Tropical Reef Shipyard Pty Ltd v QBE Insurance

The court 1 This is an appeal, by leave granted on 4 April 2011, from orders made by Gordon J on 8 February 2011, by which the appellant (the applicant below) was refused leave to file and serve a Further Amended Claim, summary judgment was given against the appellant under s 31A of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"), and the proceeding was dismissed. The questions which arise on appeal are whether her Honour was in error to have refused leave for the amendment, and to have given summary judgment under s 31A. 2 As alleged in its claim, the appellant was engaged in the business of providing ship repair and engineering services from premises at Portsmith in Queensland. Installed at the appellant's premises was a slipway onto which vessels were drawn for the purposes of repair. The appellant alleged that, on or about 4 September 2006, the vessel "Castel Braz" collided with the bottom end of the slipway, causing damage to the lower 15 metres thereof, the effect of which was to render that section of the slipway unsuitable for use, and requiring reconstruction. However, since this damage occurred to a section of the slipway that was below water, it was unobserved at the time. The appellant continued to use the slipway, ignorant of the damage. In the period between September 2006 and April 2007, there were five vessels which, because of their size, required (or, depending on the level of the tide, may have required) use of the lower 15 metres of the slipway, where the damage had been sustained. It was alleged that each of these vessels encountered disruption in being slipped or unslipped. 3 On 2 November 2006 (ie during the period when the lower 15 metres of the slipway was in a damaged condition, but when the appellant was unaware of that damage), it was alleged that the vessel "Mathamarfach" - one of the five vessels mentioned above - became stuck on the slipway in the course of being slipped, when several bogies derailed from the slip rail and the cradle supporting the vessel separated from the front bogies. It was said that that bogey was damaged thereby, that four rear bogies derailed and were damaged and thereafter were hanging off the slipway rails, that a number of rail clamps and bolts were sheared off by the derailed bogies, that the centre rail became misaligned, and that a number of timber slipway piles were seriously damaged and required replacement. 4 On 3 April 2007, at the time of slipping the fifth of the vessels to which we have referred, the appellant became aware of the damage which had been caused to the slipway in September and November 2006. An investigation was conducted and, on 31 May 2007, the appellant accepted recommendations that the lower section of the slipway not be used, and that the rating of the slipway be downgraded from 30 tonnes per metre to 20 tonnes per metre. Thereafter until 22 September 2007, the appellant did not slip any vessel which may have exceeded a loading of 20 tonnes per metre and, again following advice, from 23 September 2007 until 31 May 2008, the appellant did not, save for one exception in December 2007, slip any vessel which may have exceeded a loading of 22 tonnes per metre. Repairs to the lower 15 metres of the slipway occupied the period until 22 October 2007. Over that period, the appellant was unable to slip any vessel which required the use of the lower 15 metres of the slipway. 5 At the time of each of the incidents to which we have referred, the appellant was insured against business interruption by the respondent, QBE Insurance (Australia) Limited. The damage which occurred on 4 September 2006 was covered by a policy running to 31 October 2006, and the damage which occurred on 2 November 2006 was covered by a policy running to 31 October 2007. For presently relevant purposes, the terms of the policies were identical. 6 The appellant claimed under the applicable policy with respect both to the September incident and to the November incident, and these claims were accepted by the respondent. With respect to the September incident, the respondent paid the sum of $1,000,000. The respondent paid a further $1,000,000 with respect to the September incident, alternatively the November incident. According to the appellant, these payments fell well short of its due under the policies, and that assertion led to the commencement of the proceeding which was dismissed by Gordon J on 8 February 2011. 7 In the insuring clause of the policies, the respondent's promise was expressed as follows: Provided you have paid the Premium and provided you continue with the Business we will pay an amount in respect of weekly loss of Turnover suffered by you subject to the Limit(s) of Liability if the Business is interrupted or interfered with due to the building(s) or other property used by you at the Premises specified in the Schedule having sustained during the Period of Insurance loss or damage in respect of which you or some other person has material damage insurance, subject to the terms Conditions and Exclusions of this Policy. In the proceeding below, what was controversial was whether the appellant would be able to establish that it had suffered a "weekly loss of turnover" within the meaning of this clause. 8 The policies contained the following definitions (amongst others): Turnover means the money paid or payable to you for goods sold and for services rendered in the course of the Business at the Premises. Actual Average Weekly Turnover means the Actual Average of the Turnover for the twelve (12 months) preceding the commencement date of the interruption or if not existent then the weekly average of the period of the Business operation. 9 The cover for which the appellant was insured was identified as follows: Subject to the terms Conditions Special Provisions and Exclusions of this Policy: For Items 1, 2 and 3 of the Schedule for each week we will pay an amount based upon Weekly Calculations not exceeding the Weekly Sum Insured each week in respect of loss of Turnover suffered by you during the Indemnity Period if the Business is interrupted or interfered with due to the building(s) or other property used by you at the Premises specified in the Schedule having sustained during the Period of Insurance loss or damage by a peril in respect of which you or some other person has material damage insurance. It was item 1 in the schedule which was relevant to the circumstances of the appellant in the present case. 10 The policies also contained some "special provisions", one of which was the following: For interruption of or interference with the Business caused by material damage but subject to the terms Conditions Special Provisions and Exclusions of this Policy we will pay: for Items 1, 2 and 3 of the Schedule for each week the Rating Classification Percentage of the loss of Average Weekly Turnover based upon Weekly Calculations adjusted and agreed but not exceeding the Weekly Sum Insured. In the present case, the "rating classification percentage" was 72%. 11 The proceeding was commenced on 10 March 2009 in the Fast Track List of the court. That being the case, there were no pleadings. However, the application was accompanied by a written claim, in which the material was organised by reference to the following headings: A. General nature of the applicant's claim B. The business interruption policy and the renewals C. September 2006 incident claim D. November 2006 incident claim E. April 2007 incident claim F. Losses in respect of which indemnity sought G. Relief sought Copies of the relevant policy wording, and particulars of the losses alleged to have been sustained, were annexed to that claim. 