Samaan bht Samaan v Kentucky Fried Chicken Pty Ltd

(ii) The defendant shall pay the plaintiff's costs thrown away, together with the plaintiff's costs of the motion. Such costs to be payable forthwith and on an indemnity basis;

DECISION : (iii) The parties shall have liberty, on three days' notice to the Court and other parties, to apply for any different or special order for costs in relation to this motion and/or any different condition precedent to the grant of leave to amend;

(iv) The further hearing of the matter be expedited, but not fixed for hearing before a date to be fixed having regard to the need for the plaintiff to take such steps as she is advised are necessary as a result of the amendment and the production of the document that gave rise thereto;

(v) Otherwise, the parties have liberty to apply on 24 hours' notice to the Court and the other parties.

[Note: On 2 December 2009 the orders of the Court were amended.]

CATCHWORDS : PRACTICE AND PROCEDURE - amendment to pleadings - discovery of evidence not previously known to be available - difference between non-admission and denial - case management and ability to present case - leave to amend granted

LEGISLATION CITED : Civil Procedure Act 2005 Evidence Act 1995

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 83 ALJR 951 CASES CITED : Hall v London & North Western Railway Co (1877) 35 LT 848 Warner v Sampson [1959] 1 QB 297

PARTIES : Monika Samaan by her tutor Amanwial Samaan (Plaintiff) Kentucky Fried Chicken Pty Ltd (Defendant)

COUNSEL : A J Bartley SC / D C Morgan / T Jones (Plaintiff) I Barker QC / J Van Aalst (Defendant)

SOLICITORS : Kydon Segal Lawyers (Plaintiff) Baker & McKenzie (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20457/2006 Monika Samaan bht Amanwial Samaan v Kentucky Fried Chicken Pty Ltd

