Peninsula Shipping Lines Pty Ltd & Anor v Adsteam Agency Pty Ltd & Anor

PROCEDURE - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION - GENERALLY - where the plaintiffs apply for disclosure of the defendants' files in relation to proceedings brought in a Papua New Guinean Court - whether the documents should be disclosed as directly relevant to an in issue in the proceeding

PROCEDURE - SUPREME COURT PROCEDURE - PROCEDURE UNDER RULES OF COURT - TRIAL - OTHER MATTERS - where the plaintiffs apply, pursuant to rule 483 of the Uniform Civil Procedure Rules 1999 (Qld), for a separate determination of certain questions in the proceeding - whether these questions can be conveniently determined separately

PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS - ADJOURNMENT AND AMENDMENT - where defendants given leave to amend their defence and include a counter-claim - where the amended defence and counter-claim departs significantly from the case previously pleaded by the defendant - whether the defendants should pay the costs of and caused by the filing of the amended defence

Trade Practices Act 1974 (Cth), s 87

Uniform Civil Procedure Rules 1999 (Qld), r 5, r 211, r 483,

Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55, cited

Darvall & Darvall v Maloney [2006] QSC 345; (2006) 236 ALR 796, cited

Evans Deacon Industries Ltd v Commonwealth of Australia (1983) Qd R 40; Pos Media Online Ltd v Queensland Investment Corporation [2000] FCA 1451, cited

Lampson (Australia) Pty Ltd v Ahden Engineering (Aust) Pty Ltd [1999] 2 Qd R 252, cited

Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [2001] 1 Qd R 276, cited

Robson v REB Engineering Pty Ltd [1997] 2 Qd R 102, cited

The Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251, cited

[1] As will appear from the following reasons, this litigation between the first plaintiff ('Peninsula Australia') and the related second plaintiff ('Peninsula PNG') against the first defendant ('Adsteam Australia') and its subsidiary the second defendant ('Adsteam PNG') is a claim for a very significant amount for damages for breach of a shipping agency agreement, and other relief. By their recently delivered counter-claim, the defendants seek to completely avoid the Agency Agreement.

[2] There are a number of procedural issues pending between the parties which I will now determine.

[3] The plaintiffs have applied for an order for disclosure by the defendants of the whole of the defendants' files in relation to proceedings brought in the National Court of Justice of New Guinea by Mobil Oil New Guinea Ltd ('Mobil Oil') against Adsteam PNG, and an abandoned cross-claim in that proceeding by Adsteam PNG against Peninsula PNG. Further details of those proceedings appear in the pleadings to which I will refer later, but it is sufficient to note presently that the essence of the action by Mobil Oil was a claim that Adsteam PNG was liable to Mobil Oil for the purchase price of a quantity of diesel oil purchased from Mobil Oil and which was delivered to the vessel chartered by Peninsula PNG, the MV 'Milne Bay'. Adsteam PNG defended that action by Mobil Oil by contending that it did not contract with Mobil Oil as principal but only as the agent of Peninsula PNG and that Mobil Oil was aware of that fact.

[4] The defendants have made disclosure of some of the documents relating to the Mobil Oil action. Initially, the defendants disclosed the writ of summons issued in those proceedings, the defence by which Adsteam PNG asserted that it acted only as the agent of Peninsula PNG, a draft of the list of documents, and an internal email in which instructions were given to defend the Mobil Oil claim. Some further documents have since been disclosed, but only those which the defendants' solicitor considers 'directly relevant to an allegation in issue in the pleadings'.

[5] The defendants contend that they have made disclosure of each document which is 'directly relevant to an allegation in issue in the pleadings', as required by Rule 211(1)(b) of the Uniform Civil Procedure Rules ('UCPR').

[6] The differences between the parties really go to their competing contentions as to the ambit of Rule 211(1)(b) of the UCPR. The plaintiffs contend for a wider interpretation of that rule, arguing that the relevant issues to which the documents sought are directly relevant are:

(a) That a then employee of Adsteam Australia, Mr Mehta, had authority to enter into the particular Liner Agency Agreement ('the agency Agreement') on behalf of Adsteam PNG with the plaintiffs such that the agreement he executed was binding;

(b) That the circumstances which arose between the parties including the execution of the Agency Agreement were such that Adsteam PNG was the agent of Peninsula PNG and/or owed obligations to it;

(c) That there was subsequent ratification by the defendants of the Agency Agreement;

(d) That Adsteam PNG acted independently of Adsteam Australia.

[7] The defendants, on the other hand, contend for a narrow approach, saying that the rule relates to 'each document', not broad categories of document, and that each such document must not only be 'directly relevant', but be directly relevant to 'an allegation in issue in the pleadings'. It was submitted that the proper approach to this task is to identify a paragraph in a particular pleading and by the responsive pleading, or its absence, demonstrate the extent to which the allegation is in issue. It was contended that it is against that identified issue that direct relevance of a particular document is to be assessed.

[8] The plaintiffs' further amended statement of claim ('FASOC') asserts that Adsteam Australia employed Mr Mehta in the position of general manager, South Asia/Pacific Islands. It is alleged that Adsteam Australia carried on business and held itself out as carrying on business in providing shipping and port logistic services to ship owners, ship operators and cargo interests. Adsteam PNG was a company owned by Adsteam Australia for carrying on business in PNG, and acted at the behest and direction of Adsteam Australia.

