New South Wales Supreme Court CITATION : Cleary Bros (Bombo) Pty Limited v Waste Recycling and Processing Corporation [2009] NSWSC 1248 HEARING DATE(S) : 18/11/09 JUDGMENT DATE : 19 November 2009 JURISDICTION : Equity Division Technology and Construction List JUDGMENT OF : Einstein J DECISION : See paragraph 50 CATCHWORDS : Practice and Procedure - Application to amend pleadings - Examination of majority decision in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 - Complex of disputes concerning waste management and disposal centre at Lucas Heights - New Amendments likely to result in increase in defendant's cross-claim from $9,270,000 to $21,887,000 LEGISLATION CITED : Civil Procedure Act 2005 CATEGORY : Procedural and other rulings Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 Bomanite Pty Ltd v Slatex Corp Aust (1991) 32 FCR 379 CASES CITED : Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 Cropper v Smith (1884) 26 Ch D 700 Ketteman v Hansel Properties Ltd [1987] AC 189 Sali v SPC Ltd (1993) 67 ALJR 841 PARTIES : Cleary Bros (Bombo) Pty Limited (Plaintiff) Waste Recycling and Processing Corporation (Defendant) FILE NUMBER(S) : SC 55079/06 COUNSEL : Mr M Orlov (Plaintiff) Mr R Scruby (Defendant) SOLICITORS : Sparke Helmore (Plaintiff) Clayton Utz (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST Einstein J Thursday 19 November 2009 55079/06 Cleary Bros (Bombo) Pty Limited v Waste Recycling and Processing Corporation JUDGMENT Introduction 1 By motion filed 16 October 2009 the cross-claimant ("WSN") seeks leave to amend its further amended cross-claim statement ("FACS") and reply to Cleary Bros' amended cross-claim response. The contested amendments are to the particulars to paragraph 7 of the FACS and the particulars to paragraph 1 of the reply. These proposed amendments are relevantly identical. The proceedings 2 The proceedings concern six disputes involving a waste management and disposal centre at Lucas Heights ("LHWMC"). LHWMC is owned by WSN and operated by Cleary Bros pursuant to a contract that commenced in 1999 with a term of approximately 12 years. 3 The proceedings were commenced by summons on 10 November 2006. WSN filed a cross-claim summons and cross-claim statement on 5 January 2007. The cross-claim included a claim described as the "compaction rate claim" in which WSN sought damages for breach of contract and a declaration that it had an immediate right to terminate the contract because of Cleary Bros' alleged breaches of contract. 4 In short, the cross-claim ("compaction claim") concerns a requirement in the contract that waste put into a landfill at LHWMC be compacted at a certain rate (0.94m3 per tonne). The compaction rate is determined by the amount of airspace consumed by waste divided by the tonnage of waste placed into that airspace. The nub of the dispute between the parties regarding the compaction claim is the methodology of calculating airspace and thus the compaction rate. 5 As it currently stands, the cross-claimants are claiming between $9,270,000.00 and $21,887,000.00. The amendments are likely to result in the claim increasing by $11,286,530.00. The principles underpinning the exercise of the discretion to permit an amendment to pleadings 6 The recent decision of the High Court of Australia in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 sets the touchstone appropriate to the principled exercise of the discretion to allow an amendment to pleadings. I am unable to discern any particular inconsistency as between the reasons given by the Chief Justice and those given by the majority [in what follows I have used italics for emphasis]. 7 The majority judgment [Gummow, Hayne, Crennan, Kiefel and Bell JJ]: i. At 89, dealt with the concept of discretion: "'Discretion' is a notion that 'signifies a number of different legal concepts'. In general terms, it refers to a decision-making process in which 'no one [consideration] and no combination of [considerations] is necessarily determinative of the result'. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made." [citing the observations by Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission as apposite] ii. The majority in Aon further observed that Gleeson CJ, Gaudron and Hayne JJ in Coal and Allied Operations went on to point out that the latitude as to choice may be considerable or it may be narrow . iii. At 92, the majority observed that case management by the courts is now an accepted aspect of the system of civil justice administered by the courts in Australia, adding: It was recognised some time ago, by courts here and elsewhere in the common law world, that a different approach was required to tackle the problems of delay and cost in the litigation process. In its report in 2000, Managing Justice: A review of the federal civil justice system , the Australian Law Reform Commission noted that: "Over the last ten years Australian courts have become more active in monitoring and managing the conduct and progress of cases before them, from the time a matter is lodged to finalisation". iv. At 93 the majority pointed out that "the achievement of a just but timely and cost-effective resolution of a dispute has an effect upon the court and upon other litigants. In Sali v SPC Ltd Toohey and