Supreme Court New South Wales Medium Neutral Citation: Cave v Allen Jack & Cottier Architects Pty Ltd [2014] NSWSC 316 Hearing dates: 26 February 2014 Decision date: 01 April 2014 Jurisdiction: Common Law Before: Harrison AsJ Decision: The Court orders that: (1) The plaintiff is granted leave to file and serve the second further amended statement of claim within 14 days. (2) Pursuant to s 65(3) of the Civil Procedure Act 2005 (NSW) the question of the date on which the amendments take effect are reserved to the trial judge. (3) Separate determination of questions (i)(a), (i)(b) and (ii) is refused. (4) Costs are reserved. (5) The matter is listed for directions before the Registrar at 9.00 am on Monday, 21 April 2014. Catchwords: PRACTICE & PROCEDURE - application for leave to further amend further statement of claim - whether separate questions be answered - claim in contract and tort Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 60, 64, 65 Home Building Act (NSW) Limitation Act 1969 (NSW), s 14 Uniform Civil Procedure Rules 2005 (NSW), r 28.2 Cases Cited: ABB Engineering Construction Pty Limited v Freight Rail Corp [1999] NSWSC 1037 Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Dunstan v Simmie & Co Pty Ltd [1978] VR 669 Idoport Pty Limited v National Australia Bank Ltd [2000] NSWSC 1215 Karl Suleman Enterprizes Pty Ltd (In Liq) v Pham [2013] NSWCA 93 Perre v Apand Pty Limited [1999] HCA 36; (1999) 198 CLR 180 State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511 Tepko Pty Limited v Water Board [2001] HCA 19; (2001) 206 CLR 1 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 Category: Procedural and other rulings Parties: Rosemary Cave (Plaintiff) Allen Jack & Cottier Architects Pty Ltd (ACN 003 782 250) (First Defendant Taylor Thomson Whitting (NSW) Pty Ltd (Second Defendant) John Greenwood Constructions Pty Ltd (ACN 001 044 800) (Third Defendant) Representation: Counsel: A G Rogers (Plaintiff) D A Lloyd (First Defendant) W McManus (Second Defendant) M F Newton (Third Defendant) Solicitors: Brennan Tipple Partners (Plaintiff) Lander & Rogers (First Defendant) Colin Biggers & Paisley (Second Defendant) HWL Ebsworth Lawyers (Third Defendant) File Number(s): 2010/119922 Publication restriction: Nil Judgment 1HER HONOUR: By notice of motion filed 19 August 2013, the plaintiff seeks firstly, an order that the further amended statement of claim be further amended pursuant to the Civil Procedure Act 2005 (NSW); and secondly, an order pursuant to Part 28 r 2 of the Uniform Civil Procedure Rules 2005 (NSW) that separate questions be answered. 2The plaintiff is Rosemary Cave. The first defendant is Allen Jack & Cottier Architects Pty Ltd ("Allen Jack & Cottier"). The second defendant is Taylor Thomson Whitting (NSW) Pty Limited ("Taylor Thomson Whitting"). The third defendant is John Greenwood Constructions Pty Limited ("Greenwood Constructions"). 3The plaintiff relied on three affidavits of her solicitor Stuart Graeme Holden Tipple, sworn 19 August 2013, 24 and 26 February 2014 and the affidavit of Ivan Mark Kent, affirmed 6 February 2014. Only documents attached to the plaintiff's affidavit, sworn 29 August 2013, were relied upon. Allen Jack & Cottier relied on the affidavit of Jonathan Gregson Melville Hunt solicitor, sworn 23 October 2013. Taylor Thomson Whitting relied on the affidavit of Stephanie Bird solicitor, affirmed 23 September 2013. Greenwood Constructions relied on two affidavits of Michael Nguyen solicitor, sworn 10 and 26 February 2014. Background 4In the early to mid 1990's, the plaintiff purchased a property at Killcare, New South Wales (the property). 5On about 6 December 1996, she entered into a contract with Allen Jack & Cottier, as her architect, to build a dwelling on the property. 6In February 1998, Allen Jack & Cottier engaged, in its own right or as agent for the plaintiff, Taylor Thomson Whitting as consulting engineer for the construction of the dwelling. 7In July 2001, the plaintiff entered into a building contract with Greenwood Constructions for the construction of a dwelling. The dwelling was built on the side of a hill overlooking the ocean. Photographs of the property and its location are shown in Ex D. 8On 14 May 2010, the plaintiff commenced these proceedings. 9On 19 November 2010, the plaintiff filed an amended statement of claim. 10On 26 August 2011, the plaintiff was granted leave to file a further amended statement of claim. 11On 7 November 2011, a further amended statement of claim was filed. 12The proposed amendments against all defendants are set out in the proposed second further amended statement of claim (Ex C) (P2FASC). The second defendant neither consents to, nor opposes, the amendments sought against it. The first and third defendants oppose some, but not all, of the amendments sought to be made against them. All defendants oppose the granting of a separate determination of issues. The power to amend 13Section 64(1) of the Civil Procedure Act is the most obvious source of the Court's power to allow amendments to pleadings. Section 64 relevantly reads: "64 Amendment of documents generally (cf SCR Part 20, rules 1 and 4; DCR Part 17, rules 1 and 4) (1) At any stage of proceedings, the court may order: (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. (3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made. ..." The power under s 64 of the Civil Procedure Act must be exercised subject to s 58 of the Civil Procedure Act. Subsection 58(2)(a) provides that the Court must consider the matters in ss 56 and 57 of the Civil Procedure Act in order to determine what are the dictates of justice in a particular case. The matters enumerated in subs 58(2)(b)(i)-(vii) may be taken into account by the Court in determining what are the dictates of justice. 