Olympic Place Pty Limited v Gamcorp

Judgment (8 paragraphs)

[1]

Judgment

These reasons deal with a notice of motion filed on 18 December 2019 by the defendant, Gamcorp (Melbourne) Pty Ltd, seeking leave to file and serve an amended commercial list response to plead a proportionate liability defence in accordance with Part 4 of the Civil Liability Act 2002 (NSW).
In the main proceedings, which were commenced on 2 June 2016, the plaintiffs, Olympic Place Pty Limited, D&M O'Leary Pty Limited and Kembla Place Pty Limited, claim that Gamcorp's structural design of two warehouse-style buildings in Kelso, New South Wales (known as buildings 3 and 4), was defective. The plaintiffs claim they suffered loss as a consequence of constructing buildings 3 and 4 in accordance with Gamcorp's defective design and seek damages reflecting the cost of rectifying the as built works.
Gamcorp's amended list response seeks to plead that the supplier and installer of the roof panels on building 3, Metecno Pty Limited t/as Bondor (Bondor), is a concurrent wrongdoer within the meaning of s 34 of the Civil Liability Act 2002 (NSW).
Gamcorp asserts that Bondor's failure to install expansion cuts on the underside of the roof panels led to thermal bowing, creasing and water penetration which caused damage in respect of which the plaintiffs have sued Gamcorp. As a consequence, Gamcorp claims that its liability should be reduced in respect of that part of the plaintiffs' claim which relates to the costs of rectifying the damaged roof and wall panels on building 3.
Gamcorp contends that leave to amend should be granted because there has been no delay on its part in raising the new defence. It also asserts that granting leave to amend will have little impact on the future conduct of the proceedings.

Steps in these proceedings

On 2 June 2016, the plaintiffs commenced these proceedings claiming that Gamcorp breached the implied terms of its contract by failing to perform its design services with due care and skill and failing to ensure they were fit for purpose. The particulars to the plaintiffs' list statement referred to an expert report from Leigh Appleyard dated 29 April 2016.
By letter dated 19 August 2016, Gamcorp's solicitor requested particulars of who designed and constructed building 3. The plaintiffs' solicitor replied on 7 October 2016 noting that building 3 was designed by Gamcorp and stating that the identity of the party who constructed the building was not relevant to any issue raised in the proceedings.
On 20 September 2016, the plaintiffs served Mr Appleyard's 29 April 2016 report. Mr Appleyard's report refers to non-conformances in respect of building 3 as including a number of deformed and damaged sandwich panels throughout the structure. In Mr Appleyard's opinion, Gamcorp's design for building 3 did not conform to the requirements of relevant building standards.
On 7 November 2016, Gamcorp served its list response. It admits it had a duty to perform design services with reasonable skill and care but denies any failure to perform in accordance with that duty and its contract with the plaintiffs. In a letter sent on the same day, Gamcorp's solicitors noted that the plaintiffs had refused to disclose the entity responsible for construction of building 3 and reserved Gamcorp's right to amend its pleading to include a proportionate liability defence in circumstances where other concurrent wrongdoers are identified.
On 29 March 2017, the plaintiffs served a second expert report of Mr Appleyard which identifies the rectification works that he considered should be done to the buildings. A report by the plaintiffs' quantity surveyor, David Gallagher, was also served that day. Mr Gallagher's report refers to a number of Equideck roof cladding defects and to evidence (which Mr Gallagher had seen) of "wall and ceiling/roof cladding stress crinkling of the sheet fabric" and "gaps formed between wall/ceiling panels". Mr Gallagher's report allows for the cost of new roof panel cladding but not for any rectification works to existing wall panelling.
On 21 April 2017, the plaintiffs served lay evidence from Mr O'Leary. His affidavit refers to water penetration in the roof panels and leaking from the roof of building 3. It also refers to a discussion with a representative of Bondor in January 2010, describing Bondor as the "ultimate supplier" of the sandwich panels used for the construction of buildings 3 and 4, and to communications with Bondor between December 2013 and June 2014 in which it was requested to "complete the installation and repair the leaks in the roof". Mr O'Leary's affidavit also refers to his communications with Mr Humphreys in December 2014 and January 2015 and attaches part of the email he sent to Mr Humphreys on 19 December and Mr Humphrey's reply of 6 January but not the photos sent to Mr Humphreys.
