Public Trustee, South Australia as tutor for Cornelia Rau v The Commonwealth of Australia; G4S Australia Pty Ltd & Falck Global Solutions Ltd - Cross Defendants

PARTIES : G4S Australia Pty Ltd & Falck Global Solutions Ltd - Applicants The Commonwealth of Australia - Respondent

COUNSEL : Mr P Garling SC with Mr S Walshe - Applicants Mr R Williams QC wiht Mr P Jones - Respondent

SOLICITORS : Gilchrist Connell - Applicants Australian Government Solicitor - Respondent

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Public Trustee, South Australia as Trustee for Cornelia Rau v The Commonwealth of Australia

G4S Australia Pty Ltd - Cross Defendant & Falck Global Solutions Pty Ltd - Cross Defendant

JUDGMENT 1 Before me is a Notice of Motion filed on 7 May 2009 which seeks the following principal relief: "1. Pursuant to Section 61 of the Civil Procedure Act 2005 and/or Rule 2.1 and/or Rule 14.28 of the Uniform Civil Procedure Rules 2005, paragraphs 1 to 10 of the First Cross-Claim be struck out. 2. Pursuant to Section 61 of the Civil Procedure Act 2005 and/or Rule 13.4 of the Uniform Civil Procedure Rules 2005, the proceedings against the Second Cross-Defendant to First Cross-Claim be dismissed." 2 The motion was filed on behalf of the related companies G4S Australia Pty Ltd (formerly GSL (Australia) Pty Ltd) to which I will hereafter refer as G4S and Falck Global Solutions Ltd. (hereafter Falck). For convenience I will refer to G4S and Falck jointly as the applicants. Relief was sought against the Commonwealth of Australia (the Commonwealth). 3 In the proceedings before me, Mr P R Garling SC with Mr S J Walsh appeared for the applicants, and Mr R Williams QC with Mr P Jones for the Commonwealth. Mr S Barnes appeared for the State of Queensland but otherwise took no part in the proceedings. 4 The circumstances which give rise to the motion are somewhat unusual but by no means unique. On 7 April 2007, the Public Trustee, South Australia (Public Trustee), as tutor for Ms Cornelia Rau, commenced proceedings by Statement of Claim, filed in this court against the Commonwealth. The gravamen of the case pleaded was that from 31 March 2004 until 4 February 2005 Ms Rau was unlawfully detained by the Commonwealth at various places within Australia. Damages were claimed in respect of her unlawful detention, including for "humiliation and insult" and for: "personal injury, in particular aggravation of and loss of opportunity of recovery from, psychiatric illness."

