Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd

The motion 8 This is a motion filed on 15 April 2011 seeking further and better particulars of both the defence and the amended cross-claim. The motion is brought by PI and Mr Power, who are the first and second cross-respondents to DEE's cross-claim, and to whom I shall collectively refer as "Power". It seeks an order from the Court that DEE answer at least 80 questions put to it in a letter dated 11 April 2011. The motion was filed because Power is dissatisfied with answers given to a previous request made on 11 March 2011 and answered on 28 March 2011 and pressed (for the most part) despite a detailed response to the letter given on 26 April 2011. In the meantime, too, documents supporting some of the allegations have also been provided. 9 The motion is supported by an affidavit of John Graham Tomko, Power's solicitor, sworn on 15 April 2011, which annexes some of the correspondence between the parties bearing on this issue. DEE opposes the orders sought. It relies on Mr Black's affidavit and a number of documents exhibited to it.

The relevant principles 10 Young CJ in Eq provided a convenient summary of the relevant principles in Deemah Marble & Granite Pty Ltd (in liq) v Sutherland [2001] NSWSC 829 at [6] ("Deemah Marble & Granite"): (1) The basal function of particulars is to reduce costs by alerting the opponent to the scope of the real case being made so the opponent is not caught by surprise, nor does the opponent waste time and money in preparing to meet issues that the other party does not intend to raise: see eg Sims v Wran [1984] 1 NSWLR 317, 321 and Banque Commerciale SA (In Liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286. (2) Particulars are supplied of the material facts pleaded as P E Joske J said in Trade Practices Commission v Total Australia (1975) 24 FLR 413, 417: "While the defendant is entitled to know the case it is called upon to meet, it is not entitled to be told the evidence that will be called to prove the case. A defendant is entitled to ask for the material facts upon which the plaintiff will rely and he may make his request for the facts and matters relied on, which is taken to mean the same thing. When he asks for the facts and circumstances relied on he is going beyond the scope of particulars, and is probing for evidence." (3) However, every litigation lawyer knows it may be appropriate, in order to carry out the aim which I have stated in (1), it will almost be inevitable to disclose some of the evidence, and that if this happens, it is no answer that evidence must be disclosed by the giving of the particulars. See Sims v Wran at 321 and Wilson v Wilson (1952) 69 WN 358. (4) The party's obligation is only to supply the best particulars he or she can supply, provided that after discovery those particulars are supplemented, if possible; see Marshall v Inter-Oceanic Steam Yachting Co (1885) 1 TLR 394. (5) When one party has the means of knowing the real facts, ordinarily the opponent will not be ordered to supply particulars until after discovery: Millar v Harper (1888) 38 Ch D 110; TPC v CC (NSW) Pty Ltd (1995) 131 ALR 581, 593. (6) The degree of particularity depends upon the nature of the case: American Flange and Manufacturing Co Inc v Rheem Australia Pty Ltd [1963] NSWR 1121, 1126. (7) In equity, because other remedies may seem appropriate, and because evidence is filed by affidavit, the Court is less likely to order particulars and will not permit parties to slow down proceedings unjustifiably in their preparation for trial. This proposition is partly derived from the American Flange case and partly from the tactic used up to about 1980 by large firms acting for defendants, who created delays by constant requests for copious particulars, a worldwide phenomenon, as shown by the judgment of Wessels JA in the Appellate Division of the Supreme Court of South Africa in Moaki v Reckitt & Colman (Africa) Ltd (1968) 3 SA 98, 102. (8) The order for particulars is discretionary, the object being to ensure the efficient process of the Court. 11 The point his Honour made at (7) is of particular relevance here. In Police & Nurses Credit Society Ltd v Burgess Rawson (WA) Pty Ltd [2006] FCA 1395 at [17] French J (as his Honour then was) went further: What are "necessary" particulars of any claim, defence or other matter pleaded is a matter of judgment. The underlying principle is that the case of each of the parties is adequately exposed to the other. It is important to maintain a sense of balance in the detail of particulars sought and ordered. The provision of particulars should not be allowed unduly to increase the cost and delay associated with litigation. In contemporary commercial litigation where, frequently, the court will direct the filing of witness statements or affidavits on either side subject to the right to cross examination, the necessity for elaborate particulars and lengthy debates about them is even more questionable. 12 These remarks are reinforced by the terms of Part VB of the Federal Court of Australia Act 1976 (Cth) ("the Act"). Section 37M(1) declares that the overarching purpose of the civil procedure provisions of the Act and Rules is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible ("the overarching purpose"). Section 37M(3) imposes an obligation on the Court to exercise any power conferred by the Act or the Rules in the way that best promotes the overarching purpose. 13 The application of these principles to this case persuades me that the orders sought should not be made.

