Sherrin Hire Pty Ltd v Sherrin Rentals Pty Ltd

Federal Court of Australia|2015-10-15|Before: Ms J, Edelman J

Number of paragraphs: 65

Counsel for the Applicant: Mr F Corsaro SC with Ms J Wright

Solicitor for the Applicant: TressCox

Solicitor for the First, Second and Third Respondents/First, Second and Third Cross-Claimants: Holding Redlich

Counsel for the First and Second Cross-Respondents: Mr R D Wilson SC

Solicitor for the First and Second Cross-Respondents: Coleman Greig

Counsel for the Third Cross-Respondent: The Third Cross-Respondent did not appear

Counsel for the Fourth Cross-Respondent: The Fourth Cross-Respondent did not appear

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1981 of 2011

BETWEEN: SHERRIN HIRE PTY LTD ABN 450 07 741 942

AND: SHERRIN RENTALS PTY LTD (FORMERLY SHERRIN EQUIPMENT PTY LTD) ABN 520 74 173 756

AND between: SHERRIN RENTALS PTY LTD (FORMERLY SHERRIN EQUIPMENT PTY LTD) ABN 520 74 173 756

JUDGE: EDELMAN J DATE OF ORDER: 15 OCTOBER 2015 WHERE MADE: SYDNEY

The applicant's application filed 17 April 2015 to amend its statement of claim in the form of the proposed fourth amended statement of claim is dismissed.
The applicant pay the costs of the first, second and third respondents of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1981 of 2011

BETWEEN: SHERRIN HIRE PTY LTD ABN 450 07 741 942

AND: SHERRIN RENTALS PTY LTD (FORMERLY SHERRIN EQUIPMENT PTY LTD) ABN 520 74 173 756

AND between: SHERRIN RENTALS PTY LTD (FORMERLY SHERRIN EQUIPMENT PTY LTD) ABN 520 74 173 756

JUDGE: EDELMAN J DATE: 15 OCTOBER 2015 PLACE: SYDNEY

Introduction 1 The applicant, Sherrin Hire, essentially brings these proceedings to recover $4 million to $5 million in costs that it says it spent repairing equipment that it was sold which did not work properly. This case has unfortunately proved to be a money pit of legal expense over the last four years. The combined legal costs of the parties is already between $4 and $5 million. It is possible, based on counsels' estimates, that the combined costs up to, and including, trial could run to up to several more million dollars. As I explain below, no mediation has yet occurred. One should take place as soon as possible. 2 Much of the expense and delay has been caused by confusion about who was responsible for the manufacture, and design of the equipment. This confusion was considerably exacerbated by lengthy delays in obtaining documents concerning these matters. At first sight of this application it also appeared to me that a difficulty may have been a scorched earth approach taken by the respondents, the Sherrin Parties. This interlocutory application by Sherrin Hire to amend its statement of claim was contested to the extent that the court book for this application ran to considerably more than 1,000 pages. But it became clear during the hearing this morning that the extensive material had been included because of disputes between the parties about the proper characterisation of the reason for past delay and expense. Other than the limited extent to which it is necessary to refer to those matters below, they should be put to rest now. 3 The Sherrin Parties oppose the amendment application and also seek to strike out various paragraphs of Sherrin Hire's current pleading which Sherrin Hire seeks to amend. The cross-respondents, (who I shall refer to as either TRT or the TRT Parties because it was common ground that these parties could be treated as a unity for all purposes relevant to this application), also now wish to bring a cross-claim. Senior counsel for each of the parties accepted that the convenient course would be for the strike out application and the application for leave to bring the cross-claim to be considered in light of my reasons in relation to the amendment application. 4 A summary of the background to this amendment application begins in June 2005 when Sherrin Hire was acquired by Boom Logistics purchasing the shares in it from Mr Sherrin and entities related to him. These proceedings essentially involve a dispute about allegedly defective EWPs (elevating work platforms), sometimes colloquially described as "cherry pickers", subsequently acquired by Sherrin Hire. Sherrin Hire's business includes hiring EWPs to customers. Many of the allegedly defective EWPs were acquired by Sherrin Hire from some of the Sherrin Parties. 5 The delays and expense in this matter have been caused by confusion about some basic underlying facts. Some of the issues that caused the confusion include: (1) Sherrin Hire's action was initially brought on the basis that the EWPs were exclusively designed and built by the TRT Parties. The action was only brought against the Sherrin Parties. (2) Eight months later, Sherrin Hire amended its claim to allege that the Sherrin Parties did not merely manufacture but also designed the EWPs. (3) A further 18 months later, the Sherrin Parties alleged that TRT was the primary designer and Panalam was the designer of components of it. Only then, in December 2013, did the Sherrin Parties join TRT and Panalam to the proceedings as cross-respondents. (4) It took another four months for Sherrin Hire to commence an action against TRT and Panalam (NSD379/2014). TRT denies liability and says that most of the design was conducted by the Sherrin Parties and Panalam. (5) TRT have now taken nearly two more years to apply for leave to bring a cross-claim against two of the Sherrin Parties and Panalam including allegations which seem to include that each of them owed duties of care to TRT to prevent loss being suffered arising from any damages TRT must pay due to its liability arising from the defective EWPs. 6 The proposed pleading that is the subject of this application is the eighth iteration of Sherrin Hire's statement of claim since it commenced these proceedings nearly four years ago. Trial dates have been set twice and vacated twice. Orders for mediation have been made three times. But no mediation has occurred. Against this background and in light of the size of this application and the substantial defects in Sherrin Hire's proposed pleading, its application to amend must be refused. However, in light of the submissions made this morning and my views about the defects in the proposed pleading I will entertain the possibility of leave to amend being granted based on a ninth iteration of the statement of claim if the issues which senior counsel said were intended to be raised in that pleading can be expressed so that the issues are identified. The parties should pay careful attention to the remarks that I make in this respect in the conclusion to these reasons.