JUDGMENT 1 HIS HONOUR: This proceeding concerns an application by Kentucky Fried Chicken Pty Ltd ("KFC"), the defendant, to amend its pleadings and to withdraw admissions. Ms Samaan, the plaintiff, opposes the application. The plaintiff's claim, commenced on 10 November 2006, alleges that she ate chicken at a KFC store, contracted salmonella poisoning, and suffered severe consequential brain damage. 2 The damage suffered by the plaintiff is conceded to be most significant, and, if there be a liability, would result in a multi-million-dollar judgment in her favour. The issue in the proceedings is whether the plaintiff contracted the salmonella poisoning from chicken eaten at a KFC store. It is also not in issue that the plaintiff ate other chicken meals within a timeframe that would allow one of those meals to have caused the injury. 3 Currently, the issues, as defined by the pleadings, include an allegation by the plaintiff that she purchased a particular KFC product on a particular date. KFC have not admitted that purchase. In 2009, shortly before the commencement of the hearing, KFC discovered material in its files that affects the probability that the plaintiff had purchased the chicken product on the date and at the time that is suggested. On discovery of the material, KFC provided a copy of it to the plaintiff, and the hearing, by then proceeding before the Court, was adjourned on the application of the plaintiff for some days and thereafter further adjourned for 3 ½ months. 4 In essence, the amendment by KFC seeks to deny (as distinct from not admit) the plaintiff's purchase of the chicken product. While trite, it should be reiterated that when a party does not admit an allegation in a pleading, the party requires the other party to prove that allegation. On the other hand, when a party denies an allegation in a pleading, the party is, as the term suggests, denying that the fact occurred and suggesting (at least) that evidence may be adduced, which is inconsistent with the alleged fact. 5 However, in circumstances where a party has not admitted, but not denied, an allegation, the party is usually able to cross-examine any witness that seeks to prove the allegation, and, ordinarily, able to adduce evidence inconsistent with it. Further, a party is not entitled to refuse to plead to an allegation of fact against that party's interest, and is not entitled to plead that it does not admit an allegation, in circumstances where it has knowledge that supports, or refutes, the fact that has been alleged, or rationally affects its existence. But, in terms of the effect on the plaintiff, a denial and a non-admission have the same effect, in that both require the plaintiff to prove the fact and allow the defendant to cross-examine on evidence that seeks to prove it: Hall v London & North Western Railway Co (1877) 35 LT 848; Warner v Sampson [1959] 1 QB 297 at 319. 6 The Court's jurisdiction to allow the amendment of pleadings is governed by the terms of the Civil Procedure Act 2005 ("the Act"), and particularly the provisions of ss 56, 57 and 58 thereof. Fundamentally, the Court must evaluate the injustice to the plaintiff in allowing the amendment, and the injustice to KFC in not allowing the amendment, within the provisions of the Act. In so doing, the Court must take into account the importance of case management, not only to the parties but to the public, on the one hand, and, on the other hand, the desirability of allowing parties to prosecute their case in a manner that they consider best suits their interests consistent with justice between the parties. 7 With that short description of the underlying issues in the proceedings that now require determination, the Court will proceed to deal with the facts and/or procedural history giving rise to this determination; the principles to be applied; before applying those principles to the circumstances of this case. Facts and Procedural History 8 The underlying factual dispute is sufficiently summarised earlier. The procedural history is far more relevant to the resolution of the issues in these proceedings. 9 As earlier stated, the plaintiff commenced proceedings on 10 November 2006 and in the statement of claim alleged that she purchased a "Chicken Twister" from KFC. Leaving aside issues as to the identity of the defendant, the defendant filed its defence on 4 May 2007, an amended defence on 16 September 2008, and a further amended defence by orders of the Court dated 22 June 2009. In each such document, KFC (or the defendant through whichever corporate entity) did not admit the allegation as to purchase, but did not deny the purchase. 10 On 6 May 2009, the Court issued a subpoena, addressed to KFC, seeking, inter alia, "all documents containing sales records for the trading day on 24 October 2005". The relevance of the date 24 October 2005 is that, it is alleged, this was the date upon which the purchase occurred. The subpoena was issued at the request of the plaintiff and was also served on KFC's solicitor. 