FEDERAL COURT OF AUSTRALIA

Rivercity Motorway Finance Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) v AECOM Australia Pty Ltd (No 3) [2014] FCA 957

THE COURT ORDERS THAT:

1.    The Respondent/Cross-claimant (AECOM Australia) have leave to file and serve its amended First Cross-Claim by 29 August 2014.

2.    The Cross-respondent (NIEIR) file and serve its Defence to Cross-Claim on or before 26 September 2014.

3.    NIEIR is to provide discovery by 26 September 2014, in accordance with the existing Electronic Discovery Protocol initialled by Nicholas J in these proceedings, of all documents relating to work done by NIEIR in connection with the NSBT (as defined in the order for third party discovery made in these proceedings on 14 March 2013) in the period from 1 January 2005 to 31 August 2006, other than documents already discovered by NIEIR pursuant to that order for third party discovery made on 14 March 2013.

4.    AECOM Australia to pay NIEIR’s costs thrown away by reason of the amendments to the First Cross-Claim.

5.    Liberty to apply on three days’ notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The Respondent/Cross-claimant (AECOM Australia) have leave to file and serve its amended First Cross-Claim by 29 August 2014.

2.    The Cross-respondent (NIEIR) file and serve its Defence to Cross-Claim on or before 26 September 2014.

3.    NIEIR is to provide discovery by 26 September 2014, in accordance with the existing Electronic Discovery Protocol initialled by Nicholas J in proceedings No. NSD678/2012, of all documents relating to work done by NIEIR in connection with the NSBT (as defined in the order for third party discovery made in proceedings No. NSD678/2012 on 14 March 2013) in the period from 1 January 2005 to 31 August 2006, other than documents already discovered by NIEIR pursuant to that order for third party discovery made in proceedings No. NSD678/2012 on 14 March 2013.

4.    AECOM Australia to pay NIEIR’s costs thrown away by reason of the amendments to the First Cross-Claim.

5.    Liberty to apply on three days’ notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The First Respondent/Cross-claimant (AECOM Australia) have leave to file and serve its amended First Cross-Claim by 29 August 2014.

2.    The Cross-respondent to the First Cross-Claim (NIEIR) file and serve its Defence to the First Cross-Claim on or before 26 September 2014, noting that, in doing so, NIEIR is only required to plead to the NIEIR specific paragraphs in Part B and C of AECOM’s Second Further Amended Defence identified at footnote 4 in Annexure B of the Statement of Particulars filed by AECOM Australia on 11 August 2014.

3.    NIEIR is to provide discovery by 26 September 2014, in accordance with the existing Electronic Discovery Protocol initialled by Nicholas J in proceedings No. NSD678/2012, of all documents relating to work done by NIEIR in connection with the NSBT (as defined in the order for third party discovery made in proceedings No. NSD678/2012 on 14 March 2013) in the period from 1 January 2005 to 31 August 2006, other than documents already discovered by NIEIR pursuant to that order for third party discovery made on 14 March 2013.

4.    AECOM Australia to pay NIEIR’s costs thrown away by reason of the amendments to the First Cross-Claim.

5.    Liberty to apply on three days’ notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BACKGROUND

1    On 28 August 2014, I made orders granting AECOM leave to file amended cross-claims against NIEIR in each of the CLEM 7 Proceedings. I also ordered that NIEIR serve its defences to such cross-claims by 26 September 2014. These reasons explain why I made those orders and why I did not accept NIEIR’s submission that the amended cross-claims are documents to which NIEIR should not be required to plead because they do not comply with the relevant rules of court. A glossary of relevant terms used in these reasons is attached.

2    The general background to the CLEM 7 Proceedings is set out in my reasons for judgment dated 18 July 2014 (Rivercity Motorway Finance Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) v AECOM Australia Pty Ltd (No 2) [2014] FCA 713 at [1] to [6]). In each of the CLEM 7 Proceedings, NIEIR, the first cross-respondent, is sued by AECOM, a respondent, for damages at common law, and damages, compensation or other orders pursuant to s 82 or s 87 of the Trade Practices Act 1974 (Cth) (TPA), as it then was. The causes of action relied upon include negligence and misleading and deceptive conduct in contravention of s 52 of the TPA. In the Class Action, AECOM also seeks contribution from NIEIR. None of the applicants in any of the CLEM 7 Proceedings has sued NIEIR.

3    The CLEM 7 Proceedings raise what are likely to be complex technical issues concerning traffic forecasts prepared by AECOM. These forecasts were apparently prepared by AECOM using (inter alia) demographic and economic information supplied by NIEIR. This information is said by AECOM to have included “trip tables” or, as NIEIR described them, “trip end tables”. Further, there is documentary evidence before me tendered by AECOM which indicates that NIEIR performed “micro-simulation analyses” to produce estimates of trip ends for relevant travel zones in respect of future years addressed in AECOM’s traffic forecasts.

