FEDERAL COURT OF AUSTRALIA
Granitgard Pty Ltd ACN 007 427 590 v Termicide Pest Control Pty Ltd ACN 093 837 337 [2008] FCA 865
PRACTICE AND PROCEDURE – amended notice of motion – application to vacate trial dates – leave to file further amended statement of claim –
whether vacation of trial will prejudice respondent
PRACTICE AND PROCEDURE – application to inspect property of third party premises pursuant to O 17 of the Federal Court Rules – offer of undertaking to the court as to confidentiality
COSTS – whether respondent entitled to costs thrown away as a result of the vacation of trial dates – whether on an indemnity or standard basis – whether applicant entitled to costs of notice of motion if successful
Trade Practices Act 1974 (Cth) ss 51A, 52, 53
Federal Court Rules O 13 r 2, O 17
Abela v Giew (1964) 81 WN (Pt 1) NSW 344 cited
Australian Broadcasting Commission v Parish (1980) 29 ALR 228 cited
Caruso Australia Pty Ltd v Portec Australia Pty Ltd [1986] FCA 40 cited
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 cited
David Charles Robinson v Aware Industries Ltd (unreported, Weinberg J, 1 October 1998) cited
Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537 cited
Ex parte Fielder Gillespie Ltd [1984] 2 QdR 339 cited
Ketteman v Hansel Properties Ltd [1987] AC 189 cited
Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128 cited
Menzies v CRCI Pty Ltd [2007] NSWCA 118 cited
Smith v Gannawarra Shire Council (2002) 4 VR 344 cited
SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 4) [2007] FCA 1035 applied
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 cited
The Commonwealth v Verwayen (1990) 170 CLR 394 cited
GRANITGARD PTY LIMITED ACN 007 427 590 v TERMICIDE PEST CONTROL PTY LTD ACN 093 837 337
QUD 312 OF 2007
COLLIER J
10 JUNE 2008
BRISBANE
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY |
QUD 312 OF 2007 |
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BETWEEN: |
GRANITGARD PTY LIMITED ACN 007 427 590 Applicant
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AND: |
TERMICIDE PEST CONTROL PTY LTD ACN 093 837 337 Respondent
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COLLIER J |
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DATE OF ORDER: |
10 JUNE 2008 |
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WHERE MADE: |
BRISBANE |
Upon the applicant through its counsel undertaking until judgment is given in these proceedings or earlier order of the Court not to represent by itself , its officers, servants or agents, to any person (other than expert witnesses in these proceedings) other than in or for the purposes of these proceedings including but not limited to statements for the purposes of collecting evidence for these proceedings, that the Termiglass Physical Termite Barrier System does not comply with AS 3660.1 or is not an effective termite barrier, THE COURT ORDERS THAT:
1. The applicant have leave to file and serve a Further Amended Statement of Claim in the form exhibited to the affidavit of Tracy Lynn O’Neill filed on 30 May 2008, by 4.00 pm on 11 June 2008.
2. The applicant pay the respondent’s costs occasioned by, and thrown away in consequence of, further amendments to the amended Statement of Claim as contemplated by paragraph 1 hereof.
3. The respondent have leave to file and serve a Further Amended Defence by 4.00 pm on 13 June 2008.
4. The trial set down to commence on 23 June 2008 be vacated.
5. The applicant pay the respondent’s costs occasioned by, and thrown away in consequence of, vacation of the trial dates.
6. Pursuant to O 17 of the Federal Court Rules, that the applicant (through its legal representatives and experts) be permitted to attend at the premises of Vision Glass Recycling at 39 Colebard St, West Archerfield Qld 4110 to observe and record the manufacturing process for, to inspect the equipment used in that process and to take samples of, the crushed glass it provides to Termicide Pest Control Pty Ltd as Termiglass (“the inspection”), such inspection to be:
(a) undertaken by arrangement with Vision Glass Recycling;
(b) carried out between the hours of 9.00 am and 4.00 pm on or before 20 June 2008;
(c) carried out by:
(i) the parties’ legal representatives; and
(ii) an expert chosen by the applicant and notified to the respondent on or before 4.00 pm 12 June 2008 who is independent of the applicant and any related entity thereto;
(d) carried out in the presence of such other persons as the respondent so wishes, being no more than four persons.
7. Except by leave of the Court or with the written consent of the respondent or its solicitors, information or knowledge gained during the inspection be not:
(a) divulged to any person, firm or company other than the solicitors and counsel for the applicant and the Court;
(b) used for any purpose other than the purposes of these proceedings.
