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Thiess Pty Ltd v FFE Minerals Australia Pty Ltd[2007] QSC 209

Thiess Pty Ltd v FFE Minerals Australia Pty Ltd[2007] QSC 209

 

SUPREME COURT OF QUEENSLAND 

 

CITATION:

Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209

PARTIES:

Thiess Pty Ltd ACN 010 221 486
Plaintiff

v

FFE Minerals Australia Pty Ltd
Defendant

FILE NO/S:

BS10669 of 2004

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

13 August 2007

DELIVERED AT:

Brisbane

HEARING DATE:

26 and 27 March 2007

JUDGE:

White J

ORDER:

  1. Dismiss the application to strike out certain paragraphs of the statement of claim.
  2. FFE have leave to withdraw any deemed admissions in the proposed amended defence and to re‑plead paragraphs 4, 11, 14, 33‑39, 46, 50, 52, 54, 58.1, 68, 77, 122‑126, 128‑130 and 145‑147.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER THE RULES OF COURT – PLEADING – GENERALLY - where the plaintiff files a statement of claim and the defendant requests further particulars – where the plaintiff files further amended statements of claim in response to the defendant’s requests for further particulars – where the defendant brings an application to strike out the pleadings under r 171 of the Uniform Civil Procedure Rules 1999 (Qld) – where the defendant claims the pleadings disclose insufficient material facts – where the defendant claims the pleadings are unintelligible – whether certain pleadings should be struck out

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER THE RULES OF COURT – PLEADING – GENERALLY – where the plaintiff claims the defence discloses deemed admissions pursuant to r 166(5) – whether the pleading disclose sufficient explanation to amount to a non-admission or denial – whether the defendant should be given leave to withdraw and replead

Uniform Civil Procedure Rules 1999 (Qld), r 149, r 150, r 157, r 165, r 165, r 166, r 171, r 188

Ballesteros v Chidlow & Anor No 2 [2005] QSC 285, cited

Bruce v Odhams Press Ltd [1936] 1 KB 697, cited

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, cited

Chief Executive Officer of Customs v Preston, unreported decision of 5 January 2000, BC 200004663, cited

EK Nominees Pty Ltd v Woolworths Ltd (2006) NSWSC 1172, cited

Groves v Australian Liquor, Hospitality and Miscellaneous Workers’ Union [2004] QSC 142, cited

Hawkins v Clayton (1988) 164 CLR 539, cited

Henville v Walker (2001) 206 CLR 459, cited

Heydon v NRMA Ltd [2000] NSWLR 1, cited

Meckiff v Simpson [1968] VR 62, cited

MGICA (1992) Ltd (formerly MGICA Ltd) v Kenny & Good Pty Ltd (1996) 140 ALR 313, cited

NRNQ (a limited partnership) v MEQ Nickel Pty Ltd [1991] 2 Qd R 592, cited

Robinson v Laws [2003] 1 Qd R 81

Queensland Alumina Limited v Alinta DQP Pty Ltd [2006] QSC 391, cited

Ridolfi v Rigato Farms Pty Ltd [2001] 2 Qd R 455, cited

Thompson v Ice Creameries of Australia Pty Ltd (1998) ATPR 41-611, cited

Ting v Blanche (1993) 118 ALR 543, cited

Woodco Services Pty Ltd v John Holland Pty Ltd [2002] QSC 264, cited

COUNSEL:

SA Kerr and N Jarro for the applicant/defendant J Bond SC and A Pomerenke for the respondent/plaintiff

SOLICITORS:

DLA Phillips Fox for the applicant/defendant Corrs Chambers Westgarth for the respondent/plaintiff

  1. The defendant has filed three applications seeking the following relief
  1. that the parties are to provide electronic disclosure and document management in compliance with an identified particular protocol;
  1. that certain paragraphs of the further amended statement of claim be struck out pursuant to r 171 of the Uniform Civil Procedure Rules (“the UCPR”);
  1. that:
  1. the court declare that certain denials in the defendant’s proposed amended defence comply with the requirements of rr 165 and 166 of the UCPR;
  1. the court declares that the nonadmissions in certain paragraphs of the proposed amended defence comply with the requirements of rr 165 and 166 of the UCPR;
  1. alternatively, that the defendant have leave to amend or withdraw the admissions contained in certain enumerated paragraphs of the proposed amended defence pursuant to rr 188 and/or 375 of the UCPR.
  1. The parties wish to continue their discussions concerning the application relating to disclosure. Orders were made on 26 March adjourning that application to a date to be fixed and reserving the costs.
  1. Many of the difficulties which the defendant contends it has about the statement of claim are reflected in its approach to the defence and its application about admissions in the defence depends on the outcome of the strike out application with respect to numbers of the paragraphs.
  1. The pleadings on both sides are necessarily lengthy and have passed through a number of versions with extensive accompanying correspondence. But even so, the fundamental claim of the plaintiff against the defendant is relatively straight forward and the characterisation of the causes of action not unduly complex even if their articulation has led to a complex pleading. There is some common ground and in order to follow the issues raised by the defendant and the response by the plaintiff, Mr Bond SC and Mr Pomerenke, who appeared for the plaintiff, prepared a background overview which, to a large extent, Mr Kerr, who appeared with Mr Jarro for the defendant, was content to accept.  It is from that material and the pleadings that the following background analysis is generally taken.
  1. It is convenient to refer to the pleadings as the “statement of claim” and “defence” even though the full description of the former is “further amended statement of claim” and the latter is a draft amended defence which it had been proposed to file but which awaits the outcome of these applications.

Background

  1. The plaintiff (“Thiess”) is an integrated engineering and service provider. The defendant (“FFE”) is a specialist consultant engineer, technology consultant and designer. Queensland Alumina Limited (“QAL”) produces aluminium on behalf of a consortium of three aluminium companies at its alumina refinery at Gladstone. There it refines bauxite into smelter grade alumina by the Bayer process. This process includes as its fourth stage the calcination of the alumina. In about 1999, with a view to increasing the operating efficiency of this part of the process, QAL determined to replace the existing rotary kilns with more efficient modern technology described in the pleadings as “the Project”.
  1. In about October 1999 Thiess and FFE commenced collaborating for the purpose of preparing a build, own, operate and transfer (“BOOT”) proposal for submission to QAL to replace the rotary kilns and thereby to implement “the Project”.
  1. In the course of that collaboration FFE provided Thiess with documents, its representatives attended meetings with representatives of Thiess and participated in presentations to QAL in relation to the BOOT proposal for the Project.
  1. Thiess alleges that in the course of that collaboration FFE gave it other information about what should be allowed for estimations for the Project and made a number of express and implied representations. This allegation is controversial.
  1. In about October 2000 the nature of the proposal to be put to QAL for the Project changed because QAL had rejected proceeding by a BOOT proposal.  Thereafter Thiess and FFE worked together on an engineering, procurement and construction (“EPC”) proposal for the Project.
  1. On about 20 November 2000 Thiess and FFE executed a Memorandum of Understanding (“MOU”) pursuant to which they agreed to undertake the preparation of a joint EPC proposal.  Within the MOU FFE acknowledged that it was a technology supplier with specialist skills in technology and equipment applicable to the Project and agreed to provide or perform a number of responsibilities necessary to prepare the proposal.
  1. After the MOU was entered into, FFE gave advice to Thiess as to certain quantities which Thiess should allow for in its estimate for the joint EPC proposal for the Project.
  1. Thiess alleges that FFE represented that the information which it had provided to Thiess prior to the date of the MOU could continue to be relied on by Thiess unless it had been specifically updated or reservations about its continued reliability had been communicated to Thiess. Thiess further alleges that in many instances important information had been conveyed to Thiess prior to the date of the MOU and, because there had been no specific update or reservation communicated to Thiess about continued reliability, the representations had been impliedly continued. These alleged representations, and that they continued to be operative after the execution of the MOU, are central to the dispute between the parties.
  1. On about 12 January 2001 Thiess submitted an EPC proposal for the Project to QAL at a price of $110,916,000.  On 14 June 2001 an amended proposal was submitted for a fixed price of $107,210,000.
  1. On or about 31 July 2001 Thiess and QAL entered into a contract described as the “Main Contract” pursuant to which Thiess agreed to design, construct and commission the Project for QAL for a price of $107,210,000.
  1. Thiess alleges and FFE denies that in submitting and amending the EPC Proposal and entering into the Main Contract it relied on various estimates and representations made by FFE.
  1. The Main Contract, inter alia, required Thiess to achieve compliance with performance criteria for the calciners set out in the specification which formed part of the Main Contract and to achieve “acceptance” as defined under the Main Contract by the termination date which originally was 30 April 2005.
  1. On or about 31 July 2001 Thiess and FFE entered into an agreement described as the “Consultancy Agreement” pursuant to which FFE agreed to provide consulting engineering services to Thiess in relation to the Project. 
  1. At the same time that the Main Contract and the Consulting Agreement were entered into, QAL, Thiess and FFE entered into a Side Deed described as “the Principal’s Side Deed” which brought FFE into a direct contractual relationship with QAL. Also at the same time, the corporations which owned QAL, Thiess and FFE, entered into a Side Deed Described as “the Owner’s Side Deed”. These Side Deeds sought to give the benefit of the Main Contract and Consultancy Agreement and certain indemnities to QAL and the Owners respectively.
  1. In about July 2001 Thiess commenced performance of the works under the Main Contract. 
  1. By July 2005 acceptance as defined under the Main Contract had not been achieved.  After negotiation the parties entered into partial settlements of various claims whilst preserving their rights to make and continue other claims including those advanced in these proceedings although aspects of the settlement and the entitlement to pursue the claims is controversial.  It is, however, not controversial, that the parties agreed that
  • QAL had claimed that Thiess and FFE were legally liable to it and its owners for damages arising directly out of the way in which Thiess and FFE had done what was required by Thiess and FFE under the Main Contract and the Consultancy Agreement;
  • QAL, its Owners, Thiess and FFE had recognised that in order to attempt to achieve acceptance under the Main Contract, Thiess and FFE would be required to sustain further loss and expense directly attributable to the costs to achieve compliance with their responsibilities under the Main Contract, the Consultancy Agreement, the Principal’s Side Deed and the Owners’ Side Deed;
  • QAL, its Owners, Thiess and FFE had agreed to amend their respective rights and obligations under the Main Contract, the Consultancy Agreement, the Principal’s Side Deed and the Owners’ Side Deed to compensate QAL and its Owners in accordance with a Deed of Settlement. 
  1. The Deed of Settlement between QAL, Thiess and FFE and the Side Deed entered into between FFE and Thiess came into effect on 18 July 2005.  FFE agreed to pay to QAL
  • an amount of $1.5 million;
  • a payment of between $1.5 million and $4 million, the amount of which would depend on the extent of insurance recovery by FFE pursuant to the Project Specific professional indemnity insurance policy;  and
  • a third payment of not more than $1 million, the amount of which would depend on the extent of insurance recovery by FFE pursuant to the Project Specific professional indemnity insurance policy.
  1. Pursuant to the Deed of Settlement, except for the rights and obligations of Thiess and FFE which are contained in the present proceedings (and their extent is controversial but not to be considered on these applications), the parties’ rights and obligations under the Main Contract, the Consultancy Agreement, the Principal’s Side Deed and the Owners’ Side Deed ceased and were replaced by the rights and obligations set out in the Deed of Settlement. Pursuant to their Side Deed, FFE agreed to pay to Thiess a further $2,915,000 in full and final settlement of moneys owing to Thiess arising from FFE’s obligations under the Consultancy Agreement, other than any moneys found to be owing pursuant to these proceedings.
  1. Thiess alleges that the present proceedings against FFE are not covered by the Deed of Settlement. These proceedings relate to the parties’ dealings between October 1999 and July 2005.