The history of amendments 7 By way of background, the procedural history of the proceedings is set out below. 8 On 11 November 2011, Sherrin Hire filed its first statement of claim in these proceedings. 9 On 7 December 2011, the first return date, the parties were ordered to attend mediation by 18 April 2012. The mediation did not take place. 10 On 22 February 2012, the Sherrin Parties filed their Defence. 11 On 6 March 2012, Sherrin Hire filed its statement of claim in matter number NSD350/2012 (those proceedings are related, dealing with two financed EWPs). 12 On 28 June 2012, Sherrin Hire filed an amendment to its statement of claim. This was its second version of the statement of claim. 13 On 5 October 2012, the Sherrin Parties filed their Defence in NSD1981/2011 and their Defence in NSD350/2012 on 19 October 2012. 14 On 5 October 2012, orders were made for mediation by 30 May 2013. The mediation did not take place. 15 On 16 October 2012, the docket judge ordered that both sets of proceedings be set down for hearing for four weeks, commencing on 15 July 2013. 16 During February and March 2013 there was some dispute about the discovery process, and Sherrin Hire served the majority of its evidence in chief: 14 lay affidavits and 3 expert reports. The July trial dates were vacated in April 2013. 17 On 24 May 2013, Sherrin Hire was given leave to serve a third version of the statement of claim in both NSD1981/2011 and NSD350/2012. The docket judge made a third order that the parties attend mediation. This time the mediation was scheduled to be held by 15 November 2013. The matter was set down for trial to commence on 10 March 2014. 18 In the period July to October 2013, Sherrin Hire sought the agreement of the Sherrin Parties for arrangements for the mediation. The Sherrin Parties allegedly did not respond. 19 On 23 October 2013, the docket judge granted the Sherrin Parties an extension of time until 5 November 2013 to file their evidence. 20 On 15 November 2013, the docket judge made orders: (i) granting leave to the Sherrin Parties to join TRT, (ii) extending the time for the Sherrin Parties to serve their evidence until 29 November 2013, and (iii) vacating the hearing date of 10 March 2014. 21 On 6 December 2013, more than two years after the commencement of the proceedings, the Sherrin Parties filed their Further Amended Defence which introduced for the first time allegations that TRT: (1) was the primary designer, manufacturer and assembler of the EWPs; (a) owed a duty of care to the Applicant to take reasonable care in designing, manufacturing and/or assembling each of the EWPs, including a duty to ensure that each of the EWPs: (i) was designed, manufactured and/or assembled with due care and skill; (ii) was fit for the purpose for which it was required; (iii) was sufficiently robust to cope with reasonable operating conditions in the field; and (iv) met the Sherrin Entities' Performance Criteria; (2) is (if the EWPs are defective) a concurrent wrongdoer within the meaning of each of Part IV of the Civil Liability Act 2002 (NSW) (CLA NSW) and Part II of the Civil Liability Act 2003 (QLD) (CLA QLD). 22 The Sherrin Parties also said that Panalam: (1) was the designer of components of the EWP; (2) owed a duty of care to the Applicant to take reasonable care in carrying out its design work; and (3) is (if the EWPs are defective) a concurrent wrongdoer within the meaning of each of Part IV of the CLA NSW and Part II of the CLA QLD. 23 On 9 December 2013, the Sherrin Parties cross-claimed against TRT and Panalam. 24 On 14 April 2014, Sherrin Hire commenced proceedings NSD379/2014 against TRT, in identical terms to the allegations made by the Sherrin Parties against TRT. 25 On 8 May 2014, in its defence to the cross-claim, TRT: (1) denied that it was the primary designer of the EWPs; (2) said that Sherrin Equipment (the third respondent) had represented that Sherrin Equipment had completed 90% of the design with a company called Snorkel; (3) said that Panalam carried out certain design work; (4) said that the Panalam design work was independently verified by Kwovis; (5) said that pursuant to an agreement dated 16 September 2005: (a) Sherrin Equipment was responsible for all design verification; (b) TRT was not responsible for design specifications; (c) Sherrin Equipment provided all the information required to establish the specification and performance criteria; (d) Sherrin Equipment was intimately involved in all design stages, had the final say in all design decisions and approved all design changes; (e) Sherrin Equipment was ultimately responsible for all design issues and was specifically responsible for design verification; (f) TRT prepared manufacturing drawings based upon design criteria and design concepts provided and approved by Sherrin Equipment; and (g) Panalam designed the fiberglass parts to meet Australian Standards and the in-mould process; and (6) said that any manufacturing defects in the EWP (which are denied) resulted from defects in the design of the EWP (which are denied). 26 On 6 June 2014, Sherrin Hire served the fourth iteration of its statement of claim. Its amendments were consequential upon allegations made by the Sherrin Parties that TRT and Panalam were the designers and manufacturers of the EWPs. 27 On 19 December 2014, Sherrin Hire filed and served the fifth iteration of its statement of claim which removed the allegation that the Sherrin Parties were the manufacturer of the EWPs. 28 The Sherrin Parties foreshadowed an application to strike out this fifth iteration of the Sherrin Hire statement of claim. The docket judge ordered that the Sherrin Parties file their application by 13 February 2015. But before the application was due to be filed, on 11 February 2015 Sherrin Hire served a proposed sixth iteration of its statement of claim for which it proposed to seek leave. 29 On 31 March 2015, Sherrin Hire served a seventh iteration of its statement of claim for which it proposed to seek leave. The leave application was due to be heard in May 2015 but that hearing was vacated by the docket judge after TRT indicated that it wished to provide supplementary evidence. This occurred in early July. 30 On 6 August 2015, Sherrin Hire served the eighth iteration of its statement of claim for which it now seeks leave to file.