[9] The FASOC pleads that from in or about May 2006, Peninsula Australia sought to establish and pursue a business of providing a passenger and cargo and shipping service in PNG. It pleads a number of meetings held between representatives of the plaintiffs and of the defendants. For example, paragraph 4 of the FASOC pleads a meeting held on 23 May 2006 between Mr Baum and Mr Sorrell on behalf of Peninsula Australia and Mr Mehta. The FASOC pleads numerous representations allegedly made by Mr Mehta in that meeting, either by way of express representations or by him making no response to correct stated assumptions by the Peninsula Australia representatives. The FASOC pleads further negotiations and dealings between the parties, including a meeting held on 1 June 2006 at which, it is alleged, Mr Mehta represented to representatives of Peninsula Australia that 'Adsteam Australia and/or Adsteam PNG would provide to the proposed business' a guaranteed amount of business in a stated quantity, namely 100 TEU's (being an abbreviation for 20 foot equivalent units of carrying capacity in shipping containers), 30 vehicles and approximately 200 passengers.

[10] Central to the plaintiffs' case is the allegation in paragraph 14 of the FASOC that, in reliance on the representations said to have been made by Mr Mehta, 'on or about 29 June 2006 Peninsula Australia entered into an agreement with Adsteam PNG whereby Adsteam PNG agreed that it would provide various shipping services for Peninsula Australia and/or Peninsula PNG in Papua New Guinea in relation to the proposed business to be conducted there by Peninsula PNG'. (This is the Agency Agreement.)

[11] It is pleaded, further or in the alternative, in paragraph 14A, that the Agency Agreement was entered into by Peninsula Australia and Adsteam PNG for the benefit of Peninsula PNG, which was intended by the parties to be able to enforce the covenants therein.

[12] Paragraph 15 of the FASOC pleads, inter alia, that at the time of entering into the Agency Agreement, Mr Mehta:

(a) had the actual authority of Adsteam PNG to enter into the Agency Agreement;

(b) in the alternative, had the ostensible authority of Adsteam PNG to enter into the Agency Agreement.

[13] The Agency Agreement contained a clause 1.2 which imposed on Adsteam PNG an obligation, at a minimum, to place with the proposed business 100 TEU's, 30 vehicles and approximately 200 passengers per week.

[14] The FASOC further pleads that, by entering into the Agency Agreement, Adsteam PNG represented that it would place this minimum quantity of cargo with the proposed business each week.

[15] The FASOC then goes on to plead certain post-contractual representations, including allegations that Mr Mehta represented that the Adsteam companies would perform the obligation to solicit cargo business for developing the shipping services to be pursued in the proposed business. Further post-contractual representations by Mr Mehta are alleged as having occurred in the week commencing 13 September 2006, when he is asserted to have orally represented to a representative of the plaintiffs that the guaranteed amount of business would be available from the commencement of the proposed business.

[16] The FASOC then pleads placement of the vessel 'Milne Bay' in early September 2006, and asserts that Adsteam Australia and/or Adsteam PNG failed to perform in accordance with the obligations under the Agency Agreement by, inter alia, failing to provide the minimum guaranteed amount of business, failing to attend to such matters as supplying provisions for the vessel's crew and passengers, failing to provide ticket offices or facilities for the processing and handling of potential passengers, failing to organise the release of containers to shippers for packing or the ordering of cargo into depots for packing into the containers, and failing to provide suitable areas in its places of business to be used for the transaction of the shipping services in the proposed business. Other alleged breaches include the termination of the employment of the Adsteam PNG manager in Lae which, it is said, rendered it impossible for Adsteam PNG to perform its obligations under the Agency Agreement in the port of Lae. The termination of Mr Mehta's employment by Adsteam Australia on 13 October 2006 is pleaded, followed by assertions that Mr Schot of the defendants said to Mr Baum of the plaintiff words to the effect that Adsteam PNG would not be bound by Article 1.2 of the Agency Agreement. It is further asserted that Mr Schot informed Mr Baum, amongst other things, that Adsteam Australia and/or Adsteam PNG denied that there was any binding agreement in the form of the Agency Agreement.

[17] The plaintiffs contend that the conduct of the defendants was repudiatory in that it evinced an intention not to be bound by the Agency Agreement, and say that, by a letter dated 16 October 2006, Peninsula Australia accepted the repudiation of the Agency Agreement and terminated it.

[18] The plaintiffs say that, as a consequence of the breaches of contract, they have suffered loss and damage:

(a) Loss of the revenue which would have been derived by Peninsula Australia and/or Peninsula PNG from the proper operating of the business which was not earned;

(b) The absence of such revenue generated a lack of liquidity in the business resulting in its cessation shortly after;

(c) Peninsula Australia and/or Peninsula PNG lost profits which would have been earned if Adsteam PNG had performed the Agency Agreement.

The plaintiffs contend that these damages total in excess of US$31 million.

[19] Further claims are pleaded directly against Adsteam Australia for inducing breach of contract, it being said, in effect, that by October 2006 Adsteam Australia was aware of the existence of the Agency Agreement between Adsteam PNG and Peninsula Australia, and of the obligations on Adsteam PNG to provide services thereunder, including the obligation to provide the guaranteed amount of business. It is asserted that the conduct of representatives of Adsteam Australia, which directed and caused Adsteam PNG not to perform the Agency Agreement, amount to Adsteam Australia knowingly or intentionally inducing or procuring breaches by Adsteam PNG of its obligations under the Agency Agreement.

[20] The plaintiffs further plead cases of alleged misleading or deceptive conduct, in contravention of the Trade Practices Act 1974 (Cth) ('TPA'), constituted by the representations to which I have briefly referred above. It is said that the plaintiffs relied on the representations in negotiating an agreement for the charter of the vessel to be used in the business, entering into agreements for the purchase of terminal tractors and the engagement of a consultant, and incurring other expenses, including repair expenses.