14All parties relied on Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. The decision in Aon Risk Services sets out the matters relevant to an exercise of the Court's discretion. These include: (a)the nature of the proposed amendments; (b)the extent and effect of any delay in proposing them; (c)the prejudice to the defendant; (d)costs associated with the proposed amendments; (e)the point the litigation has reached when the amendments are sought; (f)considerations of case management; and (g)the plaintiff's explanation for delay. 15Aon Risk Services, although referring to the Australian Capital Territory rules, is relevant and of general application. Gummow, Hayne, Crennan, Kiefel and Bell JJ in their joint judgment stated: "[102] 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. [103] 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. There can be no doubt that an explanation was required in this case." 16The joint judgment in Aon Risk Services at [102] and [103] identifies what qualifies as an explanation for delay. In Aon Risk Services, the solicitor for the party seeking the amendments made a forensic decision not to offer an explanation to the Court. In explaining to the Court the circumstances giving rise to the need for the late amendment, the explanation must not only identify why the application is made at a late stage, it must also justify the need for the late amendment. In Karl Suleman Enterprizes Pty Ltd (In Liq) v Pham [2013] NSWCA 93, the Court of Appeal explained at [22]: "[22] As the plurality judgment in Aon makes clear at [102] and [103], the exercise of the discretion to allow an amendment necessarily involves a weighing process in which factors for and against the grant of leave must be identified and considered. Those factors include, if there has been delay in applying for the amendment, an explanation for the delay. At [103], it was said that the importance attached by Rule 21 (which is set out in Aon at [60] and is in similar terms to ss 56(1) and 57(1) of the Civil Procedure Act 2005) to the factor of delay 'will require' in most cases that the moving party bring the circumstances giving rise to the amendment, and explaining the delay, to the Court's attention 'so that they may be weighed against the effects of any delay and the objectives of the Rules'. Those circumstances ought explain the delay, and in doing so may justify it, in the sense that they may provide reasons for it which are not consistent with any failure on the part of the moving party, or its legal advisers, to act diligently and expeditiously in the prosecution or defence of the relevant claim. If those circumstances provide some justification for the delay, for those or some other reasons, they may be weighed against the effects of the delay on the other parties, as well as on other litigants." 17I shall consider the plaintiff's explanation for delay shortly. The proposed amendments 18Some amendments are not opposed. The disputed amendments contained in the P2FASC are set out below. 19The amendments that the plaintiff seeks to make against Allen Jack & Cottier, the architect, fall into two broad categories. They are firstly, the failure to advise the plaintiff about the terms of Taylor Thomson Whitting's terms of engagement; and secondly, the failure to advise the plaintiff about Taylor Thomson Whitting's level of competence (these amendments are also pleaded against Greenwood Constructions). 20The proposed amendments as against Allen Jack & Cottier are as follows: "7C In or about early March 2002 the first defendant became aware that the second defendant was incompetently discharging its functions under the Engineering Contract or alternatively lacked the expertise to properly discharge its functions under the Engineering Contract. Particulars (i) Correspondence dated 4 March 2002 from the third defendant to the first defendant. 7D By reason of the matters pleaded in paragraph 7 above and otherwise by reason of the nature of the relationship between the first defendant and the plaintiff, the first defendant was under a duty to advise the plaintiff that the second defendant was incompetently discharging its functions under the Engineering Contract or alternatively to advise the plaintiff that the second defendant lacked the expertise to properly discharge its functions under the Engineering Contract. 7E In breach of the said duty the first defendant did not: (ii) advise the plaintiff that the second defendant lacked the expertise to properly discharge its functions under the Engineering Contract. 