The causes of action

  1. Thiess claims damages against FFE
  • pursuant to s 82 of the Trade Practices Act 1974 (Cth) (“the TPA”) in respect of conduct which occurred prior to entry into the Main Contract and the Consultancy Agreement;
  • for breach of the MOU;
  • for negligence in the performance of the MOU;
  • for breach of the Consultancy Agreement;  and
  • for negligence in the performance of the Consultancy Agreement.

Thiess’s alleged losses

  1. Thiess claims the following losses as a consequence of the breaches set out above
  • $5,940,017.82 being costs Thiess actually incurred which were underestimated and were unrecoverable pursuant to the Main Contract and which would have been avoided were it not, as Thiess alleges, for FFE’s breaches of the TPA, the MOU or its duty of care because were it not for those breaches Thiess and QAL would not have entered into any contract.
  • Alternatively, $7,160,260.36 being the additional amount that Thiess would have recovered from QAL pursuant to an alternative contract they would have made were it not for FFE’s alleged breaches of the TPA, the MOU or its duty of care.
  • $4,824,500 being the amount of the bonus Thiess would have achieved under the Main Contract were it not for FFE’s alleged breaches of the Consultancy Agreement and its duty of care.
  • $5,122,810 being additional preliminary costs which Thiess incurred over and above those it would have incurred were it not for FFE’s alleged breaches of the Consultancy Agreement and its duty of care.
  • $1,956,528 being losses incurred in consequence of miscellaneous alleged breaches of the Consultancy Agreement and FFE’s alleged breach of duty of care.

Procedural history

  1. This matter is on the Supervised List of Cases. On 6 December 2004 Thiess filed its claim and statement of claim.  It received a request for particulars from FFE.  On 23 December 2005 Thiess filed an amended statement of claim.  On 28 April 2006 FFE delivered a request for further particulars of the amended statement of claim.  On 5 June 2006 Thiess provided an extensive response to that request.  On 6 June 2006 FFE requested some further information and on 17 July 2006 Thiess provided that further information.  On 7 August 2006 FFE requested some further particulars which Thiess provided on 15 August 2006.
  1. On 15 September 2006 FFE filed its notice of intention to defend and defence.  On 7 December 2006 Thiess filed a further amended statement of claim and on 23 March 2007 it produced yet another further amended statement of claim which is the relevant document for the purpose of this application.
  1. There has been further correspondence between the parties leading to some further minor amendments to Thiess’s pleading.

The major issues on the strike out application

  1. FFE identifies two broad bases upon which it attacks Thiess’s pleading. It argues that numerous of the paragraphs in the statement of claim do not disclose a reasonable cause of action because they fail to plead necessary material facts. The second basis is that there are paragraphs which are embarrassing because they are “unintelligible, ambiguous, vague, too general or which contain improperly conflated assertions”, FFE’s written submissions para 5(b).
  1. FFE’s counsel submit that as a consequence
  • it is impossible to plead to many of the paragraphs in Thiess’s pleading “as they conflate a large number of often inconsistent assertions”;
  • it is difficult to identify the basis upon which the representation claims are pleaded;  and
  • it will be difficult for a judge writing the trial judgment to identify and determine the claims brought by Thiess.
  1. This final concern might have been expressed more appropriately as a failure to identify the issues for trial, so that the ambit of the investigation may be more precisely confined.

Obligation to plead material facts

  1. Rule 149 of the UCPR requires relevantly

“(1)Each pleading must –

  1. be as brief as the nature of the case permits;  and
  1. contain a statement of all the material facts on which the party relies but not the evidence by which the facts are to be proved;  and
  1. state specifically any matter that if not stated specifically may take another party by surprise;

…”

FFE calls in aid r 171 to challenge the alleged failure by Thiess to conform with its obligations under r 149

“(1)This rule applies if a pleading or part of a pleading –

  1. discloses no reasonable cause of action or defence;  or
  2. has a tendency to prejudice or delay the fair trial of the proceedings;  or
  3. is unnecessary or scandalous;  or
  4. is frivolous or vexatious;  or
  5. is otherwise an abuse of the process of the court.”
  1. What are “material facts” in the context of r 149 have been described as

“… necessary for the purpose of formulating a complete cause of action”

per Scott LJ in Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712.  If even one material fact necessary to sustain the particular cause of action sought to be made out is omitted, then that part of the claim is liable to be struck out.  If a plaintiff’s cause of action is founded in a statute, e.g., the Trade Practices Act, a plaintiff must plead all the facts necessary to attract the statute.

  1. Thiess’s counsel emphasise the need to keep the distinction between material facts and particulars firmly in mind. Rule 157 obliges a party to include in a pleading particulars necessary to

“(a)define the issues for and prevent surprise at, the trial;  and

  1. enable the opposite party to plead;  and
  2. support a matter specifically pleaded under rule 150.”

In Bruce v Odhams Press Scott LJ observed at 712 – 713

“The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant.  Their function is to fill in the picture of the plaintiff’s cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial.”

A useful discussion of the role of particulars is found in the decision of Byrne J in NRNQ (a limited partnership) v MEQ Nickel Pty Ltd [1991] 2 Qd R 592 at pp 594598.

  1. As can be seen, there is some duplication in the several purposes of the pleadings proper and the particulars which expand upon them, but it must be kept firmly in mind that what the UCPR require, reflective as they are of long held approaches to pleadings, or at least since the Judicature Act 1876, is that each fact, the proof of which is essential to success at trial, must be pleaded.  In a number of FFE’s complaints what is, in truth, sought are further particulars which is not this application.

Embarrassing pleadings

  1. Rule 171 of the UCPR does not employ the terminology of the previous RSC 22.31 which enabled a judge to strike out or order amendment to any pleading which tended to “prejudice, embarrass, or delay, the fair trial of the action …”.  However Mr Bond accepts that, nonetheless, a pleading may still be struck out if it is

“… unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him.”

Meckiff v Simpson [1968] VR 62 at 70.

Purpose of pleadings

  1. More generally, the purpose of pleadings is to inform the opposite party of the case it has to meet and to permit, in a responsive pleading, the issues to be narrowed. Furthermore, the defendant cannot be expected to intuit what the plaintiff intends to convey in its pleadings by its own understanding of the facts and circumstances giving rise to the litigation. That would be a certain path to disaster.