[21] The plaintiffs further plead that the conduct of Adsteam Australia amounted to the tort of interference with contractual relations, saying that Adsteam Australia intended that the consequence of inducing a breach of contract was that Peninsula PNG would suffer damage by no longer being able to carry on its shipping business.

[22] The defendants' amended defence and counter-claim is a very long document which contains very many factual allegations. Indeed, much of it appears in the form of a narrative. I will not, for present purposes, even attempt to summarise all the matters alleged in the defence, but will limit myself to mentioning those parts of the defence which relate to the issue which the plaintiff contends for in this disclosure application.

[23] The defence confirms that Mr Mehta was employed by Adsteam Australia in the position of general manager South Asia/Pacific Islands from 1998 until October 2006, that in that position he reported to Mr Schot, who was his superior, that he was suspended from his employment on 12 October 2006 and was dismissed from his employment on 13 October 2006, and also avers that he was remunerated pursuant to a contract of employment dated 1 October 2005 which provided for payment of a salary and a performance-based bonus scheme, payment of which was solely at the discretion of Adsteam Australia.

[24] The defence asserts, in brief, that there was a series of contacts between Mr Baum of the plaintiffs and Mr Mehta in which Mr Baum was pressuring Mr Mehta to provide him initially with a letter of comfort, and then to insert into the Agency Agreement a clause to the effect that Adsteam would place 100 TEU's, 30 vehicles and approximately 200 passengers per week. So, in paragraph A31 of the defence, it is pleaded that on 28 June 2006 Mr Baum again asked Mr Mehta to include a clause to this effect in the Agency Agreement, with Mr Mehta responding that he was very afraid to put such a clause in, and that he had been very afraid to provide the letters of comfort but had done so, without telling his bosses, because of a letter he had been given assuring him, in effect, that the letter of comfort was to be used for 'in-house finance only'. It is pleaded, inter alia, that Mr Baum stated to Mr Mehta to the effect that the clause 'was for obtaining finance only and that Mr Mehta had the comfort of Mr Philip's letter (meaning the assurance letter) which was equally applicable to the Agency Agreement'. It is then said that at this point 'Mr Mehta agreed to the insertion of a clause into the Agency Agreement of the kind being discussed and went to a computer and amended a copy of the draft Agency Agreement by the insertion of what became "Article 1.2", and this document was thereafter signed by Mr Baum for Peninsula Australia and Mr Mehta for Adsteam PNG. It is then pleaded:

'A32 At no time prior to on or about 12 October 2006 did Mr Mehta:

(a) provide Mr Schot with a copy of the Agency Agreement;

(b) otherwise inform him of the presence of Article 1.2 in the Agency Agreement or of the letter or the exchanges between he and the officers of Peninsula Australia and Peninsula PNG which are pleaded at paragraphs A26 - A31 hereof.'

'A33 (a) Mr Mehta did not in fact have authority to enter into the Agency Agreement containing Article 1.2, by reason of the matters pleaded at B14 below;

(b) by reason of the matters pleaded at paragraphs A17 - A31 hereof, and, in particular, by reason of the matters pleaded at paragraphs A19(d), (e)(iii), (iv), A21(b), (c), (d), (e), (f), A22, A27(g), (h), (i), (k), (l), (m), (n), A30(f), A31(b), (f), and (g) above, Peninsula Australia, or further or alternatively Peninsula PNG knew that Mr Mehta did not have actual authority to enter into the Agency Agreement containing Article 1.2;

(c) further, by reason of the manner in which Peninsula Australia, and further or alternatively Peninsula PNG, came to know that Mr Mehta did not have actual authority, as pleaded in sub-paragraph (b) above, in those circumstances Adsteam PNG has not by words or conduct represented or permitted it to be represented that Mr Mehta had authority on its behalf to enter into an agreement containing that provision, and therefore he did not have ostensible authority to do so.

A34. In the premises the Agency Agreement was and is not binding on Adsteam PNG due to the known absence of authority of Mr Mehta to enter into an agreement containing a term such as Article 1.2.'

[26] In relation to the supply of fuel to the vessel, paragraph A69 pleads a meeting which occurred in the evening of 6 October 2006 between Mr Philip and Mr Baum of the plaintiffs and Mr Mehta, in which Mr Philip and Mr Baum inquired of Mr Mehta as to why he had not arranged for the bunkering of the vessel. The paragraph then pleads the contents of this conversation which, in effect, was a negotiation between the parties with the plaintiffs' representatives attempting to persuade Mr Mehta to pay for the bunkering. It is sufficient for present purposes to record the concluding parts of paragraph A69 and the ensuing paragraphs:

'(k) Mr Baum and Mr Philip then stated to Mr Mehta to the effect that:

(i) if Adsteam PNG issued a purchase order for the bunker expense to Mobil that evening to allow bunkering to proceed;

(ii) then Peninsula (meaning either Peninsula Australia and/or in the alternative, Peninsula PNG) would meet the bunker expense with Mobil on or about 9 October 2006;

(l) Mr Mehta then stated to the effect that he would agree to that ("the Mobil bunker contract");

(m) by reason of the matters pleaded in sub-paragraph (k) above, Mr Baum and Mr Philip represented that if Mr Mehta issued the purchase order to Mobil, Peninsula Australia and/or alternatively, Peninsula PNG would, and could, meet the bunker expense to Mobil on or about 9 October 2006 ("the inducing conduct of Mr Baum and Mr Philip");

(n) (i) in accordance with the Mobil bunker contract; and

(ii) in reliance upon the inducing conduct of Mr Baum and Mr Philip;

(iii) Mr Mehta issued a purchase order for bunkering of the vessel; and

(iv) endorsed that purchase order with the notation "A/C Peninsula Shipping Line MV Milne Bay";

Local purchase order no. 15176 issued by Adsteam PNG to Mobil Oil (PNG) Limited for 210 tonnes of fuel oil on 6 October 2006;

A70. On or about 6 or 7 October 2006, Mobil bunkered the vessel by delivering to it 210 tonnes of fuel.

