Pacific Resources International Pty Ltd v UTI

Supreme Court of NSW|2012-07-31|Before: Stevenson J

EX TEMPORE Judgment (REVIsED) 1A number of proceedings are listed before me. The various proceedings arise from a fire that occurred on 2 January 2006 at a warehouse in Botany ("the Warehouse"). 2The various plaintiffs still involved in the proceedings ("the Cargo Plaintiffs") paid the defendant, UTI (Australia) Pty Ltd ("UTI"), to store their goods at the Warehouse. 3The Warehouse was known as warehouse number 5 and was one of a number of freestanding buildings on the site. The Warehouse was fitted with an automatic sprinkler system. When the fire broke out, the fire sprinkler system was activated and sent an alarm to the fire brigade. Ultimately, the fire destroyed the Warehouse and all of its contents. 4The hearing of these matters is fixed to commence 20 August 2012 before me. Six weeks have been allocated for the hearing. This is the second time a hearing date has been set for the proceedings. It was originally set down for six weeks, commencing 12 September 2011. 5In this Court, originally, were proceedings by the owner of the Warehouse, GTA Industrial Custodian Pty Limited ("GTA"), against its tenant, UTI. GTA sought damages for destruction of the Warehouse. The parties have referred to these proceedings as "the Main Proceedings". 6The various Cargo Plaintiffs commenced proceedings against UTI in the District Court. Those proceedings were ultimately transferred to this Court. Orders have been made that evidence in each of those proceedings is evidence in the other, and in the Main Proceedings. 7By Notice of Motion filed in court yesterday, 30 July 2012, UTI seeks leave to refer to two expert reports by Mr Donald Alexander ("Mr Alexander"), both dated June 2012 ("the June Reports"). 8UTI, in circumstances to which I shall come to in a moment, served the June Reports on the Cargo Plaintiffs, who are the remaining active parties, on 25 July 2012. 9Leave is required to use these reports for a number of reasons. One is that on 13 May 2011, Hammerschlag J ordered that UTI was not entitled to rely on evidence served by it after 27 May 2011. Uniform Civil Procedure Rules 2005 (UCPR) r 31.28 provides, in any event, that UTI cannot rely on an expert report served less than 28 days before the hearing unless leave is obtained, and there are exceptional circumstances. 10The June Reports were provided to Curwoods, the solicitors then acting for UTI in the Main Proceedings. 11Curwoods did not serve the reports on the other parties because, in or around June 2012, UTI was in negotiation with GTA to settle the Main Proceedings. The Main Proceedings had then either settled in principle or were on the verge of being settled. 12Once the Main Proceedings were settled, Curwoods provided the June Reports to Norton Rose, who are acting for UTI in relation to the claims made by the Cargo Plaintiffs. Mr Marcus Suliman, the solicitor at Norton Rose dealing with the matter day-to-day, became aware of the reports on 25 July 2012. He served the June Reports on the Cargo Plaintiffs that day.

Procedural history 13It is necessary to consider briefly some of the procedural history of the matter. 14In September 2010, GTA served its evidence in chief, including a report by Mr John DeLorenzo ("Mr DeLorenzo"), a fire engineer. In this report, Mr DeLorenzo made reference to hydraulic modelling and calculations undertaken by him in respect of the sprinkler system at the Warehouse. 15By 21 December 2010, the Cargo Plaintiffs had served their lay evidence in chief and advised UTI's lawyers that they intended to rely upon all the expert evidence served by GTA in the Main Proceedings to establish liability. 16On 25 February 2011, Hammerschlag J fixed the matter for hearing for six weeks commencing on 12 September 2011 and ordered UTI to serve its lay and expert evidence by 18 May 2011. However UTI could not comply with that order. On 13 May 2011, Hammerschlag J extended the time for UTI to serve its lay and expert evidence until 27 May 2011 and made the order, referred to at [9] above, that UTI could not rely on evidence served by it after 27 May 2011. 17One of the reports served by UTI on 27 May 2011 was a report by Mr Alexander dated May 2011. 18In June 2011, UTI raised for the first time a contention that GTA, amongst other parties, was a concurrent wrongdoer for the purpose of Pt 4 of the Civil Liability Act 2002 and that a proportionate liability defence was therefore available to it. 19On 29 July 2011, Hammerschlag J granted UTI leave to proceed with this proportionate liability defence, but upon the basis that the 12 September 2011 hearing was vacated at UTI's cost. 20Thereafter each of the Cargo Plaintiffs joined GTA as a defendant. 21In August 2011, GTA served on UTI a further report by Mr DeLorenzo, to which I will refer below.