12 The proceeding came before Finkelstein J on 16 June 2009, when, despite some misgivings, his Honour accepted the parties' invitation to identify four questions for preliminary determination pursuant to O 29 of the Federal Court Rules as they stood at the time. The view was taken by the respondent, and not resisted by the appellant, that, if these questions were answered in a particular way, the answers might dispose of the proceeding as a whole. Finkelstein J heard argument on the questions on 28 July 2009, and provided his answers, with reasons, on 25 September 2009. However, the only order which Finkelstein J made on that occasion was to direct the appellant to bring in short minutes of the orders which it proposed to give effect to his Honour's reasons. The appellant did so, and on 20 October 2009 his Honour made orders in which the questions identified for separate determination, and the answers given to them, were set out as follows: Question 1: Upon the assumption that: (a) the Actual Weekly Turnover and Average Weekly Turnover figures pleaded in Annexure D to the Applicant's Claim are correct (as corrected by paragraphs 21-23 of the Supplementary Report of Stephen Munro Gibson dated 10 June 2009); (b) the allegations pleaded in paragraphs 1, 2, and 4 to 15 of the Applicant's Claim are established; and (c) the Applicant's claims pursuant to the 2005 renewal (as defined in paragraph 5 of the Applicant's Claim) are as pleaded in Annexure D and I to the Applicant's Claim (as corrected by paragraphs 21-23 of the Supplementary Munro [sic] dated 10 June 2009); upon the proper construction of the 2005 renewal, is the Applicant entitled to any and if so what amount for loss of Turnover under the 2005 renewal in respect of the September 2006 incident (as defined in paragraph 11 of the Applicant's Claim) for the period after 31 October 2007? Answer: The Applicant is not entitled to any amount. Question 2: Upon the assumption that: (a) the Actual Weekly Turnover and Average Weekly Turnover figures pleaded in Annexures D and G to the Applicant's Claim are correct (as corrected by paragraphs 21-23 of the Supplementary Report of Stephen Munro Gibson dated 10 June 2009); (b) the allegations pleaded in paragraphs 1, 2, 4 to 15, and 22 to 26 of the Applicant's Claim are established; and (c) the Applicant's claims pursuant to the 2005 renewal (as defined in paragraph 5 of the Applicant's Claim) and the 2006 renewal (as defined in paragraph 8 of the Applicant's Claim) are as pleaded in Annexures D, G and I to the Applicant's Claim (as corrected by paragraphs 21-23 of the Supplementary Munro [sic] dated 10 June 2009); upon the proper construction of the 2005 renewal and the 2006 renewal, is the Applicant entitled to any and if so what amount for loss of Turnover under the 2005 renewal and/or the 2006 renewal in respect of the September 2006 incident and the November 2006 incident (as defined in paragraphs 11 and 22 of the Applicant's Claim) where the relevant Indemnity Period under the 2006 renewal in respect of the November 2006 incident overlaps with the Indemnity Period under the 2005 renewal in respect to the September 2006 incident? Answer: The Applicant is entitled to loss of Turnover under the 2005 Renewal for the overlapping period (subject to proof of the loss of Turnover and the causal connection required by the terms of the 2005 Renewal). Assuming the facts as pleaded are correct, the Applicant is not entitled to any amount for loss of Turnover under the 2006 Renewal for the overlapping period. Question 3: Upon the assumption that: (a) the Actual Weekly Turnover and Average Weekly Turnover figures pleaded in Annexures D, G and H to the Applicant's Claim are correct (as corrected by paragraphs 21-23 of the Supplementary Report of Stephen Munro Gibson dated 10 June 2009); (b) the allegations pleaded in paragraphs 1, 2, 4 to 15, 22 to 26, and 32 to 36 of the Applicant's Claim are established; and (c) the Applicant's claims pursuant to the 2005 renewal (as defined in paragraph 5 of the Applicant's Claim) and the 2006 renewal (as defined in paragraph 8 of the Applicant's Claim) are as pleaded in Annexures D, G, H and I to the Applicant's Claim (as corrected by paragraphs 21-23 of the Supplementary Munro [sic] dated 10 June 2009); upon the proper construction of the 2005 renewal and the 2006 renewal, is the Applicant entitled to any and if so what amount for loss of Turnover under the 2006 renewal in respect of the September 2006 incident, the November 2006 incident and the April 2007 incident (as defined in paragraphs 11, 22 and 32 of the Applicant's Claim) where the relevant Indemnity Period under the 2006 renewal in respect to the April 2007 incident overlaps with: (d) the Indemnity Period under the 2005 Renewal in respect to the September 2006 incident; and (e) the Indemnity Period under the 2006 Renewal in respect to the November 2006 incident? Answer: The Applicant is entitled to loss of Turnover under the 2005 Renewal for the overlapping period (subject to proof of the loss of Turnover and the causal connection required by the terms of the 2005 Renewal). Assuming the facts as pleaded are correct, the Applicant is not entitled to any amount for loss of Turnover under the 2006 Renewal for the overlapping period. Question 4: Upon the assumption that: (a) the Actual Weekly Turnover and Average Weekly Turnover figures pleaded in Annexures D, G and H to the Applicant's Claim are correct (as corrected by paragraphs 21-23 of the Supplementary Report of Stephen Munro Gibson dated 10 June 2009); (b) the allegations pleaded in paragraphs 1, 2, 4 to 15, 22 to 26, and 32 to 36 of the Applicant's Claim are established; (c) the Respondent has paid a total sum of $2,000,000 to the Applicant in respect to the claims made in the proceedings; and (d) the Applicant's claims pursuant to the 2005 renewal (as defined in paragraph 5 of the Applicant's Claim) and the 2006 renewal (as defined in paragraph 8 of the Applicant's Claim) are as pleaded in Annexures D, G, H and I to the Applicant's Claim (as corrected by paragraphs 21-23 of the Supplementary Munro [sic] dated 10 June 2009); upon the proper construction of the 2005 renewal and the 2006 renewal, is the Applicant entitled to any and if so what amount under the 2005 renewal and/or the 2006 Renewal in respect to loss of Turnover under the said policies? Answer: The Applicant is entitled to loss of Turnover under: (a) the 2005 Renewal for the weeks ending 12 April 2007 to 25 October 2007 in respect to the September 2006 Incident; (b) the 2006 Renewal for the weeks ending 22 February 2007 to 5 April 2007 and 1 November 2007 to 14 February 2008 in respect to the November 2006 Incident; calculated in accordance with the methodology identified in the reasons for judgment, subject to proof of the loss of Turnover and the causal connection required by the terms of each of the policies. 13 The answer which Finkelstein J gave to Question 4 proved to be controversial. This question concerned the way in which "weekly loss of turnover" was to be calculated under the policies. It seems to have been common ground that it was necessary to compare the appellant's turnover in a particular week with its "actual average weekly turnover" over the 12 months immediately preceding the business interruption which the appellant sustained for the purposes of this calculation. However, it was not always the case that the appellant's turnover in a particular week was less than the actual average weekly turnover. The appellant made no claim in respect of weeks in which its turnover exceeded the actual average weekly turnover, but likewise offered no offset in such circumstances. The respondent contended that there should be a "running account", in which all the weekly plusses and minuses, as it were, would be included, such that those weeks in which the appellant's turnover exceeded the actual average weekly turnover would be offset against those weeks in which the turnover fell short of the actual average weekly turnover. 