A71. In breach of the Mobil bunkering contract and contrary to the inducing conduct of Mr Baum and Mr Philip, each of peninsula Australia and peninsula PNG failed to meet the liability Adsteam PNG incurred to Mobil pursuant to the Mobil bunkering contract in that:

(a) on 7 October 2006 Mobil raised invoice no. 30081 for the vessel's bunkering requiring Adsteam PNG to pay it PGK538,027.52, being PGK490,025 plus GST;

(b) on 9 October 2006 Mobil faxed invoice no.30081 to Mr Kelly; and

(c) despite demand made upon it by Adsteam PNG, neither Peninsula Australia nor Peninsula PNG paid the bunker sum to Mobil or to Adsteam PNG.

A72. On 20 December 2006, Mobil commenced proceedings against Adsteam PNG for recovery of the bunker sum and interest thereon and costs of that proceeding ("the Mobil proceedings").

A73. By 17 June 2008 Adsteam PNG had resolved the Mobil proceedings by:

(a) payment to Mobil of the sum of PGK539,027.52 being the bunker sum;

(b) interest on that sum in the amount of PGK64,680;

A74. In the premises, by reason of the breach of the Mobil bunker contract by Peninsula Australia and/or in the alternative, Peninsula PNG, Adsteam PNG has suffered loss and damage in the sum of PGK554,705 being the bunker sum, net of GST, and interest paid to Mobil.'

[27] Further in the defence, it is alleged that it was Peninsula Australia, or Peninsula PNG, which manifested an inability to perform the Agency Agreement by no later than 12 October 2006 by reason of its inability to pay or reimburse Adsteam PNG for expenses incurred by it. These matters, it is alleged, entitled Adsteam PNG to suspend its performance of the Agency Agreement generally, and it is pleaded (in paragraph A85(b)):

'Further and in the alternative, Adsteam PNG was entitled to suspend its performance of Article 1.2 (if, which is denied for reasons set out above, Article 1.2 was operative in the Agency Agreement).'

[28] It is contended that this conduct by Peninsula Australia, or Peninsula PNG, entitled Adsteam PNG to terminate the Agency Agreement, which it did (by its conduct) on 13 October 2006 by indicating that it would no longer perform the Agency Agreement in accordance with its terms, and would only perform an agency agreement henceforth on the basis that it was put in funds sufficient to do so.

[29] An alternative plea is that, by the collective conduct of the parties in treating the Agency Agreement as abandoned from about 16 October 2006, it was terminated.

[30] The defence then moves to respond to the allegations made in the FASOC. Paragraph B14 of the defence pleads:

'B14. As to paragraph 14 of the statement of claim the defendants:

(aa) repeat and rely on the matters pleaded at paragraphs A17 - A34 hereof;

(a) admit that on or about 29 June 2006 Mr Mehta, purportedly for Adsteam PNG and Mr Baum for Peninsula Australia signed the Agency Agreement;

(b) admit that on its fact the Agency Agreement provided that Adsteam PNG would provide services to Peninsula Australia of the kind there pleaded;

(bb) deny that the agency agreement provided that Adsteam PNG would provide services to Peninsula PNG of the kind there pleaded. As a matter of fact that is untrue;

(c) otherwise do not admit the allegations contained therein for the reasons pleaded at paragraphs B4 and B12 hereof (which respond to the allegations pleaded at paragraphs 4(b) and 12 of the statement of claim).

B14A. As to paragraph 14A of the statement of claim, the defendants:

(a) deny the allegations contained in sub-paragraph (a). It is untrue as a matter of fact and of law;

(i) do not admit that Peninsula PNG acted as alleged at sub-paragraph (b)(i) because they do not know if that is true or false;

(ii) admit that the vessel was sailed to Lae in October 2006; and

(iii) admit that shipping operations were conducted with the vessel in coastal waters in Papua New Guinea until on or about 16 October 2006;

(iv) do not admit that Peninsula PNG acted as is alleged in sub-paragraph (b)(ii) because they do not know if that is true or false; and

(v) deny the allegations because the matters alleged (the occurrence of which are not admitted) could not constitute the acceptance by Peninsula PNG of the benefit of the covenants in the agency agreement;

(c) deny the allegations contained in sub-paragraph (c) because the agency agreement was not made for the benefit of Peninsula PNG and the conduct of Peninsula PNG did not constitute acceptance of the benefits of the covenants in the agency agreement and otherwise the allegations involve mixed questions of law and fact for determination by this Court.'

'B15. As to paragraph 15 of the statement of claim the defendants:

(a) deny the allegation contained in sub-paragraph (a). It is untrue;

(i) subject to what is pleaded at (ii) below, had the actual authority of Adsteam PNG ("authority") to negotiate agreements similar to the Agency Agreement on behalf of Adsteam PNG; and

(ii) (A) had no actual authority to enter into any agreement on behalf of Adsteam PNG;

(B) that authority was reposed in Mr Schot who had the power to delegate it to Mr Mehta as he considered appropriate.