The Trade Practices Act pleadings

  1. FFE complains, amongst other things, that Thiess has failed to differentiate between the facts necessary to found relief based on s 51A and that based on s 52 of the TPA.  Section 51A is, as Hill J noted in Ting v Blanche (1993) 118 ALR 543 at 552, an interpretative section;  it does not itself create a cause of action but casts the burden of proof upon a corporation which has allegedly made a representation about a future matter to show that it had reasonable grounds for doing so.  Accordingly, a defendant will be concerned to know if the alleged representations pleaded against it fall within this category.  The norm of conduct is still that dictated by s 52.

Some preliminary observations

  1. FFE particularly challenges the sufficiency of material facts and a “conflation” of allegations especially with respect to the TPA alleged representations.  Mr Bond argues that in order to determine if FFE’s conduct contravened s 52 in a case of this kind, its conduct must be considered in the context of the totality of the parties’ relationship, Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [37][39] per Gleeson CJ, Hayne and Heydon JJ.  And in EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172, a case relied on by Mr Bond, White J of the New South Wales Supreme Court, noted at para 126

“Indeed, it is difficult to see how it could be determined whether Woolworths’ conduct was misleading or deceptive without identifying what message that conduct conveyed.  However, within the confines of the pleadings and the case fought at trial, regard must be had to the whole of Woolworths’ conduct, including its actions, inactions and silence, and not to isolated parts of that conduct which are expressly representational in character.”

  1. With those observations in mind, Mr Bond proposed that Thiess’s claims derived from the TPA must plead
  • the relevant conduct of FFE;
  • the context upon which it relied to give colour to that conduct;  and
  • the message which Thiess alleges was conveyed by that conduct in that context.

Expressed in that way, I did not understand Mr Kerr for FFE to disagree with the underlying legal principles upon which those points rely.

The impugned paragraphs

Paragraph 4

  1. Paragraph 4 of the statement of claim is in the following terms

“The facts referred to in paragraphs 5 to 84 85 below were known to Thiess and FFE at the time they entered into the Consultancy Agreement as referred to in paragraph 85 86 below.”

  1. FFE has responded in the following fashion

“4.Notes the contents of paragraph 4 and in so doing should not be taken to have accepted that the manner in which paragraph 4 is pleaded is either an appropriate method of pleading or is factually correct.  In further answer to the paragraph, FFE says that it cannot plead to Thiess’s knowledge and pleads to the paragraphs referred to in paragraph 4 where appropriate, herein below.

Additionally, FFE are unable to plead to this paragraph in any greater detail as it seeks to conflate the contents of 79 paragraphs into 1 in terms of the level of knowledge that both FFE and Thiess had.  It would be an unduly inefficient way of pleading to require FFE to deal with the knowledge of each of those parties in respect of each of the factual assertions contained in the 79 paragraphs at issue in a defence to this paragraph of the claim.  Further, the reference in paragraph 4 to “paragraph 85” is a mistake.  We assume the reference should be to paragraph 86.

  1. Thiess’s allegations of fact in paragraphs 5 to 85 are central to Thiess’s claim that representations about estimates and quantities made during the earlier discussions and proposals for the BOOT realisation of the Project continued to be operative unless expressly repudiated or varied and informed the parties when they entered into the Consultancy Agreement. That this is so, is expressed in the heading to paragraphs 4 to 86 of the statement of claim

“The factual matrix within which Thiess and FFE entered into the Consultancy Agreement”

It may well be that FFE has failed to appreciate the basis of Thiess’s claim although paragraph 34, a pivotal paragraph, pleads clearly enough

“At all times from the time the parties entered into the Memorandum of Understanding until the time Thiess entered into the Main Contract as referred to later in this pleading, FFE represented that the information which it had provided to Thiess prior to the date of the Memorandum of Understanding could continue to be relied on by Thiess, unless it had been specifically updated or reservations about its continued reliability had been communicated to Thiess.”

  1. There then follow a number of particulars about the representations to which reference will be made later. The paragraph had the additional pointer of a heading “Continuing representation regarding reliability of information”.
  1. It is, accordingly, this whole factual matrix which is the foundation of the case made for misleading and deceptive conduct against FFE. Further, the alleged conduct will inform the construction of the several pleaded contracts. Mr Bond has referred to the recent analysis of this latter principle of contractual interpretation by Muir J (as his Honour then was) in Queensland Alumina Limited v Alinta DQP Pty Ltd [2006] QSC 391 at [77][78]

“[77]The object of contractual construction is to ‘ascertain and give effect to the intentions of the contracting parties.’  Those intentions, to be determined objectively, are ‘what a reasonable person would have understood [the words of the contract] to mean.’  And to ascertain that ‘normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.’  Such a reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation which they were in at the time of the contract and a commercial contract, like the Agreement, ‘should be given a businesslike interpretation’.  Its interpretation requires ‘attention to … the commercial circumstances which the document addresses, and the objects which it is intended to secure.’

[78]Lord Wilberforce in Reardon Smith Line Ltd v HansenTangen identified the information and materials to which recourse may be had in the following passage, which was referred to with approval by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and by the Court in Pacific Carriers Ltd v BNP Paribas:

‘In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.’”

  1. FFE’s objections about paragraph 4 fall into two broad categories – the first, that it is unduly burdensome to plead to 80 paragraphs;  the second, that some allegations of fact are, effectively, noncontentious.  And, overall, FFE asks rhetorically – how can it plead to Thiess’s knowledge of these facts.  The objection that an opposite party is to be excused from responding comprehensively because to do so would be unduly onerous may be put to one side – this was a complex commercial relationship with a multitude of facts making up that relationship findings about which will impact on the ultimate decision. 
  1. Rules 165 and 166 of the UCPR set the parameters for answering pleadings.  If there is no controversy about a fact, it should be admitted and one of the purposes of a responsive pleading will be fulfilled – issues are narrowed.  FFE complains, as an example, that it is hampered in responding to paragraph 8 because Thiess cannot plead with more specificity until after disclosure.  Paragraph 8 provides

“In or about 1999, with a view to promoting its long term goals of increasing operating efficiency of its calcining operations whilst meeting and exceeding the community’s environmental requirements, QAL determined to replace the existing rotary kilns used in the calcining operations at the Refinery with the more modern technology involved in a stationary calciner alumina plant (“the Project”).”

  1. There follows some particulars noting that until after disclosure, including nonparty disclosure, the best particulars which Thiess can provide of QAL’s determination and the goals thereof are to be inferred from QAL’s website – the reference to which is given – and the terms of two documents which are set out in identified paragraphs.
  1. This type of pleading is common enough. Surely a sensible response would include acknowledging that which is clearly in the public arena and limiting the admission in that way reserving the right to amend should Thiess’s subsequent better particulars dictate it should do so. I am here simply responding to the example advanced by FFE which causes it pleading difficulty. It will be necessary to deal with each of the paragraphs mentioned in paragraph 4 which FFE impugns subsequently. 
  1. Finally, there is the response to Thiess’s knowledge. That, of course, is for Thiess to prove as part of its case. FFE can plead to its knowledge of each of the alleged facts. Where it is plain that Thiess can be accepted as knowing certain facts, e.g., the former method of calcination described in paragraph 7, what is the impediment to admitting those facts?  If some other fact emerges subsequently which casts doubt about Thiess’s knowledge, an application to withdraw an admission could, no doubt, be made and would be regarded sympathetically by a court.
  1. FFE’s pleaders needed to approach their defence in respect of paragraph 4 in a methodical fashion, devising a system which would capture the interplay of the various allegations of fact.  It is not unduly onerous in the context of this litigation and it can be done.

Paragraph 10

  1. The complaint about this paragraph is no longer pressed.

Paragraph 17

  1. This paragraph pleads representations purportedly contained in an email dated 19 April 2000, submitted by Mr Bond, to be in conformity with the requirements of r 152 of the UCPR, namely

“Unless precise words are material, a pleading may state the effect of spoken words or a document as briefly as possible without setting out all the spoken words or document.”

Thiess’s lawyers delivered a disk with the pleading which contained hyperlinks to images of the relevant documents referred to in the pleading.  FFE complains that paragraph 17 does not accurately reflect what may be drawn from the document, not that it should have been pleaded in full, and that Thiess should be compelled to be accurate.

  1. It cannot be concluded, at least as a pleading point, that Thiess’s allegations about the representations contained in the email are untenable. FFE must, therefore, plead what it contends is conveyed by the words in the email.