THE RELEVANT PRINCIPLES

4    The relevant provisions of the Federal Court Rules 2011 (Cth) (FCR) are found in rr 16.02, 16.21, 16.41 and 16.43. In particular, r 16.02(1) provides:

16.02    Content of pleadings–general

    (1)    A pleading must:

        (a)    be divided into consecutively numbered paragraphs, each, as far as practicable, dealing with a separate matter; and

        (b)    be as brief as the nature of the case permits; and

        (c)    identify the issues that the party wants the Court to resolve; and

        (d)    state the material facts on which a party relies that are necessary to give the opposing party fair notice of the case to be made against that party at trial, but not the evidence by which the material facts are to be proved; and

        (e)    state the provisions of any statute relied on; and

        (f)    state the specific relief sought or claimed.

5    Rule 16.21(1) provides:

16.21    Application to strike out pleadings

    (1)    A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:

        (a)    contains scandalous material; or

        (b)    contains frivolous or vexatious material; or

        (c)    is evasive or ambiguous; or

        (d)    is likely to cause prejudice, embarrassment or delay in the proceeding; or

        (e)    fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

        (f)    is otherwise an abuse of the process of the Court.

6    I should also refer to Div 1.3 of the FCR including, in particular, rr 1.31 to 1.35. These rules permit the Court to make orders that are inconsistent with other provisions of the FCR. This would include an order granting leave to file a pleading which does not comply with (inter alia) r 16.02.

7    The FCR, including those found in Div 1.3, are “civil practice and procedure provisions”. They must therefore be applied in the way that best promotes the “overarching purpose” in accordance with s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA). I referred to s 37M of the FCA in Rivercity (No 2) at [99] to [100] and to the joint judgment of the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 303 ALR 199 at [57] where the High Court noted, in the context of comparable provisions found in the Civil Procedure Act 2005 (NSW), that the overriding purpose “may require a more robust and proactive approach on the part of the courts”.

8    Even before the significant changes to practice and procedure in civil proceedings resulting from the introduction of s 37M, related changes to the FCA, and the enactment of the FCR, the authorities in this Court emphasised that non-compliance with the rules with respect to pleadings might be dealt with in a variety of different ways having regard to the circumstances of a particular case. In Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41-691 at 42,827 to 42,829, Drummond J discussed the discretionary nature of the Court’s power to control pleadings in the context of a case management system intended to provide for the economical and efficient conduct of civil litigation. That discussion, which was referred to with approval by Weinberg J in McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at [30] to [31], emphasised that challenges to the adequacy of pleadings may be dealt with in a variety of ways, not only by orders striking out non-compliant pleadings, but also by orders for the provision of particulars, affidavits, witness statements, expert reports or some combination thereof.

CONSIDERATION

9    NIEIR opposed me granting AECOM leave to file the amended cross-claims in circumstances where it is yet to file defences. NIEIR contended that the amended cross-claims do not give it fair notice of the case it is required to meet at trial. It did not suggest that leave should be refused on the ground that the amended cross-claims do not disclose any reasonable cause of action, or that, once filed, they would be liable to summary dismissal. Rather, NIEIR raised a variety of complaints in its oral and written submissions concerning the form of AECOM’s pleadings including, in particular, the absence of any specification as to the respects in which NIEIR’s Work (as defined) or NIEIR’s Growth Forecasts (as defined) are alleged to have been performed or made negligently or without reasonable grounds.

10    In deciding whether the leave sought by AECOM should be granted, I had regard to the statement of particulars filed by AECOM on 11 August 2014 (the Statement of Particulars) in accordance with the directions made by me on 4 August 2014 which required AECOM to file a statement of particulars specifying:

(a)    the work undertaken by NIEIR which AECOM alleges was performed negligently;

(b)    each of the representations alleged to have been made by NIEIR which AECOM alleges was false or misleading, likely to mislead or deceive or made without reasonable grounds;

(c)    which of the alleged failures, omissions, errors and choices enumerated in the joint “Consolidated List of Complaints in Respect of AECOM’s Traffic Forecasts and Reports” (the Joint Consolidated Particulars) filed by the applicants in each of the three CLEM 7 Proceedings AECOM contends NIEIR was responsible for, or which AECOM alleges NIEIR caused or materially contributed to.

