Sydney Airport Corporation Limited v Baulderstone Hornibrook Engineering Pty Limited & Ors - [2003] NSWSC 486 - NSWSC 2003 case summary — Zoe

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Sydney Airport Corporation Limited v Baulderstone Hornibrook Engineering Pty Limited & Ors

[2003] NSWSC 486

Supreme Court of NSW|2003-06-02|Before: Einstein J, McLelland J

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Court

Supreme Court of NSW

Decision date

2003-06-02

Before

Einstein J, McLelland J

Source

Original judgment source is linked above.

Judgment (33 paragraphs)

[1]

CITATION : Sydney Airport Corporation Limited v Baulderstone Hornibrook Engineering Pty Limited & Ors [2003] NSWSC 486 HEARING DATE(S) : 2 June 2003 JUDGMENT DATE : 2 June 2003

[2]

JURISDICTION: Equity Division Technology and Construction List JUDGMENT OF : Einstein J DECISION : Leave to cross-claimants to replead certain allegations.

[3]

CATCHWORDS : Practice and Procedure - Building and construction matter - Application to dismiss or strike out cross-claim - Application for further and better particulars - Approach of court to successive motions on same or similar issues - Reticence of courts to strike out pleadings - Overriding purpose rule - Pass through of liability - Considerations applicable to large complex litigation - Part 13 Rule 5 and Part 15 Rule 26 Supreme Court Rules Airports (Transitional) Act 1996 LEGISLATION CITED : Trade Practices Act 1974 Fair Trading Act 1987 Agar v Hyde (2000) 201 CLR 552 Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 Brimaud v Honeysett Instant Print (unreported, Supreme Court of NSW, McLelland J, 19 September 1988) Bruce v Odhams Press Limited [1936] 1 KB 697 Commercial Bank of Australia Ltd v Thomson (1964) 81 WN (Pt 1) (NSW) 553 Dare v Pulham (1982) 148 CLR 658 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Ellis v Grant (1970) 91 WN (NSW) 920 Emmerton v University of Sydney [1970] 2 NSWR 633 CASES CITED : General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125 H.1976 Nominees Pty Limited v Galli (1979) 40 FLR 242 Kelly v Kelly (1950) 50 SR (NSW) 261 McSpedden v Harnett (1942) 42 SR (NSW) 116 Penthouse Publications Ltd v McWilliam (unreported, New South Wales Court of Appeal, full court, 14 March 1991) Pinson v Lloyds and National Provincial Foreign Bank Limited [1941] 2 KB 72 R v Associated Northern Collieries (1910) 11 CLR 738 Saunders v Jones (1877) 7 Ch D 435 Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 Turner v Dalgety & Co Ltd (1952) 69 WN (NSW) 228 Sydney Airport Corporation Limited (Plaintiff) Baulderstone Hornibrook Engineering Pty Limited (First Defendant) Dredeco Pty Ltd (Second Defendant) PARTIES : Dredging International N.V. (Third Defendant) N.V. Baggerwerken Decloedt En Zoon (Fourth Defendant) A W Baulderstone Holdings Pty Limited (Fifth Defendant) Bilfinger Berger AG (Sixth Defendant) FILE NUMBER(S) : SC 55027/02 MA Pembroke SC, S Goldstein (Plaintiff) J Gleeson SC, I Griscti (First and Fifth Defendant) COUNSEL : RA Cavanagh (Second, Third and Fourth Defendant) C Morton (Sixth Defendant) MLD Einfeld QC, J Horowitz (Cross Defendants to Third Cross Claim) J Bicknell (First Cross Defendant to Fourth Cross Claim) Mallesons (Plaintiff) Phillips Fox (First and Fifth Defendant) SOLICITORS : Hicksons (Second, Third and Fourth Defendants) Clayton Utz (Sixth Defendant) Deacons (Cross Defendants to Third Cross Claim) Minter Ellison (First Cross Defendant to Fourth Cross Claim)

[7]