5 The Commonwealth filed a defence denying liability on 24 July 2007. On the same day it filed a cross-claim against the applicants (the cross claim). For completeness, I mention that on 26 November 2007 G4S brought a cross claim against the State of Queensland. This has no relevance to the issues before me, but explains the appearance of Mr Barnes. 6 The assertions against the applicants contained in the cross claim, however, require further attention. As against G4S, the Commonwealth whilst maintaining its denial of liability repeated in conventional terms many of the averments contained in the Statement of Claim. It also pleaded an agreement between the Commonwealth and G4S providing for G4S to provide services relating to the detention of "unlawful non citizens" at detention facilities around Australia and the management of those facilities. The agreement contained an indemnity in favour of the Commonwealth "against all damages for which the Commonwealth is, or may become, liable in respect of, or arising from: (a) any default by the (G4S). 7 As seems to be common ground during the period 6 October 2004 to 5 February 2005, Ms Rau was detained at the Baxter Centre in South Australia, managed by G4S under the agreement earlier referred to. 8 Paragraphs 8 to 10 of the cross claim were in these terms: 8. (The Commonwealth) says that if it is liable in negligence (which it denies) during the period 6 October 2004 to 3 February 2005 for the plaintiff's injuries (which are not admitted), the Plaintiff's injuries were caused or contributed to by (G4S's) breach of the terms of the Agreement or, in the alternative, by (G4S's) negligent acts, defaults or omissions such that it is entitled to be indemnified under the agreement. 9. Further, (The Commonwealth) says that if it is liable for falsely imprisoning the plaintiff for any period between 6 October 2004 and 3 February 2005 (which it denies), (Ms Rau's) consequential injuries (which are not admitted) were caused by (G4S's) breach of the terms of the Agreement or in the alternative, by (G4S's) negligent acts, defaults or omissions such that it is entitled to be indemnified under the agreement. 10 Further, or in the alternative, (The Commonwealth) says that if it is liable in negligence (which it denies) for the plaintiff's injuries (which are not admitted) then those injuries were caused by (G4S's) negligence such that it is entitled to seek contribution pursuant to the Law Reform (Miscellaneous Provision) Act 1946 (NSW)." 9 As against Falck, the cross claim pleaded a liability arising under a Deed of Guarantee: "11. Further, by written agreement dated 27 August 2003, (the Commonwealth) and (Falck) entered into a Deed of Guarantee by which (Falck) guaranteed the due and proper performance and observance by (G4S) of the detention services by the first cross-defendant under the Detention Services Contract. 12. Further, (the Commonwealth) says that if it is liable in negligence (which it denies) for the plaintiff's injuries (which are not admitted) then (Falck) is liable to indemnify (the Commonwealth) pursuant to the Deed of Guarantee." 10 Both applicants sought and received particulars of the claims against them and thereafter filed defences denying liability. 11 In March 2008, agreement was reached for settlement of the proceedings between the Trustee and the Commonwealth and such agreement was approved by McCallum J pursuant to s75 of the Civil Procedure Act. In accordance with the agreement, judgment was entered in favour of the Trustee for a substantial sum against the Commonwealth. Neither of the applicants was a party to the settlement agreement. 12 On 3 March 2008, the solicitor for the Commonwealth informed the applicants' solicitors that an agreement for settlement with the Public Trustee had been reached subject to the approval of the court and that the cross claim would be pursued. Pursuant to directions given by Registrar Bradford, by 28 August 2008 all remaining parties to the litigation had filed and served statements of issues. So far as the applicants are concerned they identified the issues as including: "1.1 Whether the settlement between the Commonwealth and the plaintiff is reasonable? ………………………….. 3.1 Whether G4S failed to comply with its contractual obligations to the commonwealth pursuant to the Detention Services Contract. 3.2 If G4S failed to comply with its contractual obligations to the Commonwealth pursuant to the Detention Services Contract (which is denied), whether that failure and/or breach of contract caused or contributed to any injury and/or disability of Cornelia Rau (aka Anna Brotmeyer) (Rau). ……………………………….. 3.4 Whether and to what extent the following caused or contributed to the injuries and/or disabilities allegedly sustained by Rau: a) the omission or commissions of the Commonwealth ; and/or b) the false imprisonment of Rau by the Commonwealth. ……………………………. 4.4 Whether any breach by G4S or any duty of care owed to Rau (which is not admitted) caused or contributed to any injury and/or disability of Rau? 4.5 Whether G4S, if sued by Rau, would have been: (a) a joint tortfeasor with the Commonwealth (b) liable in respect of the same damages sought to be recovered by the Plaintiff? …………………………….. 5.1 The terms and effect of the Deed of Guarantee dated 27 August 2003 (the Deed of Guarantee) between Falck and the Commonwealth. 5.2 Whether Falck is liable to contribute and/or indemnify the Commonwealth under the Deed of Guarantee in respect to the monies it paid in settlement with the Plaintiff? 13 The Commonwealth's statement of issues broadly corresponded with those identified by the applicants with the exception that it did not include as an issue any reference to the reasonableness of the Commonwealth's settlement with the Public Trustee. 14 On 4 December 2008, Registrar Bradford ordered that the Commonwealth serve its medical reports in respect of the cross claim by 30 January 2009 and that the applicants seek any further particulars required by 18 December 2008. According to the affidavit of Mr G Kathner, a solicitor with the Australian Government Solicitor, sworn 30 July 2009, he served three medical reports upon the applicants' solicitors on 30 January 2009. At the same time he served, inter alia, "a three volume set of folders containing: "All of the briefing material provided by me to the doctors by way of background information which, inter alia, consisted of various hospital notes pertaining to Ms Rau and material obtained from the First Cross Defendant." 15 The medical reports addressed at length and in detail the likely impact upon Ms Rau's mental health of the alleged lack of proper care provided while she was detained at the Baxter Centre. 16 Meanwhile, pursuant to the leave granted by Registrar Bradford, the solicitors for the applicants sought further particulars by a letter dated 18 December 2008, preceding their request with these paragraphs: "The settlement between the plaintiff and the Commonwealth means that the First Cross Claim as currently pleaded is inconsistent and embarrassing. The UCPR requires: A pleading to contain a summary of the material facts on which the party making the pleading relies (Rule 14.7). That a party must not in any pleading make an allegation of fact, or raise a ground or claim inconsistent with its earlier pleadings (rule 14.8) That a pleading must disclose a reasonable cause of action (rule 14.28). A pleading that fails to comply with these elementary rules is liable to struck out. There are a number of fatal defects in the current pleading. Firstly, the claim for contribution can only proceed on the basis that the Commonwealth is a tortfeasor. The Commonwealth denies it is a tortfeasor. The Commonwealth must plead that it is a tortfeasor. Secondly, the Commonwealth has not pleaded its loss, or the manner in which it was caused. As an incident of its obligation to plead all material facts necessary to establish the cause of action, it is incumbent upon the Commonwealth to plead (with precision) the loss it claims to have suffered and how that loss is said to have been caused. In order to avoid the necessity for a strike out motion, we invite you to re-plead the Commonwealth's case with precision and particularity. In do (sic) so we invite you to have regard to the following request for further and better particulars."

