 20.3 in practice would have the effect of obviating the necessity to apply to the Court for such an order. Once the mandatory payment in the nature of security is made under sub-clause 20.3, in most cases, there would be little scope to apply to the Court for additional security.

35 Consequently the capacity of the Court to exercise supervision over the grant of security would be diminished and it follows, over its own process. In my opinion, great care needs to be taken to ensure that a party is not improperly deprived of the opportunity for a trial of its case before the Court.

Sub-clause 20.3 Void as Contrary to Public Policy

36 Although Mr Fairweather attacked sub-clause 20.3 on the basis that it was analogous to a penalty and therefore should be declared void on that ground, it is more appropriate, in my opinion, to consider whether the sub-clause is contrary to public policy because of its tendency to oust jurisdiction of the Court.

37 It is a well recognised principle that no provision purporting to exclude a right to sue in Court will be recognised: Doleman & Sons v Ossett Corporation.[5]

38 However, the general rule yields to countervailing interests of public policy in the appropriate case.

39 One class of case where the interests of public policy operate to provide a valid precondition to a legal proceeding being commenced, is where a contractual process is prescribed for alternate dispute resolution. A number of the cases in this area, for example, consider the tension which arises when a contract specifies that a dispute must be referred to an expert for determination as a precondition to a legal proceeding being commenced. In this regard reference is made to Ipoh v TPS[6] and Straits Exploration Australia Pty Ltd & Anor v Murchison United NI & Anor.[7] Wheeler JA said in Straits Exploration:[8]

There is increasingly, as a matter of commercial practice, a tendency of parties to provide for the determination of some or all disputes by reference to an expert. There are a number of reasons for that course, including informality and speed; suitability of some types of disputes for determination by persons with particular expertise; privacy; and a desire to resolve disputes in a way which may be seen as reasonably consistent with the maintenance of ongoing commercial relationships. The law has long recognised that those are proper considerations to which the Court should give appropriate weight, and that it is desirable therefore that parties who make such a bargain should be kept to it. The tendency of recent authority is clearly in favour of construing such contracts, where possible, in a way that will enable expert determination clauses to work as the parties appear to have intended, and to be relatively slow to declare such provisions void either for uncertainty or as an attempt to oust the jurisdiction of the court. A considerable number of cases demonstrating this trend are collected in the reasons for decision of Einstein J in The Heart Research Institute Ltd v Psiron Ltd [2002] NSWSC 646 at [16]- [33]. (See also Australian Pacific Airports (Melbourne) Pty Ltd v Nuance Group (Aust) Pty Ltd [2005 VSCA 133 at [50] and Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135 at [21]).

40 A similar approach is taken to matters referred to arbitration: Scott v Avery.[9]

41 To similar effect is the class of case where the public interest in achieving finality in litigation through a negotiated and binding settlement of a dispute prevails. In Felton v Mulligan[10] Windeyer J made the following observations in relation to clauses which tend to oust the jurisdiction of a court:

There is no doubt a common law principle expressed by the aphorism that an agreement to oust the jurisdiction of the courts - or, as it was put in the earlier cases, to oust the courts of their jurisdiction - is unlawful and void as being contrary to public polity; that, said Pollock CB in Horton v Sayer, was "the rule which has been acted on for above a century". The earliest enunciations of it were, so far as I have noticed, in Kill v Hollister; Wellington v Mackintosh; and Thompson v Charnock. These were all cases upon agreements to refer disputes to arbitration, a disputable topic until the law was settled in Scott v Avery. But the grandiloquent phrases of the eighteenth century condemning ousting of the jurisdiction of courts cannot be accepted in this second half of the twentieth century as pronouncement of a universal rule. It is simply not correct to say that all agreements foregoing a right to have the adjudication of a court are void or unenforceable. Claims for redress for breach of contract or for a remedy for tortious damage can be settled out of court; and actions and suits of many kinds can be compromised by agreement, after they have been commenced, provided that each of the parties is sui juris. As Latham CJ said in Lieberman v Morris :

"It certainly cannot be said generally that covenants not to take particular legal proceedings are necessarily void - the ease of the ordinary covenant not to sue provides a sufficient answer to any such suggestion".

[Citations omitted]

42 However, sub-clause 20.3 of the subcontracts in this case is not a dispute resolution clause. The legitimate considerations of public policy in favour of the validity of such clauses in cases where the clause is designed to promote resolution of the dispute by private negotiation or alternative dispute resolution techniques, have no present application. Further, this is not a case where an agreement for settlement of a dispute has been achieved and where there is an overriding public interest in a settlement achieving finality in litigation with the inclusion of an appropriate release clause which achieves that result.

