Sandvik Mining and Construction Australia Pty Ltd v Dempsey Australia Pty Ltd & Ors [2012] QSC 102

[1] On 2 April 2012 this matter came on for review before a six week trial which had been set to begin on 10 April 2012. Although the matter had been supervised by the Court for some years, unfortunately shortly before the trial both parties found the need to amend their pleadings substantially. First to do so was the plaintiff. On 14 February 2012 I granted leave (which was not opposed) for the plaintiff to file and serve a fourth amended statement of claim. That statement of claim contained substantial re-pleadings of the plaintiff's case which is, essentially, for monies owing as the price of two Titon drilling rigs it had delivered to the first defendant. The second and third defendants are sued as guarantors. The defendants' case is that they have not paid for the rigs because they did not perform according to representations made before purchase and that as a result the defendants have suffered loss and damage, including because the machines did not allow the defendants to adequately perform under a contract they had to drill at the Blackstar site at Mt Isa.

[2] On 14 February 2012 I gave leave to the defendants to file and serve an amended defence and counterclaim by 16 March. I anticipated, although it was not a term of the order, that the amendments would be consequential on the amendments I had allowed to the statement of claim. The defendants did not file and serve any defence and counterclaim in accordance with that order, and the effect was that when no document was filed on 16 March 2012, my order giving leave allowing the defendants to amend the defence and counterclaim ceased to have effect - r 381. A week later the defendants purported to file and serve a substantially amended defence and counterclaim. The amendments were not merely consequential upon the amendments which had been allowed to the statement of claim.

[3] The matter came before me again on 2 April 2012. The plaintiff took many of the proposed amendments to the defence and counterclaim of 23 March 2012 in its stride. It opposed certain other amendments being made. The defendants accepted that, because of the operation of r 381, they either needed leave to file in terms of the defence and counterclaim dated 23 March 2012 or needed an order extending the time limited by my order of 14 February 2012. I preferred to deal with the matter on the basis that, by operation of r 381, after 16 March 2012, the defendants required leave to file and serve amendments to their defence.

[4] On 2 April 2012 I disposed of the application for leave to amend the defence and counterclaim. I gave ex tempore reasons for the orders I made then, except that I reserved my reasons in relation to two paragraphs of the defence and counterclaim dated 23 March 2012 for which I refused leave: paragraphs 29A and 30. The amendments sought to those paragraphs are as set out below, marked with underlining:

"29A. Had the First Defendant not been induced by the Titon Representations to enter into the Drill Rig Purchase Contract, the First Defendant would have purchased other drilling rigs in lieu of the Titon Rigs and the Pantera Rigs, namely Atlas Copco drilling rigs models no. ROC L8 and ROC L7, with a tropical pack addition.

1. 30. The First Defendant has suffered loss or damage by reason of:

(a) The Plaintiff's contraventions of the TPA pleaded in paragraph 29 above; and

(b) In addition or in the alternative, the Plaintiff's contraventions of the FTA pleaded in paragraph 29 above.

Particulars for (a) and (b)

(i) The Atlas Copco ROC L8 and ROC L7 rigs would not have been delivered late, would have been able to meet the requirements of the Production Schedule as to meters and diameter of holes, and would not have required modifications or the unscheduled maintenance that was required by the Titon rigs.

(ii) The Atlas Copco ROC L8 and L7 rigs are competitors to the Titon Rigs and Pantera Rigs respectively.

(iii) The First Defendant relies on emails from representatives of Atlas Copco to the Second Defendant dated 23 July 2004 and 26 July 2004.

(iv) Atlas Copco ROC L8 drilling rigs have been used by Straitline Drilling at Black Star since in or about March 2009.

(v) Atlas Copco ROC L7 drilling rigs have been used by BGC Contracting in various projects in Western Australia since in or about September 2005 and Atlas Copco ROC L8 drilling rigs have been used by BGC Contracting in various projects in Western Australia since in or about March 2008.

(vi) The First Defendant relies on the admission made by the Plaintiff in the document identified as document 16.1 in its second supplementary list of documents dated 20 November 2008 that the Atlas Copco ROC L8 rig was a "proven product". It may be inferred that the document was produced by the Plaintiff on or before 21 August 2004 because the Plaintiff has disclosed it as a document supporting the statements made in the Tophinke Email.

(vii) The First Defendant relies on the matters pleaded in paragraphs 24, 24A and 24B above.

(viii) Particulars of the loss and damage suffered by the First Defendant are set out in Schedule Two to this Defence and Counterclaim and in the reports by Gordon E Leck & Associates dated 17 June 2010 and 8 October 2010. The First Defendant claims special damages and in the alternative general damages."