Paragraphs 19(g) and 20(j)

  1. Both subparagraphs concern representations.  Paragraph 19(g) alleges

“On or about 29 June 2000, Thiess and FFE participated in a workshop technical presentation to QAL in relation to the BOOT proposal for the Project in which FFE represented that:

‘ …

(g)   FFE’s proposed calcination plant could meet QAL’s requirements as to alumina quality, including as to particle breakdown;

…’”

  1. Paragraph 20(j) alleges

“On or about 4 July 2000, Thiess and FFE participated in a technical presentation to QAL in relation to the BOOT proposal for the Project in which FFE represented that:

‘ …

(j)   FFE had evaluated a sample of hydrate from QAL and its proposed calcination plant could meet QAL’s requirements as to alumina quality, including as to particle breakdown;

…’”

  1. Particulars are offered of para 20(j) which require supplementation after disclosure.  FFE complains that Thiess does not plead what its requirements were.  In my view, Mr Bond is correct in his submission that for pleading purposes (and, indeed, perhaps in an evidentiary sense also) what QAL’s requirements were is not relevant.  What is relevant is that FFE’s representatives allegedly represented that whatever QAL’s requirements were they could meet them.
  1. There is a great deal of detail about both workshop presentations in paragraphs 19 and 20.  What FFE must plead to are the allegations pleaded.  The powerpoint documents may be necessary to give more particulars.  The persons present have been identified.  These allegations form part of the conduct (together with that alleged in paras 11, 13(c), 15(g) and 34) by which, Thiess pleads in paragraph 39, FFE represented

“(a)  … that the proposed calcination plant would be able to meet QAL’s requirements as to alumina quality, including its requirement that the maximum particle breakdown in the proposed calcination plant would not exceed 3% based on a 45 micron size fraction in the trihydrate alumina feed;

(b)   impliedly represented that it had reasonable grounds for making the representation pleaded in the previous subparagraph;  and

(c)   impliedly continued both those representations.”

  1. There are on the face of the pleading sufficient material facts to sustain the s 52 claim.  If further particulars are needed they may, in due course, be requested.

Paragraphs 28 to 32

  1. This group of paragraphs concerns an allegation that FFE owed Thiess a duty of care in the performance of its obligations under the Memorandum of Understanding. Thiess has provided further particulars in answer to FFE’s request but, nonetheless, FFE contends that Thiess has failed to comply with the requirements of r 150(1)(k) of the UCPR that

“Motive, intention or other condition of the mind, including knowledge or notice”

must be specifically pleaded.

  1. This group of paragraphs alleges that three named officers of FFE
  • knew that Thiess had no expertise or experience in the design of or operation of calciners;
  • knew that Thiess relied on it to perform its obligations under the Memorandum of Understanding with the reasonable degree of skill and care of an expert designer of calciners;  and
  • knew that if it did not perform its obligations under the Memorandum of Understanding with the degree and skill and care that would reasonably be exercised by an expert designer of calciners Thiess might suffer loss and damage.
  1. By r 150(2) of the UCPR any fact from which such knowledge is claimed to be an inference must be specifically pleaded.
  1. Mr Bond contends that in these paragraphs Thiess is running two cases about knowledge.  The first is that three named persons employed at a senior level by FFE knew certain facts set out in paras 28, 29 and 30 respectively.  The second requires inferences of knowledge to be drawn from, as Thiess would have it, pleaded facts.
  1. Mr Bond suggests that what FFE really wants to be told about the direct case is how Thiess will prove that those individuals (and thereby FFE) had that knowledge rather than want of a material fact in the pleading.  I accept that paras 28, 29 and 30 plead sufficient material facts about direct knowledge.
  1. The facts from which the inference of knowledge may be drawn are found in the particulars provided in response to a request by FFE’s solicitors dated 28 April 2006 (exhibit ARB36 to the affidavit of Beardow filed 9 February 2007) which identifies numbers of the paragraphs in the statement of claim.
  1. There is a further complaint about the sufficiency of material facts to support a claim in tort. Paragraph 31 alleges that FFE assumed responsibility towards Thiess to perform its obligations under the MOU with the degree of skill and care that would reasonably be exercised by an expert designer of calciners.  Paragraph 32 pleads that in the premises of the previous paragraphs in the statement of claim, FFE owed Thiess a duty of care to perform its obligations under the MOU with the degree of skill and care that would reasonably be exercised by an expert in the design of calciners. 
  1. The assumption of responsibility is an essential element of a tort based upon pure economic loss, Hawkins v Clayton (1988) 164 CLR 539 at 576 per Deane J.  That has been pleaded.  Particulars have been provided in response to FFE’s request by reference to facts pleaded in many of the allegations of fact in the first 80 paragraphs of the statement of claim.  Mr Bond broadly broke them up in this way  paragraphs 8 to 21 concerned the conduct of FFE in respect of the BOOT proposal particularly the special expertise of FFE vis-à-vis QAL and Thiess;  paragraphs 23 to 26 plead the contractual terms of the MOU;  paragraphs 28 and 29 plead knowledge by FFE.  The balance of the paragraphs refer to various pieces of advice given.  All the necessary elements of the tortious cause of action have been pleaded and the complaint is unfounded.

Paragraphs 33 and 34

  1. Although FFE has withdrawn its complaint about paragraph 34, nonetheless, it was the subject of oral submissions by Mr Kerr. It is as well to set out these paragraphs as they are central to Thiess’s case

Performance of the Memorandum of Understanding

  1. The conduct of FFE pleaded in paragraphs 34, 35, 36, 37, 38, 39, 40, 42, 44, 46, 48, 50, 52, 54, 56, 60, 62, 64, 68, 66, 72, 74, 76, 77, 76 and 77 was conduct engaged in by FFE in purported performance of its obligations under the Memorandum of Understanding.

Continuing representation regarding reliability of information

  1. At all times from the time the parties entered into the Memorandum of Understanding until the time Thiess entered into the Main Contract as referred to later in this pleading, FFE represented that the information which it had provided to Thiess prior to the date of the Memorandum of Understanding could continue to be relied on by Thiess, unless it had been specifically updated or reservations about its continued reliability had been communicated to Thiess.

Particulars

The representation was to be inferred from the following matters:

(a)The facts pleaded in paragraphs 9 to 33 and FFE’s knowledge of those facts.

(b)In light of those facts, a reasonably diligent and competent person in FFE’s position would have realized that Thiess would continue to rely on the information which FFE had provided to Thiess prior to the date of the Memorandum of Understanding unless the information was specifically updated or reservations about its continued reliability had been communicated to Thiess.

(c)A specific representation made in the following circumstances:

(i)On or about 11 January 2001, a meeting was held between Thiess and FFE at 179 Grey Street, Southbank, Brisbane.

(ii)The meeting was attended by Mr Bowra, Mr Callow, Mr Bradford and Mr Baguley on behalf of Thiess and Mr Yovich and Mr Cater on behalf of FFE.

(iii)At the meeting, Mr Baguley said words to the effect that there were a lot of areas where quantities and prices provided by FFE for the BOOT proposal for the Project had not changed, and he was still using the quantities and prices FFE had given him.

(iv)Neither Mr Yovich nor Mr Cater expressed any reservation about Mr Baguley continuing to use the quantities and prices FFE had given him for the BOOT proposal for the Project for the purpose of Thiess’s estimate for the joint EPC proposal for the Project.

(d)At no time prior to the time Thiess entered into the Main Contract did FFE communicate to Thiess anything which contradicted the representation that the information which it had provided to Thiess prior to the date of the Memorandum of Understanding could continue to be relied on by Thiess, unless it had been specifically updated or reservations about its continued reliability had been communicated to Thiess.”

  1. An overall understanding of these paragraphs requires the reader to keep firmly in mind Thiess’s central contention, namely, that from the time Thiess and FFE entered into the MOU pleaded in paragraph 23 until Thiess entered into the Main Contract with QAL pleaded in paragraph 81, FFE represented that the information provided to Thiess prior to the entry into the MOU could continue to be relied on by Thiess unless specifically updated or reservations about its continued reliability had been communicated to Thiess.
  1. Mr Kerr complains that the reference to “conduct” in paragraph 33 is undefined and the paragraph is vague and embarrassing.  Once the pivotal role of paragraph 34 is understood, paragraph 33 falls into place.  Thereafter follow various paragraphs setting out representations allegedly made during the currency of the EPC including specific advices.  Some of these matters were further clarified in correspondence.
  1. The other challenge to paragraph 34 relates to how it is set out.  I, too, like Mr Kerr, initially thought that there was some mistake because it appeared that the particulars described representations by inference and, oddly, a specific representation.  But on a more careful reading of the pleading it is clear that what the pleader has done is to plead that FFE represented that Thiess could continue to rely on information provided prior to the MOU and that representation could be inferred from certain facts and FFE’s knowledge of those facts, as well as a specific representation set out in particulars to paragraph 34(c)(i)(iv).
  1. Thus understood, there is no problem. Particulars have been given in response to FFE’s request of 28 April 2006. 

Paragraphs 3539 and 76

  1. Paragraphs 3539 are headed General representations regarding the joint EPC proposal.  Paragraph 76 is headed General representations regarding quantities and prices.
  1. Paragraphs 3539 and 76 take the form

“By its conduct pleaded in paragraphs …

  1. represented …
  1. impliedly represented …
  1. impliedly continued both those representations …”

They include that FFE impliedly represented that it had reasonable grounds for making the representations pleaded.