8. Prior to carrying out the inspection, the applicant’s legal representatives and the independent expert give to the respondent and to this Court an undertaking in writing to abide by the requirements of paragraph 7 hereof.
9. The applicant file and serve any evidence in relation to the inspection within 14 days after the inspection.
10. The application for further and better discovery be adjourned to the date of the next directions hearing.
11. The matter be set down for further directions at a date to be fixed.
12. The parties have liberty to apply.
13. The costs associated with the amended notice of motion be reserved.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY |
QUD 312 OF 2007 |
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BETWEEN: |
GRANITGARD PTY LIMITED ACN 007 427 590 Applicant
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AND: |
TERMICIDE PEST CONTROL PTY LTD ACN 093 837 337 Respondent
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JUDGE: |
COLLIER J |
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DATE: |
10 JUNE 2008 |
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PLACE: |
BRISBANE |
REASONS FOR JUDGMENT
1 In the amended notice of motion before me filed 15 May 2008 Granitgard Pty Ltd, which is the applicant in the substantive proceedings and also the applicant in these proceedings (“the applicant”), has sought the following orders:
1. That leave be granted to the applicant to issue subpoenas to:
(a) the Proper Officer of the CSIRO;
(b) Dr French;
(c) Dr Ahmed Berhan;
(d) the Proper Officer of VG Investments (Qld) Pty Ltd & Murray Blackwood Lochhead trading as Vision Glass Recycling;
(e) the Proper Officer of SAI Global Limited;
(f) Christopher E Langley trading as LTD (Consultant) Services; and
(g) Barry Schafer trading as BLS Consulting.
seeking documents in accordance with the respective schedules annexed and marked “A”.
2. Pursuant to O 17 of the Federal Court Rules, that the applicant (through its legal representatives and experts) be permitted to attend at the premises of Vision Glass Recycling at 39 Colebard St, West Archerfield Qld 4110 to observe and record the manufacturing process for, to inspect the equipment used in that process and to take samples of, the crushed glass provided to Termicide Pest Control Pty Ltd as Termiglass.
3. That the respondent provide further and better discovery of the documents listed in the applicant’s Solicitors letter dated 30 April 2008.
4. That the applicant have leave to further amend the Statement of Claim.
5. That the trial set down to commence on 23 June 2008 be vacated.
6. Such further or other orders as the Court thinks appropriate.
2 This matter was heard by me on 4 June 2008 and again on 10 June 2008. At the conclusion of the hearing of 4 June 2008, it was clear that, from the perspective of both the applicant and Termicide Pest Control Pty Ltd (“the respondent”), the key issue was whether the Court was prepared to make the orders sought by the applicant in paras 2, 4 and 5 of the amended notice of motion. In relation to the remaining orders sought by the applicant:
· the Court has already granted leave to issue the subpoenas sought in para 1 of the amended notice of motion. The only issue outstanding in relation to these subpoenas was a return date, which could be resolved once the Court had considered whether the trial dates should be vacated; and
· in the event that I was to make the orders sought by the applicant in paras 2, 4 and 5 of the amended notice of motion, any orders as to discovery would properly be the subject of future directions in this matter.
3 During the hearing of 4 June 2008, Mr Peden for the applicant proffered an oral undertaking by the applicant in relation to contact by the applicant and its employees with clients of the respondent. Mr Looney for the respondent however submitted that any such undertaking once committed to writing should, inter alia, extend to associated entities of the applicant.
4 In relation to the proposed attendance at the premises of Vision Glass Recycling, Mr Peden also accepted that any order made by the Court should be such as to maintain confidentiality of process as contemplated in ex parte Fielder Gillespie Ltd [1984] 2 QdR 339 (cf Australian Broadcasting Commission v Parish (1980) 29 ALR 228). Mr Looney submitted that any order permitting attendance at the premises of Vision Glass Recycling should contemplate attendance by independent parties.
5 I shall return to these issues later in the judgment.
6 The respondent opposed the orders sought by the applicant. However, Mr Looney for the respondent also submitted that, as it was important to the respondent that the current trial dates remain even if the Court were minded to grant leave to the applicant to further amend the amended statement of claim, the Court could nonetheless refuse to vacate the trial dates, give the respondent leave to amend its defence, and give the respondent liberty to apply in relation to any further evidence the respondent wished to lead.