17 Thereafter, over some 9 pages, the letter sought extensive particulars of the cross claim. Relevant to a number of the matters raised by counsel for the applicants in their submissions are requests for particulars numbered 1 to 8: "As to paragraph 8 of the First Cross Claim 1. The Commonwealth denies negligence in paragraph 8. Following on from the settlement with the plaintiff, does the Commonwealth still deny any negligence? 2. If the Commonwealth still denies negligence, on what basis does the Commonwealth say that: 2.1 it is liable to Ms Rau? 2.2 it is entitled to be indemnified by GSL under the Detention Services contract for that liability/ and/or 2.3 it is entitled to any remedy as pleaded in paragraph 8 (given that liability in negligence is a pre-condition of the relief sought)? 3. If the Commonwealth admits negligence, please specify: 3.1 the facts, matters and circumstances which form the basis for that negligence. 3.2 the way(s) the Commonwealth was negligent. 3.3 whether the Commonwealth says its negligence caused or contributed to Ms Rau's injuries. 4. In paragraph 8, the Commonwealth does not admit injury to Ms Rau. Is injury now admitted? If so, what injuries does the Commonwealth admit Ms Rau suffered? 5. In answer to our Earlier Request that the Commonwealth specify the injuries sustained by Ms Rau (Q. 11), you referred us to paragraph 63 of the Statement of Claim. That paragraph identifies that Ms Rau suffered the following injuries: 5.1 imprisonment; 5.2 humiliation and insult; and 5.3 aggravation of or loss of opportunity of recovery from a psychiatric illness. Does the Commonwealth now admit Ms Rau suffered these injuries? 6. Please specify what psychiatric injury the Commonwealth alleges that Ms Rau suffered 7. Does the Commonwealth allege that Ms Ray suffered any additional injury? If so, please specify the nature and extent of each additional injury. 8. How does the Commonwealth say Ms Rau suffered each injury?"