The proposed amendments in the eighth iteration of the statement of claim 31 The eighth iteration of the statement of claim which is in issue now is the proposed Fourth Further Amended Statement of Claim. It is necessary to set out the manner in which that statement of claim is pleaded. Apart from the negligence pleading, none of the other matters are in issue in this application. 32 Paragraphs 1 to 3 of the proposed statement of claim describe the parties to the action in detail. The applicant is Sherrin Hire and the respondents are the Sherrin Parties. The respondents are: (1) the Old Sherrin Company, the first respondent, which trades, or had traded, as the manufacturer and retailer of the Sherrin EWP; (2) the New Sherrin Company, the third respondent, which trades, or had traded, as the manufacturer and retailer, or just the retailer, of the Sherrin EWP; (3) Mr Sherrin, the second respondent, who was a director and actively engaged in the business of both the Old Sherrin Company and the New Sherrin Company.

The pleadings of breach of contract and misleading or deceptive conduct 33 Paragraphs 4-11 (i) describe various representations that were allegedly made by the Sherrin Parties which Sherrin Hire says that it relied upon in purchasing 16 EWPs between 2005 and 2008, and (ii) set out the terms of those contracts. 34 Paragraphs 12 to 13A then allege that the Old Sherrin Company and the New Sherrin Company breached the contracts because the EWPs were defective. Numerous defects are pleaded including cracking, delamination, openings and discontinuities, poor materials, components being too thin, water egress and so on. 35 Paragraphs 14 to 16 are not used. 36 Paragraph 17 to 17GA make similar allegations of breach of contract in relation to other EWPs that were acquired by Sherrin Hire under "Financed Purchase Arrangements". 37 Paragraphs 17H to 17J rely upon the same pleadings of representation, reliance, and defects to allege that: (1) the Old Sherrin Company and the New Sherrin Company engaged in misleading or deceptive conduct, in breach of s 52 of the Trade Practices Act 1974 (Cth) (now s 18 of the Australian Consumer Law which is Schedule 2 of the Competition and Consumer Act 2010 (Cth)); and (2) Mr Sherrin was a person involved in the breach within the meaning of s 75B of the Trade Practices Act.

The pleading of negligence 38 This application is all about the allegations of negligence against the Sherrin Parties. There are, broadly, three different duties of care pleaded and three different allegations of negligence by the Old Sherrin Company. In broad terms they are as follows. 39 First, there is an allegation of a duty to ensure that the design of the EWPs was performed with due care, skill and diligence (paragraph 17K). 17K The salient features of the relationship between the Old Sherrin Company and Sherrin Hire were such as to impute a duty on the Old Sherrin Company to take reasonable care to ensure that the design of the EWPs which the TRT Parties was to manufacture, being the preparation of the Old Sherrin Drawings as set out in paragraphs 17JA and 17JB and the directions, approvals and design undertaken as set out in paragraph 17JE and 17JF, was performed with due care, skill and diligence. 40 Secondly, there is an allegation of a duty to take reasonable care to ensure that the approval of the design was performed with due care, skill and diligence (paragraph 17LA). 17LA The salient features of the relationship between the Old Sherrin Company and Sherrin Hire were such as to impute a duty on the Old Sherrin Company to take reasonable care to ensure that the approval of the design, as set out in paragraphs 17JA, 17JB, 17JE and 17JF, was performed with due care, skill and diligence. 41 Thirdly, there is an allegation of a duty to take reasonable care to ensure that the verification of the design was performed with due, care, skill and diligence (paragraph 17LD). 17LD The salient features of the relationship between the Old Sherrin Company and Sherrin Hire were such as to impute a duty on the Old Sherrin Company to take reasonable care to ensure that the verification of the design, as set out in paragraphs 17A, 17B, 17JE and 17JF, was performed with due care, skill and diligence.