(iii) by reason of the delegation of appropriate authority (by Mr Schot orally in or about June 2006) Mr Mehta had actual authority to enter into an agreement on behalf of Adsteam PNG in the form of the so called Agency Agreement but not one that contained a provision which guaranteed to the party in the position of Peninsula Australia, minimum cargo placements (such as the provision at Article 1; 2 of the Agency Agreement ("the guaranteed cargo provision")); and

(iv) in the premises had no actual authority to enter into the agency agreement for Adsteam PNG; and

(cc) furthermore, by reason of the matters pleaded at paragraphs A1 - A90 and specifically paragraphs A17 - A31 and A33 - 34 Peninsula Australia and Peninsula PNG by Mr Philip, Mr Baum, Mr Hunter, Mr Kelly and Mr Van Raay knew that Mr Mehta wanted for actual authority to enter into the Agency Agreement.

(c) deny the allegation contained in paragraph (b). It is untrue because of the matters pleaded at paragraphs A33 - A34 and at paragraph (cc) hereof;'

[32] Paragraph B16 pleads that in the premises pleaded at paragraph B15 'the Agency Agreement having purportedly been entered into by Mr Mehta for Adsteam PNG without authority was and is not enforceable by Peninsula Australia against Adsteam PNG'. The defence further pleads that Mr Baum knew that Mr Mehta did not have actual authority to enter into the Agency Agreement purportedly on behalf of Adsteam PNG containing Article 1.2.

[33] Paragraph B26 of the defence responds to paragraph 25 of the statement of claim (which pleads the alleged breaches of contract by Adsteam Australia or Adsteam PNG) by asserting, inter alia, that the defendants 'deny that either Adsteam PNG or Adsteam Australia was obliged to provide the so-called guaranteed amount of business or any business' and admitting that they did not provide the guaranteed amount of business.

[34] In response to the claim for damages made in paragraph 27 of the statement of claim, paragraph B28 of the defence pleads, inter alia, that the defendants:

'(bb) say that even if it were enforceable, (contrary to the matters pleaded at paragraphs A1 - A41 and B14 - B17 hereof) the Agency Agreement did not oblige Adsteam PNG to provide any services to Peninsula PNG and so Peninsula PNG cannot have suffered any loss as a consequence of any breach of it by Adsteam PNG (the existence of which is denied). Peninsula PNG was not a party to the Agency Agreement;'

[35] It is further averred (in paragraph B29(c)) that Mr Schot only became aware of the contention of Peninsula Australia that the Agency Agreement contained Article 1.2 on about 12 October 2006, and only became aware that the Agency Agreement did in fact contain that clause at about 9.03pm on that day, at which time, and from which time, he on behalf of Adsteam PNG held the view that the Agency Agreement was unenforceable against Adsteam PNG for the reasons pleaded in paragraphs B14 - B17 of the defence.

[36] By way of counter-claim, the defendants seek, amongst other things, that the Court declare the Agency Agreement void, or orders under s 87 of the TPA setting it aside or varying the Agency Agreement by removing Article 1.2, and also claiming damages equal to the amount of the claim brought by Mobil 'pursuant to the Mobil bunker contract' and interest thereon.

[37] In its reply to the amended defence and counter-claim, the plaintiffs respond (at necessary length) to the many allegations made in the defence. Relevant for present purposes is the assertion in paragraph 15(c) of the reply, which responds to paragraph B15 of the amended defence, that 'the actual authority delegated to Mr Mehta by Mr Schot encompassed the Agency Agreement entered into which included Article 1.2'.

[38] The reply further pleads (in paragraph 15(i)(ix)) that since 13 October the defendants have sought to assert the validity of the Agency Agreement, and numerous matters are then alleged against the defendants including:

'(7) filing a defence on 12 March 2007 in proceedings number 1844 of 2006 commenced by Mobil Oil New Guinea Limited ("Mobil") in the National Court of Justice at Waigani Papua New Guinea ("the PNG Proceedings") that specifically pleaded:

"Further, in relation to the allegation fact pleaded paragraphs 2 and 3 of the Statement of Claim, the Defendant says the purchase of the diesel fuel was made by the Defendant, not on its own account, but expressly as agent for and on behalf of Peninsula Shipping Lines (PNG) Limited t/as MV Milne Bay as its disclosed principal had full and express authority to place the local purchase order for diesel fuel on behalf of Peninsula Shipping Lines (PNG) Limited t/as MV Milne Bay which were made in the course of the Defendant's duties and within the scope of its actual and ostensible authority to enter into such transactions with the Plaintiff".

(8) filing in the PNG Proceedings and serving upon Mobil an affidavit of Mr. Evennett sworn on 11 September 2007 which included the following statements:

(A). "In most cases instances a Liner Agency Agreement is signed between the shipping carrier and Adsteam. This was the case with Peninsula Shipping Lines Pty Limited".

(B). "On 7 June 2006 PSL and Adsteam entered into a Liner Agency Agreement which provided for the duties and responsibilities of Adsteam".

(C). "In the letter dated 16 September 2006 stated at paragraph 10 above of this my affidavit supports the basis of the Liner Agency Agreement between PSL and Adsteam".

(D). "PSL's joiner is necessary in that it was the Principal in the Liner Agency Agreement whilst Adsteam was engaged as its shipping agents".