The June Reports 22One of the June Reports is expressed to be a report "in reply" to Mr DeLorenzo's August 2011 report. The other is a report that reveals, for the first time, that Mr Alexander had conducted hydraulic modelling in relation to the water supply system to the Warehouse. 23It is necessary to read the June Reports together because they are integral to each other. The hydraulic modelling and its results form the foundation in substance for not only opinions expressed by Mr Alexander, the report which deals with that matter, but also the substance of what Mr Alexander says in reply to Mr DeLorenzo's August 2011 report. 24Another aspect of the June Reports is that they are based upon some material, including a post fire report, to which Mr Alexander has evidently had access from Mr Ian Stone ("Mr Stone") of Smith Partners Pty Ltd. Mr Alexander said that material was provided under subpoena. It seems that Mr Alexander has assumed the correctness of whatever it is that is contained in Mr Stone's report. 25There is no affidavit from Mr Stone proving whatever it is that might be in the report. It has not been served. 26The June Reports (and indeed, the earlier reports by Messrs Alexander and DeLorenzo) address the question of the adequacy of the fire prevention system at the Warehouse. 27GTA, as owner of the Warehouse, was responsible for that design. 28Now that the Main Proceedings are settled, these reports are relevant only to the question of whether, as UTI continues to contend, GTA is a concurrent wrongdoer for the purposes of Pt 4 of the Civil Liability Act. 29In his May 2011 report, Mr Alexander opined there was substantial deficiency in the pumping system at the Warehouse and gave reasons for it. He also expressed conclusions as to the "simultaneous operation of the sprinkler and fire hydraulic system". 30Mr Alexander said: - "In my opinion, it is likely that the drawing off of water from the site water main reduced the main pressure to a point where, (a) the pump could not provide the necessary pressure for the full flow and (b) there was insufficient water pressure in the ring main to lift the water to the height of the sprinkler system at the roof level of the Warehouse. From that time it is my opinion that the sprinklers either stopped discharging water or very little water was being discharged into the Warehouse." 31In his May 2011 report, Mr Alexander did not back up those opinions with any hydraulic analysis of the kind that Mr DeLorenzo conducted in September 2010 (and that Mr Alexander conducted in June 2012). 32In his report of August 2011, Mr DeLorenzo noted this. Significantly, for present purposes, Mr DeLorenzo pointed out:- "Mr Alexander, in his various responses in this matter, has invariably discussed aspects of the hydraulic factors and then drawn conclusions without the presentation of his calculations or reference to any other standards."