General Principles Regarding the Grant of Leave to Amend 42 The court's power to grant leave to amend is broad and has the remedial objective of ensuring that any defect in the pleadings is cured and that the real questions in the controversy are properly agitated and to avoid a multiplicity of proceedings: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, 185 [14] (French CJ) (citing Dwyer v O'Mullen (1887) 13 VLR 933, 939-940) and 205 [71] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). 43 The power of the court to grant or refuse leave must be exercised in the way that best promotes the court's overarching purpose to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. The applicable principles governing the proper pleading of a claim were summarised by the Full Court in Young Investments Group Pty Ltd v Mann [2012] FCAFC 107; (2012) 293 ALR 537, 540 [7] (Emmett, Bennett and McKerracher JJ): A statement of claim must allege a cause of action with sufficient particularity and not simply make allegations in general terms. The adequacy of a statement of claim is to be assessed by reference to whether the cause of action is pleaded at a level of particularity that is sufficient to define the issues and inform the other party of the case that it has to meet, in the context of the particular allegations. A respondent or defendant is entitled to know the factual foundation for the case that is being alleged, so that the respondent or defendant can prepared to meet that case at trial. In order to disclose a reasonable cause of action, a statement of claim must contain an allegation of all the relevant facts necessary to support any allegation made in it. A pleading that simply pleads a conclusion is embarrassing and should not be permitted to stand. 44 As to what is sufficient to inform the other party of the case it has to meet, in Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15 at [13], Greenwood, McKerracher and Reeves JJ explained that "courts do not, at least in the current era, take an unduly technical or restrictive approach to pleadings such that, among other things, a party is strictly bound to the literal meaning of the case it has pleaded. The introduction of case management has, in part, been responsible for this change in approach". Their Honours cited the decision of Martin CJ in Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82, 83-84 [4]-[8]. In those paragraphs, Martin CJ said: 6. [Contemporary case management techniques including preparation and exchange of witness statements and trial bundles] leave very little opportunity for surprise or ambush at trial and, it is my view, that pleadings today can be approached in that context and therefore in a rather more robust manner, than was historically the case; confident in the knowledge that other systems of pre-trial case management will exist and be implemented to aid in defining the issues and appraising the parties to the proceedings of the case that has to be met. 7. In my view, it follows that provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and appraising the parties of the case that has to be met, the Court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the Court to be spent extensively debating the application of technical pleadings rules that evolved in and derive from a very different case management environment. 8. Most pleadings in complex cases, and this is a complex case, can be criticised from the perspective of technical pleading rules that evolved in a very different case management environment. In my view, the advent of contemporary case management techniques and the pre-trial directions, to which I have referred, should result in the Court adopting an approach to pleading disputes to the effect that only where the criticisms of a pleading significantly impact upon the proper preparation of the case and its presentation at trial should those criticisms be seriously entertained. 45 These remarks were not always heeded in this application.

Difficulties with the pleading of negligence 46 The Sherrin Parties mounted a thorough attack on the pleading of negligence. Some aspects of the attack went beyond a dispute about whether the pleading had identified the issues in dispute and descended into the alleged factual or legal weaknesses of the pleading. Those matters can, and should, be left to trial. However, other aspects of the negligence pleading that were challenged by the Sherrin Parties establish that the negligence pleading in its current form leaves important issues of fact unpleaded, unknown or unclear. 47 As I have explained, there are three pleadings of negligence by the Old Sherrin Company. The duties pleaded are of a duty of care, skill and diligence in relation to (i) ensuring that care was taken in the design of the EWPs; (ii) ensuring that care was taken in the approval of the design; and (iii) ensuring that care was taken in the verification of the design. I refer to each of these separately below.