Gaudron JJ explained that case management reflected: "[t]he view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard ...". v. At 95 and 96, the majority observed inter alia as follows: What may be just, when amendment is sought, requires account to be taken of other litigants, not just the parties to the proceedings in question. The statement is consistent with what was said in Sali v SPC , which reflected a proper understanding of case management. The statements in J L Holdings do not reflect such an understanding and are not consistent with what was said in Sali v SPC . To say that case management principles should only be applied "in extreme circumstances" to refuse an amendment implies that considerations such as delay and costs can never be as important as the raising of an arguable case; and it denies the wider effects of delay upon others. ... An important aspect of the approach taken by the plurality in J L Holdings was that it proceeded upon an assumption that a party should be permitted to amend to raise an arguable issue subject to the payment of costs occasioned by the amendment. So stated it suggests that a party has something approaching a right to an amendment. That is not the case. The "right" spoken of in Cropper v Smith needs to be understood in the context of that case and the Rule, which required amendment to permit the determination of a matter already in issue. It is more accurate to say that parties have the right to invoke the jurisdiction and the powers of the court in order to seek a resolution of their dispute. Subject to any rights to amend without leave given to the parties by the rules of court, the question of further amendment of a party's claim is dependent upon the exercise of the court's discretionary power. vi. At 98, the majority observed as follows: Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a "just resolution" is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. vii. At 99-101, the majority observed as follows: In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. …The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment. … The views expressed by Lord Griffiths in Ketteman v Hansel Properties Ltd , that justice cannot always be measured in money and that a judge is entitled to weigh in the balance the strain the litigation imposes upon litigants , are also now generally accepted. In Bomanite Pty Ltd v Slatex Corp Aust French J said of Bowen LJ's statements in Cropper v Smith : "... That may well have been so at one time, but it is no longer true today ... Non-compensable inconvenience and stress on individuals are significant elements of modern litigation. Costs recoverable even on an indemnity basis will not compensate for time lost and duplication incurred where litigation is delayed or corrective orders necessary." In Ketteman Lord Griffiths recognised, as did the plurality in J L Holdings , that personal litigants are likely to feel the strain more than business corporations or commercial person. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end. The stated object in the Court Procedures Rules, of minimising delay, may be taken to recognise the ill-effects of delay upon the parties to proceedings and that such effects will extend to other litigants who are also seeking a resolution in their proceedings. viii. At 102-103, majority observed as follows : The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case . Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates . Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment. The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in J L Holdings . Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. Development of the compaction claim 8 The compaction rate claim, as pleaded initially, concerned the question whether Cleary Bros had failed to achieve an air space usage/compaction rate of 0.94m³/tonne which Cleary Bros had guaranteed under the contract and further, whether it had failed to do so for two consecutive years from the date of commencement of the contract. 9 Particulars of the claim were based on the results of aerial surveys undertaken by Geo Spectrum Australia Pty Ltd (Geo Spectrum) for each 6 month period from 18 June 2004 to 16 June 2006. 10 What is notable about the compaction claim is how it has expanded quite significantly over time. The table below demonstrates its scope in its various incarnations, which shows in stark contrast the magnitudes of the positions sought by the cross-claimants): Compaction claim Dates Time period in Years Increase in claim Original 18/06/2004 to 2 Years N/A (This claim is not pursued anymore) 16/06/2006 Amended 18/04/2004 to 27/06/2008 4 Years 0 (This is the baseline figure) (+ 100.00% on Original) 8.5 Years +$11,286,530.00 Proposed 19/06/1999 to 17/11/2003 and 18/04/2004 to 27/06/2003 (+ 112.50% on Amended) (+ 121.75% on lower claim) (+ 325.00% on Original) (+ 51.57% on higher claim) 11 WSN's evidence in chief on the cross-claim was served on 12 March 2008 and 28 November 2008, except for its quantum expert's report which was served on 11 March 2009. As the above table demonstrates, the effect of the evidence is that WSN claims to have lost up to 896,806 m³ of airspace in the period from 18 June 2004 to 27 June 2008, calculated by reference to the results of aerial surveys undertaken by Geo Spectrum. 