Plaintiff v First Defendant

1 This class action was issued in this Court as a result of a fire in Snake Valley, near Ballarat, on 8 January 2013 ('the fire').

2 The defendants, GP & JM Bruty Pty Ltd, Darren Bruty and the estate of the late Geoffrey Philip Bruty (or one or other of them), are alleged to be the owners and operators of a Massey Ferguson tractor ('the tractor'), which is said to have caused the fire.

3 The representative plaintiff, Valerie Jackson, alleges that the defendants were negligent and that this resulted in damage to her property and the properties of other group members.[1]

4 The trial of the proceeding was scheduled to be heard on 5 February 2017 in Ballarat.

(a) whether Ms Jackson should be given leave to further amend her Statement of Claim to, in effect, plead a new cause of action in respect of the fire - albeit one still connected with the operation of the tractor;

(b) whether there should be 'class closure' of the proceeding - i.e. requiring group members to register with Ms Jackson's solicitor, with a consequent failure to do so resulting in any potential claim outside this proceeding being barred; and

(c) whether Ms Jackson should be given leave to discontinue her claim as against the third defendant, the estate of the late Mr Bruty.

6 For reasons that I shall now set out, I have concluded:

(a) that Ms Jackson should be given the opportunity to re-plead her case in the form of the draft Further Amended Statement of Claim ('the draft'),[2] notwithstanding that it raises a completely different assertion as to the likely cause of the fire and, inevitably, different allegations relating to negligence;

(b) that on the material provided by Ms Jackson it is inappropriate to close the class; and

(c) that Ms Jackson should be given leave to discontinue the claim as against the estate of the late Mr Bruty.

The first issue - the amendment to Ms Jackson's pleadings

7 For the purpose of this application, the following seems clear:

(a) the fire commenced at about 3.00 pm on 8 January 2013 at a property situated at 17 McIntoshs Lane, Snake Valley ('the property');

(b) the fire spread from the property to surrounding areas within the Pyrenees Shire;

(c) Ms Jackson's case has always identified the operation of the tractor as being the operative cause of the fire;

(d) until November 2016, Ms Jackson's case relied upon the proposition that burning particles emitted by the tractor's exhaust were the cause of the fire ('the particle theory'). This theory has underpinned the allegations of negligence;

(e) for some time, counsel for the defendants, their solicitor and their experts have maintained that the design of modern tractors, including the Massey Ferguson tractor, precludes particles being emitted in such size that they can ignite a fire. The expert report of Dr Robert Casey (an engineer), obtained by the solicitor for Ms Jackson in early November of this year, accepts this proposition. In his report, Dr Casey discounts the particle theory and advances an alternative hypothesis - that there was an accumulation of debris in or around the engine which ignited and caused the fire ('the accumulated debris theory');

(f) the draft now seeks to advance, inter alia, the accumulated debris theory as the operative cause of the fire, which underpins the allegations of negligence; and

(g) the draft propounds two alternative explanations for the cause of the fire both concerned with an overheating of the tractor.

8 In Northern Health v Kuipers, and in the context of a late amendment to a pleading (in that case a defence), the Court of Appeal noted:

The Civil Procedure Act 2010 ("Act") is pivotal to the resolution of disputes about case management issues in civil proceedings to which the Act applies. The Act is applicable to the proceeding below and to the application for leave to appeal to this court. As the present case demonstrates, it is important that, in resolving such disputes, trial judges engage with the Act's provisions in balancing the competing interests of the parties and those of the administration of justice more generally.[3]

9 There are a number of relevant provisions of the Civil Procedure Act 2010 ('the CPA') which I need not set out.[4] It is, however, helpful to set out section 9 of the CPA:

Court's powers to further the overarching purpose

(1) In making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the following objects -

(a) the just determination of the civil proceeding;

(b) the public interest in the early settlement of disputes by agreement between parties;

(c) the efficient conduct of the business of the court;

(d) the efficient use of judicial and administrative resources;

(e) minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for -

(i) the fair and just determination of the real issues in dispute; and

(ii) the preparation of the case for trial;

(f) the timely determination of the civil proceeding;

(g) dealing with a civil proceeding in a manner proportionate to -

(i) the complexity or importance of the issues in dispute; and

(ii) the amount in dispute.