14 Finkelstein J rejected the respondent's construction of the policies with respect to Question 4. His Honour held that the appellant was entitled to be paid in respect of any particular week in which there was a loss of turnover, without deduction for those weeks in relation to which the appellant's turnover had exceeded the figure which represented the actual average weekly turnover. His Honour said: It is not possible to accept the respondent's construction. The cover provided by the policy makes clear that "for each week [the respondent] will pay [the appellant] … in respect of loss of Turnover" (emphasis added). This means the calculations are to be made on a weekly basis. This position is reinforced by the introduction to the policy, which speaks of indemnity "in respect of weekly loss of Turnover". In addition where a loss arises, it must be paid within "seven days whenever practicable". In other words the policy terms provide for indemnity for losses incurred on a week by week basis. Those losses must be calculated by reference to weekly figures not on an annual, or some other, basis. In the calculation of weekly loss of Turnover, there is nothing to support the introduction of a "running account". It is true that the result may be seen as a windfall gain. But it is only a windfall if the applicant's position is considered on an annual basis. It is not when analysed with the words of the policy in mind, which, as we have said, looks at the applicant's position on a weekly basis. His Honour added: The issues that remain to be resolved at trial are: (a) whether there is a causal connection between the incidents and the loss claimed and (b) whether Turnover, and therefore Actual Average Weekly Turnover, ought be calculated by reference to total invoiced sales or cash receipts, or a combination of both, plus work-in-progress. 15 Because the orders of 20 October 2009 did not finally resolve the proceeding, they were interlocutory. The respondent sought leave to appeal from the answer which Finkelstein J had given to Question 4, and that application came before a Full Court on 9 November 2009. In the hearing of that application, the respondent accepted that the evidence which it would lead at the hearing of the proceeding would not be affected by the answer given to Question 4. That was because the respondent only ever accepted the correctness of the assumed facts referred to in the question for the purposes of the determination of the separate questions. For purposes of the proceeding generally, the respondent reserved the right to put all facts in issue. In these circumstances, in a judgment given on 12 November 2009, the Full Court held that the respondent would not suffer "substantial injustice" if leave to appeal were refused: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397, 399. Referring to the appellant as "TRS" and to the respondent as "QBE", their Honours said: From our perspective, the quandary in which QBE finds itself on this leave application is a consequence of the fact that, despite the apparently common assumption of the parties and the acquiescence of the primary judge, Question 4 cannot be answered on the basis of QBE assuming TRS's allegations of facts to be true for the purpose only of the determination of the separate question. QBE submitted that the process was a type of demurrer in which it contended that TRS's claim, taken at its highest, could not in law result in a judgment in TRS's favour. The problem with this approach should be apparent from the fact that one fundamental premise on which it is based (QBE's calculations based on TRS's claim) was not admitted, proved or able to be assumed for the purpose of the determination. In the circumstances, the proceeding returned to Finkelstein J. 16 On 11 March 2010, the appellant filed a proposed amended claim, upon which it sought leave to rely. That application was to be heard by Finkelstein J on 9 April 2010. In anticipation of that hearing, on 7 April 2010, the appellant filed a short outline of the submissions which it proposed to make. It noted that the respondent's position was that, in the proposed amended claim, the appellant had not pleaded material facts sufficient to disclose a proper claim for an entitlement to indemnity under the policies. The appellant submitted that this contention on behalf of the respondent was not "premised on anything set out in Practice Note CM8 - Fast Track". Relevantly, the appellant pointed out that the Practice Note provided that there would be no pleadings in a proceeding commenced in the Fast Track List of the court, but that there would be a "Fast Track Statement" which, "avoiding undue formality", was to state in summary form the nature of the dispute, the issues which the moving party believed were likely to arise and that party's contentions, including the material facts upon which it intended to rely. On 9 April 2010, Finkelstein J refused leave for the amendment sought by the appellant, but apparently left open the prospect that a further application, if made, would be entertained. 17 The appellant did make a further application for leave to amend, which came before Finkelstein J on 20 May 2010. In the course of the hearing of that application, his Honour suggested that the preferable forum for resolving the contentious issues was a summary judgment application under s 31A of the Federal Court Act. Leave to amend was granted to the appellant, but without any finding that the claim as amended contained all the material facts that would be necessary to sustain a successful final outcome for the appellant. The understanding was, apparently, that the respondent would make an application under s 31A, referable to the claim as amended. 18 On 28 May 2010, the respondent applied for summary judgment pursuant to s 31A(2) of the Federal Court Act. After submissions which culminated, it seems, in a submission lodged on behalf of the appellant on 30 June 2010, on 7 October 2010 Finkelstein J ordered that the respondent's motion for summary judgment be stood over. His Honour pointed out that, in the calculation of loss of turnover in its claim as amended, the appellant had proposed that four steps were involved, the second and third of which were as follows: 21. The second step is to calculate Actual Average Weekly Turnover for the 12 months preceding the date of commencement of interruption. That involves, first, determining the total quantum of Turnover and second, allocating it to a particular week. TRS says the total quantum of Turnover is properly determined by reference to sales invoices raised less an adjustment for credit notes issued. It allocates Turnover to a particular week utilising one of two methodologies: (1) where labour hours can be identified, a formula is applied to allocate Turnover based on the proportion of actual labour hours for a particular week to total labour hours; and (2) if labour hours cannot be identified, for jobs with a value greater than $10,000 Turnover is allocated uniformly to weeks based on start date and end date of the job as recorded in TRS's records and for jobs with a value less than $10,000 Turnover is allocated based upon the invoice date. 22. The third step is to calculate loss of weekly Turnover from the date of commencement of interruption on a "week by week" basis. This involves two calculations: (1) calculating actual Turnover for each week (using the same method as step 2); and (2) calculating loss of weekly Turnover by subtracting actual Turnover from Actual Average Weekly Turnover. According to the respondent, the appellant's third step was not the correct way to identify its actual turnover in a particular week. 19 Finkelstein J accepted that submission. Referring to a report prepared for the appellant by Deloitte Touche Tohmatsu ("Deloitte") which calculated the extent of the appellant's loss of turnover arising from the September 2006 and November 2006 incidents, his Honour said: QBE criticises this methodology on the basis that the approach is not what the policy calls for. I agree. As will be apparent from my reasons for answering Question 4, Turnover and loss of weekly Turnover are to be determined by reference to what is paid or payable in the relevant period; averaging is not contemplated. For purposes of calculating the Actual Average Weekly Turnover the relevant period is the 12 months preceding the interruption. The Actual Average Weekly Turnover is the sum of what has been paid or is payable in that period divided by 52. The period for the loss of weekly Turnover is, obviously enough, a week. What is relevant are the amounts paid or payable in each week for which a claim is made. An amount is "paid" when it is received. An amount is "payable" when it becomes owing, which is, generally speaking, not until an invoice has been issued. The expression "paid or payable" does not usually include forward sales until the services are performed and it does not include orders or contracts until an invoice is issued. This tallies with normal accountancy practice: see Riley, [39]. His Honour's reference to "Riley" was to Cloughton, D. Riley on Business Interruption Insurance, 8th ed (1999), para 39. 