1 Proceedings 55027 of 2002 commenced on 24 June 2002 with the filing of the initial summons. The proceedings concern the contract for the design and construction of the third parallel runway at Kingsford Smith Airport. The contract was entered into between the Federal Airports Corporation as principal and Baulderstone Hornibrook Engineering Pty Limited ["Baulderstone" or "BHE"], Dredeco Pty Limited ("Dredeco"), Dredging International N V and N V Baggerwerken Deciloedt & Zoon ("the joint venture parties") as contractor. 2 By declarations made pursuant to the Airports (Transitional) Act 1996 (Cth), the Sydney Airports Corporation Limited ("SACL"), the now plaintiff, became the successor to the Federal Airports Corporation. 3 The third parallel runway was apparently constructed on an artificial peninsular that projects into Botany Bay adjacent to and parallel with the original runways. The peninsular was apparently created from reclaimed sand dredged from neighbouring parts of Botany Bay. 4 To secure the sand and maintain the integrity of the peninsular, precast vertical concrete blocks ("facing panels") were apparently positioned around the circumference of the peninsular ("the seawall") continuing for a short distance on the northern aspect of the runway, creating a diversion of the millstream ("the millstream wall"). 5 The contract is said to have included as the Works: · the construction of approximately 6,800 metres of reinforced earth sea wall with precast concrete panels ("the seawall") around the perimeter of the parallel runway and along the eastern side of the existing 16/34 runway and across the area known as "the Hawke". · the construction of approximately 1700 metres of reinforced earth sea wall with precast concrete panels said to have been designed to act as a permanent diversion of the millstream. 6 The Works occurred from about August 1992. The practical completion of the Works was apparently certified in August 1994. 7 The plaintiff alleges that the reinforced earth block structure has failed in a number of respects, including migration of sand through facing panel joints, corrosion, inadequacy of structural elements and the like. 8 Deficiencies in the seawall are said to have become apparent in and after November 1994. Thereafter, extensive investigation in which the various parties participated, was apparently undertaken and the Baulderstone parties apparently obtained expert opinion as to the causes of the problems. The Parties. 9 The plaintiff joined the joint venture parties as the initial five defendants. 10 On a later occasion the sixth defendant was joined. The Amendments to the summons.

[11]

17 It is unnecessary to repeat the record. As the further amended summons makes plain, the plaintiff relies, inter alia, upon the following causes of action: · breach of contract; · misleading and deceptive conduct said to breach section 52 of the Trade Practices Act 1974 and section 42 of the Fair Trading Act 1987; · negligence. The cross-claims. 18 A series of cross-claims have been filed. 19 In their second cross-claim against Reinforced Earth Pty Limited ("RE") the Baulderstone parties assert (paragraph 11) that RE supplied components including panels, reinforcing straps and jointing materials and carried out design of the reinforced earth retaining walls. 20 In their fourth cross-claim against GHD Pty Limited ("GHD"), the Baulderstone parties assert that GHD provided engineering and technical advice and carried out design reviews in connection with the third runway project. The third cross-claim. 21 The third cross-claim by the Baulderstone parties against the Connell Wagner parties is of present relevance. The Baulderstone parties asserted in the third cross-claim and assert in the amended third cross-claim that Connell Wagner NSW Pty Limited ("CW NSW") provided engineering services with respect to preparation of tender documents and the design and construction of the third runway and that Connell Wagner ("CW") provided certificates of compliance and was involved in and approved the work undertaken by CW NSW. The allegation by the Baulderstone parties is that they retained Connell Wagner to provide all engineering services (other than for dredging and reclamation works, geotechnical services and hydraulic model testing) for the contract, which included all detailed design and documentation, construction, stage services, progress reports and warranties. 22 It is important to note that with respect to each warranty relied upon by SACL in its claim against the Baulderstone parties, the Baulderstone parties rely upon an identical warranty in their claim against Connell Wagner with respect to all engineering services (defined as "Services to be performed by Connell Wagner") [hereinafter referred to as "the Connell Wagner Services"]. In other words, if the Baulderstone parties have any liability to SACL, which is denied, Connell Wagner, insofar as the Connell Wagner Services are concerned, is said to be liable to the Baulderstone parties for breach of an identical warranty.

[14]