7 It was common ground at the hearing of 4 June 2008 that, if I ordered the trial dates vacated, the applicant would be liable to the respondent for its costs thrown away arising from that event. However, Mr Looney for the respondent submitted that such costs should be awarded to the respondent on an indemnity basis. Mr Peden for the applicant also submitted that its costs of the hearing of the amended notice of motion should, if it were successful, be borne by the respondent.
8 The hearing resumed at 2.15 pm on 10 June 2008, and I informed the parties that, on the basis of the parties’ submissions of 4 June 2008, I proposed to:
· make the orders sought by the applicants in paras 2, 4 and 5 of the amended notice of motion;
· order the applicant to bear the costs of the respondent thrown away by the further amendment of the amended statement of claim and the vacation of the trial dates, but not on an indemnity basis as sought by the respondent;
· order the respondent to bear the costs of the applicant in relation to the amended notice of motion.
9 However before doing so I invited the parties to be heard in relation to the proposed undertaking of the applicant concerning communication with third parties with respect to the proceedings, and access to the premises of Vision Glass Recycling as sought by the applicant in para 2 of the amended notice of motion. Counsel made submissions and I have considered those submissions in the final drafting of my reasons, and formulation of my orders in relation to this matter.
10 Mr Looney also sought the opportunity to make further submissions in relation to the costs of the amended notice of motion. I shall also return to this issue later in this judgment.
11 At the conclusion of the hearing of 10 June 2008 I made appropriate orders and informed the parties that I would deliver reasons for my decision as soon as possible. I now deliver those reasons, attached to the orders I made on 10 June 2008.
The facts
12 Both the applicant and the respondent conduct businesses in the pest control and management industry, and part of that business is the installation of particle barriers into houses as protection against termites. The applicant installs a crushed granite product known as “Granitgard”. The respondent operates in south-east Queensland and supplies and installs a termite barrier system comprising glass particles known as “Termiglass”.
13 The proceedings were commenced by application and statement of claim filed on 19 September 2007. The statement of claim was subsequently amended on 15 February 2008. In the pleading currently before the Court, the applicant claims that the respondent has engaged in conduct in breach of ss 52 and 53 Trade Practices Act 1974 (Cth). In particular, it challenges representations that the respondent’s product, inter alia, forms an impenetrable barrier, is “too hard to chew, too heavy to move and too small to crawl through”, satisfies the relevant Australian Standard and that it otherwise provides a suitable physical barrier against subterranean termite entry.
14 On 15 February 2008 the proceedings were listed for hearing for five days commencing 23 June 2008, and directions were made in respect of discovery, the obtaining of samples of Termiglass from the respondent, the conduct of experiments and the filing of affidavit evidence by the applicant. Because of the applicant’s inability to meet the timetable ordered, further directions were made on 2 May 2008.
15 Both applicant and respondent have retained the services of termite experts, and a number of reports have been produced and filed as evidence.
16 The applicant has applied to the Court for leave to further amend its amended statement of claim by insertion of the following amendments:
“6A Termiglass is a crushed glass product of variable quality, containing a range of glass sizes and types.
Particulars
(a) 3 samples of termiglass have been produced by Termicide to Granitgard pursuant to orders in these proceedings. That sample contained crushed glass principally ranging in size of 1.71mm-2.36mm but with up to 1% being between 2.37mm and 3.35mm and up to 7% being between 1.19mm and 1.70mm. It contains a range of clear and coloured glass
(b) 3 samples of termiglass have also been produced by Mr Ken Thompson, a former employee of Termicide. Such samples was of product being installed by Termicide in or about December 2007 or January 2008. This sample contained crushed glass principally ranging in size from <1.18mm to 3.35mm and up to 6% being between 3.36mm and 4.75mm. The glass was also mostly coloured, and contained paper and traces of rubber
(c) Mr Tim Prow, another former employee of Termicide, installed Termicide product during the period April to December 2007. The glass that was initially installed was clear in colour but later changed to include coloured glass which smelt of alcohol. The termiglass also contained paper and contained large particles of glass of up to 25mm in size
(d) Further samples of Termiglass have been taken from a property at 38 Salvado Drive, Pacific Pines, Queensland 4211 that disclose 56% of the particles passed through a sieve of 1.18mm, 74% passed through a sieve of 74%, 88% passed through a sieve of 2.36mm and 100% passed through a sieve of 3.35mm.
8....
...
(f) has a life expectancy of 50 years.
Particulars
...
… Representation (f) is made following the installation of termiglass and is made in writing on a sticker placed on the property’s meter box by the installer of the termiglass.