11 Between 12 May and 13 May 2009, there are a series of e-mail exchanges between officers of KFC relating to the search for documents that had been sought. That exchange referred to a search for "historic sales data for 24 October 2005 for [the] Villawood store." There is a reference to backup tapes and information on tapes that only Robert Moore, an officer of KFC, who was, at that time, on leave, could access. It is clear, from the exchanges, that some 2005 finance data had been purged in March 2008, namely, after the commencement of these proceedings. 12 On 18 May 2009, part only of the answer to the subpoena was produced to the Court, the remainder, including the more relevant parts, was stood over, by consent, to 1 June 2009. On and following 18 May 2009, KFC took other steps to locate backup files that might have contained information as to sales at Villawood on 24 October 2005. Those searches were, at least initially, unsuccessful. In evidence on the motion, with which the Court is now dealing, are a number of e-mail exchanges that disclose those attempts. 13 On 18 May 2009, the aforementioned Robert Moore returned from leave. He became involved in the search for, and of, the documents. The search was hindered significantly by the purging of records by KFC on three separate occasions, each of which was after the commencement of these proceedings. 14 On 20 May 2009, Mr Moore identified two tapes of backup material for the period ending December 2007. Neither of those backup tapes contained relevant information because, it seems, there had been a purge of documents in December 2006. 15 On 22 May 2009, having failed to obtain the material on the inspected backup tapes, Mr Moore requested any backup prior to 6 December 2007, in terms that requested a backup "say early 2006 and restore again please?" On that day, Mr Moore searched backup tapes stored in a safe on-site in the USA and identified a tape created on 25 November 2005, containing financial data. He expressed the view that he would seek to restore that tape to determine whether it had the requisite information. 16 Later on 22 May 2009, Mr Moore successfully restored the aforementioned tape from which the opinion was expressed that "there is no docket details captured ... for 24 October 2005 Villawood". 17 On 1 June 2009, the subpoena to KFC was returnable and documents were produced in answer thereto. On 4 August 2009, the General Manager of KFC requested the Operations Service Manager to double check whether any sales records existed for 24 October 2005. Consequential upon the aforementioned request of the General Manager, an IT consultant, who regularly worked for KFC or on its material, was involved and he identified a backup tape, dated 8 November 2005, as potentially containing the transaction log for 24 October 2005. 18 On 4 August 2009, Mr Moore submitted an urgent request to the Databank recalling archive box containing tape PE12*JD, in response to which he received two backup tapes labelled PE122005JD 1/2 and PE122005JD 2/2. The first of those tapes contained the transaction log for 24 October 2005 for Villawood. On 5 August 2009, that raw data was transferred into an Excel spreadsheet format. On 6 August 2009, senior counsel for KFC informed the plaintiff's senior counsel of the existence of the data and provided the plaintiff with the Excel spreadsheet. On that date, senior counsel for KFC informed the Court of the existence of the data. 19 The hearing of the proceedings had commenced on 3 August 2009, but, other than the opening address by each senior counsel, little evidence had been adduced. Mr Samaan, the plaintiff's father, a significant witness as to the purchase of the chicken product, has not concluded his evidence in chief. As earlier recorded, on 6 August 2009, the plaintiff sought an adjournment until 11 August 2009, in order to examine the document that had been provided. On 11 August 2009, it having become clear to the plaintiff that more time was needed to deal with the document, and with ancillary steps associated with its examination, the hearing was adjourned until 30 November 2009. 20 On 16 October 2009 KFC filed in Court a motion that had been served after 11 August 2009. The motion was heard on two separate occasions, and, subsequent to its hearing, the Court requested from the parties, a written submission on the issue of whether the evidence, being the data on the transaction log, purportedly found on or about 5 August 2009, would be admissible in the absence of an amendment to the pleadings. It is unnecessary, and inappropriate, for the Court to rule finally on whether evidence would or would not be admissible, but a preliminary view as to its admissibility is, it seems, relevant to the prejudice created by the amendments. It is probably self-evident that the parties differ as to the admissibility of the documentation. Principles 21 The provisions of the Act establish that the overriding purpose of the Court, in issues of this kind, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The "real issues" in proceedings are the issues defined by the pleadings: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 83 ALJR 951 ("Aon") at [15], [31], [67]-[71], [82], [85], [119]-[120] per Gummow, Hayne, Crennan, Kiefel and Bell JJ. 22 In fulfilling that duty the Court must manage proceedings having regard to the just determination of the proceedings, the efficient disposal of the business of the Court, the efficient use of available judicial resources, and the timely disposal