The relevant rules 14 Order 12 rule 1(1) of the Federal Court Rules provides that a party pleading shall state in the pleading or in a document filed and served with it the necessary particulars of any claim, defence or other matter pleaded. Subrule (2) provides that rules 2 to 4 do not affect the generality of subrule (1). Rule 2 requires a party pleading to give particulars, amongst other things, of fraud. Rule 3 provides that a party pleading any condition of mind (defined so as to exclude knowledge) must give particulars of the facts on which he relies. Rule 4(1) requires a party claiming damages that include a claim for moneys "he has paid or is liable to pay" to particularise those moneys. 15 The power to make an order for particulars is conferred in O 12 r 5 which relevantly provides: 5 Order for particulars (1) The Court may order a party to file and serve on any other party: (a) particulars of any claim, defence or other matter stated in his pleading, or in any affidavit ordered to stand as his pleading; … (2) Without limiting the generality of subrule (1), where a party alleges as a fact that a person had knowledge or notice of some fact, matter or thing, the Court may order that party to file and serve on any other party: (a) where he alleges knowledge, particulars of the facts on which he relies; and (b) where he alleges notice, particulars of the notice. 16 It follows from what I said in [12] above, that in exercising this power I am bound to have regard to the need to facilitate the just resolution of this dispute (and the other matters awaiting trial) in the quickest, least expensive and most efficient way possible.

The issues 17 DEE's objections to the Power requests shortly put are that Power is asking DEE for its evidence and not for particulars of material facts and the request is so demanding that it flies in the face of the overarching purpose. In large part the objections are well founded. It is also particularly vexing that, without explanation, Power chose to file its notice of motion four days after making the request and after its solicitors had been told that the solicitor with the carriage of the matter for DEE (Mr Black) was away, that he would attend to the request upon his return, and when Power's solicitors had been advised of the return date. After his return the further request was answered, as might reasonably have been anticipated. This attempt to rely on the coercive powers of the Court is at least discourteous, and does not further the overarching purpose. 18 In oral submissions Mr Cotman SC, who appeared for Power, reduced his clients' grievances to two areas. The first related to the allegations in the amended defence and the amended cross-claim that Power comply with DEE's codes of conduct. The second related to the allegations of overcharging.