On 1 September 2017, Gamcorp served an expert report in reply of Roderick Broune. In Mr Broune's opinion, the deformed and damaged sandwich panels on building 3 and roof leaks were most likely the result of localised impact and/or mechanical damage and the failure of the builder to properly seal the junction between the external face of the southern external wall and the external loading dock area roof, and not the consequence of any defect in the roof or wall cladding sandwich panels or the design or performance of the structure designed by Gamcorp. In his report, Mr Broune states that he had not had access to the roof of building 3 and has not seen any photos in the materials that identified or illustrated creases in the roof panels.
On 16 February 2018, the plaintiffs served a third expert report of Mr Appleyard. In responding to Mr Broune's opinion that the roof panel issues were not related to the design or performance of the structure designed by Gamcorp, Mr Appleyard refers to the roof cladding as an Equideck insulated panel system manufactured by Bondor and opines that the roof leaks have most probably been caused by the excessive deflections in the composite panel roof and its supporting members.
On 31 July 2018, Gamcorp's solicitor issued a subpoena to Watts Build Pty Limited, a company that had been engaged to construct and manage the cladding and roofing of building 4. An email produced by Watts Build dated 10 December 2013 is from Askin Performance Panels Pty Limited and refers to internal conduction cuts being required along the internal side of the roof panels to prevent any thermal bowing issues.
On 12 September 2018, Gamcorp issued a subpoena to Bondor.
On 19 October 2018, Bondor produced documents to Gamcorp which included one purchase order and nine invoices issued by Bondor to the plaintiffs in relation to the supply and installation of panels to building 3. The first invoice is dated 25 February 2011 and refers to a contract price of $584,134 and works being 11% complete. The last invoice produced is dated 3 August 2011 and refers to the works being 87% complete. An earlier invoice dated 6 July 2011 refers to the works being 93.3% complete at a contract value of $557,260.
On 25 October 2018, Gamcorp's solicitor wrote to Bondor's solicitor asking if Bondor installed the roof panels on building 3. He asserted that it was unclear from the affidavit of Mr O'Leary as Bondor is described as the "ultimate supplier". The response received by Gamcorp's solicitor states that Bondor was the manufacturer and seller of the panels, but does not refer to installation.
On 1 November 2018, Gamcorp's solicitor received from the plaintiffs' solicitor a copy of the full 19 December 2014 email sent by Mr O'Leary to Mr Humphreys.
On 18 December 2018, Gamcorp issued a second subpoena to Bondor seeking further documents and communications relating to the installation of roof cladding. It is not clear what, if any, documents were produced in response to that subpoena.
On 29 January 2019, the plaintiffs were directed to serve further expert evidence by 1 March 2019. That date was subsequently extended to provide for further expert evidence from the plaintiffs to be served by 10 May 2019.
On 14 May 2019, the plaintiffs served a fourth expert report of Mr Appleyard. Mr Appleyard was asked to opine on a series of questions in respect of the sandwich roof panels on building 3. In summary, Mr Appleyard's opinion was that the roof panels failed by "local buckling action", which is also referred to as "wrinkling".
Mr Appleyard's fourth report refers to the presence of water in many of the roof panels and some of the wall panels and opines that, in addition to the roof panels, many of the wall panels also need to be replaced. The report refers to an attendance on site on 6 April 2018 (which Mr Broune also attended) and photographs taken at the time, and also attaches a report of Mahaffey Associates Pty Ltd on the volume of water in the roof and wall panels which the parties accept is not in admissible form.
Between 30 July and 1 August 2019, Gamcorp served two lay affidavits; one from Robert Cartmill, a site supervisor for Insulated Panel Projects, and one from Mr Humphreys. Gamcorp also served a second expert report from Mr Broune.
Mr Cartmill was employed by Benkirk Pty Limited, the project manager of the development. He gives evidence about Bondor's role in the manufacture, design, preparation, installation and erection of the insulated roof and wall panels for building 3. He also provides a lay opinion about the need for expansion cuts (also referred to as conduction cuts) to be made on sandwich roof panels and overlapping on the joints. In his observation, the buckling of the building 3 roof panels was likely due to the failure to include expansion cuts in the undersides of the roof panels by the panel installer.