12 Alternatively, WSN claims to have lost either 488,296 m³ or 474,722 m³ of airspace based on interpretation of biannual surveys undertaken by Goodman Consulting NSW Pty Ltd under contract with Cleary Bros. 13 Reports served in the proceedings from WSN's quantum expert, Mr Gower, give various estimates of the present value (at 31 May 2008) of lost contribution to WSN's profits caused by airspace lost in the 4 years from 18 June 2004 to 27 June 2008. At its highest the claim for that period is valued at $21,887,000. At its lowest, the claim is valued at $9,270,000. 14 It is apparent that the effect of the proposed amendments to the cross-claim would be to extend the period covered by the compaction rate claim to include the approximately 4 1/2 year period from 10 June 1999 to 17 November 2003. Although the particulars do not quantify the alleged loss of airspace during that period, there is before the court evidence on the motion derived from a table provided as part of the second witness statement of Mr Ross Manolas dated 28 September 2009, that WSN now intends to claim that a further 462,458.43 m³ of airspace was lost during the period between 10 June 1999 and 17 November 2003. 15 As aforementioned this would increase WSN's total claim for loss of airspace by more than 50% to 1,248,541 m³. 16 WSN has not served any evidence valuing the additional lost airspace specifically. However, Mr Gower's reports provide a mechanism by which a value could be worked out applying Mr Gower's estimates of the net present value at 31 May 2008 of WSN's loss per tonne for each year until 2022. This involves converting lost airspace into an equivalent loss of waste tonnes that, on WSN's case, could have been placed into that airspace. Mr Gavazzi [the solicitor for the plaintiff] has not attempted that conversion in relation to the additional 462,458.43 m³ of airspace. However, extending Mr Gower's values rateably indicates that the approximate increase in the maximum value of the claim as at May 2008 is likely to be in the order of $11,286,530. Returning to the detail 17 Unfortunately before travelling further, it becomes necessary to endeavour to explain some of the parameters involved in a very technical set of proceedings. The following explanation is no more than that which I gained from the written and oral submissions, it being quite possible that I have misunderstood some of the matters which follow. In any event the current application being interlocutory, none of what is now put forward, if it be incorrect, will affect the proposed reference of the proceedings to a referee in due course. 18 As stated earlier, the Compaction Claim concerns a requirement that waste put in a landfill at LHWMC be compacted at a certain rate called the "compaction rate". 19 The compaction rate is calculated as follows: Where: R = compaction rate s = airspace consumed by waste (measured in m ³) m = mass of waste (measured in tonnes) 20 The compaction rate is therefore expressed in terms of cubic metres per tonne. 21 The benchmark compaction rate relevant to these proceedings is 0.94m3 per tonne. 22 The major point of dispute between the parties is the methodology in assessing s (the airspace consumed by the waste). 23 The parties appear to agree that airspace usage should be calculated each 6 months and that that calculation should occur by reference to the surveys. 24 The cross-claimant defendant WSN claims that the surveys should be directed at the areas of the landfill in which waste was put into landfill during the 6 months prior and then comparing the levels on those surveys to previous surveys of those areas. 25 The cross-respondent claimant Cleary Bros claims that the surveys should be conducted of the entire site and then compared with a base survey conducted at the commencement of the contract. 26 To properly explain the difference in methodologies it is useful to use a hypothetical example where the site in question is divided into two areas, Area A and Area B. Surveys are taken every 6 months. A snapshot of 12 months allowing for two survey periods is analysed. The situation is set out in the table below: Time Area A Airspace Used (m3) Area B Airspace Used (m3) T + 0 months 0 0 T + 6 months 100 0 T + 12 months 80 100 Assumptions: (a) T is the time the contract was entered into. The site is empty at T + 0 months. Whether separate surveys are taken of each area or a survey is taken of the whole site, there is no difference. (b) 100 tonnes of waste is placed into Area A from T + 0 to T + 6 which fills Area A. (c) 100 tonnes of waste is placed into Area B from T + 6 to T + 12 which fills Area B whilst Area A is left to settle. (d) The natural settlement of 100 tonnes of waste in Area A results in a reduction or decay of its airspace volume by 20m 3 (from 100m 3 to 80m 3 ). (e) The mass of the waste does not change over time. 27 Under WSN's method regarding surveys: (a) A survey of Area A is taken at T + 6 months (the first WSN survey) (b) A survey of Area B is taken at T + 12 months (the second WSN survey) Note that a survey of Area A will not be taken at T + 12 months as Area A is not utilised in the second 6-month period. 