(9) filing in the PNG Proceedings and serving upon Mobil the affidavit of Mr. Evennett sworn on 11 September 2007 which attached in support of the application filed by Adsteam PNG a signed copy a signed copy of the Agency Agreement and makes reference to the obligations at Article 4 and Schedule B;

(10) filing a Notice of Motion in the PNG Proceedings on 12 September 2007 seeking to strike out the action against it or alternatively to join Peninsula PNG;

(11) making written submissions in March 2008 to the National Court of Justice of Papua New Guinea propounding the Agency Agreement and:

(A). stating in paragraph 6.8 that: "In the present case, from the letter dated 16 September 2006 from Mr Kelly of PSL to Mr Araa of Mobil, there is no issue that Adsteam acted as agent for its principal, PSL. The agency relationship between PSL and Adsteam was disclosed to Mobil. Mobil knew that Adsteam had the express, usual and ostensible authority to act as agent on behalf of PSL (See annexure "D" to the affidavit of Jeff Evennett filed on 11 September 2007)."

(B). repeating and relying upon Mr Evennett's affidavit of 11 September and specifically drawing the court's attention to the Liner Agency Agreement attached to it;

(C). stating in paragraph 6.13 that "In the present case, the letter of 16 September 2006 from PSL to Mobil confirm that the agency relationship between Peninsula Shipping Lines (PNG) Limited and Adsteam was disclosed to Mobil. At all material times Mobil had knowledge that Adsteam was acting as agent for Peninsula Shipping Lines (NG) Limited;

(D). stating in paragraph 7.3 that "PSL's joiner is necessary since it was the Principal in the Liner Agency Agreement whilst Adsteam was engaged as its shipping agent.

(12) obtaining an order from the National Court of Justice of Papua New Guinea on or about 13 March 2008 that Peninsula PNG be joined as a party to the PNG Proceedings and that Adsteam PNG be entitled to file a cross-claim against Peninsula PNG;

(13) serving a cross-claim upon Peninsula PNG on or about 20 March 2008, which cross claim specifically seeks to rely and enforce an indemnity against Peninsula PNG under the terms of the Agency Agreement;'

[39] The matters I have just referred to are some of the numerous matters relied on by the plaintiffs in support of a plea that if Mr Mehta did not have any authority to enter into the Agency Agreement it has been ratified by Adsteam PNG (paragraph 15(i)(xiv)).

[40] In their rejoinder to that reply, the defendants admit, inter alia, each of the facts pleaded in the reply in connection with the PNG Proceedings. The defendants further, however, expressly deny the allegation made in sub-paragraph 15(i)(xiv) of the reply, i.e. they deny the allegation that if Mr Mehta did not have any authority to enter into the Agency Agreement it has been ratified by Adsteam PNG.

[41] Rule 211(1)(b) imposes an obligation on a party to disclose to each other party 'each document ... directly relevant to an allegation in issue in the pleadings'.

[42] The test of 'direct relevance' stands in contrast to the previous rule in the Peruvian Guano case,[1] by which parties were obliged to disclose documents which might lead to a train of inquiry which may, in turn, enable the other party to advance its own case or damage the case of the disclosing party - see Lampson (Australia) Pty Ltd v Ahden Engineering (Aust) Pty Ltd [1999] 2 Qd R 252 per Moynihan SJA as 256-257; Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [2001] 1 Qd R 276 per Pincus JA at [7].

[43] Rather, as is stated in terms in the rule, the test is one of direct relevance to an allegation in issue in the pleadings. Whether or not a document is 'directly relevant' turns on whether or not the document tends to prove or disprove the truth of a particular allegation.[2] All of that, however, serves to highlight the necessity to have primary regard to the pleadings for the purpose of ascertaining and identifying the 'allegations in issue' between the parties; that process necessarily informs the ambit of the disclosure obligation. But the process is not, as the defendants here submitted in effect, reduced merely to a microscopic examination of each factual averral in a pleading and of the response (if any) to each such factual averral in the relevant responsive pleading. Rather, the process of identifying the 'allegations in issue' must be undertaken with a view to implementing the purpose of the UCPR stated in Rule 5(1), namely to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. This, I might note, is consistent with the observations of Pincus JA in Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurant & Bars Pty Ltd [2001] 1 Qd R 276 at [10].

[44] In the present case, it was submitted for the defendants that:

'The only allegations in issue in the proceedings to which the subject documents could potentially be directly relevant are:

(a) that Mr Mehta wanted for authority to enter into the Agency Agreement in the form it was signed by him (including Article 1.2); and

(b) the contention that certain conduct of the defendants might constitute ratification of Mr Mehta's conduce in entering into the Agency Agreement.'

[45] Despite the seductive simplicity of the approach contended for on behalf of the defendants, the review of the pleadings set out above reveals that the relevant allegations in issue to which these documents would be directly relevant are significantly broader than the defendants' contentions. It is clear on the pleadings that:

(a) The real issue between the parties is whether the Agency Agreement was binding according to its terms, and if so on which parties. The terms by which the plaintiffs directly raise that issue are pleaded in paragraphs 14 and 14A of the FASOC (referred to [8] and [9] above. The defendants join issue with the allegations of the efficacy of the Agency Agreement according to its terms, relying principally in that regard on the allegations of Mr Mehta's want of authority, but also raising the pre-contractual conduct of the plaintiffs' representatives when dealing with Mr Mehta and their imposition on him to include the terms of Clause 1.2 in the final form of the Agency Agreement.

(b) The question of whether the defendants, regardless of any asserted lack of authority on the part of Mr Mehta, in fact ratified the Agency Agreement (not the form of Agency Agreement which the defendants contend Mr Mehta might have had authority to sign) is specifically raised in the reply, and expressly denied in the rejoinder.