  1. Numerous prior paragraphs are referred to. FFE objects to this form of pleading here as it has where it appears in other parts of the statement of claim on the basis that Thiess seeks to “conflate” the numerous paragraphs and makes a responsive pleading difficult, if not impossible. There is criticism that paragraph 35 includes a reference to paragraph 34 which is not about paragraph 35 conduct.  There is the further criticism that paragraph 35(b) raises the spectre of s 51A of the TPA and in doing so has not provided sufficient material facts in relation to future matters.
  1. Furthermore there is a reference to the conduct pleaded in paragraph 15 which was in respect of the BOOT proposal for the Project jointly submitted by Thiess and FFE.  In particular, paragraph 15 refers to the capacity of the calciners and FFE’s engineering expertise in this area.  FFE complains that as it was a jointly prepared document, how is it pleaded against FFE? 
  1. Mr Bond’s response shortly put is – the conduct upon which reliance was placed is pleaded;  and the message derived from the conduct is pleaded.  Where there is context which gives colour to the conduct it too is pleaded.  As was submitted often in the course of argument, in the context of a complex project which involved communication over a lengthy period, in a misleading or deceptive conduct case there is no other sensible way to approach the pleading.  Paragraph 34, with which FFE’s legal advisers have difficulty, is included, as Mr Bond contends, because without specific update or reservation about Thiess continuing to rely on the preMOU advices and representations, Thiess did so.  This was clarified to FFE in correspondence. 
  1. The paragraph 15 point about the document concerns representations and conduct by FFE as a coauthor and as an expert.  As to the s 51A concern, Mr Bond was at pains to demonstrate that paragraph 120 identifies specifically the representations about future conduct pursuant to s 51A of the TPA in the pleading are those contained in paragraphs 39(a) and 76(b).  Other paragraphs do not.
  1. FFE complains that by pleading that FFE impliedly represented that it had reasonable grounds for making the representations pleaded, no material fact supports this. Mr Bond contends that the reasonable grounds are because FFE held itself out as an expert in the field of calciners.  In Heydon v NRMA Ltd [2000] NSWLR 1 McPherson AJA said of s 52 of the TPA

“If the advice is recognisable as expert opinion on the law, it carries the implication, but ordinarily no more, that, in arriving at it reasonable skill and care has been used.”

To similar effect were observations by Lindgren J in MGICA (1992) Ltd (formerly MGICA Ltd) v Kenny & Good Pty Ltd (1996) 140 ALR 313 at 356-7 and Lehane J in Thompson v Ice Creameries of Australia Pty Ltd (1998) ATPR 41611 at 40,693.

  1. FFE makes the same complaints about the excessive references to conduct in other paragraphs in its complaints about paragraph 76.  Furthermore, FFE complains that the paragraph 11 conduct was the provision in 1999 by FFE to Thiess of documents emanating from FFE’s parent companies, one at least of which was dated 1982 relating to calciners.  That is said to demonstrate that FFE had skills and expertise.  Mr Bond argues that it is not the case pleaded that each piece of advice in the introductory part of paragraph 76 was allegedly represented by FFE to be accurate and reliable.  Paragraph 76(a) limits the advice to that in the paragraphs set out in paragraph 76(a) and, against the whole of the conduct described in the introduction to paragraph 76, it seeks to establish the representations pleaded.  In short, the pleading is to the effect that FFE asserted by reference to the conduct pleaded that

“… [w]e have wellestablished skills and expertise;  the plant layout is very simple;  this has all been done before;  we can give you advice at a high level of precision;  you should regard our advice as accurate and reliable.”  Written submissions para 134.

  1. These impugned paragraphs do not fall foul of the pleading rules – they are coherent and plead sufficient material facts which, if accepted, would constitute a complete cause of action.

Paragraph 78

  1. Paragraph 78 concerns the reliance which Thiess alleges it placed on FFE’s conduct which is referenced by mentioning many previous paragraphs in calculating the price for the Project, preparing the joint EPC proposal for the Project and taking thereafter the steps pleaded in paragraphs 81 and 82 which plead the negotiation and entry into the Main Contract with QAL.  Thiess pleads that it did these things “in consultation with FFE”. 
  1. Once again, FFE complains that too many previous paragraphs are referenced in paragraph 78 and finds it impossible to respond to. 
  1. On a claim for damages pursuant to s 82 of the TPA Thiess must prove that it relied on representations and/or advice by FFE in moving towards and ultimately entering into the Main Contract as causing it loss or damage.  It pleads what might turn out to be concurrent causes but also cumulative causes and that is sufficient, Henville v Walker (2001) 206 CLR 459 per Gleeson CJ at para 14, Gauldron J at paras 5961, McHugh J at para 106 and Hayne J at para 163.
  1. FFE complains that Thiess provides insufficient details of how the conduct was relied upon by Thiess. This is either an interrogatory or a desire to know the evidence. It is neither a General Steel Industries point nor a failure to plead a comprehensible case.  The complaints about paragraph 78 are not upheld.

Paragraphs 100104

  1. Paragraphs 100104 plead breach of a common law duty of care owed to Thiess by FFE.  They mirror the allegations in paragraphs 2832.  The complaints by FFE are the same and similarly are not upheld.

Paragraph 114

  1. The complaint about paragraph 114 is withdrawn.

Paragraph 119

  1. Paragraph 119 appears as the “introductory” paragraph to a group of paragraphs headed Claims made for FFE conduct prior to the Consultancy Agreement and a subheading Claims made pursuant to the TPA and under the further heading Misleading or deceptive conduct.  Paragraph 119 is in the familiar form (in this pleading)

“The conduct referred to in paragraphs 34, 35 … and 77 above was engaged in by FFE in trade or commerce within the meaning of the TPA.”

  1. FFE contends that the fate of the mentioned paragraphs should follow their earlier fate. Since none have been struck out, then no consequential orders need be made.

Paragraph 120

  1. Paragraph 120 refers back to the conduct pleaded in paragraphs 39(a) and 76(b) and alleges that the representations were
  • made in relation to “future matters” as that expression is used in s 51A of the TPA;
  • made without reasonable grounds for making them;
  • were thereby misleading and deceptive in breach of s 52 of the TPA.

This complaint has, effectively, been dealt with in answer to the complaint about paragraph 76.  The conduct in paragraph 39(a) and paragraph 76(b) is quite precise and sufficient to sustain the alleged cause of action.

Paragraphs 121125

  1. The complaint by FFE in its written submissions upon which Mr Kerr effectively relied on the hearing appeared to be that each of the individual alleged items of conduct were required to sustain the alleged representations and made particular reference to paragraph 11 (provision of documents from parent companies).  Mr Kerr accepted that what is relied upon is a “collation” of conduct and not each individual alleged representation.  There is no vice of want of material facts here.  Particulars have already been provided.

Paragraphs 126 and 127

  1. FFE has withdrawn its complaint about these paragraphs.

Paragraph 132

  1. Paragraph 132 leads those paragraphs grouped under the heading Claims made in relation to the Memorandum of Understanding and the subheading Misleading or deceptive conduct also constitutes breach.
  1. It is in the form

“In making the representations pleaded in paragraphs 35, 36 … and 76, FFE –

  1. failed to act reasonably and diligently to provide or perform its responsibilities under the Memorandum of Understanding;  and further or alternatively,
  1. failed to exercise the degree of skill and care that would reasonably be exercised by an expert designer of calciners,

in that as pleaded in paras … FFE did not have reasonable grounds for making the representations.”

Thiess accordingly pleads it case in contract and in tort.

  1. The contractual terms which are relevant to this pleading are pleaded in paragraphs 25(i), 26 and 27 and the relevant duty of care is to be found pleaded in paragraph 32.  The allegation is that FFE failed to meet these obligations because it made representations without reasonable grounds for making them and, as Mr Bond submitted, that is the material fact which constitutes the breach.  Thiess has already given particulars, such that it can until after disclosure, of the facts it relies upon to establish the absence of reasonable grounds.  They are set out in paragraphs 121126 of the statement of claim.
  1. FFE’s complaint is twofold – consequential orders need to be made if those paragraphs referred to in paragraph 132 have been struck out and that insufficient material facts have been pleaded.  As to the first – none have been struck out and no consequential orders need be made.  As to the second, Mr Kerr contended that FFE is not told by this paragraph of the pleading what it was that could be linked from the conduct in the enumerated paragraphs to paragraph 132(a) and/or (b).  It is clear that there is no General Steel Industries point which can be advanced against these paragraphs and no consequential orders need be made.