The duty to ensure that care was taken in the design 48 As to the pleading concerning ensuring that care was taken in the design (paragraph 17K), there are a number of reasons why it is substantively defective. 49 First, the pleading alleges a failure to ensure that care was taken. This is a plea of a non-delegable duty. The pleading has the advantage of avoiding the language of "non-delegable duty" which can sometimes obfuscate more than it clarifies. In this context the pleading describes an undertaking that care and skill will be taken by the person who engages in the task: see Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 313 ALR 408, 441 [143] (Crennan, Bell and Keane JJ referring to Barclay v Penberthy [2012] HCA 40; (2012) 246 CLR 258, 284-285 [42]-[48]). Although senior counsel for the Sherrin Parties submitted that a claim based on a non-delegable duty of this nature would face insurmountable obstacles, I do not consider that this point is a suitable basis to refuse leave, particularly in the context in which Sherrin Hire has pleaded, and intends to plead, matters involving alleged undertakings and assumptions of responsibility by the Old Sherrin Company: Brookfield Multiplex Ltd (above); State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511, 527-528 [20] (Gleeson CJ); 551-553 [100]-[105] (Gaudron J) 598-599 [254]-[256] (Gummow and Hayne JJ) 607-609 [285]-[293] (Kirby J); and Woodland v Swimming Teachers Association [2013] UKSC 66; [2014] 1 AC 537, 573 [7], 575-576 [11]-[12] (Lord Sumption). 50 In oral submissions, senior counsel for Sherrin Hire submitted that the plea was intended to include both a plea of a duty to ensure that the person who undertakes the task does it with care and a plea of a duty that the Old Sherrin Company will take care in performing the task. These should have been pleaded as alternative pleas for the fundamental reason that Sherrin Hire needs to identify the person which is said to have acted without sufficient care. Another reason why those duties must be separated is because the allegations of breach will relate to different conduct by different persons. For instance, the alleged duty in paragraph 17K concerns (i) the "preparation of the Old Sherrin Drawings" and (ii) the "directions, approvals and design undertaken as set out in paragraphs 17JE and 17JF". Point (ii) is concerned with directions, approvals and design undertaken by the TRT parties upon the instructions of the Old Sherrin Company. It is unclear whether the duty being alleged is one to take care in giving directions and approvals or whether it concerns a failure to ensure that the TRT parties took care in following those directions and approvals. 51 As for the duty to ensure that care was taken, this duty is premised upon a failure by some other person to take care. The identity of that other person (is it the TRT Parties, Panalam or some other person?), the reasons why that other person did not take care, and the allegation that this failure of care caused the defects are all matters that need to be pleaded. None of these was clearly pleaded. 52 There are numerous other difficulties with the plea concerning the duty to ensure that care was taken in the design of the EWPs. Many of these were the subject of exchanges between senior counsel and the bench during the hearing, and were often, and properly, the subject of concessions made by senior counsel for Sherrin Hire. These reasons should be read together with the matters raised during the hearing including in exchanges between the bar and bench during submissions for Sherrin Hire and submissions for the Sherrin Parties. Some of these difficulties include: (1) any duty to take care in relation to giving careful instructions, directions, and approvals is pleaded by reference to paragraphs 17JE and 17JF. But those paragraphs are expressed at a very high level of abstraction. In some instances, senior counsel accepted that the pleas were incorrect. For instance, alleged negligence in "approving parts of the design" was said to mean negligence in approving "all of the design". (2) The particulars to paragraphs 17JE and 17JF are much more detailed but they are expressed by reference to evidence which has been filed. They should be reformulated so that they can stand alone and so that they clarify the facts upon which Sherrin Hire relies. (3) In paragraph 17KA, which identifies the "salient features" of the