[46] It is difficult to see how the defendants can sensibly argue that the validity and efficacy of the Agency Agreement is not one of the real issues between the parties in view of the fact that the defendants seek, in their counter-claim, orders declaring the Agency Agreement void ab initio, or orders setting the Agency Agreement aside pursuant to s 87 of the TPA. Determination of that issue between the parties is clearly much broader than the narrow issue concerning Mr Mehta's authority. And it is a fundamental issue which arises on the pleadings.

[47] Counsel for the defendants sought to advance a closely reasoned line of argument to persuade me, in effect, that the matters relied on by the plaintiffs as acts of ratification could not properly be so characterised, pointing to such well known authorities as the proposition in Petersen v Maloney [1951] HCA 57; [1951] 84 CLR 91, at 101, that, when a defaulting agent acts in excess of authority, then in the ordinary case 'only unequivocal words or acts will suffice to establish ratification'. This line of argument, with respect, missed the point that on this application I am not determining whether or not the defendants did ratify, or should be held to have ratified, the Agency Agreement signed by Mr Mehta. That is one of the many issues that will need to be determined at trial. And, in any event, embarking on the question of ratification necessarily presupposes a finding that Mr Mehta lacked authority at the time he signed the Agency Agreement, which itself is one of the real issues between the parties.

[48] When one has regard in particular to the terms of the affidavit sworn by Mr Evernett in the PNG Proceedings which positively averred the binding existence of the Agency Agreement, the exhibiting of a copy of that Agency Agreement to his affidavit to make it evidence, and the terms of the written submissions made to the National Court of Justice of Papua New Guinea, it is difficult to see how it can be said that the defendants' files relating to the PNG Proceedings would not be 'directly relevant' at least to the issue of ratification. The nature, context and extent of these PNG court documents tends to gainsay the notion that the defendants mistakenly advanced this case in the PNG Proceedings. And the matters underlying Mr Evernett's affidavit and the submissions made to the PNG Court are precisely the sorts of matters on which one would expect there to be documents on the defendants' files. Given the clear terms in which the defendants conducted themselves in the PNG Proceedings, one can reasonably expect the defendants' files to contain documents which would tend to prove or disprove the allegation of ratification. Indeed, even having regard to part of the case which the defendants have already advertised they would want to advance at trial, one would expect to find documents there to prove or disprove whether the defendants had full knowledge of Mr Mehta's conduct which was allegedly in excess of his authority, and the documents would be disclosable on that basis too.

[49] Similarly, at the more fundamental level, I would expect there to be documents on these files directly relevant (in the sense of tending to prove or disprove) to the question of whether or not the Agency Agreement was efficacious between the parties.

[50] It is no answer for the defendants to say that the documents on the files are not disclosable because they have admitted the facts which are pleaded in the reply as having occurred in the PNG Proceedings and on which the plaintiffs will rely for the purposes of establishing ratification. Whilst those facts have been admitted (and the plaintiffs will therefore not be required to further prove those particular facts), the obligation concerning the efficacy of the Agency Agreement and the allegation of ratification remain issues on the pleadings. In my view, disclosure of the defendants' files in relation to the PNG Proceedings is required.

[51] It is also relevant to note in passing the curiosity (to use a neutral term) of the fact that, whilst the Agency Agreement was the basis of the defence to the Mobil proceedings in PNG and for the cross-claim against Peninsula PNG, the defendants in the present proceeding assert a quite different agreement as the basis for recovering against the plaintiffs for the cost of the Mobil bunkering. If anything, that highlights the notion that the defendants' file documents connected with the PNG Proceedings ought be directly relevant as tending to prove or disprove the allegations in issue in the present proceeding.

[52] The plaintiffs applied, pursuant to Rule 483, for certain questions in this proceeding to be determined separately. In effect, the plaintiffs sought orders which would see the issues relating to the quantification of the damages claimed by the plaintiffs deferred until after liability issues, particularly that of the efficacy of the Agency Agreement, are determined.

[53] In approaching this application, I am cognisant of the proposition that the determination of separate issues can, in appropriate cases, be a useful case management tool, with obvious benefits for the parties in terms of the practical and financial burden of the litigation, and concomitant potential benefit for the Court in terms of allocation of judicial and administrative resources. The discretion under Rule 483 is undoubtedly wide, and permits of the separation of questions for preliminary determination when they 'can conveniently be so decided, even though this may not necessarily resolve the whole dispute'.[3]

[54] I am equally cognisant, however, of the numerous judicial expressions of caution in terms of the adoption of the approach of separating issues for preliminary determination.[4]

[55] The plaintiffs' primary submission was that it would be possible to identify and have a separate preliminary hearing to determine the following broad issues:

(c) Which parties are entitled to rely upon the Agency Agreement;

(d) What representations were made which could have been relied on.

[56] The plaintiffs' secondary (or less preferred) position was that the trial of preliminary issues could be extended to include:

(a) Each party's asserted failure to comply with their obligations under any agreement and hence the other's right to terminate;

(b) Whether a party did in fact terminate the agreement (whichever agreement is found to be valid);

(c) Whether the representations found to have been made were misleading;

(d) Whether misleading conduct was engaged in by the parties in October 2006; and

(e) What expenses were incurred by the plaintiffs in reliance on the misrepresentations.

[57] On either scenario, a trial on quantum of the plaintiffs' claim would await determination of these preliminary issues.