26 In the alternative, and if contrary to their primary submission, Baulderstone's particulars of breach are not considered adequate by the Court, then it is said to necessarily follow that the plaintiff's particulars of breach contained in the further amended summons are also deficient. In that event, the Baulderstone parties submit that the Court should order the plaintiff to file a further amended summons addressing the inadequacy of the particulars of breach and the balance of Connell Wagner's motion should be stood over until after the plaintiff has filed a second further amended summons. So much, in any event, comprised the Baulderstone parties' overview submissions furnished before the commencement of the hearing of the motions today. 27 Today, after the luncheon adjournment, Mr Gleeson of senior counsel, on behalf of the Baulderstone parties, submitted that an alternative approach to the Baulderstone parties' primary approach, would be for the Court to simply direct that the plaintiff, by a particular date, serve further particulars identifying each aspect of the drawings pleaded said to contain defective design and identifying why the drawings are defective in each respect and, further, direct the Baulderstone parties, by a later date, to serve further particulars against Connell Wagner identifying each aspect of the drawings pleaded which is said to contain defective design and identifying why the drawings are defective in each respect. The short minutes of order which he proffered along these lines would then provide for the Court otherwise to dismiss all motions and for costs of the motions to be costs in the cause. 28 The particular propositions for which the Baulderstone parties contend in relation to this exigency are as follows: · Taking this approach will avoid the injustice which will be occasioned to the Baulderstone parties if Connell Wagner is successful in its application to strike out the amended third cross-claim for want of adequate particulars of breach in circumstances where the Baulderstone parties have relied on the plaintiff's pleading as the basis for the "pass through" to Connell Wagner of any liability the Baulderstone parties may have to the plaintiff based on the plaintiff's particulars.

[26]

42 I accept that the above observations are seen to be particularly apposite in relation to cross-claims. Commercial considerations clearly require parties in live litigation to issue cross-claims at the earliest possible time in order to avoid a multiplicity of actions. This will invariably be, I accept, prior to the optimum time, from an evidentiary perspective, to pursue such a cross-claim. In reality, as the Baulderstone parties have submitted in their overview submissions, the requirement to issue cross-claims as soon as possible has a certain element of fairness to cross-defendants in that they are afforded involvement in the principal litigation as opposed to being pursued after the main action has been heard or resolved. Particular considerations in building and construction matters. 43 In complex construction matters such as the present, much, I accept, will depend on the way that the plaintiff advances its case through its expert witnesses. Clearly that stage has not yet been reached. Clearly also, once that stage is reached, there is likely to be greater certainty in identifying the precise case the plaintiff brings against the defendants and in turn, presumably, the case which the Baulderstone parties bring against Connell Wagner. I accept further that the exchange of experts' reports does serve a useful purpose in distilling the issues between the parties. 44 I further accept as of substance the Baulderstone submission that it is common in construction cases for Scott Schedules to be ordered at a particular time whereby particular defects in construction and design are identified with precision and are responded to by defendants and cross-defendants. Here again, that stage has not been reached in this litigation. The essential submission by Connell Wagner. 45 The Connell Wagner submission is that the fundamental problem with the Baulderstone latest pleading is that it still fails to identify with precision the breaches of contractual, tortious or other duties said to be owed by CW NSW and CW at all, and/or as distinct from the other subcontractor/ cross-defendants. 46 Attempts are said to have been made on three occasions to elicit sufficient particulars of the allegations in the third cross-claim sufficient to identify the precise nature of such breaches and the manner in which it was alleged they had been committed; but the contention is that the particulars still fail to elucidate the issues. The submission is that the amendments incorporated into the new pleading do not overcome the problem. 47 The proposition is that whereas the object of particulars is to prevent the opposite party being taken by surprise at the trial of an action and to identify the issues of fact to be investigated at the hearing, it is simply not the function of particulars to take the place of necessary averments in the pleading of the material facts. [Saunders v Jones (1877) 7 Ch D 435 at 451; R v Associated Northern Collieries (1910) 11 CLR 738 at 740; Bruce v Odhams Press Limited [1936] 1 KB 697 at 712-3; McSpedden v Harnett (1942) 42 SR (NSW) 116 at 119; Kelly v Kelly (1950) 50 SR (NSW) 261 at 265; Turner v Dalgety & Co Ltd (1952) 69 WN (NSW) 228 at 229; Commercial Bank of Australia Ltd v Thomson (1964) 81 WN (Pt 1)(NSW) 553 at 557, 558; Ellis v Grant (1970) 91 WN (NSW) 920 at 924, 925; Emmerton v University of Sydney [1970] 2 NSWR 633 at 635; Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 219, 220, 221; Dare v Pulham (1982) 148 CLR 658 at 664] 48 Reliance is also placed on the proposition that "the plainness and most fundamental of all the rules of pleading" is that "all the material facts constituting the cause of action ought already to have been plainly stated in the pleading itself". [Pinson v Lloyds and National Provincial Foreign Bank Limited [1941] 2 KB 72 at 75; H 1976 Nominees Pty Limited v Galli (1979) 40 FLR 242 at 246-7] 49 The authorities, as the Connell Wagner submissions have pointed out, were helpfully collected by Fisher J in Trade Practices Commission v David Jones (Australia) Pty Limited (1985) 7 FCR 109 at 112-114. Dealing with the Connell Wagner Motion Pass through of liability. 50 Baulderstone's cross-claim against Connell Wagner is said by Baulderstone to be a "pass through" of liability. It is submitted by Baulderstone that it is brought on a contingent basis, having regard to the principal claim brought against Baulderstone by the plaintiff. 51 During the course of the hearing this morning, counsel for Connell Wagner, counsel for the Baulderstone parties and counsel for SACL traversed from time to time, doing so in great detail, the degree to which the further amended summons and the third cross-claim are or are not appropriately described as having "a relevant nexus", testing, insofar as the Baulderstone proposition put this, whether or not it was appropriate to describe the third cross-claim as a "pass through of liability". 52 As earlier made plain, this is simply not an occasion to repeat the record. Having said that, it seems to me that to a considerable extent there is substance in the submission that the gravamen of the third cross-claim comprises certainly a very serious attempt by the Baulderstone parties to pass across to Connell Wagner the liability to SACL, should it ultimately come to rest with the Baulderstone parties. Having said that, there has been very significant focus during the course of the hearing, particularly by Mr Pembroke QC, on the nature and extent and occasions when it is simply incorrect to thumbnail sketch the third cross-claim with which the Court is currently dealing, as "pass-on litigation" and no more. I do not propose to go into the particular allegations which SACL makes against the Baulderstone parties, comparing them to the particular allegations which the Baulderstone parties seek to make against Connell Wagner, otherwise than to indicate that there is substance in Mr Pembroke's submission. This is not to say that there is no overlap; quite clearly there is considerable overlap, but there are very important differences.