7F By reason of the matters pleaded in paragraphs 7, 7C and 7E the plaintiff has suffered loss and damage. [failure to advise of engineer's competence] 7G In engaging the second defendant as consulting engineer in connection with the construction of the Home, or alternatively in recommending to the plaintiff that the plaintiff engage the second defendant as consulting engineer, the first defendant: (i) was aware, or ought to have been aware, of any standard conditions of engagement, including the conditions of engagement, pleaded at paragraph 20 of the defence of the second defendant filed on 18 November 2011 in so far as any such conditions of engagement are found to bind the plaintiff; (ii) was aware or ought to have been aware that the plaintiff did not know of the existence of any such conditions of engagement; (iii) was under a duty to warn the plaintiff of the existence of the such conditions of engagement. 7H The plaintiff was not aware of such conditions of engagement. 7I In the premises the first defendant was under a duty to advise the plaintiff of any such conditions of engagement. 7J The first defendant did not advise the plaintiff of the existence of, or the terms of, any such conditions of engagement. 7K If, as alleged by the second defendant and denied by the plaintiff: (i) the said conditions of engagement formed part of the Engineering Contract; and (ii) by reason of clause 4.3 of the conditions of engagement: (a) the second defendant has been discharged from all liability in respect of the Engineering Contract; and (b) the plaintiff was not entitled to commence and/or is not entitled to continue its proceedings against the second defendant then by reason of the failure of the first defendant to advise the plaintiff of the existence of, or the terms of, any such conditions of engagement, the plaintiff has suffered loss and damage. Particulars (i) Loss of opportunity to prosecute proceedings against the second defendant. [failure to advise of terms of Taylor Thomson Whitting's engagement] 21As against Greenwood Constructions, the builder, the plaintiff's proposed amendments fall into three broad categories. They are firstly, building defects; secondly, the construction was not in accordance with the Douglas engineering report and specifications; and thirdly, failure to advise the plaintiff of Taylor Thomson Whitting's competence. 22The proposed amendments as against Greenwood Constructions are as follows: "17AA As part of its duty of care to the plaintiff and as required by the statutory warranties pleaded in paragraph 10, the third defendant was, in the performance of the Building Contract, under a duty to the plaintiff: (i) to ensure that the upper level timber-framed floor was tied down so as to resist wind actions; and (ii) to ensure that the lower level masonry internal and external walls were sufficiently tied together so as to prevent lateral movement and separation. 17AB In breach of the said duty, and in breach of the statutory warranties pleaded in paragraph 9A, the third defendant: (i) did not ensure that the upper level timber-framed floor was tied down so as to resist wind actions and did not tie down the upper level timber-framed floor so as to resist wind actions; [resist wind actions] (ii) did not ensure that the lower level masonry internal and external walls were sufficiently tied so as to prevent lateral movement and separation and did not tie the lower level masonry internal and external walls sufficiently so as to prevent lateral movement and separation. [failure to tie down] 17AC As part of its duty of care to the plaintiff and as required by the statutory warranties pleaded in paragraph 9A, the third defendant was, in the performance of the Building Contract, under a duty to the plaintiff to build the Home in compliance with Condition 22 and Condition 27 pleaded in paragraph 6BE. Particulars (i) The plaintiff repeats the particulars to paragraph 10BA above. 17AD In breach of the said duty, and in breach of the statutory warranties pleaded in paragraph 9A, the third defendant did not build the Home in compliance with the said Conditions 22 and 27. Particulars (i) The plaintiff repeats the particulars to paragraph 10BC above. (ii) The recommendations in the Douglas Partners report were not complied with as pleaded in paragraph 12 above. ... 17IA In the alternative, the third defendant was under a duty of care to the plaintiff, in the discharge of its duties, to construct the Home in accordance with the plans supplied by the second defendant. 17IB In breach of the said duty the third defendant did not construct the Home in accordance with the engineering design supplied by the second defendant. Particulars (i) The engineering design supplied by the second defendant required that foundations be taken to a minimum depth of 900 millimetres unless rock was encountered prior to 900 millimetres. (ii) The third defendant did not build the Home so that foundations were taken to a minimum depth of 900 millimetres or to rock where rock was encountered prior to 900 millimetres. [not in accordance with Douglas specifications] 17J By reason of the breaches by the third defendant pleaded in paragraphs 17AA, 17AB, 17AD, 17G, 17I, 17IB the plaintiff has suffered loss and damage. Particulars of damage (i) cracking to external and internal walls and ceiling linings; (ii) misalignment of internal doors; (iii) cracking of bathroom tiling; (iv) jamming of front door; (v) jamming of garage door; (vi) the Home is unsafe and unsound and liable to collapse; (vii) the Home is not structurally adequate, stable and in a safe condition for occupation; (viii) penetration of water into the Home. Particulars of loss (i) rectification costs for repair of cracking to external and internal walls