9A The Representations relate to future matters within the meaning of s. 51A of the Trade Practices Act.
10A The CSIRO Appraisal dated December 2003 of termiglass requires the glass particles in termiglass to be between 1.2mm and 3mm in size. The conclusion made in the CSIRO Appraisal that termiglass satisfies the Australian Standard as a suitable physical termite barrier, relies on research of Ecospan Consulting Services of crushed glass particles of between 1.7 to 2.4mm in size.
10B Termiglass is manufactured for Termicide by the business trading as Vision Glass Recycling.
10C The system and procedure used in the manufacture of Termicide is incapable of consistently producing large commercial quantities of termiglass of consistent quality and size to comply with the requirements of the Australian Standard, the CSIRO Appraisal or to be consistent with the crushed glass tested by Ecospan Consulting Services.
Particulars
(a1) Termiglass that is installed by Termicide contains or is likely to contain crushed glass that ranges in size from <1.18 to 25mm. Some of the product installed contains paper and particles of rubber.
(a2) The system used in the manufacture of termiglass is incapable of consistently producing large commercial quantities of termiglass that satisfies the requirements of the Australian Standard, the CSIRO Appraisal or the samples tested by Ecospan Consulting Services.
(b) …or does not consistently satisfy...
(iii) it is not graded and shaped so that a sufficient proportion of the particles are of a size that cannot be transported by foraging termite species occurring in the region;
(iv) it is not able to be placed in a manner so that the voids between particles do not permit the penetration of foraging termite species occurring in the region.
(b1) Termiglass does not consistently satisfy the requirements of the CSIRO Appraisal that the crushed glass be between 1.2mm and 3mm in size nor does it consistently match the samples of crushed glass tested by Ecospan Consulting Services with a particle size of between 1.7mm and 2.4mm
(c) …or does not consistently:
...
13....
Particulars
…or does not consistently:”
17 It is clear that, in the existing pleading of 15 paragraphs, the proposed amendments are of some substance.
Submissions of the applicant
18 In relation to the further amendment of the amended statement of claim, the applicant submitted in summary as follows:
· it is important that the pleadings properly reflect the real questions raised by the proceedings, and that the Court permit the parties to make necessary amendments unless the proposed amendment is obviously futile or would cause substantial injustice for which there cannot be compensation: Abela v Giew (1964) 81 WN (Pt 1) NSW 344 at 345.
· as pointed out by the High Court in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, justice is the paramount consideration in determining an application to amend pleadings.
· following directions made by the Court, samples of Termiglass were obtained from the respondent and sent to the applicant’s expert, Dr Holt. The applicant suspected that the samples supplied did not accurately represent the product that was being installed. The applicant obtained samples of the respondent’s product from other sources. Some of these samples, when tested, were found to fail as an effective termite barrier.
· the amendments proposed to the amended statement of claim arise from matters which have come to the attention of the applicant after the commencement of the proceedings, the obtaining of samples, and issues arising from the variability of the samples. The variability in the sampling and therefore the effectiveness on such an inconsistent product is a matter that is now an issue in the proceeding, given the evidence that has been obtained to date and is still being obtained, including that there is a real difference between the samples provided by the respondent pursuant to the Court-approved regime and the evidence obtained of other examples of termiglass that have been installed.
· the amended pleading also relies upon s 51A Trade Practices Act given the representations relate to future matters, namely the quality of the Termiglass to be installed.
· given that the product has been installed in over 30,000 sites in south-east Queensland there is clearly substantial public interest in ensuring that issues in these proceedings are properly litigated.
· the proceedings are not old, with the first directions being made on 15 February 2008.
· the proposed amendments are already encompassed by the amended statement of claim in its current form, however out of an abundance of caution and to prevent time wasted at the trial arising from possible dispute, the applicant applies to have its pleadings amended.
· there is no prejudice to the respondent by allowing the amendment.
· the applicant accepts that it will bear the respondent’s costs of vacation of the trial dates, although Mr Peden submitted that, if the applicant is successful, it should receive its costs of the hearing of 4 June 2008.
19 In relation to the application for the vacation of the hearing dates, the applicant submitted in summary as follows:
· If the court granted the applicant leave to further amend the amended statement of claim, the matter will not be ready for a hearing commencing on 23 June 2008.
· Even without the amendment to the pleadings the applicant is not ready because the applicant has not concluded its evidence due to problems in relation to the quality of the termites connected with the testing of the respondent’s samples by the applicant’s expert.