Paragraphs 135136;  138139;  140141;  142

  1. The abovementioned paragraphs follow a similar process of pleading specific breaches of contract and tort, for example, breach regarding platework is in paragraphs 135 and 136 and the breach alleged regarding insulation is to be found in paragraphs 138 and 139.  FFE withdraws its complaint in relation to paragraph 137.  FFE’s complaint about the breach of contract case (it makes no complaint about the duty of care case) is that some of the conduct which is alleged to constitute the breaches predated entering into the MOU.  Mr Bond contended that this was a failure by FFE’s advisers to read the pleading correctly.  As to this, it falls within the same broad parameters of the allegations of reliance which Thiess has pleaded that FFE represented Thiess could do unless it specifically said that Thiess could no longer rely upon the precontractual representations and advices.  This is a reference back to paragraph 34 of the pleading concerning the continuing representation regarding the reliability of precontractual information.  Mr Kerr submitted that if that were the case, then it is necessary to make a reference to paragraph 34 in this group of paragraphs.  That is not the case, however, for all of the allegations.
  1. With respect to paragraph 135 relating to platework, the particulars of the failure are set out in paragraph 135(c) and (d).  The former asserts a failure by FFE to progress its design or analysis so as to enable it to advise Thiess that in its estimate for the joint EPC proposal it should make particular identified allowances in relation to platework.
  1. Paragraph 135(d) asserts a failure by FFE to warn Thiess to build a particular contingency into its estimate for the joint EPC proposal for the Project of an order of 6% because of the preliminary nature of the advice and the risks involved.  Those failures are alleged to postdate the MOU and are failures as Mr Bond submits in relation to the very reason why the parties entered into the MOU, that is, the preparation of the joint EPC proposal. 
  1. Additionally, each of the nominated paragraphs also refers to conduct which occurred before the MOU but which falls within the representation that the information provided prior to the MOU could continue to be relied upon.
  1. With respect to paragraph 136, Thiess alleges that in performance of the MOU, FFE gave advice about the platework for which Thiess should allow in preparing its estimate for the joint EPC proposal.  Accordingly, the failures, the subject of paragraph 136, are failures which occurred in giving advice about the platework and failures to warn.  Both of those failures relate to a period after the MOU.  As Mr Bond submitted, those are failures pleaded in relation to the task for which the MOU was entered into, namely, the preparation of the joint EPC proposal.  The other paragraphs are to the same effect except that they relate to different items, the subject of advice and information.

Withdrawn objections

  1. FFE has withdrawn its objections to paragraphs 143, 159, 174, 175, 177, 178 and 179 of the statement of claim.

Conclusion

  1. As is apparent from the above analysis, I have rejected FFE’s complaints that the identified paragraphs in the statement of claim are bad and ought to be struck out in the General Steel Industries sense as being “manifestly groundless”.  When examined carefully, informed by the nature of the claims and the organisation of the pleading succinctly presented in the Table of Contents to the statement of claim provided by Mr Bond, all falls into place.  It is, if I might comment, a rather elegant pleading, once the arrangement is grasped.  Many of the complaints are, in truth, about the provision of particulars, some of which have been provided along the way in the extensive, and largely very cooperative correspondence between the parties.
  1. There is no sense that FFE’s lawyers were being difficult and attempting to cause inconvenience to Thiess. They seemed genuinely to have misunderstood some of the basic allegations underpinning the action. The concern that disclosure should be as confined as possible, given the long period of the relationship between the parties and the extensive documentation generated by the nature of that relationship, is proper but cannot, I would suggest, be micromanaged by a strike out application.
  1. The second basis for the strike out was said to be the unintelligible or conflated assertions in the statement of claim, which made a responsive pleading difficult with respect to some paragraphs and impossible for others. The scheme of the statement of claim results in a much tighter document, it seems to me, than would have been the case had some other more expansive method been employed. FFE’s lawyers needed to respond to each of the allegations of fact in the time honoured fashion now set out in the UCPR
  1. The application by FFE to strike out Thiess’s identified paragraphs in the statement of claim is dismissed.

FFE’s application about its defence

  1. As with the statement of claim, the parties have exchanged lengthy correspondence about FFE’s defence. As with the statement of claim, there have been several changes and the pleading relied on for this application which is yet to be filed and will await the outcome of these applications I shall refer to simply as “the defence”.
  1. FFE, by its application, seeks orders by way of declaration that certain denials and nonadmissions in the defence comply with the requirements of rr 165 and 166 of the UCPR.  Alternatively, FFE seeks leave to amend or withdraw any admissions deemed to be so as a consequence of failing to comply with the rules.  After hearing submissions on the strike out application FFE had hoped that the issues raised on this application could be resolved, but that did not eventuate, and each impugned paragraph was the subject of argument.
  1. Mr Bond prepared a document which set out the paragraphs in the statement of claim and next to it the paragraph in the defence to consider the responsiveness of the pleading.  This document was marked exhibit A for identification.
  1. Rule 165 provides

“(1)A party may, in response to a pleading, plead a denial, a nonadmission, an admission or another matter. 

(2)A party who pleads a nonadmission may not give or call evidence in relation to a fact not admitted, unless the evidence relates to another part of the party’s pleading.”

Rule 166 concerns denials and nonadmissions.  It provides

“(1)An allegation of fact made by a party in a pleading is taken to be admitted by an opposite party required to plead to the pleading unless –

  1. the allegation is denied or stated to be not admitted by the opposite party in a pleading;  or
  1. ...

 

(2)However, …

(3)A party may plead a nonadmission only if –

  1. the party has made inquiries to find out whether the allegation is true or untrue;  and
  1. the inquiries for an allegation are reasonable having regard to the time limited for filing and serving the defence or other pleading in which the denial or nonadmission of the allegation is contained;  and
  1. the party remains uncertain as to the truth or falsity of the allegation.

(4)A party’s denial or nonadmission of an allegation of fact must be accompanied by a direct explanation for the party’s belief that the allegation is untrue or can not be admitted.

 

(5)If a party’s denial or nonadmission of an allegation does not comply with subrule (4), the party is taken to have admitted the allegation.

(6)A party making a nonadmission remains obliged to make any further inquiries that may become reasonable and, if the results of the inquiries make possible the admission or denial of an allegation, to amend the pleading appropriately.

(7)A denial contained in the same paragraph as other denials is sufficient if it is a specific denial of the allegation in response to which it is pleaded.”

  1. These rules represent a significant departure from the previous Rules of the Supreme Court which permitted a general denial (with specific exceptions) and nonadmissions without more and led, in some cases, to a trial coming on for hearing without the true matters in controversy between the parties being identified.
  1. There has been some struggling with the extent to which evidence may need to be pleaded to satisfy r 166(4) which, as r 149(1)(b) states plainly has no place in a pleading, see the annotations to r 166(4) in the Butterworth Uniform Civil Procedure Rules loose leaf service.  In Ballesteros v Chidlow & Anor No 2 [2005] QSC 285 I commented at paragraph 20

“The requirement to give ‘a direct explanation’ for a party’s belief in the denial or nonadmission raises significant difficulties for a pleader.  The governing general principle in respect of pleadings set out in r 149(1)(b) that a pleading must contain a statement of all the material facts ‘but not the evidence by which the facts are to be proved’ is in apparent conflict with the ‘direct explanation’ requirement in r 166(4) if it be accepted that ‘an allegation of fact’ in r 166 must be regarded as synonymous with ‘material facts’ in r 149.  The mischief of evasive denials or nonadmissions which the rule seeks to remedy is, or was, wellknown.  Commonsense clearly must prevail so that the ‘direct explanation’ must be as brief as is consistent with the statement of material facts but not evidence although I note Helman J’s observation in Doelle v Watson of 26 June 2002 at p 14.”

I think the conclusion must be that if evidence necessarily intrudes into the “direct explanation”, so be it, and it should not, unless employed profligately, be struck out on that ground alone.

  1. Some judicial observations on r 166(4) will assist in guiding the approach to FFE’s principal application.  In Robinson v Laws [2003] 1 Qd R 81 the Court of Appeal considered the “explanation” for the denial in a defamation pleading and concluded that the defendant’s “bland” alternate meaning for the alleged defamatory words was not available as an explanation for a denial pursuant to r 166(4).  At paragraph 37 de Jersey CJ said in conclusion

“Those parts of the amended defence in which the respondents advance, as part of their denial of the appellant’s particularised defamatory meanings, alternative meanings of their own, should have been struck out, because they could not rationally be justified as true matters of denial.”

  1. In Groves v Australian Liquor, Hospitality and Miscellaneous Workers’ Union [2004] QSC 142 Mackenzie J at para 12 noted that

“[T]he denial consists of simply stating the negative of the propositions pleaded in the amended statement of claim without any further elaboration why the defendants believed that the allegation is untrue.  UCPR 166(4) provides that the party’s denial of an allegation of fact must be accompanied by a direct explanation for the party’s belief that the allegations are untrue.”

His Honour elaborated this further at para 15 of his reasons.

  1. As Fryberg J stated in Chief Executive Officer of Customs v Preston unreported decision of 5 January 2000, BC 200004663, at page 5 about the requirements of r 166(4)

“[i]t is necessary under the rules for the statement of defence clearly to relate to particular allegations made in the statement of claim.  …  Each particular allegation must be dealt with …”

  1. Any alleged deficiencies in the statement of claim are not grounds for disregarding the requirements of the rules. Dutney J observed in Woodco Services Pty Ltd v John Holland Pty Ltd [2002] QSC 264 at paragraph 5 where a defendant had concluded that a meaningful defence was impossible because of deficiencies in the statement of claim, several options were available to a defendant

“[i]t [the defendant] could back its judgment on the statement of claim and seek to have it struck out.  It could seek particulars of the matters it considered necessary or it could plead in accordance with the rules.  It chose to plead but failed to do so in accordance with the rules.”