28 The result of WSN's methodology: (a) The first WSN survey will yield a compaction rate of 100/100 = 1m 3 per tonne. (b) The second WSN survey will yield a compaction rate of 100/100 = 1m 3 per tonne. 29 In other words, Cleary Bros would be in breach of the contract for both 6-month periods because the compaction rates in both surveys exceed 0.94m3 per tonne. 30 Under Cleary Bros' method regarding surveys: (a) A survey of both Area A and Area B is taken at T + 6 months (the first Cleary Bros survey); (b) A survey of both Area A and Area B is taken at T + 12 months (the second Cleary Bros survey). 31 The result of Cleary Bros' methodology appear to be: (a) The first Cleary Bros survey will yield a compaction rate of 100/100 = 1m 3 per tonne for the entire site. (b) The second Cleary Bros survey will yield a compaction rate of 180/200 = 0.9m 3 per tonne for the entire site. Note that the second Cleary Bros survey looks at 200 tonnes of waste rather than 100 tonnes because it looks to the entire site constituting 100 tonnes filled in Area A in the first 6-month period and 100 tonnes filled in Area B in the second 6-month period. 32 In other words, Cleary Bros would be in breach of the contract for only the first 6-month period because of the natural settling and compaction of Area A that has occurred in the second 6-month period. 33 In substance, Cleary Bros' methodology accounts for the natural settling and compaction of waste over time whilst WSN's methodology does not. By definition, Cleary Bros' methodology will result in lower computed compaction rates than WSN from the second survey at T + 12 months onward. The position taken by the plaintiff in relation to the putative amendments 34 Cleary Bros opposed the grant leave to amend the cross-claim on the following grounds: i. WSN has not provided any satisfactory explanation for its decision to amend the compaction rate claim at this late stage; ii. WSN has not provided any satisfactory explanation why it did not amend the compaction rate claim earlier to include the period since the commencement of the contract, having made allegations that Cleary Bros was in breach of the contract as early as May 2004 – and having foreshadowed such an amendment in April and June 2008, when at all material times WSN had available relevant aerial survey data prepared by Geo Spectrum, similar to the survey on which WSN had based its claim in respect of the period from May 2004; iii. the explanation referred to by Mr Christopoulos in paragraphs 23 and 26 of his affidavit sworn 16 October 2009 cannot be accepted in light of statements in contemporaneous document; iv. an inference is available (and Cleary Bros will submit on the hearing of the motion that the Court should draw the inference), that the amendment has been prompted as a reaction to Cleary Bros' proposal to WSN by letter dated 5 August 2009, for WSN to mitigate its loss by directing Cleary Bros to undertake compensatory excavation and certain other remedial works, sufficient to make up all of the airspace that WSN claims to have lost during the period from 18 June 2004 to 27 June 2008, such works to be undertaken at Cleary Bros' cost subject to the outcome of the cross claim; v. the amendment would result in substantial delay to the proceedings; vi. further prolongation of the litigation would result in prejudice to Cleary Bros' business and to Mr Granger personally which cannot be remedied by an order for costs; vii. to the extent that the amendments relate to claims for breaches of contract that are alleged to have occurred more than six years before the date of filing of the cross claim summons (5 January 2007), the amendment is futile because the claims are statute barred; viii. to allow the amendment in those circumstances would be contrary to ss 56, 57 and 58 of the Civil Procedure Act 2005 . 35 Cleary Bros object to leave being granted to amend WSN's reply to amended cross-claim response on the grounds that: i. it is not part of Cleary Bros' case pleaded in paragraphs 11 to 39 of the Amended Substituted Cross-Claim Response that average compaction rates achieved by Cleary Bros, should be based on Goodman survey data in respect of the period 10 June 1999 to 17 November 2003; and ii. insofar as the proposed amendment alleges otherwise, it does not arise properly in reply. Placing the proposed amendments into perspective Delay to the proceedings 36 There was affidavit evidence before the Court given by Mr Gavazzi in the following terms: i. Cleary Bros has served evidence from 9 witnesses, 6 of whom are witnesses of fact and 3 are experts. The evidence currently comprises 8 witness statements, 4 expert reports and 23 volumes of documents. ii. WSN has served evidence from 16 witnesses, 11 of whom are witnesses of fact and 5 are experts. The evidence comprises 18 witness statements (including annexures) and 7 expert reports. iii. Of the total of 25 witnesses currently giving evidence in the case, 18 are giving evidence in relation to one or more aspects of the compaction rate claim. iv. Together with counsel I have made an estimate of the likely length of the cross-examination of each witness and an overall estimate of the likely length of the hearing. I estimate that the hearing currently will occupy about 6 to 7 weeks, including time for both parties