Mr Humphreys gives evidence that the insulated roof panels were designed and installed by Bondor and that Bondor's engineers signed off on the panel designs.
Mr Broune's second report responds to Mr Appleyard's fourth report and the matters raised by Mr Cartmill. In summary, Mr Broune's opinion is that the most likely cause of the damage to the roof and wall panels was Bondor's failure to provide expansion cuts in the underside of the longest roof panels and, to a lesser degree, its failure to properly install and seal the lateral overlap joints between sections of the roof panel.
Mr Broune's second report includes observations made by him of the roof on building 3 on 6 April and 23 October 2018 and photos taken by drone on 23 October 2018 which show wrinkling had occurred to the roof panels. It also refers to Mr O'Leary's 19 December 2014 email to Mr Humphreys and to the 13 roof panel photos, of which seven depict wrinkling on the panels and six depict defects with overlapping joints.
On 16 August 2019, the Court made consent orders for the service of any further expert liability evidence in chief and lay and expert evidence in reply in relation to the moisture in the panels on building 3.
On 4 October 2019, the plaintiffs served a fifth expert report of Mr Appleyard dated 3 October 2019 which deals with the moisture content in the roof and wall sandwich panels of building 3 by reference to a report prepared by Mahaffey Associates Pty Limited.
On 3 December 2019, Gamcorp's solicitor wrote to the plaintiffs' solicitor giving notice pursuant to s 35A of the Civil Liability Act 2002 (NSW) that Bondor may be a concurrent wrongdoer in relation to the claims made against Gamcorp. It also put the plaintiffs on notice that Gamcorp intended to seek leave to amend its list response to plead that Bondor is a concurrent wrongdoer.
On around 6 December 2019, Gamcorp served an expert report of Dr Walls. That report identifies the possible causes of the wrinkling of the roof panels as including thermal expansion caused by differential temperatures of the exterior and interior surfaces of the panels not being relieved.
On 11 December 2019, Gamcorp's solicitor sent its proposed amended list response to the plaintiffs' solicitor. The amendments identify Bondor as a concurrent wrongdoer who entered into a contract with one or more of the plaintiffs for the supply and installation of Bondor insulated panels on building 3. The amendments plead that, in breach of an express or implied contractual term or duty to exercise due care and skill in installing the roof panels, Bondor failed to install conduction cuts on the underside of the roof panels which caused or contributed to thermal bowing on the roof to building 3 and caused damage.
On 11 December 2019, the plaintiffs' solicitor notified Gamcorp's solicitors that they opposed the grant of leave being given because they were, or at the least very likely, out of time to sue Bondor and no explanation had been provided as to why the defence was not pleaded many years ago.
On 12 December 2019, the plaintiffs served a sixth expert report of Mr Appleyard. The report details Mr Appleyard's opinions in respect of the matters raised by Mr Broune's report dated 1 August 2019 and the affidavits of Robert Cartmill and Derek Humphreys. Mr Appleyard maintains the opinion, as set out in his fourth report, that the insulated roof panels have failed due to wrinkling which is attributable to the inadequacies in the structural design carried out by Gamcorp and that all of the roof panels on building 3 need to be replaced.

Should leave be granted to Gamcorp to plead a proportionate liability defence?

Gamcorp submits that it should be granted leave to amend to raise the proportionate liability defence notwithstanding the application is made at a late stage in the proceedings.
It contends that its delay is explicable because it was not aware of Bondor's role until late 2018, when it received the invoices that were produced in response to Gamcorp's subpoena, and that it did not have a sufficient basis to plead the defence until late 2019, after completion of most of the lay and expert evidence.
Gamcorp submits that, to the extent there has been any delay in this case, it has also been on the part of the plaintiffs.
It argues that the plaintiffs' commenced the proceedings belatedly in 2016, choosing to sue it rather than Bondor. It says that by 2015, the plaintiffs knew or ought reasonably to have known about the issues raised by Gamcorp's amended response as they knew Bondor installed the panels, knew the panels were creased, had been informed there may be a problem with them and their installation and, from the terms of the Askin Performance email (at [29]), knew or ought to have known that conduction cuts should have, but had not, been installed on the panels.