· The findings of their Honours in JL Holdings are relevant to the determination of the vacation of hearing dates.
· The court should order the hearing dates vacated:
o to allow the amended pleadings and the real issues raised by the amended pleadings to be properly litigated and justice to be properly attained;
o to allow completion of scientific evidence;
o in view of the public policy importance of the issues raised by this litigation;
o because the principal issues that are raised by the amended pleadings have arisen as a consequence of matters discovered since the evidence in chief was being obtained and because of the sample provided by the respondent being apparently inconsistent with the product actually being installed;
o because of the limited time that has elapsed to date in preparing the matter for hearing;
o because no prejudice can be demonstrated by the respondent in permitting the hearing date to be vacated.
20 In relation to inspection of the premises pursuant to O 17, the applicant submitted in summary that:
· the proposed further amended statement of claim asserted the inability of the manufacturing processes used by the respondent to consistently produce commercial quantities of product being installed by the respondent;
· it was clear that the samples obtained of the Termiglass installed, differs to the product which had been provided by the respondent; and
· to resolve the issues of how such difference occurs and the issues raised by the further amended statement of claim the orders sought under O 17 should be allowed.
Submissions of the respondent
21 In relation to the further amendment to the amended statement of claim the respondent submitted in summary as follows:
· The case sought to be made against the respondent by the applicant at all times until 30 May 2008 was that termiglass did not work and that, as a result, statements by the respondent that it did work were misleading and deceptive. The amendments to the pleadings sought by the applicants create a fundamentally different controversy between the parties - namely that:
o Termiglass has different specifications from that which are asserted by the respondent;
o the process of production used by a third party manufacturer of the respondent is deficient;
o the product sold by the respondent does not conform to specifications of Termiglass and, in those circumstances, Termiglass does not do, or does not always do, what the respondent said it does;
o the representations relate to future matters within the meaning of s 51A Trade Practices Act.
· The justice of the case supports the refusal of the relief sought by the applicant because, inter alia:
o it is clear that the alleged issue of variability of the particle size in Termiglass was known by those who control the applicant at least by January 2006, well before proceedings were commenced by the applicant;
o notwithstanding this knowledge the applicant chose to formulate its case in the way it did, and sought to collect and put on evidence consistent with that case;
o the applicant accepted in a directions hearing that alleged differences between the product being installed and the products that were the subject of the samples provided pursuant to the assessment procedures was a matter for trial;
o the applicant only sought to amend its pleadings five weeks before trial;
o there is now some evidence that the proceedings may be actually causing detriment to the respondent;
o there is no justification for the delay of the applicant in relation to its proposal to plead s 51A.
22 The respondent opposed the proposed adjournment of the trial on the same basis that it opposed the proposed amendment to the pleadings. Further the respondent submitted that, even if the court did grant the applicant leave to amend its pleadings, no adjournment of the trial should be granted nor should it be given the opportunity to adduce further evidence.
Further amendment of the amended statement of claim
23 Conveniently, general principles relevant to the court granting leave to amend pleadings were summarised recently in the judgment of Edmonds J in SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 4) [2007] FCA 1035. In relation to this issue I adopt the following statements of his Honour:
“ [14] The starting point is that all of such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided: Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146; Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537. Although O 13 r 2 of the Federal Court Rules (‘the Rules’) confers a discretion on the Court as to whether to allow the amendments, it is well-established that an amendment will ordinarily be allowed provided it can be done without harm to the other party which cannot be compensated by an award of costs or an adjournment: The Commonwealth v Verwayen (1990) 170 CLR 394; Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128.
[15] The overriding concerns should be to ensure that all matters in issue upon which the parties seek adjudication are determined in the proceeding and to avoid a multiplicity of proceedings: Caruso Australia Pty Ltd v Portec Australia Pty Ltd [1986] FCA 40.
[16] Order 13 r 2(2) of the Rules makes explicit reference to this principle:
All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings.
[17] The general approach is that where a party satisfies the Court that he or she generally desires to amend the pleadings so as to alter an existing claim or to introduce a new claim, leave should be granted unless the proposed amendment is so obviously futile that it would be struck out if it had appeared in the original pleading or would cause substantial injustice which cannot be compensated for in the manner indicated in [14] above: Abela v Giew (1964) 81 WN (Pt 1) (NSW) 344 at 345.
[18] It is recognised that the allowance of an amendment before a trial begins (when there is time for a proper defence to be filed) stands in a very different position from amendment towards the end of a trial: Ketteman v Hansel Properties Ltd [1987] AC 189 at 220 per Lord Griffiths.”