to open, with additional time required for written and oral closing submissions. v. The proceedings are almost at a stage where they are ready to be referred to a referee for hearing. Some additional work is required to answer some aspects of the evidence which WSN served on 28 September 2009 and 12 October 2009, which Cleary Bros will argue is new evidence and not strictly in reply. I have written to Clayton Utz requesting copies of certain documents referred to in the evidence to enable that to be done. I estimate that Cleary Bros can complete its evidence in relation to these matters within 4 weeks of being provided with copies of the documents. At that point the proceedings will be ready for hearing except for the new issues arising out of the amendment. vi. In order to meet the new case in respect of airspace allegedly lost in each 6 month period from 10 June 1999 to 17 November 2003, it will be necessary to prepare survey evidence which enables the airspace used during each 6 month period to be determined on a 'contract-to-date', 'whole-of-site' basis. Those terms are explained in the Amended Substituted Cross-Claim Response. Cleary Bros' case is that this is the only method of measurement which enables Cleary Bros' performance against the contract standard to be determined, for reasons which appear from a Cleary Bros' letter to WSN dated 25 August 2004. Surveys which Goodman carried out between 10 June 1999 and 17 November 2003 were not conducted on that basis resulting, on Cleary Bros' case, in erroneous airspace usage results as appears from a Goodman letter to Cleary Bros dated 24 August 2004. vii. A practical consequence of this is that Cleary Bros did not obtain (or retain) contemporaneous survey data which would enable air space usage to be determined on a whole of site contract to date basis at various times between 10 June 1999 and 17 November 2003. The only way this could be done now is for Cleary Bros to access and make use of the raw aerial survey data obtained by WSN during that period – [18] pp 139-141. viii. A CD titled 'LUCAS HEIGHTS # 2 Digital Mapping Data May 1996 - December 2007' was served on Sparke Helmore by Clayton Utz on 10 November 2008, as Mr Christopoulos says in paragraph 11 of his affidavit. A copy of the information was requested originally on 27 February 2008, because it was referred to generally in a witness statement by Ralph Bennett of Geo Spectrum served on 20 December 2007. However, since receiving the disk in November 2008 Cleary Bros has not undertaken any review of the completeness, sufficiency or utility of the data in respect of the period prior to 18 June 2004 because it was irrelevant to WSN's pleaded case at that time. ix. Mr Granger has made a preliminary review of a sample of the information contained on the CD for the pre June 2004 period and has ascertained that it comprises both DXF and digital terrain model electronic data, although he has not yet been able to determine whether all the information is in a form which is usable by software currently available to Cleary Bros. x. It will be necessary for Cleary Bros to review the adequacy of WSN's discovery in light of the expanded case. In material respects the orders for discovery by WSN made on 15 June 2007 were confined to the period after June 2004. xi. If the amendment is allowed it will be necessary for Cleary Bros to retain Mr Goodman to prepare survey evidence on a whole of site, contract to date basis, for the 6 monthly periods covered by the claim. I wrote to Mr Goodman with a view to identifying what work would have to be done and to obtain an estimate of how long it would take. Mr Goodman has written to me advising that he estimates the work is likely to take him 22 (and potentially as long as 31) working weeks. xii. Since then I have enquired of Mr Goodman by telephone whether access to Geo-Spectrum's data on the CD is likely to result in any significant saving of time. Mr Goodman has informed me and I believe that the data would not obviate the necessity for him to validate the digital terrain models and source coloured aerial photographs for each of the survey periods, but about two weeks of work might be saved, so that his estimate of the time necessary under Scenario A in his letter would be 20 to 29 working weeks, instead of 22 to 31 working weeks. xiii. Inevitably detailed evidence of the kind mentioned above is likely to create a need for WSN to prepare further evidence in reply which may take several months. xiv. If this was to occur the proceedings are unlikely to be ready for hearing by a referee before the middle of next year at the earliest. xv. I am not able to estimate at this time what effect the additional evidence would have on the length of the hearing, other than to assume that necessarily it would take longer. 