of the proceedings (and other proceedings in the Court) at an affordable cost to the parties: s 57 of the Act. This puts case management as a major consideration in the achievement of the purpose in s 56 of the Act. 23 Further, by the provisions of s 58 of the Act, in dealing with an amendment of a document, the granting of an adjournment, or in any other procedural issue, the Court is required to act in accordance with the dictates of justice, which, in that regard, is defined as including, inter alia: the purposes in ss 56 and 57 of the Act; together with the degree of expedition with which the respective parties have approached the proceedings; the degree to which any lack of expedition was beyond the control of the respective parties; the use the parties have made or could have made, of opportunities granted during the course of the proceedings; and the degree of injustice suffered by the respective parties as a consequence of any order or direction. 24 The requirements of justice, and the criteria to be considered in dealing with an application for an amendment, operate within the framework of an ordered progression to a fixed trial date: Aon at [32]. The Court is not obliged to accept the addition of new claims at the last moment before trial, and, a fortiori, during the course of the trial: Aon, ibid. 25 Compensation, by way of an order for costs, even indemnity costs, to a party, who has wasted resources, or will waste resources, on account of an amendment, will often be inadequate. And even though the Court may be able to fashion an order that could properly compensate the aggrieved party, there is a fundamental public interest in ensuring the efficient use and operation of the courts and an irreparable element of unfair prejudice to the other party in unnecessarily delaying proceedings: Aon at [5], [30] (per French CJ), [99]-[101] (per Gummow, Hayne, Crennan, Kiefel and Bell JJ), and [137]-[138] (per Heydon J). Conclusion 26 These proceedings are unusual and quite exceptional. Fundamental to the determination of the motion is the effect that an amendment to the pleadings will have on the remainder of the proceedings. In turn, this depends upon the use that may be made of the transaction log for 24 October 2005. 27 The contents of the transaction log, at least on a preliminary view, are contained in a document that, ordinarily, would be admissible at hearing. The document, or its contents, could rationally affect the assessment of the probability of the existence of a fact in issue in the proceeding, namely, whether the plaintiff or her father purchased the chicken product at KFC on the day in question. As such, it is relevant, and, absent the application of one or more of the exclusionary provisions, would be admissible. 28 The plaintiff submits that the prejudice caused to her by the delay in producing the document, or notifying of its existence, would allow the Court to rule the document inadmissible. While cogent submissions have been advanced by the plaintiff as to the inappropriateness of the defendant's conduct, it would seem that the only basis upon which the evidence could be rendered inadmissible would be by an application of the provisions of s 135 of the Evidence Act 1995, or, although it is unclear how precisely it would fall within the provision, under s 138(1) of the Evidence Act. 29 The evidence has not been improperly obtained, nor has it been obtained in contravention of the law. On one view, it may have been obtained as a consequence of an impropriety, being the failure to answer properly or in good time the subpoena addressed to the defendant. However, it would seem that, while it may have been undesirable that KFC did not answer the subpoena in good time, the material was not "obtained" as a consequence of an impropriety. As a consequence of the foregoing, s 138 of the Evidence Act would not seem to permit exclusion of the evidence. 30 On the other hand, s 135 of the Evidence Act may be more problematic from the defendant's perspective. That provision allows the Court to refuse to admit evidence, if its probative value were substantially outweighed by the danger that the evidence might be unfairly prejudicial to the party against whom it is adduced. It also allows the Court to refuse to admit evidence if its probative value were substantially outweighed by the danger that the evidence might cause, or result in, an undue waste of time. 31 The exercise of the discretion conferred by s 135 of the Evidence Act involves an ascertainment of the probative value of the evidence and the weighing of that probative value with the danger of unfair prejudice, or of undue waste of time. However, the question necessarily arises as to whether that discretionary exercise is different, or would result in a different outcome, if the amendments sought were, or were not, permitted. 32 Earlier I referred to the judgment of the Court of Appeal in Warner v Sampson, supra. In that judgment, Lord Denning said: "Sometimes the pleader 'denies', sometimes he 'does not admit' each and every allegation, but whatever phrase is used it all comes back to the same thing. The allegation is to be regarded 'as if it were specifically set out and traversed seriatim'. In short, it is a traverse, no more and no less.