Resolution 19 In paragraph 2 of the amended defence, DEE alleges that, in October 2007, PI was engaged by DEE to provide services in respect of the Transpower New Zealand North Island transmission line upgrade project. It alleges that it was a term of PI's engagement that both Power and PI would conduct itself and himself with personal and professional integrity in all aspects of its and his activities and deal honestly and fairly with DEE, avoid any situation or interest that might place it or him in a position of conflict of interest, or create an appearance of conflict of interest, and comply with all applicable laws, regulations and DEE's policies. 20 Particulars of those allegations were provided in the following terms: Particulars That term was implied in fact, or alternatively was incorporated by the agreement of the parties recorded in an email dated 23 October 2007 by which Mr Power confirmed that "... DEE has made me aware of its high ethical standards and ... I will comply with those standards" The Downer EDI Limited Corporate Code of Conduct dated 12/2003 required inter alia, that: (i) each of PI and Power were to be loyal to DEE show the highest business integrity in their dealings with others and conduct DEE's business in accordance with law and principles of good business practice; (ii) each of PI and Power were not to engage in activities or hold or trade assets that involve or could appear to involve a conflict between their personal interests and the interests of DEE; (iii) each of PI and Power were not to make any unauthorised gains or payments and were only to use company assets as authorised; and (vii) any instances of non-compliance with the Code may result in DEE taking disciplinary action including dismissal or removal of PI's and or Power's engagement. The Downer EDI Engineering Code Of Conduct NSW dated August 2007 required, inter alia, that: (i) each of PI and Power was required to deal honestly and fairly with DEE and dishonesty was viewed as a serious breach of the Code of Conduct; (ii) all company financial reports were to accurately reflect the relevant facts or the true nature of a transaction and improper or fraudulent reporting was seen as contrary to DEE's policy, and may be in violation of the law; and (iii) each of PI and Power were to avoid situations where their personal interests may be in conflict with the interests of DEE. including where additional external employment or business interests conflict with the requirements or interests of DEE or where PI or Power had close ties with a competitor. 21 In paragraph 46 of the defence, in an allegation which is also made in the cross-claim, DEE alleges non-compliance with the implied or incorporated term in the agreement with Power and PI. The reasons given are that PI overstated the on-costs of the personnel provided to DEE in invoices to DEE and in breach of the MOU, and failed to ensure that all on-costs that were incurred were justified and reasonable and accurately supported by valid receipts or other appropriate documentation, and that such failure was in breach of the obligations pleaded in paragraph 2(b) and 4(b) of the defence. Detailed particulars are given of the way in which the obligations have been breached (see [6] above). 22 Mr Cotman foreshadowed a number of arguments concerning the substance of the allegations DEE makes with respect to adherence to the codes of conduct which might reasonably be put at the trial, but which, in my view, are not properly complaints about the pleading and do not justify an order for further and better particulars. 23 Power submitted that it was necessary for DEE to identify all the applicable laws, regulations and policies applicable to the engagement and all the facts and matters relied upon for the implication of the alleged term. I disagree. It is clear from the pleadings and the correspondence that DEE's case is that it was a term of the agreement made with DEE that Power comply with all applicable laws, regulations and DEE's policies and that (the Trade Practices Act/Fair Trading Act question aside) the only allegation of non-compliance related to the DEE codes of conduct. Mr Williams, who appeared for DEE on the motion, confirmed that this was so, and for this reason I ordered that the words "inter alia" be struck from the statement of the particulars in the amended cross-claim and defence, removing the first grievance in Power's request of 11 April 2011. Copies of the codes were provided to Power's solicitors with the letter from Mallesons of 28 March 2011 in reply to the first request for particulars. As I have already said, the nature of the non-compliance is set out in the particulars in the amended defence and cross-claim. 24 The starting point for any assessment of the adequacy of the particulars given, and the reasonableness of further requests, is the allegations themselves. The relevant allegations are those contained in paragraphs 2-14 of the cross-claim and paragraphs 4, 20-21, 28-32, 42 and 46 of the defence. 25 Several of the questions are couched in terms of a request that DEE identify "all facts and matters (but not evidence)" for certain of the allegations. This is a paraphrase of previous requests that Power provided, for "all facts and circumstances", which was met with the response that the request was not a proper request for particulars, but sought evidence. In my view, despite the apparent endorsement of such an approach in Trade Practices Commission v Total Australia (1975) 24 FLR 413, the change of language in this case is merely cosmetic. This is not a demand that DEE provide material facts, which was what Trade Practices Commission v Total Australia was concerned with. The particulars DEE has provided to date are sufficient to enable Power to know the case it has to meet. In my opinion, the additional burden it seeks to impose on DEE at this point in the proceeding is unreasonable. 26 Where Power asks for itemised calculations of each head of damage (for example in relation to the request for further and better particulars of paragraph 14 of the amended cross-claim) at this point in the proceedings the request is misconceived. The information is not necessary to enable Power to know the case it has to meet. 27 In other cases, DEE has indicated it will provide further and better particulars after discovery. PI contends that this is a "vice" in DEE's approach as the particulars are "necessary to allow the definition of issues for the purposes of discovery. Discovery will not resolve this". I reject the contention. 28 In each case, I regard DEE's position as entirely reasonable and proper. Its position is that before it can provide further particulars, it needs to know what PI's actual on-costs were. Discovery should produce the necessary material. It is absurd to suggest, as PI does, that these particulars are necessary to define the issues for discovery. To the extent that any ambiguity arose from earlier correspondence or from the pleadings themselves, the ambiguity has been removed by counsel's submissions or concessions made in court in response to questions from the bench, questions that could have been - but were not - asked in correspondence. 29 In all the circumstances, I am at a loss to understand why it was necessary to seek to invoke the coercive powers of the Court. It is to be remembered that s 37N(1) of the Act imposes a duty on the parties to conduct the proceeding in a way that is consistent with the overarching purpose. Section 37N(2) requires that a party's lawyer must take account of that duty and assist the party to comply with it. Some of the concerns raised by Power could undoubtedly have been assuaged by a telephone call between counsel at much less cost and inconvenience. 30 My responses to the specific requests in the letter of 11 April 2011 are as follows:

Paragraphs 3, 8 31 These requests concern the allegations relating to the breach of DEE's codes of conduct. I decline to require further particulars.

Paragraph 9 32 In its letter Power asked which of the on-cost representations is alleged to be misleading or deceptive, or likely to mislead or deceive by reason of the allegations made in this paragraph. DEE replied that each was. In my view, that is an adequate response. 33 Power also required that, with respect to each representation, DEE identify the specific document, the specific content alleged to be false, what is alleged to be the true position at the time the statement was made, the facts on which DEE relies for establishing the true position, the amount claimed as damage flowing from the allegedly false representation, the amount invoiced and paid, and the amount alleged to be correctly payable. Power suggested that the particulars be provided in the form of a Scott Schedule. Power complains that the allegations are allegations of fraud and must therefore be particularised with care and in some detail. DEE denies it is alleging fraud, only misleading or deceptive conduct. Mr Cotman submitted these were "weasel words" and there is some substance to that submission. 34 I have some sympathy with Power's position but, in my view, the request for any more information than has already been provided is premature. The amounts actually invoiced are known to Power. Indeed, it tendered copies of the actual invoices at the hearing of the motion. The allegation is that the figures were overstated. On the information presently available to DEE (which I was informed derives from an audit of PI conducted by or on DEE's behalf) the overstatement amounts to at least $325,779. That is the precise figure DEE seeks in its cross-claim (with interest). DEE submits that the true position (that is the complete position) will be revealed after both PI and Mr Power give discovery because only then will it have the information from which the invoices were drawn. 35 I do not consider that it is necessary to provide the degree of particularity Power seeks at this point in the proceeding. I leave open the question of whether or not it might be necessary at a later stage. For the moment I refuse the requests.

Paragraph 10 36 Paragraph 10 of the amended cross-claim pleads: Power knew that the On-Cost Information and the On-Cost Invoices overstated the on-costs that were properly payable to DEE and were not justified and reasonable or supported by valid receipts or other appropriate documentation. Particulars That knowledge is to be inferred from Power's control of and involvement in PI's business and his knowledge of the actual costs incurred in that business. 37 Power seeks from DEE a description of "all facts and matters (but not evidence)" on the basis of which it is alleged that Mr Power knew at the time each statement was made that each relevant item of on-cost information overstated the on-costs, was not justified and reasonable and was not supported by valid receipts or other appropriate documents". It seeks a description of the facts upon which DEE relies to allege that Mr Power knew them or knew what valid or appropriate documents are referred to as required to support each matter. It also seeks that DEE identify all facts and matters (but not evidence) on the basis of which it is alleged that Mr Power knew at the time each statement was made that each of the on-cost invoices overstated the on-costs, was not justified and reasonable, or was not supported by valid receipts or other appropriate documents, and requires DEE to state the facts upon which it relies to allege that Mr Power knew the true position, and the valid or appropriate documents required to support each matter. 38 DEE replied that the particulars to the paragraph were sufficient to enable PI and Mr Power to know the case they had to meet and that it was not obliged to give particulars of knowledge by reason of O 12 r 3(2) of the Federal Court Rules. I accept the response and decline to order further particulars. Order 12 r 5(2) gives the Court the power to make such an order. In this case, however, no such order is appropriate. The particulars given are clear enough. Anything further can only require DEE to produce its evidence.