11    The overarching basis on which NIEIR opposed leave was that the amended cross-claims do not provide it with sufficient notice of the case that it is required to meet. While I accept that the pleadings against NIEIR present difficulties, I am not satisfied that NIEIR is not in a position to plead to the key allegations made against it or that it is not sufficiently informed of the case it is required to meet. Further, I think the efficient case management of the CLEM 7 Proceedings favours the orders which I made. I say this in circumstances where, subject to three exceptions (RCMML, RCMS and Mallesons), all other cross-respondents are already the subject of orders requiring them to file a defence, where AECOM’s expert evidence on issues relevant to NIEIR must be filed by 1 December 2014, and where a trial will not take place until September 2015.

12    One problem with the amended cross-claims which was identified by NIEIR in its written submissions as a “key definitional issue” relates to estimates or forecasts of “Brisbane traffic or Brisbane traffic growth after 2005”. This seems to me to be of much less significance than it might have been having regard to paragraphs 4.4 to 4.9 of Annexure B to the Statement of Particulars. These paragraphs state:

4.4    Broadly, NIEIR was retained to develop and provide to AECOM Australia, for use in its NSBT modelling and forecasting, the following outputs in respect of each of two scenarios to be determined by NIEIR (known as the Bank Case and the Base Case), namely:

    (a)    economic, population, employment and land use estimates and forecasts for Brisbane both for a base year and future years (including 2011, 2016, 2021 and 2026); and

    (b)    estimates and forecasts of vehicle trip origins and destinations within Brisbane (by zone and by trip purpose), both for that base year and those future years, which were:

        (i)    to be derived by NIEIR from its economic, demographic and land use estimates and forecasts for Brisbane; and

        (ii)    to reflect the outcomes of NIEIR’s (so-called) “micro-simulation analyses”, that is, an analysis by NIEIR of travel patterns by reference to household characteristics in each travel zone which, NIEIR contended, justified higher trip rates (reflecting things like increased part time work and casualisation), resulting in overall higher forecast traffic volumes.

4.5    AECOM Australia contends that NIEIR was thereby predicting Brisbane traffic and Brisbane traffic growth after 2005 for these two scenarios (a key issue), because these estimates and forecasts of vehicle trip origins and destinations discussed in 4.4(b) above are estimates and forecasts of vehicle trips in Brisbane (both in total and by zones) for the relevant years, from which growth forecasts can also then be identified as between any two relevant periods (e.g., comparing NIEIR’s total forecast trips in Brisbane for each of 2011 and 2016 directly identifies NIEIR’s forecast traffic growth in Brisbane between those two periods).

4.6    These tasks and outcomes essentially comprise what AECOM Australia has defined as “NIEIR’s Growth Forecasts”.

4.7    Predicting overall Brisbane traffic was an absolutely critical step in what ultimately became AECOM Australia’s Traffic Forecasts, because NSBT traffic is inevitably a function and subset of, and fundamentally influenced by, forecast total Brisbane traffic volumes (also referred to as total Brisbane traffic demand).

4.8    In simplistic terms, total Brisbane traffic demand as so estimated (for the current year) or forecast (for the future year) is the key input in the top of a “pipe”. Subsequent modelling then works out how those overall estimated or forecast trips for Brisbane will move from their forecast origin to their forecast destination, including, for example, whether they will need to cross the Brisbane River and, if so, whether they will ultimately choose the NSBT or a competing river crossing to do so.

4.9    By undertaking the task of estimating and forecasting vehicle trip origins and destinations, NIEIR was not just acting as an economic consultant or demographer, but was also undertaking an additional, critical role relevant to the determination of total Brisbane traffic demand.

(footnotes omitted)

13    Shortly stated, AECOM asserts that NIER supplied critical inputs that were used to produce AECOM’s traffic forecasts. Whether or not it is correct to refer to these inputs as forecasts of traffic growth or forecasts of Brisbane traffic growth seems to me to raise a semantic debate which may be of little practical significance. What is important for present purposes is that AECOM asserts, rightly or wrongly, that if its forecasts were made without reasonable grounds, then the same must also be true of the trip end estimates in respect of future years provided to AECOM by NIEIR.

14    NIEIR also complained about paragraphs in the amended cross-claims (which actually appear in relevant paragraphs of AECOM’s defences which are then repeated in the amended cross-claims) which it says include definitions relating to work alleged to have been performed by NIEIR that are not confined in any meaningful way and which are vague and overlapping. In particular, NIEIR submitted that it is left in a state of uncertainty as to precisely what work is said to have been done by NIEIR.

15    There is force in these criticisms of the amended cross-claims. The problem seems to me to spring from an excessive use of broadly defined terms most likely motivated by a desire to plead the case against NIEIR in the widest possible terms. The use of defined terms should, theoretically at least, lessen rather than add to the complexity of a pleading. In practice, however, the defined terms used in these pleadings, and the frequency with which they appear, including in other defined terms, have the opposite effect. A distinguishing feature of AECOM’s amended cross-claims is their sheer prolixity. In this regard, I am satisfied that the amended cross-claims do not comply with r 16.02(1)(b) and (d).