(2) For the purposes of subsection (1), the court may have regard to the following matters -

(a) the extent to which the parties have complied with any mandatory or voluntary pre-litigation processes;

(b) the extent to which the parties have used reasonable endeavours to resolve the dispute by agreement or to limit the issues in dispute;

(c) the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding;

(d) the degree to which any lack of promptness by a party in undertaking the proceeding has arisen from circumstances beyond the control of that party;

(e) the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;

(f) any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;

...

10 Of course the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules') also provide that the Court may make, at any stage, an order that a pleading be amended or that a party have leave to amend a pleading.[5]

11 In addition to the provisions of the CPA and the Rules there are statements of principle of the High Court, particularly in Aon Risk Services Australia Ltd v Australian National University.[6]

12 With each of these matters in mind, I have identified the following factors as being relevant to the consideration of an amendment to a pleading:

(a) whether there will be a substantial delay caused by the amendment;

(b) whether there is an irreparable element of unfair prejudice caused by the amendment;

(c) concerns of case management arising from the stage in the proceeding when the amendment is sought;

(d) whether the grant of the amendment will lessen public confidence in the judicial system; and

(e) whether a satisfactory explanation has been given for seeking the amendment at the stage when it is sought. [7]

13 To this list I would add the following observation which, I am afraid, is trite: each case turns on its own circumstances and that, at the end of the day, the primary question must be: what do the interests of justice dictate? In reaching any determination, one does not look solely at the question of injustice for the party seeking the amendment but also to any consequential effects upon his or her opponents and, perhaps not equally as important but no doubt relevant, the Court in the management of its business.[8]

14 In determining such an application it is not, save for the most unusual case, necessary for parties seeking the amendment to substantiate the proposed amendment with evidence. I mention this because at times in the course of submissions made by the counsel for the defendants it was suggested that Ms Jackson was obliged to do so. Recently John Dixon J, in Fabfloor (Vic) Pty Ltd v BNY Trust Company of Australia Ltd, stated the point succinctly:

It is not now and never has been the law of this state that, absent special circumstances,[9] a party must by evidence verify in advance a claim to be pleaded in a proceeding. The long-standing principle is that a party, or more usually, a party's legal representatives must certify that there is a proper basis for the allegations made in the pleading. Rule 13.01(3) provides that a pleading must be signed, either by counsel who settled it, or by the party's solicitor. [10]

15 So, to require a party to produce evidence prior to granting an amendment is effectively putting the cart before the horse. All lawyers are now under statutory obligations under the CPA in relation to putting matters before the Court regarding allegations raised in the course of a proceeding. It should be assumed that if the allegation is made (and where necessary a proper basis certification under the CPA filed) that there is a sound basis for doing so. If it transpires (not during the course of the trial but when the case has concluded and the evidence is in) that the lawyers had no such belief, then their conduct can be examined afresh. But it is not the role of the Court in the course of an application to amend a pleading to conduct a forensic examination of the conduct of the lawyers or require that the evidentiary basis for the amendment be disclosed unless the allegations raised are such as to warrant explanation.

16 Paragraphs [15] to [18] of the draft clearly set out the new case that Ms Jackson wishes to bring. There is no basis to refuse the amendment as:

(a) whilst the application is made late, it is not so late that appropriate trial management techniques cannot be applied to accommodate the change of tack;

(b) there is proper basis for the amendment - namely the expert opinion of Dr Casey. Although it was belatedly commissioned (in September 2016 for a trial in February 2017), once the report was received the lawyers for Ms Jackson acted reasonably in promptly bringing the application to amend the statement of claim to align with Dr Casey's opinion;

(c) apart from the forensic disadvantage of having to meet a new case, there is no substantive prejudice to the defendants. Of course they will have to ask their experts to address the new case - but that should not take long and they will have the benefit of the report prepared by Dr Casey; and

(d) the vacation of the trial date is unfortunate but not a disaster, as the trial can be heard in Ballarat in September 2017.

17 Accordingly, I propose to grant leave to Ms Jackson to further amend the statement of claim (i.e. paragraphs [15] to [18]) in the form of the draft.