37 During the hearing of the motion each party was permitted to call some short evidence from their respective solicitors. In the case of Mr Gavazzi his evidence included that of a telephone conversation which he had had with Mr Goodman during the luncheon break. That evidence was as follows: I asked Mr Goodman whether what would be involved on his part on reviewing the surveys of the Lucas Heights site between 1999 and June 2004 on the basis of the methodology adopted by WSN in this case, which was in respect of the areas of landfill as distinct from the whole of site survey which is the Cleary Bros position. I inquired of him as to what would be necessary for him to undertake that survey work and he indicated to me that it would be very similar in nature to the survey work he set out in his letter to me in response to a letter I issued to him in October, that the process would involve obtaining aerial photographs, photogrammetry of the site for the relevant periods, he would need to obtain those photos in respect of each of the relevant period, the six monthly periods, and he would then need to engage a consulting firm to create a digital terrain model in respect of the aerial photogrammetry of the site. He would then need to take that information and conduct some extensive analysis in respect of each six monthly date to determine areas of excavation and areas of land filling, which is the position that WSN adopts. That would take in his estimation no less time than he indicated in relation to the whole site because the work is no less detailed and requires a comparison of the survey relevant to the previous six monthly survey … He indicated that the difference in the two processes was that in respect of the whole of site contract to date basis methodology he would compare the survey at a six monthly date to the base survey date in 1999 whereas on the WSN methodology he would still undertake the comparison but it would be a comparison of the survey conducted at a date compared with the survey for the previous six months in respect of the change in the areas, in respect to that survey. Prejudice to the plaintiff -deleterious effects of prolonging the litigation on Cleary Bros and Mr Granger 38 Cleary Bros further raise the following matters which are appropriate to be taken into consideration on the application: i. Mr Granger has primary responsibility for the conduct of the proceedings on behalf of Cleary Bros and for providing instructions to Sparke Helmore. ii. He is also a key witness in relation to both matters of fact and expert opinion. His current statement dated 25 June 2009 runs to 460 paragraphs and refers to 4 volumes of documents. iii. The conduct of the proceedings has taken up a substantial amount of Mr Granger's time and has diverted him from his role and responsibilities as Cleary Bros' Technical Manager, which is described in the following paragraphs. iv. As Technical Manager, Mr Granger has primary responsibility for Cleary Bros' operations at the LHWMC and for administering the contract with WSN on a day-to-day basis. v. In that capacity his responsibilities also include: (a) managing the Environmental Engineering and Contract Division, Engineering Services Division and Construction Division of Cleary Bros; (b) providing technical and engineering advice to the Chief Executive Officer and directors of Cleary Bros in respect of all Cleary Bros' operations; (c) acting as the management representative and being responsible for the day to day operation of Cleary Bros' Business Management System, OHS&R Management System and Environmental Management System. Quality assurance officers report directly to Mr Granger on matters of policy, internal audit and system training; (d) identifying Cleary Bros' resource requirements and ensuring that adequate resources are available for Cleary Bros' operational and contract work requirements, including delegating responsibility as appropriate to divisional managers and delegates; and (e) reviewing Cleary Bros' quality management system with the Chief Executive Officer, including reporting non-conformances and reviewing Cleary Bros' quality, environmental and occupational, health and safety policies. Together with divisional managers, Mr Granger is responsible for preparing records of each review. [A more detailed statement of the scope of Mr Granger's role and responsibilities as the Technical Manager has been extracted from Cleary Bros' Corporate Business Management Manual – [53].] vi. Mr Granger's responsibilities in respect to the implementation, maintenance and follow-on reviews of Cleary Bros' management systems relating to quality, OHS&R and environmental management are described in a document titled 'Management Responsibility' (Procedure CB 4.1) dated 4 May 2005 and 1 February 2006 – [54]. vii. Mr Granger also: (a) has direct management responsibility for the following Environmental Engineering and Contracts Division projects: Port Kembla Landfill Albion Park Quarry Redevelopment Gerroa Sand Mine Redevelopment Lucas Heights 1 Landfill Rehabilitation; (b) executive oversight and review for the following Construction Division projects: Garden Gates Subdivision, Western Sydney $8m Minto Renewal 3 Subdivision $5m The Hermitage Subdivision, Western Sydney $5m Garden Gates 38B – 47 Subdivision, Western Sydney $7.3m viii. Mr Granger also is currently responsible for overseeing submissions of tenders for new projects being sought by Cleary Bros with an approximate contract value as stated below: Estimated Contract Value Crookwell Wind Farm $23m Nan Tien Temple, Wollongong $5m Bingara Gorge Golf Course $10m Macarthur Gardens 3 Subdivision, Campbelltown $6m Mittagong Subdivision $10m - $15m Minto Renewal 4 