24 In these proceedings I accept the submission of Mr Looney that the alleged lack of consistency in relevant samples of Termiglass appeared within the contemplation of the applicant well before commencement of the current substantive proceedings. This was indicated by evidence drawn to my attention at the hearing of 4 June 2008 by Mr Looney including:
· Two letters, undated and dated 22 February 2006 respectively, from the managing director of Granitgard Marketing Pty Ltd, Mr Sapsford, to Mr Simon Hanson at CSIRO Appraisals referring to random samples of Termiglass.
· References in the letter of 22 February 2006 from Mr Sapsford stating that the applicant had been collecting samples of Termiglass from various building sites and that the samples collected “showed a wide size variation”, querying the “quality consistency of Termiglass”, and alleging that the “Termiglass tested by Ecospan may not be representative of the product installed over the last 18 months”.
25 Further, I accept the submission of Mr Looney that the amendments proposed by the applicant to the amended notice of motion appear to result in a reformulation of the applicant’s case rather than a simple elaboration of pleadings already served and filed. Mr Looney drew my attention to, for example, correspondence between the solicitors for the parties against a background of tests by various experts indicating that the fundamental issue between the parties was the effectiveness of Termiglass as a product made from glass, as distinct from the consistency of its manufacture and issues arising as a result of any lack of consistency.
26 However in the circumstances of this case I nonetheless consider that the order sought by the applicant be made.
27 First, as his Honour pointed out in SPI Spirits, such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided and to avoid a multiplicity of proceedings. It is regrettable that the applicant has sought to further amend its statement of claim only a few weeks out from trial, however this does not derogate from the principle that it is in the interests of justice that the real questions in controversy be decided at trial. I note further that the applicant has a new Counsel who has brought a “fresh legal mind” to these proceedings, which appears to be at least an explanation, if not a justification, for the delay in seeking to amend the pleadings at this late stage.
28 Second, while trial is listed to commence two weeks hence, I note the observations of Edmonds J as to amendments sought to be filed by the applicant at a time when there remains the opportunity for the respondent to file a proper defence. Even leaving aside for the moment the issue of whether the trial dates should be vacated, the submission of the respondent that the trial dates should remain unaltered notwithstanding any order as to amendment of the pleadings indicates that, from the respondent’s perspective:
· there remains sufficient time for it to file a proper defence in this matter; and
· it would not be prejudiced in respect of its own pleadings by the further amendment of the amended statement of claim.
29 Third, it is not submitted by the respondent that the proposed amendments are so obviously futile that they would be struck out if they had appeared in the original pleading.
30 Fourth, I am not satisfied that any prejudice to the respondent arising from amendment to the pleadings cannot be compensated by costs and the undertaking proffered by the applicant. As clearly emerged from Mr Looney’s submissions at the hearing of 4 June 2008, the real concern of the respondent arising from amendment to the pleadings is the adjournment of the trial and prolonging of the litigation. I turn to that issue now.
Vacation of the trial dates
31 Having ordered that the amended statement of claim be further amended, the question is whether the trial dates should be vacated. In my view they should.
32 I have considered the respondent’s submission that, even with the pleadings amended, the trial can still proceed on the 23 June 2008. In my view it is unlikely that either party would be properly prepared for trial by that date, given that the respondent will need to consider whether to amend its defence, and fresh orders as to discovery and further evidence as well as new trial directions may be necessary. Although the proceedings are currently listed for hearing for five days commencing 23 June 2008, as Kirby J pointed out in JL Holdings, 189 CLR 146 at 169-170 departures from a court-ordered timetable including orders as to trial dates are not decisive, as such orders are servants of justice.
33 A key issue is the extent to which the adjournment of the trial prejudices the respondent in such a way that the respondent cannot be compensated by an award of costs. Clearly the respondent will suffer prejudice from the prolongation of the litigation, which is a relevant consideration particularly where the application to vacate the trial dates takes place shortly before the trial commences (cf Menzies v CRCI Pty Ltd [2007] NSWCA 118). In relation to more substantial prejudice, Mr Looney drew my attention to affidavits of Mr Paul Jeynes, director of the respondent, sworn 19 November 2007 and 4 June 2008, where Mr Jeynes deposed, inter alia:
· He had received telephone calls in February 2008 from two customers of the respondent informing him that they had been told by the applicant that the respondent’s product is ineffective, and that the applicant had brought an action against the respondent, however Mr Jeynes was able to convince the customers that there was no substance to the applicant’s allegations.