43 Sub-clause 20.3 of the subcontracts gives rise to a significant financial barrier to the commencement of a legal proceeding against the builder, Baulderstone, by the other contracting party, Materials Fabrication. The financial impost is to be calculated on a palpably arbitrary basis. In many cases, it is likely to inhibit, and in some cases severely inhibit, if not preclude, the exercise of a legitimate right for a party to a dispute to conduct a trial of its cause before a court.[11]

44 In my opinion sub-clause 20.3 of the subcontracts has the effect of ousting the jurisdiction of the Court, or tends to have that affect. Further, the clause may operate to deter a claimant from pursuing a legitimate claim for the full amount of its loss and damage because it does not have the financial means readily at hand to deposit ten per cent of its claim prior to commencing its action. Bearing in mind that a prospective litigant will already more than likely have expended legal fees on commencing its action, a disincentive is created to pursuing the full quantum to which that party may be entitled.

45 Further, as I have earlier described, the regime contemplated by sub-clause 20.3 operates in a practical sense to curtail the supervisory jurisdiction of the Court to order security for costs and thereby control its own process. In this regard reference is made to the work of Professor GE Dal Pont, Law of Costs[12] where the learned author observes:

The question arises as to whether it is possible for the parties, by express agreement, to oust the court's jurisdiction, whether inherent or statutory, to order security for costs. Courts have traditionally been reticent to enforce agreements purporting to oust their jurisdiction, the concern being that to give effect to any such agreement could deny the court's role in promoting a just outcome between the parties, a point of especial relevance in this context given the foundation for the jurisdiction to order security for costs.

46 As far as sub-clause 20.3 is concerned there is no balancing consideration of public policy such as the interest in pursuing alternative dispute resolution or achieving finality in a dispute by an agreed and binding settlement which effectively releases them from further action. In my opinion sub-clause 20.3 of the subcontracts offends public policy. It is void and is of no affect on that ground.

47 As to discretionary considerations, Materials Fabrication seeks the leave of the Court to lift the stay ordered on 26 February 2009 to enable it to prosecute its claim. The granting of a stay is made pursuant to the inherent jurisdiction of the Court and may be made pursuant to rule 23.0.1 in the appropriate case. It is a discretionary power of the Court.

48 Interlocutory orders may be varied by the Court pursuant to the exercise of its powers under its rules or pursuant to its inherent power to regulate its own process, even where those orders have been obtained through the product of a binding contract entered into by the parties. Any ouster of the Court's jurisdiction to vary a consent order cannot be effected, except by clear words in the consent agreement, if it can ever be ousted at all: RD Werner & Co Incorporated v Bailey Aluminium Products Pty Ltd.[13] However in this case, the order made on 26 February 2009 did not reflect an agreement which included any term that the plaintiff could not invoke the Court's power to vary the order made. Indeed the order of 26 February 2009 specifically contemplated that such an application could be made.

49 Even if I am wrong in arriving at the conclusion which I have, as to the invalidity of sub-clause 20.3, and on the assumption that the sub-clause is in fact valid and binding on the plaintiff, there are significant factors to be taken into account in the exercise of the Court's discretion, which in any event would militate against the continuation of the stay in this proceeding. In my opinion, the anatomy of this case changed very significantly upon Baulderstone filing and serving its amended defence and counterclaim dated 22 June 2008.

50 Prior to that event Baulderstone filed a rudimentary defence which made no positive allegation. A defence if maintained in this form would be in breach of paragraph D.3.04 of the Guide to Commercial List Practice and hence the practice of the Technology, Engineering and Construction List. Paragraph D.3.04 provides:

As a matter of practice, defences which merely deny or not admit all allegations will be struck out by a Judge, without application, and the defendant will be required to plead again and pay the costs thrown away.

51 However, by its amended defence and counterclaim Baulderstone now seeks to advance positive allegations in its defence, and a very significant counterclaim against Materials Fabrication, which I have described.

52 Mr Fairweather referred me to the Sydmar Pty Ltd v Statewise Developments Pty Ltd[14] where one of the factors to be considered in the making of an order for security for costs was stated by Smart J to include the following:

Whether substantially the same facts are likely to be canvassed in determining the action and the cross action, the court would be slow to allow a situation where the action is stayed because of the inability to provide security but the cross action covering substantially the same factual areas proceeds.

53 In this case if Baulderstone prosecuted its counterclaim on the basis that the claim of Materials Fabrication, as that claim is reflected in its present statement of claim, was stayed, there would be nothing to prevent Materials Fabrication from raising those matters as a set-off to Baulderstone's counterclaim by way of defence to that proceeding. Such a defence could not be locked out by a failure to comply with sub-clause 20.3 of the subcontracts, even if that clause was valid and binding on Materials Fabrication. Save for no order being made on the setoff for the payment of any surplus found to be due to the plaintiff, exactly the same issues would be agitated, both legally and factually as if it was a positive claim advanced by Materials Fabrication in its proceeding.

55 The additional claims made by Materials Fabrication foreshadowed in paragraphs 5 and 47 and 14 and 50 of its proposed reply and defence to counterclaim, can be commenced as of right by Materials Fabrication on the basis that they do not have to operate under the umbrella of clause 20 of the subcontracts as I have found.

56 Further, as I have described, Materials Fabrication has the right to raise its present claims under the subcontracts as a set-off to the amended defence and counterclaim of Baulderstone. If the case proceeded in that fashion, Materials Fabrication may well be faced with an Anshun estoppel, should it ever at a later time seek to revive its claims for damages. This would be an undesirable result and could lead to further proceedings being issued. It would also in my view be contrary to the interests of justice.