[27]

53 In my view the allegations of breach of the terms of the first Connell Wagner contract to be found in paragraphs 29.1, 29.2 and 29.3 are insufficient to enable the cross-defendant to know the nature of the case alleged against them. To my mind the particulars fail to remedy that deficiency. 54 The short position, it seems to me, is that the cross-defendants to the third cross-claim are entitled to know with sufficient specificity, in what manner and/or in what respect they failed to exercise all reasonable care, skill and diligence in providing engineering services to the cross-claimant; in what respects were the cross-defendants in relevant breach by failing to submit compliant designs and design drawings; what were the inadequacies in the designs and the design drawings; which were the tender specifications and requirements in respect of which the incorrect or inadequate designs and design drawings were prepared; and which were the respects in which the designs or design drawings provided by the cross-defendants did not comply with the tender specifications and requirements of the plaintiff. The particulars repeated in schedule 1 to the third amended cross-claim may be appropriately read as alleging that the relevant walls, in the manner in which they were designed pursuant to particular drawings, were designed so that they would not have the design lives as required by the nominate specifications. The problem with schedule 1, as it seems to me, is that it simply does not identify the deficiencies with sufficient precision to permit the cross-defendants to know the nature of the precise case which they are required to meet or to plead to. In short, insofar as the Connell Wagner Services are concerned, it is necessary, as it seems to me, for the allegations of breach to go the distance of identifying with sufficient precision what aspects of the design work of the cross-defendants are alleged to have constituted the relevant breaches. 55 However, insofar as the cross-defendants allege an insufficiency of pleading or of particulars in relation to the allegation of causation or loss, it does not seem to me that those submissions are of substance. 56 For precisely the same reasons, in my view paragraph 40 of the third cross-claim falls short of providing sufficiently precise particulars of the breaches of the second Connell Wagner contract sought to be pleaded in paragraphs 40.1, 40.3 and part of 40.4 [excluding the reference to a breach of warranties] and 40.7 [excluding the reference to a breach of warranty]. 57 Here again, it does not seem to me that the challenge to the particularity of the allegation of loss is of substance. 58 Dealing with the Trade Practices Act and related claims, paragraph 49 suffers, it seems to me, from the defect that the cross-defendants are not apprised of what was their conduct [qua the first CW representations] in or in relation to which the subject drawings and designs are alleged to have been misleading and deceptive. In what respects is it alleged that the subject designs and drawings were inadequate or inappropriate to achieve the designated purpose? 59 Likewise, as it seems to me, the pleading of the allegedly misleading or deceptive second, third and fourth CW representations, in each case again repeating paragraph 49, is defective. 60 Consistent with the reasoning which underpins the ruling going to paragraph 49, proper particulars require to be furnished of the matters alleged in paragraphs 50 and 51 of the third cross-claim. 61 Dealing with the negligence causes of action, part of the amended third cross-claim, for the very same reasons each count of negligence, as it seems to me, falls short in failing to identify with sufficient particularity the precise alleged breaches of duty of care. 62 Outside of these particular matters, none of the submissions pressed by Connell Wagner either by their written overview submissions or by their submissions from the bar table in terms of deficiencies, shortcomings or unfairness or embarrassment in terms of the pleaded case, or the pleaded and particularised case, appear to me to be of substance. The way forward. 63 Having given the matter careful consideration and cognisant of the strictures against the Court dismissing out of hand a pleading for lack of particulars, and cognisant also of the stage which these proceedings have presently reached, and, most particularly of all, cognisant of the many areas in respect of which the amended third cross-claim, notwithstanding the attack upon it, has survived that attack, it seems to me clear that the appropriate way forward in the interests of justice is as follows: · to require Connell Wagner to plead to so much of the third amended cross-claim as has survived the attack on the motion; · to defer for the time being any obligation upon Connell Wagner to plead to those sections of the third amended cross-claim as in my view, as expressed above, suffer from important defects in terms of pleading or particulars; · to identify a date and time by which the Baulderstone parties are to be granted leave to supplement the third amended cross-claim, either in the pleading section or by providing the particulars in the areas of deficiency as above described; · to require the plaintiff by a date and time to be identified, to either