18 The Commonwealth, by letter dated 18 December 2008, replied: "As to paragraph 8 of the First Cross Claim 1. No 2. Not applicable 3. ……….. 3.1 The Commonwealth admits that it owned Ms Rau a non-delegable duty of care which included inter alia that she would be provided with adequate health care and that duty was breached by the failure to provide Ms Rau with adequate health care. 3.2 The Commonwealth having a non-delegable duty to Ms Rau is liable for the negligence of its contractor being the First Cross Defendant. 3.3 The Commonwealth says that as a result of the breach of its non-delegable duty owed to Ms Rau she suffered injury in that her psychiatric condition remained untreated and as such deteriorated and she suffered further damage which has permanently altered her schizophrenic disorder and worsened her long term prognosis. The Commonwealth relies in this regard upon all of the reports of Dr Jonathon Phillips, Associate Professor Hopwood and Professor Keks already served upon you. 4. See answers to paragraph 3 supra 5. The Commonwealth admits that during the term of her immigration detention at Baxter Ms Rau suffered an aggravation of and lost the opportunity to be properly treated for her psychiatric disorder which led to a deterioration in her psychiatric condition with an adverse effect upon her long term prognosis. Further during her detention at Baxter she suffered psychiatric injury as a result of the experiences she encountered whilst detained at Baxter. 6. The Commonwealth says that Ms Rau suffered and continues to suffer from inter alia schizophrenic disorder with psychotic episodes, schizoaffective disorder, dysthymic disorder and demoralization disorder. The Commonwealth relies in this regard upon all of the reports of Dr Jonathon Phillips, Associate Professor Hopwood and Professor Nicholas Keks already served upon you. 7. Yes. See paragraph 6 supra 8. The Commonwealth says that Ms Rau suffered her injuries as a result of the conditions she encountered at Baxter. These conditions included a lack of proper medical assessment, proper medical monitoring and treatment and exposure to a behaviouristic treatment regime which was anti-therapeutic. Further Ms Rau was exposed to punitive type treatment and management whilst at Baxter. The Commonwealth relies in this regard upon all of the reports of Dr Jonathon Phillips, Associate Professor Hopwood and Professor Nicholas Keks." 19 The Commonwealth denied that the cross claim was liable to be struck out and declined to amend it. 20 In the period between February and May this year, according to Mr Kathner's affidavit, there was a deal of further correspondence between the solicitor for the Commonwealth and the solicitor for the applicants concerning, inter alia, the production of relevant documents, discovery and inspection of documents, the extent of the admissibility into evidence of certain medical reports and other interlocutory matters. So far as the evidence before me reveals, the Commonwealth sought to cooperate as much as possible, although its solicitor's letter to the solicitor for the applicants of 8 April 2009 contained in the last paragraphs more than a hint of exasperation: "On 3 April 2009, we raised once again our concerns that the Cross-Defendants were embarking upon "fishing expeditions", but nevertheless provided further various Migration Series Instructions and invited the viewing of electronic media files at our office (the twelfth response). That invitation received no response. On 6 April 2009, we sent correspondence to you once again reminding you that there had been no seeking of any further orders for supplementary discovery or no receipt of any subsequent subpoenas. We also raised with you the issue of relevance of the documentation, copies of which you had sought. We drew your attention to the fact that you had already been provided with many of the documents of which you were seeking copies (the thirteenth response). We have set out the above history of the matter as we are concerned about the progress of the case on behalf of the Cross-Defendants. We have on numerous occasions received requests for particulars and documents. These requests now total nineteen. We remind you that the role of particulars is to allow a party to prepare its Defence. Your client's defences were filed on 28 September 2007. You have regularly sought the provision of further documentation since December 2008, in the absence of any Court orders. We have, on occasions, attempted to meet these requests in an apparently forlorn hope that the matter might be advanced to enable it to progress to mediation in the first half of 2009 and if not resolved, proceed to a hearing shortly thereafter. We are greatly concerned that the Cross-Claim in this matter has now been with your and your clients for 21 months and we have received no evidential material in response to the expert reports served upon you. Rather we have received a trail of multiply dated Requests for Particulars and documentation. The process of your clients cross claim proceedings against the State of Queensland also appear to be impacted upon by a rather desultory approach to pre trial preparations. We make this comment based upon the lack of any substantive orders being sought by your clients on the many occasions that the matter had been before the Court since you joined Queensland on 24 December 2007. Section 56 of the Uniform Civil Procedure Act states that the "overriding purpose of this Act and Rules of Court, in their application to civil proceedings is to facilitate the just, quick and cheap resolution of the real issues in the proceedings". It is apparent to us that this overriding purpose is not being achieved by the continuing stream of correspondence from you in this matter. We invite you to identify, with precision, the real issues in the proceedings and attend to the service of any evidential material upon which your clients intend to rely. We are of the firm view that the current piecemeal approach to this litigation is neither efficient, nor appropriate. If your clients wish to move the Court for any orders, then that should be done forthwith. Respectfully such steps may be more beneficial than the manner in which the litigation has proceeded to date. We put you on Notice that if you intend to move the Court for orders in relation to supplementary discovery and/or particulars and should such applications be unsuccessful, we will be seeking an order that your clients pay the costs of such Motions on an indemnity basis. We note that the matter is back before the Court on 9 April and on that occasion we will be seeking orders contained overleaf as draft Consent Orders." 21 On 9 April 2009, the matter was again listed for directions before Registrar Bradford. After hearing argument, the Registrar ordered the applicants to file any application for further particulars or further discovery by 7 May. Instead the applicants, on that date, filed the motion now before me. 22 The evidence relied upon at the hearing of the motion comprised the affidavit of Mr G A Covington sworn 17 August 2009 (on behalf of the applicants) and 2 affidavits sworn respectively 30 July 2009 and 13 August 2009 by Mr G Kathner on behalf of the Commonwealth. Those affidavits did little more than identify relevant documents, to many of which I have already made reference. 23 At the time it was filed the cross claim was, I think, technically unobjectionable, although some of the objections taken now were then available. It followed the conventional form of cross claims in pending proceedings where the parties assume that the issues raised by all the pleadings will be dealt with at the one trial. Obviously, if the cross claim were pleaded now in the same form it would, in light of the settlement, be defective and liable to be struck out. At least, the Commonwealth would have been required to plead the reasonableness of the settlement and concede its own liability as a foundation for the cross claim. 24 The first order sought in the motion relies on s61 of the Civil Procedure Act (CPA) and rule 2.1 or 14.28 of the Uniform Civil Procedure Rules (UCPR). Under UCPR 14.28 the Court may strike out a pleading that discloses no reasonable cause of action or has a tendency "to cause prejudice, embarrassment, or delay in the proceedings". It is, perhaps, questionable whether the rule applies to a pleading which, at the time of filing, was appropriate. However, in any event, the power, in my view, by its terms is discretionary. The Court is not obliged to strike out a technically deficient pleading if the interests of justice do not require it to do so. 25 In that connection it is appropriate to refer to the overriding purpose of the CPA and UCPR as set forth in ss(1) and (2) of s 56 of the former: "(1) The overriding purpose of the Act and of rules of court, in their application to civil proceedings is to facilitate the quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power give to it by this Act or by rules of court and when it interprets any provision of the Act or of any such rule."