18 I should add that I do not accept the defendants' submission that the claim based on the accumulated debris theory espoused by Dr Casey needs further particularisation, as requested by its counsel. The complaints made by counsel were essentially requests for further evidence and, to my mind at least, demonstrated great, if not total, familiarity with the case which the defendants now face. There is no need for any further particularisation of this part of the case.

19 That said, the claims brought under paragraph [20A] to [20D] of the draft, relating to overheating, do not contain any adequate particularisation. There is no expert report to support this case and the allegations do not identify, in any proper way, the case the defendants will have to answer at trial: what is meant by overheating, how it occurred and the way in which it contributed to the start of the fire.

20 I propose to order that Ms Jackson provide further and better particulars in relation to paragraphs 20A, 20B, 20C and 20D of the draft.

21 The circumstances of this application warrant a further step: in any civil proceeding in this State, a legal practitioner acting for a party in the proceeding must file a proper basis certification declaring that, on the factual and legal material available, there is a proper basis for each allegation of fact in a pleading. A proper basis certification is filed with the party's first substantive document in the case.

22 Section 42 of the CPA makes clear that the onus of filing a proper basis certification endures as the litigation proceeds:

(1) A legal practitioner acting for a party in a civil proceeding must file a proper basis certification in the following circumstances:

(a) on the filing of the party's first substantive document in the proceeding;

(b) on the filing of any subsequent substantive document in a civil proceeding which:

(i) adds or substitutes a party;

(ii) makes, adds or substitutes a claim or cause of action;

(iii) makes, adds or substitutes a substantive defence or substantive matter by way of response or reply;

(iv) makes, adds or substitutes a material allegation, denial or non-admission of fact or law;

(v) makes any significant amendment to a first substantive document or a subsequent substantive document;

(c) as provided for by the UCPR;

(d) as directed by the court.

23 A statement of claim is defined as a substantive document.

24 Ms Jackson's legal practitioners should file a proper basis certification in relation to each of the three theories espoused in the draft. The proposed amendment to Ms Jackson's claim has the effect of, at the minimum, substituting a claim[11] or a material allegation[12] and, at the highest, constitutes a significant amendment to the earlier statements of claim.[13]

25 Upon the filing of the certification, the Court will assume that Ms Jackson, who is advancing the pleading, can establish her allegations at trial.[14]

The second issue - should there be class closure?

26 Brendan Pendergast, solicitor for Ms Jackson, deposes in his affidavit (sworn 7 November 2016) that, to date, twelve registrations and one opt out notice have been received from group members. He also says that notification from only one insurer of properties that were damaged or destroyed by the fire has been received, listing approximately 20 claims, which are recoverable pursuant to its right of subrogation. Mr Pendergast requests that the Court make an order for class closure.

27 In Matthews v SPI Electricity Pty Ltd (Ruling No 13), I discussed the relevant considerations for a court in determining whether to make an order for class closure.[15]

28 The current proceeding is an open class action - i.e. it is brought on behalf of all persons who suffered damage as a result of the fire; not just those who have registered with Mr Pendergast's firm. Class closure requires not only that the group be defined precisely but that group members take a positive step (usually registration) so as to be included in the group. In some cases if a group member does not register (or perhaps, if given the opportunity, opts out) then the group member will not have the ability to participate in the distribution of the proceeds of any settlement and will, in many cases, be precluded from bringing any subsequent claim against the defendant(s) on his or her behalf.[16]

29 The underlying purpose of class closure is two-fold - to accurately fix the numbers who will participate in any settlement scheme and to provide the defendant(s) with certainty that a settlement will cover the field - with the exception of the identified group members who have opted out.

30 As class closure is often complex and potentially unfair to some group members, courts have, at times, been reluctant to make such orders.[17] Usually orders giving effect to class closure are made with the intention of encouraging settlement and on the basis of a joint application by the parties to the proceeding.[18]

31 In Matthews, I said as follows (which I think still holds good) in respect of the making of such orders:

Ultimately, it is a question of balance and judicial intuition. It requires a determination as to when in the course of a proceeding it is appropriate and in the interests of the group as a whole to require a step to be taken which may promote a prospective settlement as against simply letting the case proceed, perhaps interminably, without requiring group members to lift a finger - even if that course leads to disaster. [19]

I then ordered class closure in relation to economic loss and/or property damage claims but not in relation to personal injury and dependency claims.