  1. Rule 188 provides that

“A party may withdraw an admission made in a pleading … only with the court’s leave.”

There has been extensive correspondence between the parties about the pleadings including the defence and the deemed admissions.  FFE contends that the impugned paragraphs of its defence do not contain deemed admissions because the explanation required by r 166(3) or (4) is sufficient.  However, FFE seeks leave generally to replead any identified deemed admissions in its defence by virtue of r 166(5), that is, its noncompliance with r 166(3) and (4).  It submits that it is entitled to do so because the application is timely and the trial is not imminent and there is no identified prejudice to Thiess apart from the loss of the deemed admissions.  Thiess argues that each admission needs to be scrutinised carefully particularly as FFE has not provided an affidavit deposing to why it needs to contest the deemed admitted allegations of fact.

  1. In Ridolfi v Rigato Farms Pty Ltd [2001] 2 Qd R 455, a case relied on by Thiess, the defendant insurer in a worker’s compensation case did not respond to a notice to admit facts in the time limited by the rules with the consequence that the facts were deemed to be admitted.  The plaintiff prepared for trial on that basis.  About a week before trial, the insurer’s new solicitors alerted the plaintiff that an application would be made to withdraw the deemed admissions at the commencement of the trial.  It was refused by the trial judge.  On appeal, de Jersey CJ said at pp.4589 that the court below had been given no explanation as to why the notice was not responded to and what response it would have made and ordinarily a court would expect sworn verification of the circumstances justifying a grant of leave.  The Chief Justice observed at paragraphs 20 and 21 of his reasons

“[20]   There is no principle that admissions made, or deemed to have been made, may always be withdrawn ‘for the asking’, subject to payment of costs.  The discretion is broad and unfettered, as exemplified by Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 and Equuscorp Pty Ltd v Orazio [1999] QSC 354.

[21]   The charter of procedure contained in the Uniform Civil Procedure Rules cannot be approached on the basis that if important provisions are ignored, even if inadvertently (and that is not established here), the court may be expected to act indulgently and rectify the omission.  Fulfilling procedural requirements will often contribute significantly to securing an ultimate result which may be considered just.  Allowing the appellant to withdraw these deemed admissions would substantially erode the beneficial worth of a very important procedural mechanism directed, through expediting cases and reducing costs, to promoting the interests of justice.”

  1. In his reasons for judgment McPherson JA, quoting from Coopers Brewery said that admissions are required for the purpose of ensuring that the court is called upon to determine “only questions bona fide in dispute”, at para 26.
  1. Referring to Cropper v Smith (1884) 26 Ch D 700 at 710, Williams J (as his Honour then was) said at para 31

“ … The court ought to correct errors or mistakes in procedure made by the parties so that the matter was determined in accordance with the rights of the parties.  That statement, although made over 100 years ago, is still relevant, and it encapsulates a principal which a judge must always take into consideration in determining whether or not it is appropriate, for example, to allow a party to withdraw an admission.  Essentially it is no more than a recognition that courts will, so far as possible, ensure that a party has a fair trial.  But, for example, where detriment or prejudice is selfinduced, the party may not be entitled to relief.”

His Honour emphasised that each case must be taken on its own facts.  As is apparent, here the proceedings are still very much at the preliminary stage and considerations which weighed with the court in Ridolfi, such as the imminence of the trial and necessary prejudice to the plaintiff, are absent here.  The emphasis which Mr Bond was seeking to make was the obligation on FFE to admit facts not in issue.

Particular paragraphs in the defence

Paragraph 4

  1. This paragraph and paragraph 4 of the statement have already been set out but it is convenient to do so again.  Paragraph 4 of the statement of claim pleads

“The facts referred to in paragraphs 5 to 84 85 below were known to Thiess and FFE at the time they entered into the Consultancy Agreement as referred to in paragraph 85 86 below.”

Paragraph 4 of the defence pleads in response

“Notes the contents of paragraph 4 and in so doing should not be taken to have accepted that the manner in which paragraph 4 is pleaded is either an appropriate method of pleading or is factually correct.  In further answer to the paragraph, FFE says that it cannot plead to Thiess’s knowledge and pleads to the paragraphs referred to in paragraph 4 where appropriate, herein below.  Additionally, FFE are unable to plead to this paragraph in any greater detail as it seeks to conflate the contents of 79 paragraphs into 1 in terms of the level of knowledge that both FFE and Thiess had.  It would be an unduly inefficient way of pleading to require FFE to deal with the knowledge of each of those parties in respect of each of the factual assertions contained in the 79 paragraphs at issue in a defence to this paragraph of the claim.  Further, the reference in paragraph 4 to ‘paragraph 85’ is a mistake.  We assume the reference should be to paragraph 86.

  1. Mr Kerr, in essence, conceded that if its strikeout application in respect of paragraph 4 of the statement of claim was not successful then FFE will need to replead in accordance with the rules.  The content of paragraph 4 is not a nonadmission as understood within the rules.  How FFE goes about pleading to paragraph 4 in an organisational sense is a matter for its lawyers to grapple with.  The overarching pleading that FFE “knew” the facts alleged in each of the paragraphs 5 to 85 can be dealt with as an aspect of its response to the allegations in each of the paragraphs.  I have commented on Thiess’s knowledge in the strikeout application.  What must be done is to admit those facts not genuinely in dispute and deal with any nonadmissions as r 166(3) and (4) requires and any denials as r 166(4) requires.  It is the failure to accept this regime, the purpose of which is to narrow the issues and confine disclosure – the goals articulated by FFE’s lawyers in their submissions – which underpin some of the objections to the statement of claim.
  1. FFE should have leave to replead its response to paragraph 4.

Paragraph 11

  1. The issue here is quite short in compass. In the statement of claim, Thiess pleads that “under cover of a letter dated 10 December 1999 … FFE provided Thiess with, inter alia, the following documents …”  Then follows the identification of three documents.  FFE’s response admits that it sent a document bearing that date which included a number of attachments and “relies on the entirety of the document, including its attachments as if they were set out in full herein, but otherwise denies the contents of paragraph 11”.  FFE goes on to give further explanation about the purpose of the documents.  The point in issue is that FFE does not admit that the three identified documents were amongst the attachments.  It is a deemed admission.  I did not discern Thiess to oppose leave being given to replead about the three identified documents and accordingly leave is given.

Paragraph 14

  1. Paragraph 14 of the statement of claim needs to be set out fully in order to follow the submission that FFE has failed to give a direct explanation for the nonadmission.  It provides

“14.   On or about 6 or 7 March 2000, Thiess and FFE attended a meeting to discuss the submission of a BOOT proposal for the Project involving 3 calciners with a nominal capacity of 4,500 metric tonnes per day (throughout this pleading this unit of measurement is referred to as ‘TPD’ or ‘MTPD’), in which FFE represented that whilst the largest unit FFE had built was a 2,250 TPD alumina calciner, scale up to 4,500 TPD was not a risk as FL Smidth had built suspension calciners for the cement industry up to 10,000 TPD, and it was the same basic technology.

Particulars

(a)The meeting was held on or about 6 or 7 March 2000 at 179 Grey Street, Southbank, Brisbane, and was attended by Mr Bowra and Mr Callow on behalf of Thiess and Mr Yovich on behalf of FFE;

(b)The representation was made orally by Mr Yovich saying words to the effect pleaded.”

  1. The defence in paragraph 14 is as follows

“14.   Admits that on or about 6 or 7 March 2000 employees of Thiess met with employees of FFE to discuss the submission of a BOOT proposal for the Project, but otherwise does not admit the contents of paragraph 14 having regard to the discussion sought to be asserted therein.  At no stage on or about 6 or 7 March 2000 did Mr Yovich advise any representative of Thiess that there was no risk associated with the scale up to 4,500 tpd.  Further, FFE notes that any reference which was made to similarities between FL Smidth design and the proposed design for the Project was limited to mechanical design and size of the vessels only.

  1. The words underlined were added in response to correspondence from Thiess’s lawyers that the pleading was not in compliance with r 166(4).  Mr Bond submitted that the representations alleged in paragraph 4 of the statement of claim have four components, namely
  1. whilst the largest unit FFE had built was a 2,250 TPD alumina calciner;
  1. scale up to 4,500 TPD was not a risk;
  1. as FL Smidth had built suspension calciners for the cement industry up to 10,000 TPD;  and
  1. it was the same basic technology.

Mr Bond accepts that the first sentence which is underlined in paragraph 14 of the defence is a direct explanation to (ii).  There was no response to the other three representations.  The further submission is that the explanation purportedly in the last sentence of the defence introduces new material which is more than an explanation for the nonadmission.  I accept Mr Bond’s submission that to do this, the defence needs to plead the material facts of Mr Yovich’s reservation. 

  1. Leave is given to FFE to replead paragraph 14 to deal with those matters.

Paragraphs 3339

  1. This group of paragraphs in the defence are actually submissions about the inadequacy of the pleading in the statement of claim. There is very little attempt to produce a responsive pleading in conformity with the rules. Mr Kerr has specifically withdrawn the complaint set out in the defence to paragraph 34, but otherwise submitted that FFE, depending on the outcome of the strikeout application, should be given leave to replead.  It is clear that those paragraphs in the defence are not in conformity with the rules and it is appropriate that leave be given to FFE to replead those paragraphs.