Irretrievable prejudice to the Cargo Plaintiffs 33During the settlement negotiations in June and July 2012, GTA approached each of the Cargo Plaintiffs and asked them to consider whether they would withdraw their claim against GTA in the event that GTA could achieve a settlement with UTI. In those circumstances, the Cargo Plaintiffs had to consider whether they would let GTA out of the proceedings notwithstanding the fact that UTI maintained its proportionate liability defence and its contention that GTA was a concurrent wrongdoer. 34The evidence before me revealed that the solicitors acting for the various Cargo Plaintiffs gave consideration to the current state of UTI's evidence concerning the adequacy of GTA's fire prevention system and, in particular, the evidence then to hand from Mr Alexander. 35Mr Bennett, solicitor for the plaintiff, Pacific Resources International Pty Ltd, said in an affidavit sworn in this application: - "In mid June 2012, I was informed by the solicitors for GTA [that it] was likely to settle its claim against UTI. GTA's solicitors requested that PRI discontinue its claim against GTA. I again reviewed the evidence that had been served pursuant to the Court timetable, including the expert reports of Mr DeLorenzo and Mr Alexander, to assess the strength of PRI's claims against GTA. Based on that evidence I remained of the view that PRI's claim against GTA was not strong. There was now a significant costs risk to PRI of maintaining its claim against GTA [as there was] a hearing scheduled for 6 weeks and for which GTA was to appear only in its capacity as a defendant and not as a plaintiff. Based on that assessment, I recommended to PRI's insurer to discontinue the claim against GTA and I obtained those instructions. PRI has notified GTA's solicitors that PRI will discontinue its claim against GTA. PRI is presently negotiating a Deed of Settlement with GTA's solicitors... On my review, the [June Reports] are intended to support UTI's contention that GTA was partly responsible for the fire as a concurrent wrongdoer. They are also intended to proportionately increase the responsibility of GTA for the fire relative to UTI's responsibility. The [June Reports] would therefore have been relevant to PRI's assessment of its claim against GTA, and its consideration of whether or not to discontinue its claim against GTA. As PRI has now agreed to discontinue its claim against GTA, if the evidence in the [June Reports] is accepted by the Court in the hearing, PRI will be prejudiced in its ability to recover its claim in full against UTI." 36Mr Hunt, the solicitor for thirteen of the Cargo Plaintiffs, gave this evidence about that matter: - "I am informed by Kristen Cecille Le Mesurier (a solicitor in the employ of Piper Alderman and who has the day to day conduct of the matter on behalf of the cargo plaintiffs under my supervision) and verily believe that on or about 3 July 2012, she advised...GTA's solicitor, that Piper Alderman were instructed to discontinue proceedings against GTA on the basis of the evidence that had been served in the proceedings, and on the understanding that no further evidence implicating GTA would be served as UTI was prevented from doing so by virtue of the guillotine order made by his Honour Hammerschlag J on 13 May 2011. On or about 4 July 2012, the notice of discontinuance in each of the 13 proceedings in which Piper Alderman act were prepared. GTA and Pacific Resources International signed these notices of discontinuance on or about 18 July 2012." 37Mr Chandra, who has conduct of the matter on behalf of the solicitor for Brackley Industries Pty Ltd ("Brackley"), gave this evidence: - "On or about 8 May 2012 [Brackley's solicitors] received a letter from GTA's solicitors requesting that [Brackley] discontinue its proceedings against GTA... On or about 21 June 2012 [and 10 July 2012] [Brackley's solicitors] caused to be sent a letter to [UTI's solicitor] requesting that [UTI] obtain instructions as to whether it intended to press its concurrent wrongdoer defence against GTA in the circumstances... On or about 10 July 2012 [Brackley's solicitors] received a letter from [UTI's] solicitor advising [UTI] would press the concurrent wrongdoer defence against GTA. I sought advise from Counsel Mr Neal about whether [Brackley] should press its claim against GTA. I received oral advise from Mr Neal on or about 12 July 2012. In accordance with instructions...on or about 17 July 2012 [Brackley's solicitors] caused to be sent a letter to GTA's solicitor advising that [Brackley] agreed to discontinue its claim against GTA... On or about 20 July 2012, the Court was advised that [Brackley] had agreed to discontinue its claim against GTA. 38In his submissions on behalf of Brackley, Mr Neal of counsel said: - "On or about 17 July 2012 Brackley made an important decision to discontinue the proceedings against GTA. That decision was made upon the advise of Counsel, given on the state of evidence at the time. Mr Alexander's new evidence, based on new modelling, is directed at establishing that GTA's breach in relation to the fire systems contributed to the damage caused by the fire, for the purpose of reducing any judgment against UTI pursuant to s 35 [of the Civil Liability Act], in circumstances where Brackley is now no longer able to recover against GTA. Previously, Mr Alexander's evidence on that topic was not based on modelling and was minor, insubstantial and arguably, inadmissible...the new evidence is substantial. It is not put that had the new evidence been served prior to Brackley agreeing to discontinue, Brackley would definitely have continued its claim against GTA. But certainly, the new evidence would have been carefully considered. In giving the advice and making the decision to discontinue, Counsel and Brackley were entitled to rely on the evidence as it stood, particularly having regard to the fact that no warning was giving that further evidence from Mr Alexander was to follow." 39What that evidence (which was not challenged) shows is that when the various Cargo Plaintiffs' lawyers gave consideration to the delicate question whether, in light of the settlement between GTA and UTI, they would, nonetheless, advise their clients to keep GTA in the proceedings, they had to make an assessment of the likely success of UTI's proportionate liability defence. They made their assessment of that matter based upon the evidence then served by UTI in relation to that question. 40It appears to me that it may have made a difference to the consideration given by those lawyers to the question of letting GTA out had they known that Mr Alexander had, to a very considerable degree, by his June Reports bolstered the evidence that he was prepared to give on behalf of UTI in relation to that issue. 41Mr Neal, in his submissions, as I have set out above, very candidly and appropriately said that he cannot say that his client would definitely have made a different decision had the June 2012 Reports been to hand. 42That appears to be the position of each of the Cargo Plaintiffs. 43But the point is that a different decision may have been made. 44Were UTI to be now permitted to rely upon the further evidence, it would cause irretrievable prejudice to the Cargo Plaintiffs, who have acted to release GTA based upon what was on the table in the middle of July 2012. 45I do not know whether it would be possible for any of the Cargo Plaintiffs to rejoin GTA in the proceedings now. Certainly that could not be done without jeopardising the hearing date. There is no suggestion made before me I should entertain any such proposition. 46In those circumstances, it is my opinion that it would not be just to allow GTA to rely upon this further material. For that reason alone I propose to refuse to grant the leave sought. 47In any event, it seems to me there was considerable doubt as to whether the Cargo Plaintiffs could adequately deal with further material. 48Mr DeLorenzo has said in an email dealing with this matter it would take him between three and four weeks to deal with the June Reports and that, in any event, he will not be in a position to commence upon that course for three-odd weeks because of his other commitments. 49In those circumstances, it appears to me that it is a matter for speculation as to whether, by some case management of the hearing, it would be possible to accommodate matters to give Mr DeLorenzo a proper opportunity to answer Mr Alexander's report. 50Further, there is the issue as to the extent to which Mr Alexander has relied upon whatever it is in Mr Stone's material. It does seem that Mr Alexander has made assumptions as to the correctness of Mr Stone's material and, as I understand, there is no evidence on and there is to be no evidence put on by Mr Stone to prove those assumptions. 51For all those reasons, it is my opinion that UTI's Notice of Motion of 30 July 2012 should be dismissed with costs and I so order.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 August 2012

At a glance

Court

Decision date

Before

Source

Judgment (5 paragraphs)

Parties

Cited By (1)