32 Returning to this case, I assume that the group members who have not opted out have elected to remain in the class (as they are entitled to). Ultimately, absent any orders to the contrary, the group as defined will be bound by the judgment.[20]

33 There is nothing that encourages me to take the significant step of requiring class closure. The defendants do not seek such an order. There is no real suggestion that settlement negotiations would be assisted by the making of such an order. At best, Mr Pendergast opines that the prospects of a successful mediation 'will be increased'. The exercise would be costly and in the context of this case, disproportionate to any benefit.

34 At the moment, and particularly given the lack of enthusiasm of the defendants for such a step, I decline to make the order sought for class closure. Of course, this does not preclude Ms Jackson seeking to make this application again at an appropriate time.

The third issue - should the Claim against the estate of the late Mr Bruty be discontinued?

35 Section 33V of the Supreme Court Act 1986 ('the Act') provides that a group proceeding may not be discontinued without the approval of the Court. Ms Jackson seeks orders discontinuing the claim against the estate of the late Mr Bruty.

36 Recently, in Laine v Thiess Pty Ltd, Dixon J discussed the relevant principles:

In Wotton v State of Queensland ('Wotton'), where leave to discontinue an entire proceeding was sought, Rares J observed:

Under s 33V(1), a representative proceeding cannot be settled or discontinued without the approval of the Court. The decided cases on s 33V(1) all appear to have been concerned with settlements, rather than discontinuances. The considerations affecting a settlement are not always the same as a discontinuance. It is important that any order that is made has regard to the interests not only of the present parties but of group members who may be affected by the terms of any grant of leave to discontinue.

In Mercedes Holdings Pty Ltd v Waters (No 6), Jacobson J determined that considerations of fairness and reasonableness were pertinent to any application to discontinue a representative proceeding. That proceeding concerned discontinuance of claims against particular defendants, not discontinuance of the entire proceeding.

In Pendrigh v Ex ADA Ltd Derham AsJ adopted a slightly different approach, considering whether discontinuance of the entire proceeding was fair and reasonable and if it would be in the interests of group members.

...

In the present case, it is clear that the plaintiff requires court approval for discontinuance of the proceeding by force of s 33V of the Act, notwithstanding that the proceedings have not been served and the basis for the discontinuance is that the proceedings have no real prospect of success. In Wotton, Rares J approached the question of approval from the perspective of how the discontinuance would affect the interests of group members. That approach is plainly what is required in the present case, since discontinuance is, as I will shortly demonstrate, unarguably in the interests of the parties.[21]

37 The claim against the late Mr Bruty was premised solely on the basis that he was the owner of the tractor. Given the admission contained in paragraph 9 of the defence that the tractor was owned by the first defendant, GP & JM Bruty Pty Ltd, Mr Bruty could not have been liable. There is also no suggestion that GP & JM Bruty Pty Ltd will not be able to meet any putative judgment obtained by Ms Jackson. I am also prepared to assume that Ms Jackson's lawyers have thoughtfully considered any potential downside of discontinuance.

38 Accordingly, the application should be granted. I will order that pursuant to s 33V of the Act that Ms Jackson have leave to discontinue the proceedings against the estate of Mr Bruty.

39 There is a remaining issue: Section 33X(4) of the Act provides that unless the Court is satisfied that it is just to do so, an application for approval under s 33V must not be determined unless notice has been given to group members. Counsel for Ms Jackson submitted that I should dispense with this requirement.

In making any order or giving any direction in a civil proceeding, the Court is required to further the overarching purpose to facilitate the just, efficient, timely, and cost effective resolution of the real issues in dispute in the proceeding, by virtue of s 8 of the Civil Procedure Act 2010 (Vic). In determining whether it is just to dispense with the notice to group members under s 33X(4) of the Supreme Court Act, I must seek to give effect to the overarching purpose by having regard to the matters set out in s 9 of the Civil Procedure Act.[22]

41 As I see it, there is no real prospect that any group member would oppose the order being made. Given the considerable expense and inconvenience associated with notifying group members of the discontinuance against the estate of Mr Bruty (with no tangible or practical benefit to those group members), I will order that the requirement of s 33X of the Act (that notice be given to group members of the application for approval under s 33V of the Act regarding the discontinuance of the proceedings against the estate of Mr Bruty) be dispensed with.