[5] The first defendant bought two Titon and two Pantera drilling rigs from the plaintiff. It complains about the performance of the Titon rigs. It can be seen that the first defendant has always made a case that, had it not been induced by the plaintiff to buy two Titon drilling rigs, it would have bought two Copco drilling rigs with the model number ROC L8. The proposed amendments of 23 March 2012 seek to mount a case that, had the first defendant not been induced to purchase the two Titon rigs it would not have bought Titon or Pantera rigs, but would have purchased two Copco L8 drilling rigs and two Copco L7 drilling rigs.

[6] It was said at the hearing on 2 April 2012 that neither side had any expert opinion as to the likely performance of the Copco L8 and L7 rigs at the Mt Isa site, or at all. It was evident from the proposed amendment to the particulars to paragraph 30 that the defendants wished to call evidence as to the performance of both these drillings rigs in circumstances where they were used by others - the L8 rigs at the Blackstar site and the L7 in Western Australia. The plaintiff objected that the amendments would lead to what it called "a trial within a trial", by which I understood a hypothetical trial as to the performance of the L7 and L8 machines in the circumstances of the Mt Isa site, and over the period during which the defendant operated the Titon and Pantera machines in fact.

[7] It is evident that the trial of this proceeding will be particularly fact-rich as to the performance of the Titon and Pantera machines at the Blackstar site over the period the first defendant performed, or attempted to perform its contract there. Matters such as the mechanical performance of the drilling rigs, unscheduled maintenance, the availability of trained operators and trained mechanics, and the availability of spare parts loom large. At one review the parties told me they had agreed on 150 volumes of "primary drilling records" which the mechanical engineers who would give evidence agreed were relevant as the basis for their conclusions. Matters specific to the Blackstar site, such as geology and climate, are said to play a part in the machines' performance.

[8] Pursuant to direction the parties had agreed upon a trial timetable showing that examination and cross-examination of the witnesses they wished to call on the issues were almost able to fit within the time allocated by the Court for the case - six weeks. The timetable made no allowance for any examination of the performance of the Atlas Copco L7 and L8 rigs, in general, or in circumstances relevant to, or analogous to, the Blackstar site.

[9] There was no acceptable reason offered for the late amendment to the pleading. From the beginning of the case, the defendants have made a case in terms of the old pleading. The affidavit material filed on this application simply was that on 28 and 29 February 2012 a partner of the firm representing the defendants conferred with the second defendant and that, "it became apparent that the allegation in paragraph 29A of the defence and counterclaim would have to be amended (as it has been) so as to conform to the evidence that Mr Dempsey will give at trial." There was no explanation as to why the person who seems to have provided all the instructions over the five year history of this litigation either changed his instructions so shortly before trial, or was never adequately proofed until just over a month before the trial was to start.

[10] The merits of the defendants' proposed new claim were not apparent from the material on this application. As can be seen from the proposed new particulars to paragraph 30 the defendants have two emails from the middle of 2004 which they rely upon as showing that the Atlas rigs would have been available for purchase and some very general statements made by the plaintiff that the Atlas rig was known to the plaintiff as a competitor and a "proven product". This seemed a long way from proving that delays and difficulties would not have been encountered with the Atlas rigs as they were with the Titon rigs. Counsel appearing for the defendants on 2 April 2012 (who was junior counsel briefed on trial) could not tell me that the rigs referred to in these emails were the same as the rigs which were said to have performed as pleaded at paragraphs (iv) and (v) of the particulars. In that regard I note that on 9 March 2012 the defendants issued a subpoena to Atlas Copco Australia Pty Ltd asking for L7 and L8 manuals for the years 2004 and 2005 to be produced to the Court. It seemed to me that the defendants knew little about the Atlas machines which they asserted would have performed satisfactorily at the Mt Isa site, and would not been subject to any of the problems to which the Titon rigs were subject.

[11] This material also did not demonstrate that the plaintiff ought not be taken by surprise by the details of the new case sought to be made against it. Reliance was placed on a single sheet of paper headed "Competitor Analysis Atlas Copco". This document was apparently produced by the plaintiff. It compares the plaintiff's Titon rigs to the Atlas Copco rigs. It is in the nature of general marketing material and not at all a technical analysis of the qualities of either machine.

[12] The solicitor for the plaintiff was cross-examined on the application in an effort to demonstrate that while the pleading remained in its unamended state, the lawyers for the plaintiff had not sought to run a technical case to the effect that the Atlas Copco L8 rigs would not have performed satisfactorily in place of the Titon rigs. In fact the solicitor for the plaintiff swore that he had sought expert opinion as to the performance of the L8 rigs but had been advised it was almost impossible to obtain.

