Solicitors:
Holman Webb (Plaintiffs)
Central Coast Council Legal (Defendant)
File Number(s): 2017/348639
[2]
EX tempore Judgment (REVISED)
These proceedings were commenced in 2017.
On 5 December 2019 they were set down for hearing for seven days commencing yesterday, 24 August 2020.
The proceedings arise out of a joint venture between the first plaintiff, Norcross Pictorial Calendars Pty Ltd and Gosford City Council, to which the defendant is the successor. Under that joint venture, Norcross agreed to build a public car park on part of land owned by the Council in consideration of being able to develop for its own benefit the balance of the Council's land as a mixed residential and commercial development. That summary oversimplifies somewhat the nature of the joint venture but it suffices for present purposes.
One of the complaints Norcross makes against the Council arises from the Council's rescission of a resolution granting Norcross or its nominee an electricity easement over Council's land to allow power to be directed to the development site.
The plaintiffs together, and the distinction between them is not significant for present purposes, alleged that they thereby suffered loss.
Thus, in their List Statement, the plaintiffs set out what they contend to be the Council's breach of an obligation to grant the easement in question and state at C30:
"By reason of the Council's breach, PTL Land Pty. Ltd. suffered loss and damage.
Particulars
(a) In order to proceed with its development, PTL Land Pty. Ltd. had to make alternative arrangements for electricity supply that did not require an easement from the Council.
(b) The alternative arrangements referred to in paragraph (a) resulted in a delay in achieving practical completion of 104 days from 8 March 2017 to 20 June 2017 resulting in a revised practical completion date of 17 July 2017.
(c) Additional interest payable by reason of 104 day delay: $475,588.
(d) Costs of re-design and additional works, additional power works, additional project manager costs and associated consultants' fees and Ausgrid charges: $134,100
(e) Interest on failure to grant easement at Supreme Court rates in accordance with s. 100 of the Civil Procedure Act 2005 until 31 August 2019: $89,904."
The Council responded to that allegation simply by denying it.
In submissions served last Thursday 20 August 2020, the Council submitted, for the first time, that:
"Delay in practical completion cannot solely be attributed to the Council rescinding the easement. It was caused by other delays and poor management of the construction of the building on the [relevant land]. The additional interest claim is not recoverable".
Yesterday, the proceedings reached a stage where Mr Marshall SC, who appears with Mr Walker for the Council, was cross-examining the plaintiff's first witness, Mr Andrew Cochrane.
Once it became clear that Mr Marshall was seeking to cross-examine Mr Cochrane about the issues referred to in [52] of last Thursday's submission, Mr Condon SC, who appears with Mr Bentley for the plaintiffs, objected on the grounds of relevance. Mr Condon submitted that the Council had not hitherto raised the matter agitated at [52] of its submissions and should not be permitted to do so.
After some debate, I directed the Council to circulate a draft List Response that clearly raised the issue foreshadowed at [52] of its submissions.
The proposed Response, which I marked MFI-3, expanded the Council's response to paragraph C30 of the List Statement as follows:
"The Council denies paragraph 30 of the List Statement, and further says that any delay in practical completion was due to:
(a) poor management of the process of the design and installation of the power supply from Ausgrid to the Site;
Particulars
(i) Ausgrid installed a substation/kiosk on an easement near the Site some years before 2016 (testimony of Mr Cochrane)
(ii) in the tender put out by Cadence there was no detailed plan for the provision of permanent power to the Site: Documents -Exhibit 1;
(iii) in the Building Contract there was no detailed plan for the provision of permanent power to the Site: Documents- Part E of the Contract (CB 1229);
(iv) in the Construction Certificate there was no detailed plan for the provision of permanent power to the Site: Documents- Newcrest certified plan by G Force Technologies (CB 2678)
(v) to avoid delays the detailed plan for the provision of permanent power to the Site ought to be settled and approved by Ausgrid at the time the Construction Certificate is issued: Documents J Holiday email 4 May 2016 (CB 695);
(vi) until 2 March 2016 no Level 3 Electrical Engineer was engaged to design the provision of permanent power to the Site: Documents- Cadence Direction no 18 (exhibit 4);
(vii) the design for the provision of permanent power to the Site without resort to any easement across Council's land was approved by Ausgrid on 7 December 2016: Documents - Ausgrid letter of 7 December 2016 (CB 668) later amended on 21 February 2017 (CB 685)
(viii) Ausgrid could not connect permanent power to the Site until all electrical work in the building on Site was complete including the installation of meters/metering system and the Private Termination Enclosure or equivalent at the Site. Ausgrid required about 6 weeks' notice of any proposed electrification (also called a shutdown): Documents - Connells emails and letter at CB 749,747,745-6;
(ix) On 27 February 2017 Cadence directed the Builder to install an embedded network for electricity metering purposes: Documents- Cadence Direction 73 (in exhibit 4);
(x) no electrical meters, metering system or embedded network was installed at the Site by 15 March 2017, nor it is inferred, by 27 March 2017: Documents: CB 685,783,790;
(xi) a shutdown was booked by the Builder with Ausgrid to occur on 27 March 2017, and this was postponed or rebooked to occur on 3 May 2017: Documents- CB 2619;
(xii) it is inferred that the postponement in the shutdown was caused by the incomplete embedded network;
(xiii) on 3 May 2017 permanent power was connected to the Site by Ausgrid,
(b) the failure of the supply of terrazzo tiles to the site.