20 In the circumstances, Finkelstein J held that the appellant was not able to sustain its claim for lost income as that claim was then formulated. But his Honour continued: I do not, however, accept that TRS cannot establish a claim for compensation. To do so it will have to replead its case in accordance with the following methodology. First step - identify the date of commencement of interruption. Second step - calculate the Actual Average Weekly Turnover for the twelve months preceding the date of commencement of interruption. Third step - calculate the weekly Turnover for each relevant week: that is for each week in respect of which loss is claimed. I have described how Turnover is to be calculated for purposes of both step two and step three. Fourth step - calculate the loss of weekly Turnover by deducting weekly Turnover from the Actual Average Weekly Turnover for each week. Fifth step - establish that any reduction in income is caused by the interruption. One way of proving causation is to: (1) identify the vessels TRS was unable to slip and repair in the relevant period; (2) estimate the vessels it lost the opportunity to slip and repair in the relevant period; and (3) determine the value of the work that could have been performed on those vessels and the date or dates upon which invoices for that work would have been issued. There may be other ways to prove causation. Sixth step - reduce the loss of weekly Turnover by the Rating Classification percentage and (where applicable) reduce the figure to the maximum Weekly Sum Insured. It should be noted that it was the passage from his Honour's reasons set out in the previous paragraph, not the passage set out in this paragraph, that explained why he reached the conclusion that the appellant's then formulation of its claim was not such as carried a reasonable prospect of success. Specifically (and we return to this aspect below), his Honour's inclusion of the "fifth step" mentioned above was by way of advice to the appellant about how it might recast its claim so that it would have a reasonable prospect of success, rather than a reason for the s 31A conclusion which he reached in relation to the claim as it then stood. 21 Notwithstanding the deficiency in the appellant's claim which his Honour had identified, Finklestein J took the view that the appellant should be given another opportunity to deliver what his Honour described as "a Further Amended Statement of Claim", in order to show the existence of a claim "that should be allowed to go to trial". His Honour concluded: 29. It is appropriate, I think, to put TRS on terms that it should, within a short period of, say, 28 days, make any further amendment application it wishes to make. Failing that, or if any proposed application to amend is refused, judgment should be entered in favour of QBE on this part of TRS's claim. It was this conclusion which led to his Honour's order of 7 October 2010 that the respondent's motion for summary judgment be stood over. 22 On 8 November 2010, the appellant filed a Notice of Motion by which it sought leave further to amend its claim. That application came before Gordon J on 9 December 2010, together with the respondent's previously stood over motion for summary judgment under s 31A. On 21 December 2010, Gordon J determined both aspects adversely to the appellant, and directed the parties to bring in draft orders. That direction having been complied with, on 8 February 2011, her Honour rejected the application to amend, and granted the respondent's motion under s 31A. She dismissed the proceeding. 23 A significant aspect of the claim upon which the appellant sought to rely before Gordon J was what it described as its "alternative methodology" for the calculation of its loss. That methodology corresponded with the claim that had been rejected by Finkelstein J on 7 October 2010. The appellant did not seek to persuade Gordon J that she should take a different view of the matter from that which had been taken by Finkelstein J, and her Honour, quite correctly in our view, approached the hearing before her on the basis that it was the continuation of the hearing in which Finkelstein J had stood over the respondent's application under s 31A, and had given the appellant another opportunity to formulate its claim in a way that would correspond with his Honour's view as to the operation of the policies. However, the appellant also introduced a new methodology - described as the "primary methodology" - by which to calculate the extent of its loss. It was this aspect of its proposed amended claim that was the focus of the reasons of Gordon J given on 21 December 2010. 24 Her Honour took as her starting point the 6-step procedure which Finkelstein J had, on 7 October 2010, identified as necessary for the appellant to establish the extent of its loss: see para 20 above. Her Honour said: 13. TRS pleaded its claim in the following terms: First Step 34. … [T]he date of commencement of interruption to the "Business," resulting from the 3 September 2006 incident, is 3 April 2007. Second Step … 34A. As set out in page 1 of 2 of Annexure E1 hereto, the "Actual Average Weekly Turnover," for the period 4 April 2006 - 3 April 2007, is $392,431. The methodology applied in calculating that figure is explained in paragraph 34B below. 34B In allocating "Turnover" to each week, in the period 4 April 2006 - 3 April 2007 in order to give effect to the language: "money paid or payable to [TRS] for goods sold and for services rendered", regard has been had to: (a) the value of invoices issued in each week; less (b) the value of credit notes issued in each week, without regard to the timing of the rendering of services. … Third Step … 37A As set out in Annexure F1 hereto, for each week in the period 3 April 2007 - 22 October 2007, "Loss of Weekly Turnover" is as set out in the column, styled "Loss/(Gain) of Average Weekly Turnover". 37B. The methodology in relation to the quantification of turnover within the column styled "Weekly Turnover" is equivalent to the methodology described in paragraph 34B above … … Fourth Step … 40A. As identified in Annexure F1 hereto, total loss in the period 3 April 2007 - 22 October 2007, after applying the "Rating Classifications percentage" and (where applicable) the weekly cap, totals $3,187,059. 14. A careful reader of the pleading will note that the four steps pleaded by TRS (see [13] above) omit the fifth step of the Finkelstein J's template. QBE submits that TRS not only failed to plead, but cannot plead, the fifth step identified by Finkelstein J - to establish that any reduction in income was caused by the interruption due to property having sustained loss or damage. In particular, QBE submits that TRS was obliged to plead, and did not plead, the following elements to establish causation: 1. identify the vessels TRS was unable to slip and repair in the relevant period; 2. estimate the vessels it lost the opportunity to slip and repair in the relevant period; and 3. determine the value of the work that could have been performed on those vessels and the date or dates upon which invoices for that work would have been issued. Although his Honour said (see [6] above) that there may have been other ways to prove causation, in the present case TRS did not suggest that there was another way. Indeed, TRS submitted that they had adopted what was colloquially described as the "Finkelstein template" or the "Invoice Methodology": see [6] above. 