16    Be that as it may, and focusing on what both AECOM and NIEIR each appear to consider to be the key issue, it is open to NIEIR in its defence to answer the contention that it provided Brisbane traffic growth forecasts through the provision of estimates or forecasts of trip ends for future years as contended by AECOM with an admission or a denial and, if wholly or partly the latter, a response that indicates precisely what NIEIR provided to AECOM if not Brisbane traffic growth forecasts. I expect NIEIR’s defence to reveal what work it says it performed, and whether that work included the preparation and supply of estimates and forecasts of the kind referred to in para 4.4(b) of Annexure B to the Statement of Particulars.

17    One of the difficulties AECOM faces is that it is the applicants who assert, and will presumably seek to prove, that AECOM relied upon unreasonable growth forecasts in preparing its traffic forecasts. In the particulars to para 37 of the statement of claim in the RCM Proceeding, for example, the applicants allege that in preparing its traffic forecasts, AECOM relied upon unreasonable predictions of traffic growth after 2005, a complaint defined by AECOM in the Statement of Particulars as the “First Traffic Growth Rate Complaint”. The same allegation is made in the Portigon Proceeding. AECOM’s case against NIEIR is contingent in the sense that, if the applicants establish the growth forecasts were overstated and prepared either negligently or without reasonable grounds, then AECOM will contend that NIEIR is a party wholly or partly responsible for such overstatement.

18    There are related allegations made in the Joint Consolidated Particulars filed by the applicants in each of the three CLEM 7 Proceedings. The Joint Consolidated Particulars refer to various complaints including, relevantly for present purposes, what AECOM has described in its Statement of Particulars and defined as follows:

    the “Alternative Car Trip Generation Complaint” (para 21 Joint Consolidated Particulars);

    the “Grouped Growth Rate Complaint” (para 22 Joint Consolidated Particulars);

    the “Second Traffic Growth Complaint” (para 33 Joint Consolidated Particulars);

    the “Insufficient Differences Between Scenarios Complaint” (para 127 Joint Consolidated Particulars).

Other matters raised by the applicants against AECOM which AECOM also seeks to raise against NIEIR, are:

    the “Demand Multiplier Complaint” (section 9.3.11 of Mr Veitch’s Report);

    the “Economic/Demographic Land Use Complaint” (subpara 27(b)(iii) of the Second Further Amended Statement of Claim in the Class Action).

19    In the Statement of Particulars, AECOM has made it clear that its case against NIEIR is put on the basis that if AECOM’s forecasts were defective (in the sense of negligently prepared or made without reasonable grounds) then NIEIR’s forecasts must also be defective in the same sense. Thus, at para 3.2 of the Statement of Particulars, in the context of the First Traffic Growth Rate Complaint, AECOM contends:

(a)    if AECOM Australia is found to be liable to any Applicant (which is denied) because the Applicants make out the First Traffic Growth Rate Complaint, then NIEIR will be liable to AECOM Australia for any loss thereby suffered by AECOM Australia because:

    (i)    AECOM Australia relied upon NIEIR’s predictions of traffic growth in Brisbane after 2005; and

    (ii)    NIEIR’s predictions of traffic growth in Brisbane after 2005 will, in that event, necessarily have been negligently prepared, constitute misrepresentations and/or have been made without reasonable grounds for the same reason(s) that AECOM Australia is found to be liable to one or more of the Applicants by reason thereof;

AECOM’s case against NIEIR with respect to each of the other complaints referred to in [18] above adopts the same general approach, namely, if AECOM’s work was defective, then it necessarily follows that NIEIR’s work was also defective in the relevant sense.

20    NIEIR contends that the logic underlying this approach is fallacious. Whether AECOM’s approach is logical is not the issue for present purposes and is, in any event, not a question that can be decided in the abstract or in the absence of evidence. What I regard as most significant for present purposes is that AECOM has by its particulars confined its case against NIEIR to one that is, in relevant respects, co-extensive with, and wholly dependent upon, the case brought by the applicants against AECOM based upon each of the seven complaints referred to in [17] and [18] above, and that AECOM does not advance any additional basis for its assertion that any of NIEIR’s Work (as defined) or NIEIR’s Forecasts (as defined) was defective.

21    With respect to some of the complaints referred to in [18] above (ie. the Grouped Growth Rate Complaint and the Insufficient Differences Between Scenarios Complaint), AECOM says that the approach it took in its own work was based upon advice given by NIEIR to AECOM. As to these complaints, I am satisfied that AECOM has included in the Statement of Particulars sufficient particulars to enable NIEIR to know the case it has to meet.

Associate:

Dated:    5 September 2014

Glossary

Schedule

(Proceedings NSD 757 of 2012)