Woolloomooloo Foundation Pty Limited v Maritime Services Board of New South Wales

CATCHWORDS : ACTS CITED : SCR Pt 8 r 8 Walker v The Commonwealth Bank of Australia (1985) 3 NSWLR 496 Brisbane South Regional Health Authority v Taylor (1997) 186 CLR 541 CASES CITED : Weldon v Neal (1987) 19 QBD 394 McGee v Yeomans [1977] 1 NSWLR 273 Huntsman Chemical Company Australia Limited v International Pools Australia Limited (1995) 36 NSWLR 242 DECISION : See paras 9, 13, 17, 18, 27, 29, 41 & 42.

THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION DUNFORD J 31 MARCH 1999 30001/95 - WOOLLOOMOOLOO FOUNDATION PTY LTD -v- MARITIME SERVICES BOARD OF NEW SOUTH WALES & ORS JUDGMENT 1 HIS HONOUR: By Notice of Motion filed 22 February 1999 the plaintiff seeks to amend its Statement of Claim. The various defendants take different positions, and initially it is appropriate to consider the position of the sixth to ninth defendants. 2 The proceedings concern the tendering process for what is commonly know as the "Finger Wharf" at Woolloomooloo and some associated works. The plaintiff was an unsuccessful tenderer in the project and the seventh defendant was the successful tenderer while the sixth, eighth and ninth defendants are joint venturers in the project with the seventh defendant. 3 By its Summons filed on 5 January 1995 and the Amended Summons filed in Court on 7 March 1995, the plaintiff sought inter alia a declaration that the decision of the first defendant on 4 March 1993 to appoint the seventh defendant as the preferred tenderer for the redevelopment of Woolloomooloo Bay was void; an order in the nature of certiorari that such decision be set aside, and an order restraining the first defendant from implementing or otherwise carrying into effect such decision. The sixth to ninth defendants were not joined as parties in the proceedings, but they subsequently applied on their own motion to be joined pursuant to SCR Pt 8 r 8 on the ground that they were parties whose joinder was necessary to ensure all matters in dispute in the proceedings be effectively and completely determined and adjudicated upon. 4 This application by the sixth to ninth defendants was consented to by the plaintiff and an order made by me to that effect on 11 April 1995. At that time I also ordered that the costs of the application for joinder, and costs between the defendants and the other parties be reserved to be dealt with by the trial Judge. The proposed Amended Statement of Claim no longer seeks the orders to which I have referred, but merely seeks damages against the first and second defendants, that is to say, no order in the nature of certiorari or for injunction is sought nor any declaration to the effect that the decision appointing the seventh defendant as the preferred tenderer was void. 5 The reason why they sought to be joined was because although no relief was expressly sought against them, if the decision to appoint the seventh defendant as preferred tenderer was set aside as void, the contracts for the sixth to ninth defendants to develop the area at Woolloomooloo Bay, which flowed from the successful tender, would also be set aside, and in that way their contracts were in jeopardy. Now that it is no longer sought to have the decision of 4 March 1993 set aside, their contracts are no longer in jeopardy and therefore there is no need or purpose for them to be parties to the proceedings. Accordingly, Pt 8 r 9 applies, they have ceased to be proper or necessary parties and it is appropriate to order that they cease to be parties. 6 Mr Smith SC on behalf of the plaintiff does not oppose an order that they cease to be parties, but opposes any order for costs in their favour on the ground that they should not have been joined in the first place, as he submits they did not come within the terms of Pt 8 r 8(1) and he referred me to Walker v The Commonwealth Bank of Australia (1985) 3 NSWLR 496. In my view that case is distinguishable. It involved an application by a company liquidator to set aside payments to a creditor of the company on the ground that such payments were preferences, and the issue was whether persons who had given mortgages as guarantors of the debt should be joined. Needham J held they were not necessary parties as no estoppel would be created by the proceedings if they were joined and in any event, they could, if sued in separate proceedings, have raised any matter including that the creditor was not liable for the original debt. 7 It seems to me that is a very different situation to the situation here. As I say, if the plaintiff was successful in having the decision of 4 March 1993 appointing the seventh defendant as the preferred tenderer set aside, the sixth to ninth defendants would have lost their rights that flow from the seventh defendant ultimately being the successful tenderer and therefore they had a very substantial, significant and direct interest in the outcome of the proceedings. If that decision of 4 March 1993 was set aside they would have no remedy to have the successful tender and the contracts which flowed therefrom reinstated. I am therefore satisfied that they were proper parties to be joined pursuant to Pt 8 r 8. 8 The plaintiff has a further major problem in this regard in that it consented to their joinder, and it is arguable that having done so it is now too late to submit that they should never have been joined in the first place. They having been joined, as the plaintiff no longer seeks any orders which will affect their rights, I am satisfied that the plaintiff should pay the costs incurred by the sixth to ninth defendants, but no material has been put to me which would justify an order for costs on an indemnity basis. 