relationship between Sherrin Hire and the Old Sherrin Company, there is an immediate need to separate those salient features that relate to the non-delegable duty and those salient features that relate to the duty of the Old Sherrin Company to take care in preparing the design. Those salient features that relate to both (such as paragraph 17KA(b)) should be pleaded in relation to each duty separately. Additional information will be required, for example, in relation to the salient feature that the Old Sherrin Company had control over its subcontractors and suppliers for the purposes of the duty to ensure that care was taken. Who are those subcontractors and suppliers over which it is said to have control? How does the control arise? Further, the allegation in that paragraph (as well as paragraph 17LB(b)) that Sherrin Hire was the manufacturer of the EWBs should be removed. It was common ground (and is pleaded in paragraph 17K) that the TRT Parties were the manufacturer of the EWBs. 53 As for the duty of the Old Sherrin Company to take care in its design, it appears that this is the duty to which the pleaded breach in paragraph 17L refers. 54 But it is unclear what matters are relied upon as constituting the Old Sherrin Company's work in designing. One matter that is clearly pleaded is a provision of drawings by the Old Sherrin Company. But the plea of breach also cross-refers to paragraphs 17JA, 17JB, 17JE, and 17JF. It is unclear whether any other allegations arise from these paragraphs of design work by the Old Sherrin Company. For instance, is the reference in paragraph 17JF(d) ("designing the EWP basket") intended as a reference to design work done by the Old Sherrin Company or as a reference to design work done by the TRT parties but based on instructions or directions from the Old Sherrin Company? The omission of paragraph 17JD also appears to be intentional. That paragraph concerns the provision by the Old Sherrin Company to the TRT Parties of a disc containing calculations, machine specifications, and a 3D model of an EWP. Senior counsel for the Sherrin Parties submitted that although this disc was provided by the Sherrin Parties, the content of the disc came from a different person apparently described as Snorkel. 55 It may be that the duty of the Old Sherrin Company to take care in designing the EWPs is intended to include a duty to take care in issuing instructions and directing changes to be made to the design. If so, then these should also be pleaded. It is not sufficient to assert, as part of the recitation of facts and with the citation of considerable evidence, that instructions were given on occasion (paragraph 17JE and also paragraph 17JF(c)). The duty to take care in issuing instructions must be specifically pleaded. The instructions must be identified. Who gave them? When were they given? To whom were they given? If evidence has already been led on these matters, as particularised in the pleading, then these should not be difficult matters to plead. 56 There is, however, another difficulty which would arise even if the duty in paragraph 17K had been pleaded as a duty upon the Old Sherrin Company to design the EWPs with care. This is that there is no plea of causation between the alleged failure by the Sherrin Parties to take care in design through the drawings and the defects in the ultimate design of the EWPs. This is not a matter which could be implied. It must be expressly pleaded. It is likely that there will be real dispute on this point. The Sherrin Parties say that the design changed after the drawings were made by the Old Sherrin Company. They assert that this matter is common ground. In any event, they point to the absence of any of the detail in the drawings which can be related to any of the design defects. The same point can be made about any pleading of breach of a duty to take care in issuing instructions. There would then need to be a pleading of how particular defects would have been avoided if the TRT Parties had followed the instructions, communications, or directions. If the defects that would be avoided are intended to be pleaded as those particulars in paragraph 17L then those particulars should be allocated to the particular breach (ie whether they were matters that the Old Sherrin Company designed, or gave instructions for the design, or owed a duty to ensure that the TRT Parties carefully designed). None of this is sufficiently pleaded.