42 It was accepted that if I granted the amendment, the trial date would need to be vacated.

43 Subject to hearing from the parties, I propose to make the following orders:

1. The requirement of section 33X of the Act that notice be given to group members of the application for approval under section 33V of the Act of the discontinuance of the proceedings against the third defendant is dispensed with.
2. Pursuant to section 33V of the Act the plaintiff has leave to discontinue the proceedings against the third defendant.

1. The plaintiff has leave to file and serve a further amended statement of claim.
2. By 16 December 2016, the plaintiff file and serve a further amended statement of claim.
3. By 16 December 2016, the plaintiff's legal practitioner file a proper basis certification in relation to the substantive allegations in the further amended statement of claim.

1. By 6 January 2017, the plaintiff is to file and serve further and better particulars of paragraphs 20A, 20B, 20C and 20D of the further amended statement of claim.

1. By 27 January 2017, the defendants file and serve a defence to the further amended statement of claim.

1. The order of the Honourable Justice John Dixon made on 15 April 2016 is varied as follows:

(a) The date in paragraph 5 is extended to 24 February 2017.

1. The order of the Honourable Justice J Forrest made on 29 September 2016 is varied as follows:
   • (a) The date in subparagraph 2(a) is extended to 31 March 2017;
   • (b) The date in subparagraph 2(b) is extended to 14 April 2017;
   • (c) The date in subparagraph 2(c) is extended to 28 April 2017.

1. The order of the Honourable Justice J Forrest made on 29 September 2016 is varied as follows:
   • (a) For the parties lay witness lists, the date in paragraph 5 is extended to 12 May 2017;
   • (b) For the mediation to be completed, the date in paragraph 6 is extended to 31 May 2017.

1. The trial date of 6 February 2017 be vacated and the proceeding be re-listed for trial in Ballarat in respect of the issues of liability only on 18 September 2017 on an estimate of 15 days.

1. The directions listed on 31 January 2017 be vacated and the proceeding be relisted for further directions on 7 June 2017 at 10.00 am.

1. The parties have liberty to apply on 24 hours' notice.

44 I will also give the parties the opportunity to make submissions as to the costs of the application of 11 November 2016 and any costs thrown away by reason of the amendment.

[1] The lead plaintiff brought the proceeding on her own behalf and on behalf of the group members, those of whom suffered loss of or damage to property, economic loss, whose enterprise suffered loss or damage, whose use or enjoyment of land was interfered with, who suffered personal injury and the legal representatives of the estates of any deceased persons who suffered from any of the above.

[2] Exhibit BFP-1 to the Affidavit of Brendan Francis Pendergast sworn on 7 November 2016.

[3] [2015] VSCA 172, [22] (Kyrou and McLeish JJA) ('Northern Health') (citations omitted).

[4] Sections 7, 8 and 25 and Part 4.2 relating to case management.

[6] (2009) 239 CLR 175, [5] (French CJ), [111], [113] See also: (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[7] See Ultra Thoroughbred Racing v Those Certain Underwriters (Ruling) [2011] VSC 370, [8].

[8] Northern Health [2015] VSCA 172, [33].

[9] Such as where an amendment that necessarily implies that there was no proper basis for the pleading prior to its amendment is sought late in a proceeding resulting in a significant recasting of the issues in dispute.

[10] [2016] VSC 99, [42].

[14] Fabfloor (Vic) Pty Ltd v BNY Trust Company of Australia Ltd [2016] VSC 99, [45] (Dixon J).

[15] [2013] VSC 17; (2013) 39 VR 255 ('Matthews').

[16] See Matthews [2013] VSC 17; (2013) 39 VR 255 [3] - [6].

[17] See Winterford v Pfizer Australia Pty Ltd [2012] FCA 1199; King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2002] FCA 1560 [9].

[18] See Matthews [2013] VSC 17; (2013) 39 VR 255[31] - [39] and more recently Muswellbrook Shire Council v Royal Bank of Scotland NV [2016] FCA 819 [8] - [30].

[19] [2013] VSC 17; (2013) 39 VR 255, 273 [76].

[20] See Timbercorp Finance Pty Ltd (in liq) v Collins [2016] HCA 44 [9], [52].

[21] [2016] VSC 689, [10]-[12], [14] ('Laine') (citations omitted).