Subdivision $4m ix. Mr Granger currently splits his time as to about 70% to the management and conduct of these proceedings and as to about 30% to his role and responsibility as Technical Manager. The time which he is required to allocate to the conduct of the proceedings is continuing to significantly limit the time he has available to discharge his duties and responsibilities as Technical Manager and is interfering with his ability to do so effectively. Mr Granger has always played an important role in developing and expanding Cleary Bros' business. However, as a result of the time taken up by the proceedings, he is significantly limited in his ability to investigate and pursue future work opportunities for Cleary Bros. Personal considerations 39 Cleary Bros also reliant on the following matters in support of their proposition that at this late stage the amendments should not be permitted: Mr Granger's wife suffered a stroke in 1998, which has left her with residual disability including short term memory loss, reduced mobility, epilepsy and speech and comprehension impediment. He has arranged for a carer to attend on his wife 3 days per week. However daily he ensures that his wife takes prescribed medication in the morning before he leaves for work at between 7.00am and 7.30am and on his return from work no later than 6.00pm in the evening ensures that she takes her evening medication. Mr Granger is otherwise required to be on call to attend on his wife as necessary, particularly should she suffer an epileptic fit or muscular spasm. His wife takes medication each morning and evening consisting of Lamictal, Tegretol and Dilantin. However she suffers from periodic short term memory loss which can cause her to be unsure as to whether she has taken medication, unless Mr Granger is present to ensure that she does so correctly. On weekends Mr Granger is the full time carer for his wife. 40 Cleary Bros contend that taken together the whole of the above described circumstances above described circumstances have imposed a very significant strain on Mr Grainger which will be prolonged considerably if the current application for leave to amend be granted at this late stage. The concession offered by WSN 41 In attempting to mitigate the prejudice that would inevitably befall Cleary Bros if the amendments were allowed, WSN made a particular concession. Essentially the concession amounted to an acceptance that if one adopted Cleary Brothers methodology then compaction rates would have been met prior to 18 June 2004. WSN made it clear that the Cleary Bros' methodology would effectively result in each survey for each 6-month period leading up to June 2004 yielding compaction rates under the 0.94m3 per tonne threshold. This was what the plaintiff's counsel referred to as the "wide" concession. 42 The cross-claimant contends that the result of the concession is that there can be no utility in Cleary Bros investigating or putting on further evidence of compaction rates pre-June 2004 it suggests will delay the proceedings. 43 This proposition was gainsaid by the plaintiff. It's proposition was that: i. If the issue is made about the earlier period, Mr Goodman's calculations will be under challenge. ii. In order to demonstrate that even if one accepts WSN's methodology in surveying the filled area, that is not in fact what Mr Goodman carried out and the results are wrong. iii. Goodman's error resulted in change in methodology. iv. In order to challenge or demonstrate the error still requires generation of survey evidence. v. It is still necessary to go back to the Geo Spectrum survey material and reconstruct and undertake a further valuation of correct areas of landfill and volumetric changes assessed on a 6-month basis. vi. At the end of the day, what is involved is undertaking the exercise to demonstrate that the previous Goodman methodology is wrong. The concession removes but one issue that the pre-2004 evidence has to address. vii. The concession removes need for extra evidence pre-2004 if and only if Cleary's methodology is correct, but not otherwise The contest as to the period of time necessary to be taken if Mr Goodman was to use his aerial surveys to determine the change in volume between 26 monthly periods in the period prior to 2004 44 The defendant's solicitor also gave short oral evidence of having spoken to Mr Bennett of Geo-Spectrum who had been accustomed to carrying out aerial surveys on behalf of WSN. The evidence given as to the likely time parameters was as follows: The purpose of the call was to ascertain how long it would take for - I explained to Ralph Bennett if Mr Greg Goodman, who he knows to be Cleary Bros' surveyor, was to use his aerial surveys to determine the change in volume between two six-monthly periods in the period prior to 2004. Ralph asked me how many periods I was talking about. I said there would be roughly eight periods involved and he indicated it would take about two days per period to determine the change in volume. He said it wouldn't - I asked him would it require to digitise the aerial photos. He said that it wouldn't; the aerial photos which he has provided to me, which I - which we, Clayton Utz have provided to Sparke Helmore, are in 3D DXF format and Ralph indicated that a