25 Gordon J then noted that the appellant's position was that it had sufficiently "pleaded causation" in the following paragraphs of its proposed amended claim: [29]. In the premises of paragraphs 23-28, above, throughout the period 3 April 2007 - 22 October 2007, [TRS]: (a) was unable to, and did not, slip any vessels which required the use of the bottom 15 metres of the slipway; (b) sustained interference to the work schedule of vessels in fact on the slipway, as a result of an inability to utilize the bottom 15 metres of the slipway; (c) lost opportunities to undertake double slipping of vessels, as a result of an inability to utilize the bottom 15 metres of the slipway; (d) lost opportunities to seek smaller vessels (which did not need to use chainage 174 - 189) by reason of the need to investigate and undertake repairs of the type described above; (e) further to the above, lost opportunities to slip and repair vessels by reason of the closure in April 2007, the investigations in April and May 2007, the repairs in July and August 2007, the closure for further repairs in each of September 2007 and October 2007 and the stranding of HMAS Leeuwin on the slipway in October 2007. Loss [30]. Accordingly, in these premises, in the period 3 April 2007 - 22 October 2007, the ship repair and engineering business of [TRS] was interrupted or interfered with. [31]. By virtue of the interruption and/or interference set out above, [TRS] sustained loss and damage, constituted both by direct losses and, further, by reason of lost opportunities to slip and repair vessels. 26 In the view taken by her Honour, this was not sufficient. She said: The allegations in paragraphs [29] - [31] are in general terms. What is alleged to be the weekly loss is quantified: see [16] above. It is to be noted, however, that there is no specific pleading that the loss in any particular week is as a result of the interruption to the business. The pleaded case claims the whole of the difference between the average weekly turnover and the actual weekly turnover (subject to some required exclusions which may be put to one side). Read as a whole, the pleading asserts that the loss alleged came about because of the matters alleged in par [29] of the FAC (which in turn refers back to the premises provided by pars [23] to [28] of the FAC). Whether this form of connection between the alleged loss and the damage to the slipway is sufficient depends upon the proper construction of the Policy. Or, to put the same point another way, whether the plaintiff must prove that the loss suffered in a particular week bore a specified relationship with the damage to the slipway depends upon the proper construction of the Policy. 27 According to Gordon J, that question of construction would, ordinarily, await argument at trial. However, in the present case, the question had been "concluded" by the reasons given by Finkelstein J in his Honour's O 29 decision on 25 September 2009. Her Honour said: 20. Ordinarily the question of construction would await argument at trial. In this case, however, having regard to the decision of separate questions, the relevant point of construction has been concluded. 21. Under the Policy, the cover provided that "for each week [QBE] will pay [TRS] … in respect of loss of Turnover". Finkelstein J found at [14] in Tropical Reef Shipyard Pty Ltd [2009] FCA 1088, this meant that the calculations are to be made on a weekly basis. That conclusion was found to be reinforced by a number of aspects of the Policy: 1. the introduction to the Policy which referred to "weekly loss of Turnover"; and 2. where a loss arises, it must be paid within "seven days whenever practicable". The Policy provided indemnity for losses incurred on a week by week basis. In other words, if a weekly claim had been made, for example, on 17 April 2007, TRS was obliged to establish the causal link between the loss claimed in that week and the interruption to TRS' business. If it was established, then the claim was paid within "seven days whenever practicable". The next week the same was required of TRS and so on. The facts for each week may well have been different because the cause or causes of the loss (if there was a loss) may well have been different. In the case of TRS, given the nature of its business and the different contractual and payment terms with different customers (see [17] above), it would be expected that the loss in any one week was caused by a different set of facts and matters. 22. How each of those facts and matters relate to a claimed loss in any one week is not pleaded and contrary to TRS' submission it should not, in my view, be simply inferred that the loss of turnover (set out in [16] above) was caused by the matters pleaded in [29]-[31] of the FAC. It is drafted as an ambit claim. The difficulty is that the ambit claim ignores the words of the Policy that required TRS to address the claim on a week by week basis. Put another way, the amendment is futile and should not be allowed: Commonwealth v Verwayen (1990) 170 CLR 394 at 456 per Dawson J. 28 In the light of the views which her Honour had formed about the primary methodology put forward by the appellant, Gordon J said that it was "unnecessary to reconsider" the appellant's alternative methodology, ie the methodology which had been rejected by Finkelstein J in his reasons of 7 October 2010. 29 Before turning to the appellant's case on appeal as such, we make a brief observation about the procedural history which the proceeding below endured. In his reasons of 4 April 2011 granting leave to appeal, Gray J said (Tropical Reef Shipyard Pty Ltd v QBE Insurance (Australia) Ltd [2011] FCA 592 at [2]): The circumstances surrounding the case have become very complex. In many respects, their complexity is an object lesson in the difficulties that can be created by attempts to take shortcuts in the resolution of legal disputes. There have been no less than three sets of reasons for judgment given by single judges of the Court and one set of reasons for judgment given by a Full Court in relation to an application by the respondent for leave to appeal from orders made at an early stage of the proceeding. The proceeding was originally commenced in the fast-track list of the Court. Accordingly, there is some irony in the fact that it is now well over a year and a half since the proceeding was commenced. We agree with these observations. 30 A singular feature of the procedural history below is that, it being a Fast Track proceeding, there were no pleadings. Thus the provisions of O 11 r 16 of the Rules in force at the time, which provided for a pleading to be struck out if, amongst other things, it disclosed no reasonable cause of action, had no application. Yet the whole of the case before Finkelstein J, and later before Gordon J, was conducted, it seems, as though the Fast Track Statement for which cl 4.2 of Practice Note CM8 provided was required to set out a sequence of factual allegations such as would sustain a cause of action. It may have been because the Practice Note did not expressly provide for consequences if a Fast Track Statement did not contain those allegations that Finkelstein J proposed that the dispute between the parties could be resolved by recourse to s 31A of the Federal Court Act. Whether or not that was so, it is significant that it was by reference to the appellant's perceived inability to marshal its factual allegations into a coherent documentary sequence which identified a permissible means of calculating weekly turnover that both Finkelstein J and Gordon J addressed the question required by s 31A. 31 The provisions of s 31A which were relevant in the circumstances of the present case are subs (2) and (3): (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; Those provisions were considered in Spencer v Commonwealth (2010) 241 CLR 118. Having pointed out that s 31A involved a departure from previous tests for the summary dismissal of a proceeding - exemplified in such cases as Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 - Hayne, Crennan, Kiefel and Bell JJ continued (241 CLR 118 at [58]-[60]): How then should the expression "no reasonable prospect" be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is "no reasonable prospect". The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like "no reasonable prospect" is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes (87) as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt. In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim. Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes. It is in the light of this exposition of the operation of s 31A that we approach the questions raised on the present appeal. See also the judgment of French CJ and Gummow J at [24]-[25]. 32 Certain things were more or less uncontroversial in the proceeding below, or, at least to the standard set by s 31A, could not be controverted. The appellant's slipway had been damaged, and that damage compromised the appellant's ability to slip the full range of vessels that might be expected to be brought to the shipyard for repair in the normal course. There was no suggestion that this was not a conventional case for coverage of the kind for which the policies provided. Indeed, as noted above, the respondent had in fact made payments under the policies to an extent. The issue was not therefore, whether the appellant was entitled under the policies: it went only to the quantification of that entitlement. Given the sums involved, we do not for a moment depreciate the importance of that issue, but we do consider that the nature thereof was inherently such as would give good cause to pause before reaching the conclusion for which s 31A provides. 33 In its case on appeal, the appellant contended that it was open to it to challenge the reasons of Finkelstein J published on 7 October 2010. There was, it was said, no need to have made application for leave to appeal from the order standing over the respondent's s 31A application, since the proceeding before Gordon J became, in effect a continuation of that application, and the occasion when it was finally determined. In making that determination, her Honour had taken Finkelstein J's reasons as a given, and those reasons, no less than her own, provided the basis for the order ultimately made under s 31A. We accept this approach. Finkelstein J did not determine the respondent's application under s 31A, but stood it over for further consideration, in the light of any further application to amend on behalf of the appellant. We accept that Gordon J's judgment, whilst standing as the appealable determination of the s 31A application, was informed in part by the reasons of Finkelstein J given on 7 October 2010, and that it should now be open to the appellant to base its grounds of appeal, to the extent necessary, upon those reasons, additionally to the reasons of Gordon J herself. In its Notice of Appeal, the appellant followed that course, and we would accept it. 34 The focus of the appellant's attack on the reasons of Finkelstein J of 7 October 2010 was upon the passage which we have set out at para 19 above. Specifically, it was submitted that his Honour was wrong to take the view that the appellant had no reasonable prospect of making good the calculation of its turnover in respect of a particular week other than by reference to invoices which had been issued. The appellant had three bases from which it contended that the trial Judge might ultimately, without error, accept a calculation that was not limited in the way proposed by Finkelstein J. 35 The first basis was conceptual rather than factual, but nonetheless involved a rejection of the proposition that any calculation of weekly turnover was necessarily limited by reference to invoices and credit notes which had been issued in the week concerned. On the hearing of the appeal, we were informed that neither party had referred Finkelstein J to Riley. The whole of the subparagraph from which his Honour's citation was taken reads as follows: By using the ordinary meaning of sales, together with receipts for services rendered, the definition of turnover caters for practically all types of business. It also provides for credit transactions in connection with the sale of goods or services by the use of the phrase "the money paid or payable". Further, it tallies with the normal accountancy practice for the figure credited in the trading account by referring to "goods sold and delivered", that is, when they are entered in the sales book, and does not include orders, or forward sales or contracts, until the goods are manufactured and invoiced or the services are actually performed. Under the sub-heading "Turnover: payments in advance, stage or progress payments", the text reads as follows: The exact nature of the contract must dictate the manner in which the situation is dealt with, but the loss of turnover is again based on the extent to which turnover has been earned whether actual money has changed hands or not. According to the appellant, there is ample authority in Riley to allow for turnover to be calculated, in an appropriate case, by reference to the stage which had been reached in a particular maintenance or repair job, for example, notwithstanding that an invoice was not issued in the actual week in which the work had been performed. 36 The second basis related to the different types of repair contracts into which the appellant entered, and to its contractual entitlements to payment under different invoicing patterns. In evidence before Finkelstein J was a report by the Commercial Manager and Company Secretary of the appellant, Steven Munro Gibson. He said that there were the following "chargeable type jobs" run by the appellant in the course of its business: (a) Fixed price - where the customer pays a fixed price for completion of the work; (b) Estimate/budget - where the work is completed on a labour and material charge basis, but it is expected that the job will be completed +/- 15% of the budget/estimate; and (c) Cost Plus - where the work is completed on a labour and material charge basis. A vessel under repair may require 300-400 jobs to be carried out, not including variations and additional work. Mr Gibson said that work in progress may build up quickly and may not be able to be invoiced until it reaches particular contract requirements, for example: (a) Milestone invoicing - the customer may only be able to be invoiced when particular milestones are achieved (eg completion of particular work, slipping/unslipping etc); (b) Progress invoicing - this could be either on a dollar value or time basis (or both) as agreed to with the customer (eg invoice every 2 weeks value of work in progress); and / or (c) Completion invoicing - where invoices are raised only on completion of the work. It was submitted on behalf of the appellant that the question whether a sum was "payable" to it, under any of the contractual scenarios or invoicing patterns set out above, in a week other than that in which the relevant invoice had been issued was pre-eminently one of factual and, to an extent, legal detail which should be left to the trial Judge. The appellant should not have been cut out from making good its case by reference only to the "reasonable prospect" test for which s 31A provides. 