The duty to ensure that care was taken in the approval of the design 57 As to the pleading of a failure to ensure that care was taken in the approval of the design (paragraph 17LA), it appears that this is again a plea of a non-delegable duty of Sherrin Hire to ensure that care is taken by the person who approves the design. But the pleaded breach in paragraph 17LC is alleged to be a breach by the Old Sherrin Company in giving its approval to the design. In other words, the pleaded breach is a breach involving a failure of Sherrin Hire to take care in giving its approval. 58 Again, in oral submissions senior counsel for Sherrin Hire submitted that Sherrin Hire intended to plead both duties. For the same reasons as I have explained above, they should be pleaded separately. 59 In relation to a duty of the Old Sherrin Company to take care in giving its approval there are significant gaps in the pleading. I will not repeat the observations made above which recur in relation to this pleading concerning approval. But further defects are as follows: (1) there is no pleading of how and when, and in what terms, the Old Sherrin Company gave its approval; (2) there is no causation pleading that if the Old Sherrin Company had taken care in the giving of its approval then the design would not have contained the defects pleaded; and (3) one potentially significant "salient feature" which is presumably intended to support the allegation that the Old Sherrin Company owed a duty to avoid causing pure economic loss by a failure to take care in approving the design is paragraph 17LB(l) which refers to the dependence of Sherrin Hire on the Old Sherrin Company's "control, management and conduct of the approval of the design of the Sherrin EWPs" (see also paragraph 17KA(l)). This bare assertion is insufficient unless the particulars to paragraph 17LB are intended as particulars to paragraph 17LB(l) only. If not, then those particulars that relate to paragraph 17LB should be identified. 60 Finally, it should be observed that if the duty is said to be one owed by all the Sherrin Parties to take care in giving approval then there is also no plea that the approval of the Old Sherrin Company was given on behalf of the other Sherrin Parties. The pleading at 17M(b)(viii) might suggest that the New Sherrin Company is liable for negligence but there appears to be no identification of the manner in which the New Sherrin Company can become liable for the negligence of the Old Sherrin Company. However, the assumption of the parties, expressly articulated at the oral hearing by senior counsel for Sherrin Hire, was that the only complaint of negligence was directed to the Old Sherrin Company.