Pausing here, I do not accept that the Askin Performance email has the import that Gamcorp contends. As the plaintiffs' submit, the Askin performance email relates to roof panels manufactured and supplied by Askin for use on building 4, not to the Bondor Equideck panels to be installed on building 3. The email also makes clear that there are many variables that impact on a sandwich panel's performance.
Even if I were to accept that the Askin performance email put the plaintiffs on some type of notice that construction cuts were required for roof panels, I am not persuaded by Gamcorp's submission that the plaintiffs knowledge about that matter or its knowledge of Bondor as the installer of the roof panels is significant to the issue of delay. Nor do I accept Gamcorp's submission that any relevant delay is on the part of the plaintiffs.
The proportionate liability regime implemented by Part 4 of the Civil Liability Act enables a defendant to seek to reduce its liability by reference to the existence of other concurrent wrongdoers who have not been joined by a plaintiff as defendants in the proceedings. By doing so, the defendant shifts the risk of a failure to recover the whole of the claim onto the plaintiff: Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10 at 626-7.
A plaintiff may have no interest in identifying concurrent wrongdoers and the legal framework does not place any obligation on a plaintiff to join or sue them. Where a plaintiff chooses not to join all potential concurrent wrongdoers as defendants, as in this case, it is for the defendant to identify, plead properly and prove the existence of the concurrent wrongdoer as if it were bringing a cross-claim against them: Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2014] NSWSC 846 at [33] and [46]; Ucack v Avante Developments Pty Limited [2007] NSWSC 367 at [41].
As the moving party who seeks leave to amend, Gamcorp is to bring the circumstances giving rise to its amendment to the Court's attention to explain its delay. In doing so, Gamcorp has to provide reasons to justify the delay which are not inconsistent with any failure on its part or its legal advisers to act diligently and expeditiously in the defence of the relevant claim. If the circumstances provide some justification for the delay, they may be weighed against the effects of the delay on the other parties: Karl Suleman Enterprises Pty Ltd (in liq) v Pham [2013] NSWCA 93 at 22.
As to the identification of Bondor as the installer of the sandwich roof and wall panels, the evidence indicates that Mr Humphreys, a Gamcorp employee who worked on designs for building 3, was aware that Bondor was responsible for all elements of the roof and wall panels, including their design and installation. By 6 January 2015, Mr Humphreys was also aware that the water leaks to the roof may have been caused by the installation of the Bondor roof panels, was aware that the roof panels had creased and had received photos of the damaged roof panels.
In those circumstances, at the time the proceedings were commenced in 2016, Gamcorp was aware, or ought reasonably be expected to have been in a position to become aware, of Bondor's role in supplying and installing the roof panels, contrary to Gamcorp's counsel submission that it only became aware on receipt of the Bondor invoices in October 2018.
In April 2017, Gamcorp was also on notice about the issue of the leaking, creased and moisture penetrated Bondor roof panels from Mr O'Leary's affidavit, Mr Appleyard's first and second expert reports and Mr Gallagher's first report. It was also reminded about Mr Humphreys' role in dealing with Mr O'Leary about the issue.
Yet, it appears from the affidavit of Gamcorp's solicitor Mr Everingham, that no investigations were taken to explore Bondor's role and the possibility of it being a concurrent wrongdoer until September 2018, when a subpoena was issued to Bondor for documents. Even accepting that the parties had been participating in mediation during that time, taking steps to investigate Bondor's role more than two years after the proceedings were commenced and seventeen months after Mr O'Leary's affidavit was served cannot, in my view, be characterised as expeditious or diligent.
I am also not persuaded by Gamcorp's submission that it had no cause to look at the issue of the cause of the damage to the sandwich roof panels until it received Mr Appleyard's fourth report in May 2019.
The fourth Appleyard report may have raised, for the first time, detailed evidence of the history of sandwich panels and referred to moisture in and damage to the wall panels. But, the existence of crinkling, creasing and water penetration in the sandwich roof panels, what caused damage to them and a claim for their rectification had been the subject of the lay and expert evidence served by the plaintiffs since April 2017. The crinkling and creasing of the roof panels was also apparent from photos which had been made available to Gamcorp in December 2014 and to Mr Broune in mid-2017.