Paragraph 13 39 Paragraph 13 reads: In reliance on the On-Cost Representations, DEE accepted, without further verification, the rates specified in the On-Cost Information and paid the On-Cost Invoices. Particulars DEE accepted the rates specified in the On-Costs Information by return email sent by Mr McKenna of DEE to Mr Power on 1 September 2008. 40 The request in connection with this paragraph is for "all facts and matters (but not evidence)" on the basis of which it is alleged that DEE relied on the on-cost representations in accepting the rates specified and paying the on-cost invoices. It also asks that DEE specify with particularity when the alleged loss and damage was allegedly suffered. DEE's response was to refer to the particulars already provided, and to indicate that, with respect to subparagraph (1), the other matters upon which DEE relies are matters of evidence. 41 With respect to the request regarding the loss and damage allegations, DEE replied that it suffered "potential loss and damage at the time it accepted the rates specified in the on-cost representation without further verification on the basis of the alleged representations and actual loss and damage at the time of paying the on-cost invoices". 42 That is undoubtedly a sufficient and proper response.

Paragraph 14 43 This is another request for DEE to identify "all facts and matters (but not evidence)" to indicate the basis upon which it is alleged that DEE suffered loss and damage, to quantify the damage, whether the quantum is the amount pleaded and, if not, to indicate each head of damage, the extent that such head of damage includes any moneys DEE has paid or is liable to pay and the amounts and, to the extent that the head of damage is comprised within the pleaded amount to quantify it item by item. 44 DEE confines its case at present to the pleaded sum. Its answer identifies the damage as "at least" that sum. It envisages that discovery may prove that the sum is an undervaluation. Until leave is sought and granted to amend the pleading it remains the amount claimed. Whilst there was an ambiguity created by the pleading of the claim which sought an order that the sum be paid as well as damages, Mr Williams made it plain that DEE was seeking the amount of overpayment either by restitution or through an award of damages for misleading or deceptive conduct. 45 DEE has undertaken to provide further and better particulars after discovery. 46 The pleading is sufficient to put Power on notice of the case it has to meet.

Paragraph 15 47 Paragraph 15 of the amended cross-claim pleads that PI was not entitled to charge DEE the amount of the on-cost overcharge and that DEE paid the overcharge by a mistake of fact, arising from its belief in the accuracy of the information, invoices and representations. 48 Power asks that the mistake be specified with particularity and that the person or persons who made it be identified. 49 DEE replied in words to the effect that the alleged mistake was a mistaken belief in the accuracy of the information, invoices and representations, and that it was DEE who made the alleged mistake. 50 Mr Cotman insisted that it was necessary to identify the person within DEE who made the mistake. He submitted that, depending on who is nominated as having being mistaken, Power would have a different response and the identification of the person who was misled is an integral part of the allegation and a material fact. I reject the submission. As the moneys were paid by DEE after PI submitted invoices signed by Mr Power I fail to see why Power needs to know any more than what DEE has told them in order to understand the case put against it.

The Amended Defence 51 The requests for particulars of the amended defence are similar to the requests for particulars of the amended cross-claim and must suffer the fate of those requests.

Paragraph 4 52 I reject the request for further particulars concerning paragraph 4 which deals with the codes of conduct for the reasons given earlier. I regard the answer given to the request for further and better particulars of paragraph 20 to be sufficient.

Paragraph 21(b) 53 Power here complains that DEE has not provided particulars of what is meant by "actual on-costs incurred". This relates to an allegation that PI was "only entitled to invoice, or recover from DEE, its actual on-costs incurred" in respect of personnel provided to DEE". I must confess to having trouble understanding where the room for ambiguity arises. I gather that this is a request in a different guise for precise figures of what PI was entitled to charge DEE for the on-costs associated with the employment of each individual. As I have already indicated, DEE should provide that information in due course. I do not consider, however, that it is reasonably necessary for it to be provided at this stage. This is an example of the situation referred to in Deemah Marble & Granite per Young CJ in Eq in point (5) of the summary of principles above. That is to say, where one party has a means of knowing the real facts, ordinarily the opponent will not be ordered to supply particulars until after discovery.