37 The third basis drew on the Deloitte report to which we have referred. The report set out Australian Accounting Standards AASB 118, which addresses the recognition of revenue, particularly as a result of rendering of services, as follows: When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction shall be recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the entity • the stage of completion of the transaction at the reporting date can be measured reliably; and • the costs incurred for the transaction and the costs to complete the transaction can be measured reliably." This accounting standard was said to leave open the reasonable prospect that the appellant might ultimately calculate the timing of its turnover other than by reference to invoices and credit notes issued in a particular week. 38 The respondent's first response to this aspect of the appellant's case was to propose that the O 29 determination by Finkelstein J of 20 October 2009, in relation to Question 4, resolved conclusively that "turnover" in a particular week was to be calculated only by reference to invoices and credit notes issued in that week. While we can accept that his Honour's determination had effect, subject to any appeal, with respect to the matters with which it dealt, we do not accept that it concluded adversely to the appellant the question whether established turnover might be allocated to a particular week otherwise than by reference to invoices and credit notes actually issued in that week. Given the terms of the order made by his Honour on 20 October 2009, it is to his Honour's reasons for judgment that one must turn to know what was actually determined by reference to the procedure for which O 29 provided. When one does so, it will be found that the substantial question with which his Honour was concerned was whether each week should stand alone, or whether, as proposed by the respondent, a running account should be kept in a way that would provide for positive items to be set off against negative ones. His Honour's answer to that question presupposes that, in advance of the methodology proposed in the answer being applied to the facts, the weekly loss of turnover over the period that was relevant will have previously been calculated. It was how the calculation should be done, rather than the matter resolved on 20 October 2009, which later caused his Honour to reach a provisional conclusion under s 31A of the Federal Court Act which was adverse to the appellant. 39 The respondent next submitted that the appellant was precluded from challenging Finkelstein J's conclusion that the notion of a sum being "paid or payable" in the definition of "turnover" in the policies was tied to invoices and credit notes which had been issued in a particular week because it (the appellant) ran its own case before his Honour by reference to that very notion. In its written outline on the present appeal, the respondent put it as follows: 36. TRS's responding written submissions did not proffer a different view of the meaning of "paid or payable" other than to affirm that Deloitte's view was that this should be regarded as meaning, in the context of TRS's business, "sales invoices raised in respect of goods sold and services rendered less an adjustment for credit notes". This was consistent with QBE's submission. Submissions such as those now raised by TRS were not put below and it cannot raise them now. It was submitted on behalf of the appellant that the above passage mischaracterised the nature of the appellant's case before Finkelstein J. For the reasons which follow, we accept that submission. 40 Relevantly to the present matter, the appellant's written submissions of 30 June 2010 relied heavily on the Deloitte report to which we have referred. It is true, as the respondent pointed out, that that report expressed the view that "money paid or payable" was to be "determined by reference to sales invoices raised in respect of goods sold and services rendered less an adjustment for credit notes". That observation was contained in a section of the report entitled "Turnover", and under the sub-heading "Interpretation and quantification of Turnover". However, later in that section, the sub-heading "Allocation of Turnover to weeks" appeared. There followed what seems to have been a careful treatment of the alternative ways in which turnover as reflected in invoices less credit notes might be allocated to particular weeks which might be regarded as relevant to the revenue flows concerned. The report stated: In accordance with the two policies, Turnover is required to be determined on a weekly basis for the period 12 months prior to any Indemnity Period and for the duration of the Indemnity Period. As the invoice date (or credit note date) may not accurately reflect the date on which the revenue was 'earned' we have sought to identify an appropriate method of allocation of Turnover to weeks. 41 Thus, although it is correct to say that, in its case before Finkelstein J, the appellant proceeded broadly on the assumption that a sum would not be payable unless it had been invoiced, it is not correct to say that, in the allocation of payable sums to weeks, the appellant tied itself to the weeks in which the invoices had been issued. The Deloitte report made a distinction between the "payable" status of a particular sum and the week to which it should be allocated for the purposes of the policies. That report fairly reflected the way the appellant put its case before Finkelstein J. By the conduct of that case the appellant did not, in our view, preclude itself from now challenging the reasons of his Honour with respect to the "paid or payable" point. 42 In its oral submissions made on appeal, the respondent argued that Finkelstein J had been correct, in his provisional determination under s 31A of the Federal Court Act, to conclude that the methodology presented in the Deloitte report, which effectively stood as the appellant's case on this point, was inconsistent with the policies and was, therefore, an impermissible basis upon which to locate a reasonable prospect of success in the proceeding. The passage in his Honour's reasons which sustained the respondent's submission was that set out in para 19 above. For our part we do not regard the way the matter was approached in the Deloitte report as incapable of sustaining a case with a reasonable prospect of success. The policies, which were, of course, the respondent's documents, were not models of drafting. The insuring clause referred to "an amount in respect of weekly loss of Turnover", and the cover was identified as "an amount based upon Weekly Calculations not exceeding the Weekly Sum Insured each week in respect of loss of Turnover" (emphasis added in each case). Although a week-by-week approach is required by these provisions, the allocation of sums that had become payable to particular weeks was not, with respect to his Honour, unambiguously dealt with by reference only to the raising of invoices and credit notes. 43 Neither do we consider that his Honour's O 29 reasons of 25 September 2009 foreclosed any reasonable prospect of the appellant succeeding save by reference to a concept of turnover which was limited to the week-by-week raising of invoices and credit notes. As mentioned above, those reasons were concerned with what his Honour described (in his reasons of 7 October 2010) as "averaging". We doubt that the appellant would have had any reasonable basis for supposing that, by then running a case which resisted the idea of averaging, or of offsetting, it was thereby closing the door forever on any case that its weekly turnover was to be calculated other than by reference to invoices and credit notes issued in the week concerned. Whether the policies, properly applied to the facts of the case, did leave that door ajar is a difficult question which, in our view, warrants the attention of the court at trial. It is not one which can now be answered, or which should have been answered on 7 October 2010, in the summary terms required by s 31A. 44 For the above reasons, we take the view that Finkelstein J was in error to have held that the way the appellant advanced its case in the hearings leading to his Honour's judgment of 7 October 2010 justified the conclusion that the proceeding had no reasonable prospect of success. 