26 In substance, counsel for the applicants contended in their submissions, as I understand them, that the Cross Claim against G4S: Fails to state the material facts relied upon; Is impermissibly inconsistent with an earlier pleading; Contravenes the principle that a party may not both approbate and reprobate: Conflates contractual obligations with obligations under the general law; Fails to identify those facts pleaded in the Statement of Claim and repleaded in the cross claim which are alleged to be relevant to the liability of the applicants; Fails to recognise that a large proportion, if not most, of the allegations in paragraph 62 of the Statement of Claim repleaded against the applicants relate on their face to the acts or omissions of entities unrelated to the applicants or to the detention of Ms Rau while she was at Baxter; Fails to plead the basis of the Commonwealth's underlying liability in particular whether it is in negligence and/or false imprisonment; whether it includes aggravated and/or exemplary damages; and whether it includes damages for the aggravation of Ms Rau's condition while she was detained in Queensland 27 For the Commonwealth, it was submitted that any deficiencies in the pleadings have been, or may be, cured by the provision of particulars; that a number of deficiencies now asserted by the applicants were present in the original pleading; and that it would be unjust and quite contrary to the provisions of s56 of the CPA to give the applicants the relief they seek at this stage of the proceedings. 28 In the course of argument I was referred to a good deal of authority. It is useful to commence consideration of such authority with the following passage from the judgment of Hodgson JA (Mason P and Handley JA agreeing) in Kirby v Sanderson Motors Pty Ltd (2002) 54 NSWLR 54: "It might appear that these rules do not require that causes of action be stated in pleadings: the requirement is to have a statement of material facts, and indeed to have only such a statement. However, in my opinion -

(1) "Material" means material to the claim, that is, to the cause or causes of action which are relied on.

(2) The requirement of a statement of material facts does not exclude the allegation of legal categories, such as duty of care, fiduciary duty, trust and contract.

(3) The general requirement to avoid surprise means that material facts must be stated in such a way that a defendant can understand the materiality of the facts, that is, how they are material to a cause of action.

Accordingly, even on the basis of these rules which are common to the District Court and the Supreme Court, I do not take cases such as Konskier as establishing that there is never any requirement to do more than set out facts. Where there is a danger of surprise, which arises particularly where there is lack of precision and clarity in the pleading, it may well be appropriate to require a plaintiff, either in a statement of claim or in particulars, to explicitly relate the facts it pleads to specified causes of action." 29 In relation to inconsistent pleadings, there was reference to Issitch v Worrell 172 ALR 586 where, at paragraph 32, Drummond J with whom Spender J and Katz J agreed, said: "32 But once the appellant decided to answer the claim made on her in respect of the $110,167 in the way she did, she was not entitled thereafter to set up in the alternative the inconsistent answer she now suggests she would also have relied on, if only absence of consideration had been specifically pleaded by the trustee. A party can as a general rule plead inconsistent sets of facts in the alternative (cf O 11 r 8(2); In re Morgan (1887) 35 Ch D 492 and Delfino v Trevis (No 1) [1963] NSWR 191 at 196), but not where one of those sets must be known to the party to be false. It has long been recognised that such a pleading is embarrassing and will be struck out. In Brailsford v Tobie (1888) 10 ALT 194 at 195, the defendant pleaded two factually inconsistent accounts in justification for not having paid the moneys claimed by the plaintiff. Holroyd J ordered that the defendant elect which one of these two cases she would maintain, saying: "... I think it would be most improper to allow the defendant to plead as she has done. The actual facts must be within her own knowledge, and that being so she has set up two sets of facts inconsistent with one another. If this were allowed it would be permitting a party knowing the facts to deliberately place on the record statements, one or other of which must be known to be a lie. This, in my opinion, ought not to be allowed."

33 Whether or not the gloss on the general rule referred to in Brailsford has its foundation in the old requirement for sworn pleadings, it is in accord with modern practice in not permitting parties to litigate whatever issues they choose, only the crucial issues. See, eg, Ashmore v Corporation of Lloyd's [1992] 1 WLR 446 at 448 and, more generally, UTSA Pty Ltd v Ultra Tune Australia Pty Ltd (1996) 21 ACSR 457 at 459. " 30 Of more direct relevance to this case is the statement of principle by Lord Denning MR in Stott v West Yorkshire Road Car Co Ltd and Anor [1971] 3 All ER 534 at 537: "It follows that a tortfeasor is entitled to recover contribution from another tortfeasor (i) when he has been held liable in judgment; (ii) when he has admitted liability; and (iii) when he has settled the action by agreeing to make payment to the injured person, although, in making the settlement, he has not admitted liability. But, of course, when the tortfeasor settles an action, he cannot claim contribution from the other tortfeasor unless he proves that he himself was 'liable'. He must prove, therefore, that, if the claim had been fought out, he would have been held responsible in law and liable to pay in whole or in part for the damage. At that subsequent stage, therefore, he must admit liability because otherwise he does not bring himself within the section. In this particular case, therefore, the bus company will have to say to the van owners: 'We settled the action because we were liable in part, and we are ready to prove it. And now we claim contribution.' On proof that they were responsible in law in part for the injury to the plaintiff, they can claim contribution. In support of this view, I would quote from one of first commentators on this Act, Professor Glanville Williams. He wrote:

'… considerations of policy are overwhelmingly in favour of allowing a tortfeasor to settle out of court and then claim contribution, rather than go to the trouble of defending an action merely to qualify for the right to contribution.' So much for the point of substance. I turn now to the point of procedure. It was said that in consequence of the settlement, the original action is dead, and being dead, there is nothing on which the third party proceedings can bite. I cannot agree with this contention. It is answered by reference to s 39(1) (b) and (2) of the Supreme Court of Judicature (Consolidation) Act 1925 and RSC Ord 16, r 4(3) (b) . As I read those provisions, once the action itself is settled, the third party proceedings can proceed in just the selfsame way as if they had been started by a separate action. It is not necessary to bring a new action. 31 As to Mr Garling's submission that the Commonwealth as cross claimant was seeking to "approbate and reprobate" there was reference to VACC Insurance Ltd v BP Australia Ltd (1999) 47 NSWLR 716 where it was held by Fitzgerald JA (Meagher JA agreeing) that an insured could not seek contribution from its insurer under the Law Reform (Miscellaneous Provisions) Act 1946 on a basis which contradicts the basis upon which liability had been found against the insured in an action by another party. 32 The judgment of French J (as he then was) in Century Insurance Ltd (in provisional liquidation ) v The New Zealand Guardian Trust Ltd [1997] FCA 1020 was given in a case somewhat akin to this case in that the primary proceedings were settled. Before his Honour was an application that cross claims be dismissed as "oppressive, vexations, or an abuse of the process of the court". 33 After holding that the cross claims may be pursued, following Stott, and after considering the terms of the pleadings, his Honour said: "It can be seen from the paragraphs which have been referred to that the entire cross claim as presently pleaded is posited upon the proposition that liability is established in favour of Century and the applicants and as against NZGT and NZIIT. Plainly the Statement of Cross Claim as presently pleaded cannot stand because it has been overtaken by the event of the settlement.

Nevertheless I accept, as Mr Corboy counsel for NZGT and NZIIT submitted, that the cross claim can be amended to seek contribution and/or indemnity upon the basis that the settlement was a reasonable settlement of a liability that could be shown to exist. As he submitted, there is a public interest in the negotiated resolution of proceedings and as a general rule the Court should not impede the amendment of the cross claim to take account of the events that have occurred." 34 Mr Williams referred to the observations of Weinberg J in McKellar v Container Terminal Management Services Ltd 165 ALR 409, especially at paragraph 30 and 31:

"30 I note also the views expressed by Drummond J in Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691 at 42,827-9. I note in particular his Honour's comments (at 42,827):

Authority acknowledges the blurring, in recent times, of the distinction between pleadings and particulars: see, for example, Beach Petroleum NL v Johnson (1991) 105 ALR 456 at 466 , where von Doussa J referred to the tendency now towards narrative pleading as there is a growing concern that pleadings according to traditional rules do not adequately make known to the court and to the parties the nature of the opposing cases in complex matters''. His Honour also commented that: [t]echnical objections raised to pleadings on the ground of alleged want of form will be received with less enthusiasm today than in times past.'' Notwithstanding O 11 r 2(a), a respondent does not have an absolute right in every case to insist upon the applicant pleading in the statement of claim every material fact necessary to show the existence of a complete cause of action.