The lay affidavit of Mr Cartmill highlights this point. He was provided with copies of photographs of the topside of the roof panels taken in 2014 and the underside which had been taken in 2017, from which he was able to conclude that what he describes as the buckling of the roof panels was due to the absence of expansion cuts.
In these circumstances, I am not satisfied that Gamcorp has adequately explained why enquiries about the damage to the sandwich roof panels or Bondor's role were not made of Mr Cartmill or Mr Humphreys in late 2016 after the proceedings were commenced or in early 2017 after the first round of lay and expert evidence, and independently of any analysis in Mr Appleyard fourth report.
At the hearing, I was taken in some detail to the expert and lay evidence served by both parties and the steps taken in preparation for the case being ready to be listed for trial. While Mr Everingham's affidavit identifies some steps taken to investigate the existence of concurrent wrongdoers, as noted above, they were not undertaken in a timely way. Rather than prioritising its investigations to determine whether Bondor was a concurrent wrongdoer and pleading its proportionate liability defence promptly, it seems that Gamcorp waited until nearly all of the lay and expert evidence was in and the case was ready to be listed for trial.
The plaintiffs oppose leave as they submit that granting Gamcorp leave to amend will cause them prejudice. That say that, given the time since the roof panel works were done, they will very likely have no recourse against Bondor and any culpability apportioned to Bondor will reduce the damages the plaintiffs may recover from Gamcorp.
Gamcorp challenges this submission. It argues that the plaintiffs have not established any prejudice as it has not said it would have brought any action against Bondor earlier or at all, nor when any cause of action "may" have expired. It also argues that any cause of action the plaintiffs may have had against Bondor was statute barred by May, June or July 2017, at a time when Gamcorp was not in a position to have pleaded a proportionate liability defence.
Gamcorp relies on the comments of Judge Jenkins in Adams v Clark Homes Pty Ltd [2015] VCAT 1658, a case in which a question arose as to whether to allow a builder to exercise its right of apportionment by bringing a concurrent wrongdoer claim where the plaintiffs were statute barred from suing. Adopting the reasoning of Judge Anderson in an analogous situation in Hiss v Galea [2012] VCC 740, Judge Jenkins states, at [88], that "the fact that the Applicants are now statute-barred is a circumstance entirely of their own making and ought not to prejudice the Builder in seeking to exercise its right to apportionment in accordance with the Part IVAA" of the Wrongs Act 1958 (Vic).
The plaintiffs submit, correctly in my view, that Judge Jenkins' approach, and that of Judge Anderson in Hiss v Galea, can be distinguished from this case. Unlike the position of the parties in these proceedings, in Hiss v Galea, the plaintiff had been put on notice prior to the limitation period expiring of the defendant's intention to contend that a named third party was a concurrent wrongdoer. The third party concurrent wrongdoer was also joined to the proceedings.
Any prejudice occasioned by the loss of the plaintiffs' right to join Bondor as a result of Gamcorp raising its defence at a late stage in the proceedings is a factor that is particularly relevant to the exercise of my discretion in the present application: The Owners - SP 67635 v Metlej Developments Pty Ltd [2013] NSWSC 1564 at [12]; Teckno Ceramics Pty Ltd v Zdenko Milat [2003] NSWCA 254.
A relevant question is whether Gamcorp's delay in notifying the plaintiffs that Bondor was the concurrent wrongdoer and making its application for leave to amend can be said to have caused a risk of prejudice as it might have led to the plaintiffs being time-barred from joining Bondor: The Owners - SP 67635 v Metlej Developments Pty Ltd [2013] NSWSC 1564, at [32].
Unlike some cases, it is not clear whether and when any claims the plaintiffs might have had against Bonder might have expired.
The evidence relied on by the plaintiffs is equivocal, being a statement by their solicitor of a belief that the limitation period on any cause of action that the plaintiffs may have had against Bondor has expired. When pressed at the hearing, plaintiffs' senior counsel could not say whether the plaintiffs were time barred or not, but accepted that some causes of action were likely to have expired by late 2017 and that it would be difficult to argue they were now not statute barred.