[30]

65 During the course of those submissions by Mr Pembroke, the Court raised with him the question of whether it could be seriously contended that the further amended summons did not plead, or effectively plead by reference, that drawings had been prepared containing defective design. To my mind, clearly paragraph C 25.1, when read together with the definition of "Project brief" (see page 97 of Exhibit B1), properly construed, amounts to just such an allegation of drawings containing defective design. Likewise to my mind, paragraph C 25.6 of the "Contentions" portion of the further amended summons amounts to the same essential allegation. For those reasons, and notwithstanding the differences to which Mr Pembroke pointed in his submissions, between the emphases in the further amended summons and those in the third amended cross-claim, it seems to me appropriate to require that SACL, as I have said, identify, if it can by some particular date and time, where it has communicated to the Baulderstone parties by way of particulars, the aspects of the drawings upon which SACL relies, which are said to contain defective design and also identifying why the drawings are defective in each respect. 66 The matters which then seem to me to remain for decision are, as a matter of case management of the proceedings, what precise directions as to the way forward should be given. Clearly, and for reasons which I have already sought to give, it is, it seems to me, entirely inappropriate on the Connell Wagner motion, to order any part of the third cross-claim to be currently struck out. 67 Doing the best that I can in the circumstances, it seems to me appropriate to permit the Baulderstone parties to replead and to furnish such particulars as may be thought appropriate, to those sections of the third cross-claim which it seems to me are defective. 68 There is not a great deal of difference between requiring the Connell Wagner parties to plead to such portions of the third amended cross-claim as have survived the attack and now striking out those portions of the Connell Wagner cross-claim as have not survived that attack. To my mind that being the case, there is no necessity for the Court to currently strike out those portions of the document. The Court can by case management procedures, simply direct that the Connell Wagner parties be not obliged to plead to those sections of the pleading shown to be defective in this judgment. In the fullness of time, it may be that leave will be granted to the Baulderstone parties to file a fourth amended cross-claim, and as between striking out sections of the cross-claim presently and not doing so, a decision either way will not play any role in my decision as to costs of and occasioned by or in relation to the motion. Plainly enough, Connell Wagner has succeeded to a certain extent in its motion. 69 In those circumstances, I seek the parties assistance in terms of some form of short minutes of order. I have endeavoured to achieve an accommodation of what I regard as real problems in the current version of the third cross-claim on the one hand, and on the other hand, a way forward which ought to permit all of the parties the benefit of having the Connell Wagner parties plead to so much of the third cross-claim as has survived. To my mind there is a real urgency in SACL producing a time and date for the communication by it to the Baulderstone parties of these particulars which will be soon, so that the matter can be again returned to the rails in terms of a conventional piece of litigation where pleadings require to be completed before one can usually achieve very much else. Costs 70 I propose to reserve costs up to the occasion when the whole of the motions can be finally treated with. One imagines that will be after the further particulars are furnished.

Sydney Airport Corporation Limited v Baulderstone Hornibrook Engineering Pty Limited & Ors

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