31 His Honour continued (at paras 42,828-9): While, prima facie, the court's rules with respect to pleadings must be complied with, compliance is enforced by the invocation of the court's discretion to strike out non-conforming pleadings. Consistently with the comments in Beach Petroleum , judges of this court have dealt with challenges to the adequacy of pleadings in a more flexible way than would be required by a strict application of those rules. This is an approach that reflects the discretionary nature of the court's power to control pleadings and the objective of the court's case management system, provided for by O 10 r 1, of achieving efficient and economical use of the resources of all the parties, as well as those of the court. Australian Competition and Consumer Commission v Golden West Network Pty Ltd (Fed C of A, 19 August 1997, unreported) provides an example. There Lockhart J said: It is important that I say something about motions to strike out statements of claim in the conduct of modern litigation. Today, courts are playing an increasingly active role in case management. Motions to strike out pleadings are matters of practice and procedure. In its role of case management, courts devise various procedures to overcome deficiencies in pleadings other than by simply ordering that the offending paragraphs be struck out. Sometimes it is appropriate to strike them out, sometimes not. On some occasions it is better for the court to direct the applicant, whose statement of claim is under challenge, to furnish particulars or to file and serve affidavits to show that there really are facts which can be proved and which, if proved, would support the general statements made in the statement of claim. This is not, of course, intended to be a substitute for a defective pleading in every case because, as is well known, pleadings must assert basic or constitutive facts, not the evidence by which they are to be proved. But case management is a sensible and flexible thing. It must not be unduly circumscribed.'' When it is said that a pleading is so bad that it should be struck out, the outcome, in my opinion, is now to be governed not just by whether the pleading fails to comply with one or other of the rules of pleading. The court will take into account whether the defects are of substance, that is, whether, notwithstanding any deficiencies in the pleading, the fundamental function of pleading is still served. The court will also take into account how these objectives can best be achieved, where a pleading does not do that: striking out may be appropriate in some cases while an order for particulars or directions under O 10 r 1(2), including directions of the kind referred to by Lockhart J, may be appropriate in others. In any event, that a pleading alleges conclusions does not mean it is necessarily bad. The requirement of O 11 r 2 to plead the material facts, is subject to the established qualification to rules in this form that allows, in appropriate cases, pleading at a level of generality which excuses the failure to plead every fact material to the cause of action sued upon: Charlie Carter Pty Ltd v SDAEA (WA) (1987) 13 FCR 413 at 417 ; ATPR (Digest) 46-021. In Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (Fed C of A, 3 September 1991, unreported) French J, in dealing with a complaint that a statement of claim alleging contraventions of s 45 of the Act pleaded conclusions in terms of the section, rather than the material facts underlying them, said: I do not accept that the pleading of something which can be described as a conclusion cannot also be a pleading of a material fact. The real issue in a case where such an objection is raised is whether the facts are pleaded at too great a level of generality. In my opinion, the level of generality of the statement of claim in this case is too great for Rothmans to know with any precision what case it has to meet.''

The modern approach to litigation in this court is not to strike out or order further particulars of a conclusionary pleading, if it appears that that is unnecessary in the circumstances of the particular case to achieve the object of pleadings: see also Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 at 42,679. It is, in my opinion, a legitimate and necessary exercise of the controlling discretion the court has over pleadings to utilise that power to ensure that a party is not required to incur the expense of providing masses of information in its pleadings that can be seen to be unnecessary for the proper disposition of the case, even though the prima facie obligation of a party to plead all material facts necessary to make out its cause of action could be said to require that. This is not to suggest that clarity in pleading is not important. The need to focus on pleadings being used to identify the matters really in issue is particularly pressing in a complex case. But the rules of pleading do not now provide the only means for achieving this. And above all, those rules are not now intended to be an arsenal for litigation by attrition." 35 On the other hand, Mr Garling relied on what was said by Weinberg J in the earlier paragraph, 26: "When a claim is made under s 82 of the Act, the gist of the cause of action being damage, the statement of claim must allege the damage suffered, and that it was suffered by reason of the contravention of the Act. Material facts must be pleaded which show the required causal link between any alleged contravention of the Act, and any damage to the applicant. A deficient pleading, namely one that does not plead relevant material facts, cannot be saved by particulars. It is not sufficient simply to allege loss and damage as a result of alleged contraventions of the Act; it is necessary to identify a causal connection between the impugned conduct and such loss as is said to have been suffered by the applicants: Bond Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222; 71 ALR 125 per French J, cited with approval by Burchett J in Multigroup Distribution Services Pty Ltd and by Goldberg J in Mitanis ." 36 The final authority to which I think I should refer is the very recent decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 (5 August 2009). The case which concerned the amendment of pleadings involved a consideration of the possible tension between provision such as S56 of the CPA and what the High Court itself said in Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146. The court was unanimous in its decision and in the conclusion to their joint reasons Gummow, Hayne, Crennan, Kiefel, and Bell JJ encapsulated the principles which seem to me to flow from the case (omitting citation of authority): "[111] An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. 176 On the contrary, the statements are not consonant with this court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.

[112] A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.