surveyor should not have to re-digitise those aerial DXF files. I then said to Ralph if there was an indication that it would take Mr Goodman between 20 to 30 weeks, what did he think of that, and Mr Bennett said that he would be out of business if it would take that long to do. Q. And did he say anything about how long it would take to do? A. He did. He indicated it should take two days, possibly three. He didn't think it would take a week but he said even if it took a week, and he said it shouldn't take that long, if you were doing eight different calculations it wouldn't take longer than eight weeks. Anterior Correspondence 45 As has already been demonstrated these are very complicated proceedings. Although it has not be necessary in these reasons to travel into the correspondence which passed between the solicitors, it is particularly pertinent to include reference to paragraphs 10-13 to the affidavit of Mr Christopoulos who had deposed as follows: In a letter dated 1 October 2008 Sparke Helmore requested production of Geo-Spectrum's aerial survey records since 1999. I obtained these directly from Geo-Spectrum and provided them to Sparke Helmore by letter dated 10 November 2008. Following receipt of WSN's Amended Cross-Claim Statement filed on 28 May 2008, by letter dated 30 May 2008, Sparke Helmore advised Clayton Utz: "the particulars of the allegations of breach in paragraph 7 of the amended cross-claim statement are confined to breaches that are alleged to have occurred in the period 18 June 2004 to 16 June 2006. Although the statement 'Further particulars to be provided' continues to appear in the particulars of paragraph 7, we assume that your client has now fully particularized the claims which our client is required to meet and that no further amendments are presently contemplated." By letter dated 6 June 2008, Clayton Utz advised Sparke Helmore: "You have requested us to foreshadow the respects in which it is likely that the particulars in relation to the compaction rate claim will be amended. We expect that the particulars to paragraph 7 of the Amended Cross-Claim List statement will be amended to include allegations that compaction rate requirements were not met from 16 June 2006 to date, and prior to 18 June 2004. As you know the documents sought on the subpoena from Goodmans have not been discovered by your client and are not in the possession of our client. Without those documents our client is presently unable to identify the period of time prior to 18 June 2004 that compaction rate requirements were not met, or provide particulars of the rates that it alleges were in fact achieved." 46 In essence it appears that following this exchange of correspondence WSN sought further discovery as well as seeking documents from the surveyor by subpoena. What was being sought was surveys in a particular format and in addition, the instructions which had been given to Goodman's. The same material had been sought from Goodman's. Thereafter Cleary Bros had informed WSN that they had passed across all the information which they had had. 47 Matters clarified with the service of an affidavit by Mr Goodman dated 25 June 2009, where [particularly in paragraphs 17-19] Mr Goodman dealt with the surveys which he had carried out from 1999 to 2004 [having been instructed by Mr Grainger to conduct six monthly surveys of the volume of fill placement on the site in May and November of each year] although he could not recall Mr Grainger instructing him to use any particular methodology for those surveys. He then set out his usual practice in preparing the initial six monthly surveys and continued in following paragraphs to refer to reconsideration of the surveying methodology [following conversations which he and Mr Grainger had been late 2003 and early 2004 regarding the relevance and accuracy of the fill placement surveys conducted in the initial period to January 2004]. He deposed that during that time he realised and discussed with Mr Grainger, that there was a possibility that filling work had been carried out on a wide range of areas on the site then had been considered in the respective six monthly surveys. 48 I am satisfied that receipt of this new information altered the antecedent position. One must recall that this was a circumstance in which it had been foreshadowed by WSN that it expected that the particulars to paragraph 7 of the amended cross-claim list statement would be amended to include allegations that compaction rate requirements were not met from 16 June 2006 to date, and prior to 18 June 2004. 49 Importantly WSN had made quite clear that as the documents sought on the subpoena from Goodmans had not been discovered, Cleary Bros and were not in the possession of WSN and without those documents, WSN remained unable to identify the period of time prior to 18 June 2004 that compaction rate requirements were not met, or provide particulars of the rates that it alleges were in fact achieved." Decision 50 In the result the principled exercise of the relevant discretion is to allow the contested amendments with leave to the plaintiff to amend its reply and to address such further evidence as may be necessary in dealing with the amendments. ************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.