· He was concerned that the respondent would not always know when the applicant approached the respondent’s customers and made such allegations.
· He was aware that the respondent had lost at least one customer since the proceedings had commenced.
· He was concerned as to the possible adverse effect of these proceedings on the respondent’s business, and that any adjournment of the trial would increase the risk that the respondent would lose customers.
· The applicant operated on a national basis whereas the respondent operated mainly within south-east Queensland.
34 I note the concerns of the respondent and its officers which are very real, and I do not understate their anxiety. I also note that the parties to these proceedings are clearly in competition for business in south-east Queensland, and that Mr Peden submitted that the applicant was aware that one of its staff may have contacted customers of the respondent as Mr Jeynes deposed. However in relation to these points:
· Notwithstanding the fact that Mr Jeynes had had the relevant telephone conversations with customers, his evidence was that he was able to convince them of the lack of merit in the applicant’s claims, with the result that no damage arising from the contact by the applicant could be demonstrated.
· There was no evidence that any customer had been lost to the respondent because of the claims of the applicant (as distinct from since the proceedings had commenced).
· The applicant is prepared to give an undertaking in relation to informing third parties of these proceedings.
· While for any litigant prolongation of litigation is undesirable, in this case the litigation has only been on foot since the end of 2007.
· The application to vacate the trial dates has been made several weeks ahead of the scheduled commencement date of the trial; and
· Perhaps regrettably, litigation is not uncommon in industries characterised by strong competition as this industry appears to be, and applications to clarify pleadings in litigation are also not uncommon.
35 The respondent has not demonstrated any prejudice from vacation of the trial dates for which it would not be adequately compensated by costs and an acceptable undertaking from the applicant.
36 Further, I accept the submission of Mr Peden that there is some public interest in having all issues raised by the applicant properly considered following adequate preparation for trial, hence justifying an adjournment of the trial dates (cf Smith v Gannawarra Shire Council (2002) 4 VR 344). I do not consider that the applicant is in any way seeking to champion the public interest in prosecuting this case, and indeed this was not the applicant’s contention. Nonetheless proper resolution of the issues in dispute in this case does, in my view, have public interest implications because:
· Apparently 30,000 premises in south-east Queensland have installed the respondent’s product; and
· Determination of issues pertaining to effective building practices in south-east Queensland is an issue of public interest.
37 In my view, the appropriate order is that the trial dates should be vacated, and that the applicant is to bear the costs of the respondent thrown away by vacation of the trial dates subject to an undertaking in a form acceptable to the respondent.
Access to premises of Vision Glass Recycling
38 In light of the leave granted to the applicant to further amend its amended statement of claim, it is appropriate to make an order pursuant to O 17 of the Federal Court Rules to allow the applicant access to the premises of Vision Glass Recycling, subject to conditions as to confidentiality. In relation to this issue I also accept the submission of the respondent that access to the relevant premises by experts nominated by the applicant be confined to persons who are independent. It is also appropriate that information or knowledge gained by the independent expert and the applicant’s legal representatives remain confidential.
39 On 10 June 2008, I permitted the parties to be heard in relation to the issue of access to the premises of Vision Glass Recycling. Counsel for the applicant and the respondent sought instructions as to whether common ground could be identified in relation to the form the access and inspection would take. After some confusion between Counsel and the Court as to exactly what remained in contention between the parties with respect to the inspection, it was clear that there were three issues requiring determination by the Court:
· whether the applicant should have leave to undertake an inspection of the manufacturing plant (as proposed by the respondent) or the manufacturing process (as sought by the applicant);
· whether the form of inspection should be otherwise limited (as proposed by the respondent) or be in the terms sought by the applicant in its amended notice of motion; and
· whether any persons nominated by the respondent should be present at the inspection (as proposed by the respondent) or whether no such persons should be permitted to attend (as proposed by the applicant).
40 Notwithstanding Mr Looney’s submissions concerning the extent to which observation by the applicant of the process employed by Visionglass Recycling necessarily entails explanation by Visionglass Recycling of that process, which is not contemplated by O 17 of the Federal Court Rules, the appropriate order in my view is that sought by the applicant in relation to the manufacturing process, in terms sought by the applicant in its amended notice of motion. An order in such terms flows from the further amendments to the amended Statement of Claim. Limitations proposed by the respondent, in my view, are not warranted in light of these amendments. The order sought by the applicant does not attempt to compel Visionglass Recycling to engage with the applicant beyond the terms contemplated by the order, which are only to observe and record the manufacturing process, inspect equipment used, and take samples of crushed glass.