Paragraphs 46, 50, 52 and 54

  1. Mr Kerr conceded that the defence’s response to the paragraphs in the statement of claim bearing the same numbering do not comply with rr 165 and 166 of the UCPR.  Thiess does not oppose leave being given to FFE to replead and leave is given.

Paragraph 58

  1. In paragraph 58, Thiess pleads that FFE advised Thiess “that drawings which it provided to Thiess and which are collated in annexure A (the ‘Drawings’), would enable Thiess to …”  There follows a statement as to what Thiess could do with the drawings and particulars of advice that could be inferred from conduct.
  1. By its defence FFE pleads that it

“58.Does not admit the contents of paragraph 58 and in further answer, says that:

58.1FFE did not provide the documents in the form that are collated in Annexure A to the ASC (statement of claim) to Thiess …”

FFE continues pleading an explanation of what it did provide by way of information and the purposes for which it provided that information.

  1. Thiess complains that 58.1 is either a nonadmission or a denial but without more, does not move the case forward.  I accept that submission.  The positive case ought to have been pleaded. I do not, however, accept that the explanation proffered in 58.258.5 is not sufficiently responsive for the purposes of the rules.  Accordingly, FFE should be responsive to the issue which it raises in 58.1 and has leave to replead and otherwise need not replead paragraph 58 of its defence.

Paragraphs 60, 62, 64 and 66

  1. Each of the numbered paragraphs in the statement of claim allege that FFE had given Thiess specific advice as to what Thiess should allow for in its estimate for the joint EPC proposal for the Project, be it floor plates or tonnes of steel per calciner. The defence in each of the paragraphs denies the contents of the paragraph and by way of explanation of the denial asserts that FFE “assisted” Thiess in estimating the amounts needed for each item but that “it was Thiess’s responsibility, being the party responsible for structural design, to estimate the type and number of … that would be required for the Project.”
  1. Mr Bond contends that the defence fails to address the question whether FFE gave advice to Thiess as Thiess alleges.  His submission is a little “too nice”, I would suggest.  There can be no doubt that a more refined defence would have expressed a denial of giving advice and then explained that what it gave was “assistance”.  But I am of the view that the pleading is sufficient for the purposes of r 166.

Paragraph 68

  1. Because of amendments to the statement of claim, Thiess has no opposition to leave being given to FFE to replead paragraph 68 of the defence and leave is accordingly given.

Paragraph 77

  1. This extensive paragraph in the statement of claim is not included in its entirety in the document exhibit A for identification which was used for this application. For the full paragraph it is necessary to revert to the statement of claim itself. In paragraph 77, Thiess claims that FFE failed to disclose to Thiess prior to Thiess’s entry into the Main Contract with QAL that it had not progressed its design or analysis to the point where it could give Thiess the advice Thiess was reasonably entitled to and did in fact expect from FFE namely “accurate and reliable advice as to what should be allowed for in the estimate for the joint EPC proposal for the Project.”
  1. By its defence, Thiess denies the contents of paragraph 77 and then proceeds to give a “further answer”.  For the purposes of this application, the significant “explanation” is found in 77.1.1

“A detailed design for an alumina calciner with a 4,500 TPD capacity did not exist; …”

It goes on to allege that a final design for the calciners had not been developed and would not be developed for the purposes of preparing the EPC proposal.  As a consequence, FFE pleads that the advice which it provided could only be an estimate based on conceptual and not developed designs being based on a scaleup of a smaller calciner.  FFE further pleads that the advice which it gave Thiess could not, therefore, be relied upon as being actual amounts that would be required in the completed project and that there would (“may”) be some variance between the quantities of materials estimated for the purposes of preparing the EPC proposal and the quantities required in the completed Project.

  1. I accept Mr Bond’s submission that this response “misses the point” of paragraph 77 of the statement of claim, that is, that FFE did not disclose to Thiess that it had not done these things and that the basis of the advice was therefore different from the understanding pleaded by Thiess.
  1. In order for the parties to join issue on a very important aspect of the claim, it is essential that FFE pleads to the allegation in paragraph 77 of the statement of claim.  Leave is given to do so.

Paragraphs 122 to 126

  1. This group of paragraphs in the statement of claim alleges that identified representations in paragraphs 36 to 39 and 76 were false and in the premises misleading or deceptive in contravention of s 52 of the TPA.
  1. FFE has responded by denying the contents of each of the paragraphs on the basis that each is embarrassing and should be struck out, refers to its response to the particular paragraphs referred to in the statement of claim and then concludes by pleading

“Says that if, which is not admitted, it is found that FFE did make the representation referred to in paragraph … then FFE had reasonable grounds for making it.”

Mr Kerr conceded that the fate of these paragraphs in the defence depends upon the outcome of the strikeout application.  The strikeout was not successful and it is clear that the defence is insufficient insofar as it is merely a submission about the deficiencies of the statement of claim.  Mr Bond raises the further point that it seems to involve an attempt to be both a denial and a nonadmission without a pleading in the alternative.  These matters can be attended to in the repleaded paragraphs.  Leave is given.

Paragraphs 128 to 130 and 145 to 147

  1. In this group of paragraphs Thiess pleads its loss or damage by alleging that if it were not for the conduct of FFE referred to in certain enumerated previously pleaded paragraphs, Thiess would not have entered into the contract with QAL that it did and either would not have entered into any contract or negotiated a different contract.
  1. FFE responds in the following fashion

“For the reasons referred to herein in response to each of the paragraphs identified in paragraph [128 or as relevant] FFE denies the contents of paragraph … and in further answer says that if which is not admitted”

Thereafter Thiess is alleged to have suffered no loss because it has been fully compensated by the settlement.

  1. It is plain that there is no explanation given for the denial in conformity with the obligation under r 166.  As Mr Bond reasonably concedes, the explanation for the denial at this point in the proceedings prior to disclosure, might be that “despite reasonable enquiries …” that FFE is unable to give any better explanation.  That preserves the position so that after disclosure a full explanation may be able to be extended.  These paragraphs should be repleaded in conformity with the rules with some precision and leave is given.

Conclusion

  1. FFE has been largely unsuccessful in its application seeking declaratory relief that certain paragraphs of the defence are pleaded in conformity with the rules. The paragraphs which have survived that examination are paragraphs 58 (excluding paragraph 58.1), 60, 62, 64 and 66.  I am not inclined to make declarations of conformity when the paragraphs may need to be recast.  These reasons should be a sufficient statement that those paragraphs at present are acceptable.
  1. As has been indicated in these reasons, FFE has leave to replead those paragraphs in the defence identified as not being in accordance with the rules, namely, paragraphs 4, 11, 14, 3339, 46, 50, 52, 54, 58.1, 68, 77, 122126, 128130 and 145147.
Close

Editorial Notes

  • Published Case Name:

    Thiess Pty Ltd v FFE Minerals Australia Pty Ltd

  • Shortened Case Name:

    Thiess Pty Ltd v FFE Minerals Australia Pty Ltd

  • MNC:

    [2007] QSC 209

  • Court:

    QSC

  • Judge(s):

    White J

  • Date:

    13 Aug 2007

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
ALR (1993) 118 ALR 543
2 citations
Ballesteros v Chidlow No 2 [2005] QSC 285
2 citations
Bruce v Odhams Press Ltd (1936) 1 KB 697
2 citations
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
2 citations
Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738
1 citation
Cropper v Smith (1884) 26 Ch D 700
1 citation
EK Nominees Pty Ltd v Woolworths Ltd (2006) NSWSC 1172
2 citations
Equuscorp Pty Ltd v Anthony Orazio [1999] QSC 354
1 citation
Groves v Australian Liquor Hospitality & Miscellaneous Workers' Union [2004] QSC 142
2 citations
Hawkins v Clayton (1988) 164 CLR 539
2 citations
Henville v Walker (2001) 206 CLR 459
2 citations
Heydon v NRMA Ltd [2000] NSWLR 1
2 citations
Meckiff v Simpson (1968) VR 62
2 citations
MGICA (1992) Ltd (formerly MGICA Ltd) v Kenny & Good Pty Ltd (1996) 140 ALR 313
2 citations
NRNQ (a limited partnership) v MEQ Nickel Pty Ltd [1991] 2 Qd R 592
2 citations
Queensland Alumina Ltd v Alinta DQP Pty Ltd [2006] QSC 391
2 citations
Ridolfi v Rigato Farms Pty Ltd[2001] 2 Qd R 455; [2000] QCA 292
2 citations
Robinson v Laws[2003] 1 Qd R 81; [2001] QCA 122
2 citations
The Chief Executive of Officer of Customs v Preston [2000] QSC 178
2 citations
Thompson v Ice Creameries of Australia Pty Ltd (1998) ATPR 41-611
2 citations
Woodco Services Pty Ltd v John Holland Pty Ltd [2002] QSC 264
2 citations

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