[113] In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. 177 It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

[114] Rule 21 of the Court Procedures Rules recognises the purposes of case management by the courts. It recognises that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The Rule's objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering ANU's application for amendment. It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases. What was a "just resolution" of ANU's claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward. A just resolution of its claim necessarily had to have regard to the position of Aon in defending it. An assumption that costs will always be a sufficient compensation for the prejudice caused by amendment is not reflected in r 21. Critically, the matters relevant to a just resolution of ANU's claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided." 37 As it seems to me, the authorities to which I have referred reinforce Mr Garling's submission that the cross claim is technically defective, in light of the events that have occurred, but they also confirm that the power to strike out such a pleading is discretionary. The discretion is to be exercised having regard to what was said in Aon, given that the issue which actually arose in that case differs somewhat from the issue which arises here. 38 Although the proper pleading of the Commonwealth's cross claim against the applicants (which would undoubtedly be complex) may be useful, in my opinion, the attainment of justice does not require that to be done. In the balancing exercise required, I have come to the conclusion that I should decline to strike out the existing pleading. In reaching that conclusion I take into account that some of the matters now agitated by the applicants were available to them when the cross claim was first filed and that after being notified of the settlement of the proceedings between the Plaintiff and the Commonwealth they participated in the action for some months by, inter alia, formulating issues and seeking and receiving particulars. It would, in my opinion, be contrary to the directive of S56 to order, at this stage, that the cross claim be struck out and repleaded. In my opinion any remaining uncertainty as to the case the applicants are required to meet can, albeit perhaps imperfectly, be dealt with by the provision of further particulars in respect of which I intend to give leave. 39 It is next necessary for me to say something about the applicants' contentions regarding the cross claim against Falck which raise the additional issue that it, in any event, does not disclose a reasonably arguable cause of action. 40 The cross claim purports to be based on a "Performance Guarantee" dated 27 August 2003 made between Falck and the Commonwealth. After reciting the agreement between the Commonwealth and G4S for the provision of "Detention Services" and that clause 7.4 of that agreement required Falck to lodge with the Commonwealth a Performance Guarantee, it contained, inter alia, these provisions: "1. In the event of any breach by (G4S) of the provisions of the contract, (Falck) will: (a) pay to the Commonwealth on demand any and all sums of money then due from (G4S) under the Contract; ………………………………… 3. The Guarantor, as a separate, additional and primary liability, unconditionally and irrevocably will indemnify and keep indemnified the Commonwealth from and against all losses, damages, costs and expenses of any kind which may be suffered or incurred by the Commonwealth by reason of or in consequence of: (a) default by (G4S) in performing or observing its obligations or discharging its liabilities under the Contract, but only for the same amounts and to the same extent as (G4S) would be liable to the Commonwealth for that Default; (b) the Commonwealth attempting to enforce any of (G4S's) obligations under the Contract; or (c) the Commonwealth attempting to enforce or preserve any of its rights under this Deed." 4. This deed is a continuing guarantee to the Commonwealth until the obligations and liabilities of (G4S) under the Contract have in all respects been performed, observed or discharged." 41 On behalf of the applicants, it was submitted that Falck's liability under the guarantee can be triggered only by default on the part of G4S, yet such default is not pleaded or identified. Further, so it was submitted, the loss against which indemnity is claimed was not pleaded. 42 In reply, counsel for the Commonwealth pointed to the fact that in the applicants' request for particulars of August 2007 nothing was sought in respect of paragraphs 11 and 12 of the cross claim and that in the request of December 2008, one question only was asked, which bore no relationship to the matters now complained of. 43 It was submitted that the cross claim plainly relies on the indemnity constituted by clause 3 of the Performance Guarantee as a primary liability. I agree that on its face clause 3 amounts to an indemnity which permits Falck to be sued as a primary obligee in respect of any default by G4S without the necessity for a prior demand. Support for that view is, I think, provided by the observations of Burchett J in Re Taylor Ex Parte Century 21 Real Estate Corporation 130 ALR 723 as to the interpretation of instruments purporting to be both a guarantee and an indemnity. Although it is necessary to identify a default by G4S which triggers the obligation, it is unnecessary to show that G4S, having defaulted in its obligations, has also failed to pay the damages arising from such default. 44 In my opinion, applying what was said by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, the case against Falck is not "so obviously untenable that it cannot possible succeed" or "manifestly groundless". I decline to strike it out. 45 The applicants seek leave to file an amended defence to the cross claim. In my view, in accordance with established principle, such leave should not be given in the absence of a draft of the proposed defence. This is a matter which, if the applicants are so advised, may be raised with Ian Harrison J, who has agreed to case manage the matter. 46 I make these orders:

The Notice of Motion is dismissed in so far as it seeks orders that paragraphs 1 to 10 of the cross claim be struck out and that the proceedings against Falck be dismissed.

I give the applicants leave to seek further particulars of the cross claim within 7 days and I direct the Commonwealth to reply to any such request within 14 days.

I direct the applicants to serve a draft of any proposed amended defence upon the Commonwealth within 14 days.

I direct that the matter be listed for further directions before Ian Harrison J at 9.30am on Friday, 23 October 2009.

I order that the applicants pay the Commonwealth's costs of the motion. 6. Exhibits may be returned.

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