The duty to ensure that care was taken in the verification of the design 61 As to the pleading of a duty to ensure that care was taken in the verification of the design, the fundamental defect in this plea is that there is no identification of what it means to verify a design. How is this concept different from the process of design itself? How is it different from the concept of approval of the design? 62 In oral submissions, senior counsel for Sherrin Hire submitted that this plea might not add anything to the plea of negligence in relation to approval. But senior counsel for the Sherrin Parties pointed to evidence that there is a distinct and separate concept of verification, including with legislative consequences. A further problem in relation to this plea of negligence is how a claim could be made that the Old Sherrin Company breached the duty by itself carelessly verifying the design (see paragraph 17LF). Senior counsel for the Sherrin Parties said that it was common ground, and pointed to evidence filed as well as earlier versions of the statement of claim that suggests that the Old Sherrin Company did not verify the design. The evidence suggests that a third party called Kwovis provided a certificate of verification of the EWP, and another certificate of verification that was provided in relation to fibreglass components by Mr Cumming.

Conclusion 63 For the reasons I have given, the application by Sherrin Hire for leave to amend its pleading in the form of its eighth iteration, the proposed Fourth Further Amended Statement of Claim, is refused. However, based on the submissions of senior counsel for Sherrin Hire this morning, there are at least some of the proposed amendments, even perhaps many of them, which would not be objectionable and would not cause any significant disruption to the timetable to trial if expressed in the manner orally submitted. Sherrin Hire should have an opportunity to express those amendments properly. 64 Although I consider that significant periods of delays in this matter are not the responsibility of Sherrin Hire, it remains the case that Sherrin Hire has had eight attempts at its pleading of negligence over a four year period. It will now have an opportunity for a ninth attempt. It is extremely unlikely that there will be a tenth. In circumstances in which my preliminary view is that the current pleading of negligence (for which there is an extant strike out application) has some difficulty, Sherrin Hire should take great care in its drafting of the ninth iteration of its statement of claim. It would also be appropriate for senior counsel for all parties to confer when the pleading is drafted. This includes senior counsel for the TRT Parties who wish to file a cross-claim in similar terms to Sherrin Hire's amended statement of claim concerning negligence. That conferral should occur in person rather than by correspondence. The time has passed when counsel for an opposing party could be treated as always having a right to object to a pleading without providing positive input concerning how the pleading might be appropriately pleaded. In the circumstances of this case, that positive input is essential if there is to be any opposition to the ninth iteration of the statement of claim. I should emphasise that the contrary approach was not suggested, indeed was positively denied, by senior counsel for the Sherrin Parties who appears to have adopted a very co-operative approach to conferral. 65 During the conferral process, the parties may also fairly assume that if a proposed amendment is going to require substantial additional evidence, rather than questions of law or short additions to existing evidence, then it is unlikely that I will grant leave for that amendment to be made. The reason for this is that 49 witness statements have already been filed. Apart from responses to the TRT Parties' evidence, there is no more evidence that is currently required. After four years, and millions of dollars in legal expenses, it is time to draw a line. I certify that the preceding sixty five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.

Trade Practices Act 1974(Cth)ss 52, 75B

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