Supreme Court New South Wales Medium Neutral Citation: Freitas v Bluescope Steel (AIS) Pty Ltd [2012] NSWSC 1194 Hearing dates: 21/09/2012 Decision date: 21 September 2012 Jurisdiction: Common Law Before: Garling J Decision: (1) The third defendant has leave to withdraw the admission contained in its defence; (2) The third defendant has leave to file and serve an amended defence on or before 4pm 28 September 2012. (3) I grant Transfield leave to file the reply to the defence to the fourth cross-claim on or before Friday 5 October 2012. (4) I order the third defendant to pay the second defendant's costs of the motion on an indemnity basis. (5) I order that the fourth cross-claimant serve all evidence upon which it proposes to rely in reply to the fourth cross-defendant's defence on or before 4pm 19 October 2012. Catchwords: PRACTICE AND PROCEDURE - leave to amend pleadings - futility or abuse of process - discretion Legislation Cited: Civil Procedure Act 2005 Law Reform (Miscellaneous Provisions) Act 1946 Category: Procedural and other rulings Parties: John Freitas (P) Bluescope Steel AIS Pty Ltd (D1) Transfield Services (Australia) Pty Ltd (D2) K&R Fabrications (W'Gong) Pty Ltd (D3) Representation: Counsel: Mr Cooley (P) B Wilson (D2) Mr Greenhalgh (D1) R Gambi (D3) Mr Stiles (Cross-Defendant) G Polczynski (Cross-Defendant) Solicitors: Bussoletti Lawyers (P) Bartier Perry (D1) DLA Piper Australia (D2) McCabes (D3) File Number(s): 2010/353117 EX TEMPORE Judgment 1The third defendant K&R Fabrications Wollongong Pty Ltd ("K&R"), has filed a notice of motion on 20 August 2012, which seeks the following relief: 1. The third defendant have leave of the Court to withdraw an admission pursuant to Rule 17.2(2) of the Uniform Civil Procedure Rules 2005. 2. The third defendant have leave to file and serve the proposed amended defence to the second amended statement of claim, copy of which is annexed to the affidavit of Nicholas James Bell dated 17/08/2012. 2With the exception of the second defendant in the proceedings, Transfield Services (Australia) Pty Limited ("Transfield"), no other party objects to the orders sought in the notice of motion being made. Principal Proceedings 3The principal proceedings relate to a claim made by Mr John Freitas for damages for personal injury sustained on 1 November 2007 whilst he was working at the premises of the first defendant, Bluescope Steel (AIS) Pty Limited ("Bluescope") at Port Kembla. At those premises Bluescope operated an integrated steel works, which included an operation carried out at the hot strip mill. 4The plaintiff pleads in each successive version of his statement of claim, a paragraph to this effect: "10. The third defendant was at all material times contracted by the first defendant and/or the second defendant or alternatively the first and second defendant to undertake certain work during the shutdown of the Hot Strip Mill on 1 November 2007 which included replacing a turnbuckle on the south door No.1 Walking Beam Furnace at the Hot Strip Mill." 5The plaintiff further pleads that as a consequence of the turnbuckle being adjusted, a heat shield dislodged and fell on the plaintiff causing him injury and damage. 6In its defence to the statement of claim in respect of the quoted paragraph 10, K&R pleaded this: "4. In respect of paragraph 10 of the statement of claim the third defendant, (a) admits that it entered into subcontract with the second defendant to provide mechanical maintenance and shutdown maintenance at the Port Kembla steel works; and, (b) denies that it was contracted by the first defendant." 7A similar pleading was maintained throughout subsequent versions of amended statements of claim and amended defences. 8An issue has arisen because Transfield has filed a fourth cross-claim against K&R in which it claims that by reason of a specifically identified contract, that K&R has been in breach of the contract in a number of respects and Transfield is entitled to damages for those breaches of contract. 9In addition, Transfield in the fourth cross-claim pleads a cause of action for contribution based upon s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. K&R is indemnified by a policy of public liability insurance with respect to the claim by the plaintiff insofar as the claim is made by the plaintiff for tortiously caused damages. 10Counsel for K&R informs the Court, as might be obvious in accordance with usual insurance practice, that the public liability policy does not respond to the claim for breach of contract made by the fourth cross-claim, although it does respond to the claim made under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. That lack of insurance coverage for the fourth cross-claim explains why K&R is represented by different lawyers in respect of the defence of the fourth cross-claim. 11In the fourth cross-claim Transfield plead the terms of a specifically identified contract, namely a Maintenance Services Alliance Subcontract dated 28 November 2011. It pleads that the services defined in the contract which were to be provided by K&R included the work being performed by the plaintiff on 1 November 2007. 12In the defence to that cross-claim, K&R pleads with respect to the alleged contract as follows: "5. In respect of paragraph 12, K&R: (a) denies that the contract relied upon by Transfield remained in force as at the date of the plaintiff's injury; (b) states that the contract was expressly terminated by Transfield upon its due date, namely 28 November 2006; (c) otherwise does not admit paragraph 12." A dispute exists 13There is a dispute between the parties as to whether on the date of the plaintiff's injury, 1 November 2007, the Alliance Subcontract entered into on 28 November 2001 was, or was not, in effect. Transfield pleads that it was. On the other hand, the specific defence pleaded by K&R denies that the contract was in force and pleads that it was expressly terminated on 28 November 2006. 14There is a potential inconsistency, although one which is not immediately obvious, between the defence to the fourth cross-claim and the pleading, to which I have earlier referred, by way of a defence to the plaintiff's claim. It is a potential inconsistency because the plaintiff does not plead the specific contract which Transfield itself pleads in the fourth cross-claim. The plaintiff merely pleads that K&R was providing services pursuant to a subcontract. I should immediately say nothing turns on the phrase "subcontract" or "contract". Notice of motion 15However, Transfield proposes to tender as part of its claim on the fourth cross-claim, the pleading by K&R in response to the plaintiff's claim as constituting an admission that K&R did have a subcontract with Transfield and were engaged in work pursuant to that subcontract at the time the plaintiff was injured. In light of that expressed intention, K&R has brought its motion seeking the orders to which I have earlier referred. 