[58] The defendants, whilst conceding support for the notion of the hearing of separate questions if that were possible, submitted that it was simply not feasible in the present case to surgically divide the issues in the manner contended for by the plaintiffs. The defendants pointed, for example, to the plaintiffs' contention that the defendants repudiated the contract, and the defendants' competing contention that the opposite was true. In that regard, the defendants' assertion of repudiation by the plaintiffs turns on the proposition that the plaintiffs were obliged to supply certain things (including a vessel that worked), that it failed to meet these requirements, and that this constituted part of the repudiatory conduct relied on by the defendants which gave rise to an entitlement to terminate any contract. The defendants also pointed to clear areas of crossover between evidence touching liability and quantum issues, particularly concerning the existence of containers and trailers and other evidence concerning the mode, or proposed mode, of operation of the plaintiffs' business.

[59] Whilst, as I have already observed, the discretion under Rule 483 is unfettered, and each case must be considered on its own merits, in practical terms there is much to be said for observing the touchstone of whether the separate issues can be conveniently decided in a preliminary hearing. The secondary (or less preferred) option contended for by the plaintiffs seems to me to be not very convenient at all, either in a legal or a practical sense. If I were at all inclined to order a trial of separate issues, it would be in respect of the issues contended for in the plaintiffs' primary position.

[60] I do not think, however, that this is a case in which even those issues can 'conveniently' be decided separately from the other issues on liability (including, but not limited to, the Trade Practices claims) that arise in this case. This is not a case in which there is a discrete factual or legal inquiry associated with the existence or otherwise of the Agency Agreement. Even less is it a case in which there is a discrete point concerning the construction of particular terms of the Agency Agreement, which is clearly the sort of issue which might conveniently be separately determined.

[61] Moreover, even on the abridged review of the pleadings set out in the previous section of this judgment, it seems to me that there is at least a real risk that separation of issues will result in there being findings of credit made in respect of witnesses who will necessarily feature further in subsequent aspect of the case. In this regard, it is sufficient simply to identify the centrality to the issues of (at least) Mr Baum, Mr Hunter and Mr Philip on the plaintiffs' side and Mr Schot on the defendants'.

[62] In my view, it cannot be plainly said that this is a case in which a discrete issue or issues can conveniently be separated out from the factual and legal matrix of the disputes between these parties.

[63] The application for the determination of separate issues will accordingly be dismissed, with costs reserved.

[64] The remaining issue for determination between these parties is the appropriate order for costs in light of the leave given to the defendants to amend their defence and include the counter-claim. I have referred above to the fact that the amended defence and counter-claim is, in itself, a significant document which goes far beyond the defence which had previously been filed.

[65] It is a matter of historical fact in these proceedings that the defendants were tardy in undertaking the investigations which ought to have been completed long ago for the purposes of responding to the claim and pleading their counter-claim.

[66] The plaintiffs contend that the amended defence and counter-claim involves such a departure from the case previously pleaded by the defendants as to warrant an order that the defendants pay, amongst other things, the plaintiffs' costs of and incidental to the action since 30 August 2007 (being the date of the delivery of the FASOC), save for any costs related to the amendment of the statement of claim and all particulars thereof.

[67] To the extent that the plaintiffs otherwise seek their costs resulting from the delivery of the amended defence, and to guard against the prospect of Rule 692 not being applicable in the circumstances of this case where the plaintiffs had, in August 2007, delivered the FASOC, I would order that the defendants pay the plaintiff's standard costs of and caused by the amendment to the defence.

[68] Otherwise, it is simply not possible for me at this point to make any meaningful judgment or assessment of the extent to which, as is contended for by the plaintiffs, a 'substantial amount of work which was done in relation to the issues previously raised by the defendants is now wasted'. It does seem to me, however, that the defendants, by their more recent conduct of the proceedings, have tacitly conceded that their previous level of attention to this litigation was less than desirable, and certainly less than that expected for consistency with the obligation under UCPR Rule 5(3) to proceed in an expeditious way. To the extent that the plaintiffs did reasonably incur cost and expense in this litigation after delivering the FASOC and prior to leave being granted to amend the defence which has become wasted by consequence of the delivery of the amended defence[5] it seems to me, in the circumstances of this case, appropriate to order that the defendants pay on the indemnity basis such of the plaintiffs' costs of and incidental to the proceeding from 30 August 2007 to 8 August 2008 which are thrown away by reason of the filing of the amended defence.

[69] Otherwise, as I have said, I consider it appropriate for there to be an order that the defendants pay the plaintiffs' costs of and caused by the amended defence on the standard basis.

1. That, subject to any valid claim for privilege, the defendants make disclosure of their files relating to the PNG proceedings;

2. The costs of that application for further disclosure be reserved;

3. The application under Rule 483 for certain questions to be determined separately be dismissed, with the costs of that application reserved;

4. The defendants shall pay on the indemnity basis such of the plaintiffs' costs of and incidental to the proceeding from 30 August 2007 to 8 August 2008 which are thrown away by reason of the filing of the amended defence;

5. The defendants shall pay the plaintiffs' costs of and caused by the amended defence on the standard basis.

[1] Compagnie Financiere et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55.

[2] Robson v REB Engineering Pty Ltd [1997] 2 Qd R 102, per Demack J at 105.

[3] See Darvall & Darvall v Maloney [2006] QSC 345; (2006) 236 ALR 796.

[4] See, for example_, Evans Deacon Industries Ltd v Commonwealth of Australia_ (1983) Qd R 40; Pos Media Online Ltd v Queensland Investment Corporation [2000] FCA 1451.

[5] The Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251.