Now the effect of a traverse has been known to generations of pleaders. It 'casts upon the plaintiff the burden of proving the allegations denied', see Bullen And Leake's Precedents Of Pleadings (3rd Edn), p 436. So this general denial does no more than put the plaintiff to proof. " (Per Lord Denning at 311) 33 There are other statements in Warner, supra, to like effect. These include: "In my opinion at the present time, although the practice of pleaders may vary, there is no effective line to be drawn between non-admission, on the one hand, and denial on the other. Certainly a general traverse of the kind used in the defence here should not be taken against the defendant as going beyond a putting to proof…." (Per Hodson LJ at 319)

"If the words in the paragraph, instead of being a denial, had read 'This defendant does not admit', and so on, then, says the plaintiff, there would have been no cause for complaint, but in fact there was a denial of the plaintiff's title, and that amounts to a disclaimer. I am bound to say that for my part I cannot accept this contention. The methods of pleaders vary, but the use of a general traverse in one form or another is very common indeed. Some pleaders, if they wish to go no further than to put the plaintiff to the proof of the matters averred in the statement of claim, will use the form 'The defendants do not admit'. Others will say 'The defendants deny'. Having regard to the modern practice of pleaders, I have always regarded the two forms as having a similar effect, and indeed it is difficult to see what other effect in the ordinary case a denial could have than putting the plaintiff to proof, unless the defence also contained some positive averments. If this be the effect of a general traverse such as the one under consideration here, and for my part I think it is, then the pleading cannot amount to a renunciation by the defendants of their character as tenant." (Per Ormerod LJ at 324-325). 34 While Warner concerned landlord and tenant proceedings, in which it was claimed that a denial in the pleading amounted to a denial of the plaintiff's title as landlord, thus giving rise to a forfeiture of the lease, the foregoing citations are of general import, and accord with ordinary practice. If the facts be within the knowledge of the pleader, and a denial be appropriate, then denial ought be made. If the pleader were to have no knowledge of the existence or otherwise of the fact, then a non-admission is appropriate. But in each case, the party that has pleaded either a denial or a non-admission is capable of cross-examining on the fact to which the other party has been put to proof, and is capable of adducing evidence inconsistent with the existence of that fact. 35 On that basis, whether the transaction log is admissible does not depend upon whether the defence of KFC pleads a non-admission (as it currently does) or pleads a denial, as it would, if the amendments were permitted. In other words, whether or not the motion is granted, with one small exception, the plaintiff is in the same position, and so too is the defendant. The small exception is that the parties are formally on notice, as is the Court, of the real issues between them, namely, that KFC denies that the offending chicken was purchased from it. And on that basis, the amendments cause no prejudice and ought be permitted, to the extent that the plaintiff can be compensated for the cost occasioned by the waste of time and by the necessity to examine the data that has now been belatedly produced. I do not underestimate that any delay in the proceedings will cause stress to the plaintiff and her family. This is so, regardless of their confidence or otherwise in the outcome. To the extent possible, I will make orders that seek to ameliorate any delay. But the stress is due to the production of the evidence, not the amendment that is sought. 36 I deal with other aspects that have been raised and/or ought be foreshadowed. During the course of the proceedings on the motion, it has become clear that significant material, which was originally available to KFC, has been destroyed by it. That material, if it were to exist, could have been used to prove or disprove the consumption of particular items, on a particular date, and thereby to undermine or to corroborate the conclusion sought to be derived from the contents of the transaction log. The destruction of this material, at a point in time when KFC knew of these proceedings, was said to be relevant to the determination of the amendments. It may be relevant, but I consider it to be only marginally so. It is more relevant to the exercise of discretion under s 135 of the Evidence Act. The inability of the plaintiff to have available to her material that would undermine the weight of the contents of the transaction log is a matter relevant to the question of unfair prejudice. 37 As earlier stated, I am not deciding, at this point in time, that the transaction log is admissible. My preliminary view, subject to submissions that may be made hereafter, is that the transaction log is admissible and ought not be rejected under s 135. The inferences that flow from that proposition, if any, are matters for the trial and not for preliminary adjudication. As was stated by me during the course of exchange with counsel, as I understand the evidence as it currently stands, the transaction log is a record of that which an employee entered through the computer, at a particular time, not what the client ordered and not what was delivered. 38 The Court makes the following orders: On condition that the defendant, by 12 noon 25 November 2009, undertakes that it will pay forthwith any and all costs reasonably incurred by the plaintiff in the examination and/or verification of the material discovered by it on 6 August 2009:

(i) Leave be granted to the defendant to file and serve a second further amended defence in the terms filed with the notice of motion, denying the purchase by the plaintiff, or on her behalf, of the defendant's chicken product;

(ii) The defendant shall pay the plaintiff's costs thrown away, together with the plaintiff's costs of the motion. Such costs to be payable forthwith and on an indemnity basis;

(iii) The parties shall have liberty, on three days' notice to the Court and other parties, to apply for any different or special order for costs in relation to this motion and/or any different condition precedent to the grant of leave to amend;

(iv) The further hearing of the matter be expedited, but not fixed for hearing before a date to be fixed having regard to the need for the plaintiff to take such steps as she is advised are necessary as a result of the amendment and the production of the document that gave rise thereto;

(v) Otherwise, the parties have liberty to apply on 24 hours' notice to the Court and the other parties. [Note: On 2 December 2009 the Court amended these orders.]

02/12/2009 - Paragraph 37 amended in accordance with subsequent decision. - Paragraph(s) 37

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