16Transfield opposes the orders. Firstly, because it submits that by reference to a document dated 1 July 2008, executed by representatives of Transfield and K&R, that it is beyond argument that as at 1 November 2007, the contract which Transfield has pleaded in its fourth cross-claim was in effect and was operative with respect to the plaintiff's work at the time he was injured. Secondly, Transfield submits that there are a number of matters going to the discretion of the Court which would mean that the Court would not make the order sought by K&R. Futility 17It is appropriate to deal with the first argument, namely that such an amendment to the defence would, in the light of the letter of 1 July 2008, be doomed to fail, and as a consequence any such amended pleading would be an abuse of process. It is unnecessary to set out the whole of the terms of that document. 18A careful reading of it, in my view, gives rise to two inferences. The first is that the parties agreed as at 1 July 2008, that the Alliance subcontract was on foot, that they were acting in accordance with the terms of it, and that they were in agreement on the way in which the contract ought be terminated. That is the construction for which Transfield contends. 19The second inference, which I regard as being open, is that the parties have been in dispute with respect to the terms of the contract and the performance of it, that this document constitutes steps on the way to the resolution of that dispute and that the terms of it were drafted by lay people without addressing the niceties that lawyers might. 20Although I have to say that if called upon in the absence of any other evidence to decide this issue, the probabilities would favour the inference for which Transfield contends, I am not able to say that the other inference which would support the position of K&R is not open, nor am I able to say that it is unarguable. 21In those circumstances I am not prepared to accede, notwithstanding that Mr Wilson has said everything that could possibly be said in Transfield's favour, to his submission that the proposed defence would by reference to the document of 1 July 2008 be futile, not that it would constitute an abuse of process. Discretion 22I need to consider the discretionary matters relied upon by Transfield. This matter is fixed for hearing in November of this year. This issue has arisen late. It has arisen because, on the unchallenged evidence of Mr Bell, the solicitor for K&R, an underlying factual mistake was made in the period between inquiries being made by factual investigator and the solicitors for K&R speaking to the relevant executives of the company. Of itself, the fact that there was a difference in the instructions received by K&R's solicitors would ordinarily be a good reason to support permitting the withdrawal of an admission. However, it is not quite as simple as that, as Mr Bell, frankly, concedes. Notwithstanding that he was in possession of the factual information indicating a dispute about this matter and a need for the clarification of his instructions, he has repeated the original defence on one or more occasions since he was aware of the dispute. That fact would tell strongly against the granting of leave upon the basis of a mistake in the instructions. 23The fact that the case has been fixed for hearing and that the amendment which involves a withdrawal of the admission, is being sought relatively late in the proceedings is a factor which, having regard to the overriding purpose to be found in sections 56, 57, and 58 of the Civil Procedure Act 2005 is a matter which is to be taken into account. 24On the other hand, it seems to me from my knowledge of the case through my case management of it, and from what I have been told and read in the evidence which is to be tendered, that the dispute between Transfield and K&R about whether the 2001 contract was extended; if so, on what terms, and, as well, the terms upon which K&R were carrying out work on 1 November 2007, and the factual background to the letter of 1 July 2008, can be addressed as a matter of fact with witnesses who, although it may be difficult to find, are, nevertheless, still alive and can give evidence of it. This factual dispute will not extend the hearing by any appreciable extent. 25I am not satisfied that either party, but in particular Transfield, would be actually prejudiced by the allowance of this amendment. On the other hand, a failure to allow the amendment, including the withdrawal of the admission, may result in this case between these parties being decided on the conduct of lawyers and pleadings, rather than on the factual substance of the dispute between them. 26Ultimately, it is a matter for the exercise of a discretion as to whether I should grant the orders sought. The overriding question is what do the interests of justice require? That is an evaluative judgment in light of the nature of the dispute, the importance of it, the extent to which it will delay the proceedings, and the extent to which it will allow the real issues in dispute to be properly litigated. 27Taking into account all of the matters to which I have referred, I am of the view that I should make the orders sought by K&R in its motion and I should grant the relief sought. Orders 28I make the following orders: (1)The third defendant has leave to withdraw the admission contained in its defence; (2)The third defendant has leave to file and serve an amended defence on or before 4pm 28 September 2012. (3)I grant Transfield leave to file the reply to the defence to the fourth cross-claim on or before Friday 5 October 2012. (4)I order the third defendant to pay the second defendant's costs of the motion on an indemnity basis. (5)I order that the fourth cross-claimant serve all evidence upon which it proposes to rely in reply to the fourth cross-defendant's defence on or before 4pm 19 October 2012. ******** 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. Decision last updated: 08 October 2012