9 I therefore order that the sixth, seventh, eighth and ninth defendants cease to be parties to the proceedings. I order the plaintiff to pay the costs of the sixth, seventh, eighth and ninth defendants of the proceedings to date, including any reserved costs and the costs of today. This order may be entered forthwith at the expiration of twenty-eight days from today. 10 I turn now to deal with the application to amend the Statement of Claim, being the subject of the notice of motion filed on 22 February 1999 on behalf of the plaintiff. The proposed Amended Statement of Claim is annexed to the Notice of Motion and the first defendant has only two objections to it; one is to paragraph 40.2 and the other is to paragraph 42(b). 11 In relation to paragraph 40.2 the objection is that it alleges discussions between the plaintiff and Wedderlight-Delmo Pty Limited, formerly the seventh defendant, after the tendering process was complete, and this submission is supported by reference to a letter of particulars dated 25 March 1999, where it is alleged that the discussions took place "after the announcement of the result of the tender assessment process on 22 March 1993". 12 This is not the time nor place to determine when the tender process was complete and when, if at all, the first defendant was entitled to speak to the person who was, at that stage as I understand it, "the preferred tenderer" and who became "the successful tenderer". These are matters that can be resolved at trial. 13 I therefore propose to allow paragraph 40.2, but in the light of the letter of particulars to which I have referred, I will only allow the amendment if there is inserted on the second line, after the word "and", the words "after the announcement of the result of the tender assessment process on 22 March 1993". 14 As to paragraph 42(b) the first defendant objects to the plaintiff splitting the claim for damages in two and having the claim for damages in respect of the costs of preparing and submitting the formal tender dealt with at the main hearing, followed by a subsequent inquiry into damages in respect of its loss of opportunity and loss of business reputation. 15 No evidence in relation to this latter head of damages has yet been filed, and pursuant to an order I made on 9 June 1998 no further evidence in chief is to be permitted at the trial, without a special order of a Judge. 16 Counsel for the first defendant submits that all the evidence on damages should be on before the actual trial starts, and that there may be disadvantages in relation to the cross-examination of the plaintiff's principal witness if this is not so. On the other hand, if the first defendant is successful in its defence of the proceedings, all this evidence which would no doubt be costly to gather would be irrelevant. 17 In all the circumstances I am satisfied that there will be no real prejudice to the first defendant in permitting the claim for damages for loss of opportunity and business reputation to be separated from the other claims for damages and made the subject of a subsequent inquiry. I will therefore permit paragraph 42(b) in its present form. This is not of course in any way intended to limit the attitude that might be taken by the trial Judge at the trial. 18 I order the plaintiff to pay the costs of the first defendant occasioned by the amendment. 19 The second defendant who was at all relevant times the Minister with responsibility for the first defendant, opposes the proposed Amended Statement of Claim on a number of grounds. 20 Firstly, he draws attention to the form, particularly of paragraph 22, and submits that there are technical deficiencies in the form of the pleading, and in particular no allegation of damage. The allegation of damage is to be found in paragraph 25. This may be confusing because of the heading "proceedings" in paragraph 23, but it is nevertheless there. 21 Paragraph 22, standing by itself, may not be the most elegant pleading of all time but it is sufficient for the purposes. 22 Whilst conceding that the proposed amendment, if the subject of fresh proceedings, would be statute barred at this stage, it prima facie comes within the terms of SCR Pt 20 r 4(5) as being a claim substituting a new cause of action arising out of the same or substantially the same facts as pleaded in the earlier Statement of Claim. Counsel for the second defendant nevertheless submits that I should make an order pursuant to sub-r (5A) to the effect that the amendment not relate back to the date of the filing of the Statement of Claim, but date from today, and relies on the fact that no cause has been shown for attempting to recast the claim, nor has there been any explanation for the delay in bringing the amendment application. 23 He referred me to the decision of the High Court in Brisbane South Regional Health Authority v Taylor (1997) 186 CLR 541, particularly the dicta of McHugh J at 556, where his Honour refers to the general presumption of prejudice which arises from a long delay and the rationales that have persuaded legislatures for more than four centuries that, generally speaking, civil actions should be commenced within fixed periods. 24 He submits that having regard to the presumed prejudice and the lack of any explanation for the delay in seeking the amendment an order should be made under sub-r (5A) which would, in effect, give the second defendant a good limitation defence to the claim as now amended. 25 In my view sub-r (5A) was not intended to cover a situation such as the present. If it were it would completely negative the effect of sub-r (5), which is remedial legislation designed to overcome the settled rule of practice known as the Rule in Weldon v Neal (1897) 19 QBD 394; see McGee v Yeomans [1977] 1 NSWLR 273 at 284-5. 26 It is also to be borne in mind that Taylor's case was concerned with the commencement of proceedings out of time, not with the amendment out of time of proceedings which had already been on foot for a number of years, and in my view there is a substantial difference between the two. 27 I therefore propose to allow the Amended Statement of Claim as against the second defendant. 