57 As to the question of costs, I am satisfied that the plaintiff played a significant part in giving rise to the necessity for this application. In correspondence which preceded the application, Materials Fabrication by its solicitors offered to file and serve an amended statement of claim substantially in the form pleaded in its proposed reply and defence to counterclaim dated 24 July 2009. This document was deficient in that the quantum of the plaintiff's claim was not adequately particularised. Baulderstone's solicitors responded by advising that the amended statement of claim in the form proposed would not satisfy the requirement that it be provided "with all necessary particulars". It requested delivery of a draft which included, amongst other things, "full particulars of the precise amount claimed, along with a clear articulation of the basis upon which such amounts are claimed".

58 The plaintiff, however, did not provide a fully particularised draft amended statement of claim, or indeed any proposed amended statement of claim, and had not done so by the time the application was heard.

59 As I have found, compliance with the requirements of sub-clause 20.1 of the subcontracts included, amongst other things the requirement to give notice to the builder of the "calculation of any amounts of money claimed". The clause also provided that the subcontractor must not commence proceedings unless a valid notice "strictly complying with this clause has been served". This requirement was, as I have found, an aid to the effective implementation of the dispute resolution process provided in the subcontracts.

60 Further, as I have found, sub-clause 20.1 in this respect is also consistent with the practice of the TEC List.

61 Baulderstone was entitled to rely on sub-clause 20.1, and did rely upon the clause, as a reason for resisting the lifting of the stay in the proceeding made by the order of 26 February 2009. I would not have made an order lifting the stay unless Materials Fabrication either had filed an amended statement of claim in proper form or was subjected to an order that it did so.

62 Unless the stay is lifted, there would be no facility for the plaintiff to file any amended statement of claim in the proceeding. Having been satisfied that sub-clause 20.3 of the subcontracts did not operate to justify a stay, I am nevertheless prepared to lift the stay and direct that the plaintiff file and serve an amended statement of claim in proper form. Making an order of this kind will also enable directions to be given to facilitate the future progress of the case. The filing and service of an amended statement of claim, if properly drawn, would serve to satisfy the requirements of sub-clause 20.1 of the subcontracts, and would also serve to satisfy the procedural requirements of the TEC List.

63 Had this step been taken at an earlier time, as it ought to have been, the necessity for the present application, in all likelihood, would have been avoided.

64 For these reasons, the plaintiff should pay the costs of the present application together with the defendant's costs thrown away by reason of the delivery of its amended statement of claim, to be paid on a party/party basis.

65 The usual practice in relation to making application for an amended pleading is that, prior to the application being made, a draft of the proposed pleading is served on the respondent to the application and filed with the court. I dispense with that step in this case because the particular deficiency in the present pleading has been clearly articulated before the Court and is the subject of a specific direction. It is expected that the directions of the Court will be complied with.

66 However, if there remains any fundamental deficiency in the particulars of the quantum included in the amended statement of claim to be delivered by the plaintiff, the matter can be dealt with by the defendant making an appropriate application to the Court, pursuant to the liberty to apply facility which I shall specifically provide for in the orders.

(1) The plaintiff be permitted to prosecute its claims against the defendant and the stay made by order of 26 February 2009 be lifted.

(2) The plaintiff by 20 October 2009 by 4 pm file and serve an amended statement of claim. Such amended statement of claim is to include the following:

(a) All of the claims made by the plaintiff against the defendant including, if it is so advised, those foreshadowed in Paragraphs 5 and 47, 14 and 50 of its proposed reply and defence to counterclaim filed 27 July 2009 and such other claims as it may be advised.

(b) Such amended statement of claim is also to include particulars of the plaintiff's claimed loss and damage and in each case with a statement as to how the sum claimed has been calculated or arrived at.

(3) The defendant is to file and serve its amended defence and counterclaim by 4 pm 17 November 2009.

(4) The plaintiff file and serve its reply and any defence to counterclaim by 4 pm 17 December 2009.

(5) The matter be re-listed for directions on the first TEC List directions day of 2010.

(6) The costs of this application shall be paid by the plaintiff. Further, the plaintiff shall pay the costs of the defendant thrown away by reason of the delivery of its amended statement of claim. All such costs to be paid on a party/party basis.

(8) This order be drawn up by the solicitors for the plaintiff and signed by a judge.

[1] [2009] VSC 244 at para 79.

[2] [1997] 42 NSWLR 396 at p.402.

[3] [1998] FCA 1340; [1998] 158 ALR 267 at para 273.

[4] 73 ALR 289 at pp.299-300.

[5] [1912] 3 KB 257.

[11] In this regard, the right to commence a civil proceeding, which is entrenched in the common law, is reinforced by the right to conduct a fair civil trial provided for in s. 24(1) of the Charter of Human Rights and Responsibilities Act 2006.

[13] [1988] FCA 142.

[14] [1987] 73 ALR 289 at p.300.