Paragraph 28(a) 54 I note from Power's written submissions that this request is no longer pressed.

Paragraph 29(b) 55 This paragraph reads: (a) [DEE] says that Power is estopped from advancing the allegations made in this paragraph, or alternatively has waived any such allegations and/or acknowledged that DEE's conduct in sending the letter dated 11 June 2009 was done in good faith and consistently with the arrangements between the parties, by the provision of further information to DEE in order to seek to address DEE's concerns in the period after 11 June 2009; and (b) otherwise denies the paragraph. 56 Power asserted that it had an entitlement to "full particulars". DEE correctly replied that it was only entitled to reasonable particulars to enable it to know the case it has to meet. Nevertheless, I am of the view that further particulars of the allegations in paragraph 29 could and should be provided. I think that DEE should provide particulars of the "further information" Power gave to DEE to which reference is made in the penultimate line of subparagraph 29(a). Unfortunately, this is not what Power sought in its request. The request suffers from the same problem as many others, in that it is couched as a request for the identification of "every fact and matter (but not the evidence)…" It is also suffers from a lack of clarity. Still, together with the particulars of the further information, I think that DEE should clarify what it means by "the arrangements between the parties" in the same subparagraph.

Paragraph 31 57 Paragraph 31 of the defence is a response to the allegation in paragraph 26 of the amended statement of claim that DEE has been unjustly enriched. It pleads that DEE paid PI $2,286,991.64 between October 2007 and July 2009, and that DEE otherwise denies the paragraph. 58 Power asks DEE to "identify which of the moneys [DEE] alleges in this paragraph were paid to PI, were paid pursuant to the dealings described and recorded in the MOU [memorandum of understanding]". 59 DEE replied that this was not a proper request for particulars, and that if Power contends that the money was not "paid pursuant to the dealings described and recorded in the MOU", it can plead that in reply. 60 For my part, having regard to the allegations made, I do not see how this request could properly be characterised as a request for particulars and I refuse it.

Paragraph 32 61 This request is in similar terms to the requests for particulars in paragraph 10 of the amended cross-claim and invites the same response. DEE's response was to repeat its objection to providing particulars of "facts, matters and circumstances" but nonetheless to offer particulars of the way Power acquired the knowledge attributed to PI and Mr Power in the pleading. In summary, Power was told that it knew the matters alleged because they (by which I understand DEE to mean Mr Power) were told at meetings held on the dates particularised. 62 A further request that DEE "identify the alleged effect at law of the alleged knowledge of Power and PI" was rightly met with the response that this was not a proper request for particulars. In my view, no further particulars are required.

Paragraphs 32(b)(iii), 42(b), 46(e) and (g) 63 These requests ask for confirmation that particulars previously given constitute DEE's "particularised statement of the content of this part of the claim". I regard this request as an abrogation of the responsibility imposed on the parties by s 37N of the Act. DEE's response was to remind Power that it was not required to give particulars of knowledge and, in the first case, to note its previous response, which was to provide the source of that knowledge. Nothing further was required of DEE. Power was in fact given more information than that to which they were entitled under the rules. I do not accept Power's submission that "[DEE] gives some information but refrains from giving the information the status of particulars" and should elect whether or not it is giving particulars or keeping its options open.

Paragraph 46 64 These requests are for the same information sought with respect to paragraph 9 of the amended cross-claim and for the reasons given above, I refuse to order they be answered at this time.

Conclusion 65 I order that DEE: (i) provide particulars of the further information giving rise to the alleged estoppel or waiver and/or acknowledgment pleaded in subparagraph 29(a) of the amended defence; and (ii) identify the arrangements between the parties, to which reference is made in the same subparagraph. 66 Otherwise, the motion is dismissed with costs. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.