Gamcorp submits that the plaintiffs' causes of action against Bondor would have expired sometime between March and July 2017. Gamcorp also argues that it would not have been in a position to properly plead a proportionate liability defence by that time and, as a result, its delay in raising that defence has not been the cause of any prejudice to the plaintiffs.
The plaintiffs submit that the Court does not need to make a finding on that matter and that the risk of prejudice that they are out of time is sufficient.
In the absence of further evidence, it is not possible to have any certainty as to when and if the plaintiffs are time-barred from bringing a claim against Bondor. However, it seems to me to be arguable that the plaintiffs' most likely potential causes of action expired in the period from late 2017 to sometime in 2019. This is because the Bondor invoices and Mr O'Leary's affidavit suggest that Bondor ceased installing panels in June or July 2011 and the evidence indicates that damage, in the form of building 3's leaking roof, developed in 2013.
It follows that I am satisfied that there is a risk of real prejudice to the plaintiffs if leave to amend is granted. This is because, if Gamcorp's concurrent wrongdoer claim against Bondor succeeds, the plaintiffs' claim for damages will be reduced and they are likely to have lost the opportunity to join Bondor as a defendant during the course of the proceedings. Relevantly, that lost opportunity might have been avoided if Gamcorp had been more diligent and expeditious in investigating whether Bondor was a concurrent wrongdoer.
The plaintiffs may have been on notice that Gamcorp was considering making a claim against a concurrent wrongdoer from November 2016. That, however, did not relieve Gamcorp of a duty to act promptly to investigate Bondor's role and the issues with the roof panels if it wanted to raise a defence of proportionate liability: Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2014] NSWSC 846 at [45].
I accept that Gamcorp needed to inform itself of issues relating to expansion cuts and thermal bowing in order to be in a position to properly plead that Bondor was a concurrent wrongdoer and its proportionate liability defence, and that it may not have been in a position to have done so when the proceedings were first commenced. But, for the reasons referred to previously, it is to be expected that Gamcorp should have been in a position to do so earlier, rather than waiting until the parties were ready to be allocated a hearing date, with the consequence that the plaintiffs are at risk of real prejudice if the amendments are permitted.
Gamcorp submits, and I accept, that the amendments are important to it. It also submits that it would be prejudiced if leave is not granted as it could be left without the benefit of a proper reduction in its liability to properly reflect its responsibility for the plaintiffs' loss or damage.
The potential prejudice to Gamcorp is a relevant factor that must also be taken into account. That said, the apportionment provisions in the Civil Liability Act do not prevent Gamcorp from bringing an action against Bondor for contribution in separate proceedings, for which the limitation period should not yet have expired: Rennie Gollerdge Pty Ltd v Ballard [2012] NSWCA 376 at [151]; Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2014] NSWSC 846 at [55]. As Ball J noted in Sanderson Motors, the prejudice suffered by Gamcorp if leave was refused would be the inconvenience of additional proceedings and irrecoverable legal costs, not the potential loss of a right to claim against Bondor.
As to case management, while the cause of the damaged roof and wall panels may already be in issue, it seems inevitable that granting leave to Gamcorp to raise a concurrent wrongdoer defence is likely to lead to further delay in the proceedings. Irrespective of whether the plaintiffs would be able to make a claim against Bondor, it is to be expected that they may wish to undertake further factual enquiries and seek to adduce further evidence to rebut the defence sought to be raised.
I accept Gamcorp's submission that there appears to have been some delays on the part of the plaintiffs in serving its expert evidence. No doubt this has also been a reason why these proceedings have been running for more than three and a half years. However, but for this delayed application for leave to amend, the proceedings would likely have a trial date. It seems to me that it would not facilitate the just, quick and cheap resolution of the real issues in the proceedings to grant leave to amend to raise a new defence at this late stage of the case.
For these reasons, I have concluded that that it would not be consistent with the dictates of justice or the provisions of ss 56 and 57 of the Civil Procedure Act to grant leave to Gamcorp to amend its list response to plead the proportionate liability defence in respect of Bondor.

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Judgment (8 paragraphs)

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