45 Turning now to the reasons of Gordon J published on 21 December 2010, the question which then arose was whether the appellant should have leave to amend its claim to base the quantification thereof on invoices and credit notes issued week-by-week, as required by the earlier judgment of Finkelstein J. However, the problem identified by Gordon J was not that the appellant had not proceeded conformably with Finkelstein J's reasons in that respect. Rather, it was that a causal link between the amount of the appellant's loss as so calculated and the interruption to business which the appellant sustained had not been articulated in its claim as sought to be amended. That there should be such a link had, in the view of her Honour, been established by Finkelstein J in his O 29 reasons of 25 September 2009. 46 As to the last aspect mentioned above, we do not, with respect, agree with her Honour that Finkelstein J made any such final determination on 25 September 2009 as would conclude the question of construction to which her Honour referred. For such purposes we must look, of course, primarily to the answers which his Honour gave in his orders of 20 October 2009. Each of the answers that might have the potential to be relevant in the present context was qualified by a proviso that it was "subject to proof of … the causal connection required by [the policies]". Although there are passages in Finkelstein J's reasons of 25 September 2009 that would provide some currency for the supposition that his Honour was concerned with the matter of causation, what should have been regarded by Gordon J as binding on the appellant as a final determination of a question arising in the proceeding was each of the answers to the four questions actually given on 20 October 2009. 47 Ultimately, it may well be held that it is necessary for the appellant "to establish the causal link between the loss claimed in [a particular] week and the interruption to [the appellant's] business", but we do not regard such a requirement as having been laid down in a final way by Finkelstein J in his orders of 20 October 2009. 48 The issue of exactly what links the policies required as between the original loss or damage to buildings or property, the interruption of business and the loss of turnover is, in our view, a difficult one. It may be noted that, in the two clauses which are presently relevant, the explicit causal link required by the policies, given by the use of the expression "due to", is between the occurrence of damage to the appellant's buildings or property and an interruption to the appellant's business. On one view of the policies, if that link exists, and "loss of turnover" occurs (in a particular week) in fact, the appellant's claim has been made good. In other words, it having been established that, in a period in which the appellant has sustained an interruption to its business as a result of damage of the kind covered by the policies, the appellant's turnover was less than it had been on average in the previous 12-month period of presumptively normal operation, it may be that the appellant was not then obliged to show, in a particular week, that that shortfall was causally linked to identifiable business which was not, but otherwise would have been, carried out. We do not suggest that the trial Judge need ultimately see the policies in this way, but we do not see that constructional considerations at this level of detail have been a feature of any of the interlocutory judgments which have to date been given in the proceeding. 49 Another problem which, in our view, ought to have been left to the trial for resolution is implicit in the passage in Gordon J's judgment, set out at para 27 above, which posits the making of a claim on 17 April 2007, by way of example. On the template by reference to which her Honour was working, the weekly loss of turnover had to be the (positive) difference between the actual average weekly turnover calculated by reference to the previous 12 months and the sum of the invoices, less credit notes, raised by the appellant in the week concerned. How that difference might be linked to the interruption of business in that week, even in the best of worlds, is a difficult and, in some senses, a rather artificial, question. On the approach suggested as necessary by this part of her Honour's reasons, the appellant would succeed only if it were able to show that, absent the interruption to its business, it would have written more invoices in that week. On such an approach, it is quite possible that the appellant would be denied coverage under the policies, even in a week in which its operations were, for example, completely idle for reasons unarguably the result of the damage suffered by its slipway, simply because it was unable to show that, under normal conditions, it would have written more invoices in - not with respect to - that week. There is a view which should not be dismissed as beyond the scope of the reasonable, in the s 31A sense, that an outcome of this kind would not have been within the contemplation of the policies. 50 We sense that the underlying merits of the appellant's case have fallen between two stools in the way that the problems arising under its written Fast Track Claim have been sequentially addressed in the interlocutory determinations which have been made in the proceeding below. Finkelstein J's reasons of 25 September 2009 were concerned with the permissibility of averaging. His Honour's reasons of 7 October 2010 were concerned with the state of affairs that might give rise to the conclusion that a particular sum had been "paid" or had become "payable". Gordon J's reasons for the judgment presently under appeal had the result that the appellant was out of court on the proceeding as a whole, but not as a result of any direct consideration of the causal linkages required by the policies as such. Rather, her Honour's reasons were largely to be explained by her perception of what had been determined by Finkelstein J on the two previous occasions to which we have referred. Importantly, her Honour took it as a given that Finkelstein J's "fifth step" was an indispensible part of any successful claim under the policy. That may be so, but it has not been directly decided at any stage of the proceeding: as mentioned above, Finkelstein J's various steps were a kind of advice to the appellant as to how to formulate a claim that could succeed. By this combination of interlocutory judgments, the appellant finds itself in a position where the central question of causal links which must be determined under the policies has not been directly or specifically considered, yet, largely by reference to the assumed answer to that question, it has been met by a finding that its case as a whole has no reasonable prospect of success. In our view, this is not the kind of outcome which is contemplated by s 31A. 51 For the above reasons, we consider that so much of the present appeal as challenges Gordon J's order under s 31A of the Federal Court Act should be upheld. 52 There remains the question whether Gordon J was in error not to have given the appellant leave to introduce what it now describes as its primary case. For reasons which we have explained above, we think it was wrong, in a Fast Track proceeding, to prevent the appellant from articulating the case which it intended to run. For those same reasons, we do not think that the absence of a stated link between the damage to the appellant's property and its loss of turnover in a particular week should have been regarded as sufficient to exclude the appellant from running a case consistent with its claim as it was articulated. That may well have been a case that confronted problems, but these, in our view, and absent grounds for a finding under s 31A, are such as should have been left for resolution at trial. 53 We shall allow the appeal, set aside orders 2-5 made by the court on 8 February 2011, dismiss with costs the application brought by the respondent for summary judgment and give the appellant the leave to amend which it sought by Notice of Motion dated 22 November 2010 the question of the costs of that application to amend being remitted to the docket judge. We shall order the respondent to pay the costs of the motion for leave to appeal, and of the appeal. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Edmonds, Jessup & Robertson.