28 Mr Perram on behalf of the second defendant, also seeks an order that the plaintiff pay the second defendant's costs of the proceedings to date on the basis that the previous claim, which was a claim for misfeasance in public office, has been resolved in his favour. Although the claim for misfeasance in public office and also claims of lack of good faith and misuse of ministerial discretion have been abandoned, a lot, if not all, of the costs incurred on behalf of the second defendant to date, will be absorbed in the costs of his defending the proceedings as now reconstituted. 29 I therefore will not make an order for the costs of the proceedings to date, but only the usual order that the plaintiff pay the costs of the second defendant of the amendment and the costs of the second defendant thrown away by the amendment. 30 I come now to consider a claim for indemnity costs in relation to the third, fourth and fifth defendants. They were, at relevant times, officers of the first defendant, being its chief executive, a senior project manager and the property manager. 31 In the pleadings to date serious allegations have been made against each of these defendants; in particular, it has been alleged that they were guilty of misfeasance in public office, which involved an allegation that by their conduct they had misused their position of trust in public office. These are, of course, very serious allegations to make against senior public servants involved in the disposition of public rights with large commercial consequences. 32 In the proposed Amended Statement of Claim this allegation, and all other allegations against them in their individual capacities are withdrawn, and no relief is sought against any of them. The third defendant is now deceased, but it is agreed that that does not affect the outcome of this application. In the circumstances it is agreed that they should cease to be parties in the proceedings, but there is some dispute as to how this should be done. 33 Mr Smith SC on behalf of the plaintiff submits that he should be given leave to discontinue the proceedings against them, and has indicated that he would not oppose an order that leave be granted on condition that no further proceedings be commenced against them in respect of these matters, except by leave of the Court; whereas Mr Finch, counsel for the relevant defendants, submits that there should be an order directing the entry of judgment in their favour, so that they are vindicated and no proceedings can in any event be brought against them in the future. 34 In my view they are entitled to be vindicated and they are entitled to be placed in a position where they can assert that the allegations against them have, in effect, been withdrawn, that there are no outstanding allegations against them, and that this situation is permanent. 35 In this regard I note that there has been no evidence adduced as to why they were joined and why these allegations were made against them in the first place, nor why the allegations have now been withdrawn. 36 On the other hand, Mr Smith is concerned that if judgment were entered against them, in some way which he cannot foresee and cannot particularise, there may, at a later stage in the proceedings be some question of an issue of estoppel or even res judicata arising out of the fact that they were senior servants of the first defendant which, being a corporation, can only act through its servants. 37 To guard against this possibility, remote and all as I believe it to be, I consider the appropriate order is to grant leave to discontinue against them, but on condition that no proceedings be commenced against them in the future arising out of these matters, and that there be no qualification to that condition permitting the leave of the Court to be obtained. 38 Arising from the discontinuance against them is the question of costs, Mr Finch submitting that an order should be made for their costs on an indemnity basis. Whilst Mr Smith SC consents to an order for costs, he opposes it being on an indemnity basis. 39 It is true that one of the grounds for ordering costs on an indemnity basis is that a party has instituted or maintained proceedings that have no real prospect of success (see cases referred to at Ritchie: Supreme Court Procedure (NSW) at p 1144.7), but in Huntsman Chemical Company Australia Limited v International Pools Australia Limited (1995) 36 NSWLR 242 at 248, Kirby P expressed some reservation about the widening of the circumstances in which costs should be awarded on an indemnity basis, and expressed the view that if a general rule of indemnity costs was adopted in commercial litigation it could present a risk that costs recovery entitlements would be abused. 40 Although these proceedings have a strong administrative law flavour they are, in substance, proceedings of a commercial nature and it is also relevant to bear in mind that the costs of the third, fourth and fifth defendants in the present case, to a very large extent, are also the costs of the first defendant, and I have no doubt that they will be paid by the first defendant out of its public funds. 41 In these circumstances I consider that an order for indemnity costs is not warranted. I therefore grant leave to the plaintiff to discontinue the proceedings against the third, fourth and fifth defendants on terms that no proceedings be subsequently instituted by the plaintiff against such defendants on the same causes of action, or arising out of the same or similar facts. 42 I order the plaintiff to pay the third, fourth and fifth defendants' costs of the proceedings.

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