41 In addition to making the order in such terms, however, I am prepared to order that the respondent be permitted to nominate persons additional to its legal representatives to attend the inspection. I accept Mr Looney’s submissions that, inter alia:
· it is appropriate for persons nominated by the respondent to be present during the inspection so as to be in a position to be able to deal with evidence adduced during the inspection and address submissions arising in consequence of the inspection;
· persons nominated by the respondent may be better placed than the respondent’s legal representatives to understand the technical aspects of such evidence; and
· there is no reason to prevent, for example, Mr Jeynes, who in addition to being a director of the respondent is also a director of Vision Glass Recycling, from attending the inspection.
42 It is appropriate nonetheless to limit the number of additional persons the respondent can nominate to attend the inspection to four persons, in order to minimise hindrance to the proper completion of the inspection.
43 I note that both parties accepted that it is inherent in an order of the Court permitting access to the premises of Vision Glass that there be no active interference in the conduct of the inspection by the respondent. The applicant has not demonstrated that the presence of four persons nominated by the respondent would interfere with the conduct of the inspection.
Costs
44 As I have noted earlier in this judgment, it was common ground that the applicant should bear the respondent’s costs thrown away by adjournment of the trial. Mr Looney however submitted that these costs be assessed on an indemnity basis.
45 I have considered this issue, but take the view that an order for indemnity costs is inappropriate in these circumstances. As a general proposition, indemnity costs are awarded to an innocent party where, inter alia, the circumstances of the case are such as to warrant the Court in departing from the usual course. There should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice (cf Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233). An example of an award of indemnity costs against a party to proceedings in circumstances involving the adjournment of a trial was David Charles Robinson v Aware Industries Ltd (unreported, Weinberg J, 1 October 1998) where the reason for the vacation of the trial dates was the complete failure of the applicant in that case to prosecute his application including multiple failures to comply with directions of the Court.
46 Although it appears that the applicant in this case could have reformulated its pleadings at a time earlier in these proceedings than at the filing of the amended notice of motion, in my view this does not demonstrate a failure of the applicant to properly prosecute its case or any other special or unusual feature justifying the Court in departing from the ordinary practice as to costs. Prior to 15 May 2008 when the amended notice of motion was filed the applicant brought to the attention of the docket judge and the respondent the possibility that it would be applying for leave to further amend the amended statement of claim. It filed and served its amended notice of motion several weeks before the trial with the benefit of input from new Counsel. In my view, the ordinary rule as to costs should apply in relation to vacation of the trial dates.
47 However, I will also make an order awarding the respondent any costs thrown away by reason of the further amendments to the applicant’s amended statement of claim.
48 In relation to the costs of the amended notice of motion, while as a general rule costs follow the event, I have already made observations with respect to the approach taken by the applicant to reformulating its pleading and whether the applicant could have sought to do so at an earlier time. Further, although Mr Peden contended on 4 June 2008 that the normal rule applies and the applicant would be entitled to its costs if successful on its amended notice of motion, other than this limited submission Counsel have not made submissions specific to these costs to date. Mr Looney asked that Counsel be given an opportunity to make submissions at a later date in relation to the costs of the amended notice of motion, a course of events not opposed by Mr Peden.
49 In the circumstances I consider that the appropriate course is to reserve the costs of the amended notice of motion.
Undertaking
50 Finally, at the hearing of 10 June 2008, and following submissions by Counsel and questions by me, both Mr Peden and Mr Looney sought instructions from their respective clients as to the form of the applicant’s undertaking concerning informing third parties as to the nature of the proceedings. The orders I make in relation to the amended notice of motion are subject to the final form of the undertaking proffered by Mr Peden on behalf of the applicant on 10 June 2008, which undertaking I understand is acceptable to the respondent.
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I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. |
Associate:
Dated: 12 June 2008
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Counsel for the Applicant: |
Mr J Peden |
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Solicitors for the Applicant: |
Hopgood Ganim and O'Neill Marengo |
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Counsel for the Respondent: |
Mr PA Looney |
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Solicitor for the Respondent: |
Bennett & Philp |
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Date of Hearings: |
4 June 2008 and 10 June 2008 |
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Date of Judgment: |
10 June 2008 |
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Date of Publication of Reasons: |
12 June 2008 |