[13] In my view the amendments to paragraphs 29A and 30 of the defence and counterclaim raised factual issues too extensive to be accommodated at a very late stage before trial. There was no compelling case as to the merits of the case proposed. There was no expert opinion which supported the defendant's proposed new case and no indication that a non-expert case had been properly prepared or worked up - to the contrary. No satisfactory explanation was put forward for the lateness of the amendment. The case was a supervised one. Six weeks had been allocated from the Court calendar for its hearing and the trial timetable proposed by the parties made no allowance for this issue to be ventilated.

[14] While the plaintiff had not been able to obtain relevant expert opinion as to the operation of the Atlas L8 rigs prior to the proposed amendment, there was no evidence that it had not prepared this aspect of its case, or was prepared to concede this aspect of its case. The amendment put forward as to the Atlas L7 rigs and as to the performance of the L7 and L8 rigs was put forward very late in circumstances where the plaintiff could not fairly and properly meet the case sought to be advanced. At the very least the plaintiff would have required non-party disclosure of documents relating to the technical specifications of the L7 and L8 rigs in 2004 or 2005 and documents as to their operation over several years in the field as particularised in the proposed amendments to paragraph 30 of the counterclaim.

[15] For these reasons I refused the amendments sought.

[16] This matter was set down for trial, for six weeks, commencing 10 April 2012. On 5 April 2012 the defendants applied for an adjournment on the grounds that their senior counsel was ill. I granted the adjournment, over opposition from the plaintiff. It seemed to me that it would be unreasonable to expect junior counsel for the defendants to run the matter alone. Unusually, the parties had agreed that the defendants would present their case first at trial. There was no prospect of new senior counsel being briefed in the matter in time to be of much assistance to the defendants.

[17] I reviewed the matter again on 12 April 2012. Counsel for the defendants asked that I make an order that the costs thrown away by the adjournment be each party's costs in the cause. He said that if his clients ultimately succeeded at trial, they wanted to recover the costs thrown away by the adjournment necessitated by the illness of their senior counsel. Counsel for the plaintiff asked that I make no order as to costs.

[18] Counsel for the defendants relied upon State of Queensland v Brooks and McCabe.[1] In that case the Court of Appeal was forced to vacate a hearing date due to the illness of one member of the Court. Costs were reserved and ultimately ordered to be paid to the successful party, including costs of the vacated hearing date. Keane JA, said:

"It is true that neither party was responsible for the circumstances which led to the vacation of the first hearing. But that is no reason to deny the successful party costs necessarily incurred by it in relation to the determination of the appeal in its favour. There is no principle of law that a successful party should recover only those costs which it has incurred by reason of the default of the other party."

[19] The plaintiff points to two cases[2] in which orders were made against the party seeking the adjournment of a trial although the party had not acted unreasonably.

[20] In a third case of Alstom Power Limited v Yokogawa Australia Pty Ltd & Another (No 4)[3] senior counsel for one side was forced to retire during the trial with illness. The trial was adjourned. Bleby J described that as, "one of the many exigencies which may afflict the smooth running of a trial" - [11] - and said that he did not consider that he was granting an indulgence to the defendants in adjourning the trial, but rather "endeavouring to ensure that, in the unfortunate circumstances which had happened, the defendants would not be unduly prejudiced in the conduct of their case" - [13]. Bleby J refused an application by the plaintiff in that case for costs thrown away and apparently did not make an order as to costs.

[21] In this matter the plaintiff was ready for trial and wished the trial to go ahead. While the defendants themselves were in no way to blame for the need for an adjournment, the necessity for an adjournment does come from their side of the record. Costs thrown away on a six week trial are potentially very significant. The need for the adjournment in no way comes from the plaintiff. Even if the plaintiff is not successful at the end of the trial, there is no good reason why it should pay the costs thrown away because of this adjournment. As noted, there are at least two cases where, in such circumstances, costs orders have been made in favour of the party standing in the position of the plaintiff in this matter. The plaintiff however has not asked for its costs, it has asked that there be no order as to costs of the adjournment. In effect that will mean the parties bear their own costs thrown away by the adjournment. In the circumstances it seems to me that it is a more just order than that sought by the defendants.

[1] [2006] QCA 523, [5].

[2] R & R Industries (Australia) Pty Ltd v Marbletrend Pty Ltd [2010] FCA 1311 and Business in Focus (Aust) Pty Ltd v Begun Property Pty Ltd [2006] FCA 264.

[3] [2010] SASC 109.