Particulars
(i) the Architect EJE specified that grey honed (or slip resistant) terrazzo tiles as being the applicable finish for the wet area floors in the apartments, the verandas and the ground floor: Documents: Cadence Direction no 21 of 24 March 2016, EJE architecture plan for Apartment 201 in the Cadence Tender package;
(ii) the Builder's program's critical path planned to have the terrazzo tiles installed to all apartments and verandas in floor by floor from 10 September 2016 to 1 November 2016 (levels 2 and 6 respectively); Documents- eg items 293,322 of the program (CB 1615 - 1638),
(iii) the terrazzo tile approved by Cadence was supplied by Fibonacci Stone in platinum honed: Documents - Cadence Direction no 21 of 24 March 2016;
(iv) by 2 November 2016 no terrazzo tiles had been delivered, and no terrazzo tiles had been laid on Site: Documents - minutes of Project Control Group B of 2 November 2016 item 2.5 CB 2549-51;
(v) on 15 November 2016 the Builder's Mr Connell travelled to Italy to inspect the first shipment of terrazzo tiles and to bring back samples, as the tiles were from a different manufacturer from that approved by Cadence: minutes of Project Control Group B of 2 November 2016 item 2.5, CB 2549;
(vi) on 9 December 2016 deliveries of the terrazzo tiles was scheduled not to all arrive until mid-march 2017. 'This delay in ground floor terrazzo product will delay the program past the current contract PC date' ;Documents- Project Control Group report of Cadence of 9 December 2016 at pages 3 and 14 (CB 2543, 2554);
(vii) the Builders progress reports disclose that the tiling was incomplete until sometime in late June 2017. This is supported by the Builder's program critical path which shows extended finish times for tiling. Documents: Tiling in Payment Claims no 14 (CB 1707), no 16 (CB 1770-1), no 17 (CB 1799, 1814,1815),no 18 (CB 1959), no 19 CB 1997, 2004 -5), no 20 (CB 2022, 2029), no 21 (CB 2096) and (CB 1615-1638);
(viii) it is inferred that this accounts for Mr Connell's statement at [37] of his first affidavit that 'The date of practical completion in fact occurred later , on 17 July 2017, because of unrelated reasons.'"
The ambit of the proposed amendment to the Response reveals the problem here.
The Council seeks to open up what it contends to be the question of the true cause of the delay of practical completion of the development by reference to the detailed matters proposed to be agitated in the Response.
This is an argument that has not been foreshadowed.
It is true that a witness to be called by the plaintiff, Mr Connell, who was the project manager for the builder, said in an affidavit sworn in June of last year that:
"The date of practical completion in fact occurred later, on 17 July 2017, because of unrelated matters [ie matters unrelated to the rescission of the resolution approving the easement]"
It is also true that the documents Mr Marshall seeks to deploy in cross-examining Mr Cochrane are those that the plaintiff has put into evidence to support their case.
However, these are reasons why the council should, in fairness, have foreshadowed the argument it now seeks to advance. It should have done so by amending its Response, in the manner now proposed, well before trial.
I agree with the submissions made by Mr Condon and Mr Bentley that:
"The proposed amendments involve issues of factual complexity. The complexity reinforces the submission that pleading them now takes the plaintiffs by surprise (see UCPR r 14.14(2)). A defendant should specifically plead a break in the chain of causation: see, for example, Julstar Pty Ltd v Hart Trading Pty Ltd [2011] FCA 657, [45]. Although the matter is in the Building and Construction List, the contentions in the List Statement and List Response serve the same purpose as pleadings: Brambles Australia Ltd t/as CHEP Australia v Tatale Pty Ltd [2006] NSWSC 204 at [9] (Bergin J as her Honour then was); Resource Equities Ltd (subject to Deed of Company Arrangement) v Garrett; Resource Equities Ltd v Carr [2009] NSWSC 1385 at [204] (McDougall J)." (Footnotes omitted.)
As Ipp JA said in Ingot Capital Investments Pty Ltd & Ors v Macquarie Equity Capital Markets Ltd & Ors [1] :
"Under the Commercial List practice, the parties, in stating the facts, have 'greater latitude than under the pleading rules in explaining the plaintiff's legal contentions and issues arising from the facts.' (Bernard Cairns, Australian Civil Procedure, 7th ed (2007) at 87). This practice allows parties in the Commercial List, in pleading their cases, to comply fully with the surprise rule and to lay their cards on the table in the clearest possible way. They are expected to do this. This practice is the basis on which the Commercial List operates."
The same of course applies in the Technology and Construction List.
The plaintiffs were taken by surprise by the argument now proposed to be advanced.
Mr Condon says, and I accept, that the plaintiffs cannot meet the case now proposed to be agitated without an adjournment.
It would not, in the circumstances of this case, be just to impose an adjournment on the plaintiffs.
The application by the defendant to amend its Response, in accordance with MFI 3, is refused.
I will not permit cross examination of Mr Cochrane, or any other witness, on the issues sought to be raised by the amendment.
The Council should pay the costs of its application to amend the Response.
[3]
Endnote
[2008] NSWCA 206 at [418].
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Decision last updated: 26 August 2020