and ceilings linings; (ii) rectification costs for repair of misaligned of internal doors; (iii) rectification costs for repair of cracking of bathroom tiling; (iv) rectification costs for repair of jamming front door; (v) rectification costs for repair of jamming of garage door; (vi) (a) rectification costs for repair of to make Home sound, not liable to collapse and safe for occupation; alternatively, (b) costs of demolition of Home and cost of rebuilding; alternatively (c) cost of demolition of Home and costs expended on building Home. [construction not in accordance with report and plans] 17K In or by early March 2002 the third defendant had become aware that the second defendant lacked the expertise to properly discharge its functions under the Engineering Contract. Particulars (i) Correspondence dated 4 March 2002 from the third defendant to the first defendant 17L By reason of the matters pleaded in paragraph 17K above and otherwise by reason of the nature of the relationship between the third defendant and the plaintiff, the third defendant was under a duty to advise the plaintiff that the second defendant did not have experience in domestic construction or alternatively to advise the plaintiff that the second defendant lacked the expertise to properly discharge its functions under the Engineering Contract. 17M In breach of the said duty the third defendant did not: (i) advise the plaintiff that the second defendant did not have experience in domestic construction; (ii) advise the plaintiff that the second defendant lacked the expertise to properly discharge its functions under the Engineering Contract. 17N By reason of the matters pleaded in paragraphs 17K, 17L and 17M, the plaintiff has suffered loss and damage." [failure to advise plaintiff about engineer's lack of competence - same as the allegation against Allen Jack & Cottier] The explanation for delay 23Allen Jack & Cottier and Greenwood Constructions submitted that this Court should not accept the plaintiff's evidence as a proper explanation or justification for the delay. Greenwood Constructions adopted Allen Jack & Cottier's submissions on this topic. They objected to the amendments for two main reasons. They are firstly, the explanation for delay is inadequate; and secondly, the lateness of the amendments will cause them to suffer both actual and presumptive prejudice. Additionally, Greenwood Constructions said that the plaintiff's amendments are unarguable or barely arguable. 24The underlying dispute that gives rise to these proceedings occurred from 1998 to about 2004, that is some 10 to 16 years ago. In May 2010 (nearly 4 years ago), these proceedings were commenced. On 19 November 2010, the plaintiff filed an amended statement of claim; and on 7 November 2011, a further amended statement of claim was filed. This is the third time that the plaintiff has sought to amend her statement of claim and I take this into account when I consider whether or not any further amendments should be allowed. 25As the pleadings currently stand, the parties are substantially prepared for trial. The plaintiff and the defendants have served lay and expert evidence. No trial date has been allocated, nor will one be allocated for 2014. The trial is estimated to take place in 2015. As a hearing date has not yet been allocated, if leave to file the proposed second further amended statement of claim is granted, other matters awaiting a hearing date will not be inconvenienced. 26It is important to appreciate that in order for the plaintiff to properly draft her pleading in her case, she is reliant on expert opinion of architects, engineers and builders. These reports are technical in nature and expensive. I have taken these, what I shall call general considerations, into account in relation to each category of amendment. 27The plaintiff's explanation for delay in seeking to bring the amendments has been provided by the plaintiff's solicitor, Mr Stuart Tipple. I shall refer to his explanation in relation to categories of amendments and his explanation concerning mediation. (i) Allen Jack & Cottier's alleged failure to advise of terms of engagement of Taylor Thomson Whitting 28On 26 February 1998, Taylor Thomson Whitting faxed a copy of a document entitled "Fee Confirmation of Taylor Thomson Commission" to Allen Jack & Cottier. Taylor Thomson Whitting's terms of engagement read, "In accordance with the Association of Consulting Engineers Australia 1991, Conditions of Engagement." (Conditions of Engagement). On that same day, Taylor Thomson Whitting faxed that document together with a covering sheet to the plaintiff. The coversheet included the recommendation by Allen Jack & Cottier, "Rosemary - we think this is fair & reasonable. We recommend acceptance. Please advise asap." There is no dispute that the plaintiff signed the commission document. However, she no longer had a copy of either document when she commenced these proceedings. 29The plaintiff now seeks to allege that Allen Jack & Cottier did not advise her in relation to the limitation clause contained in Taylor Thomson Whitting's Conditions of Engagement. 30Clause 4.3 of the Conditions of Engagement (now superseded) read: "Duration of Liability The Consulting Engineer shall be deemed to have been discharged from all liability in respect of the Services, whether under the law of contract, tort or otherwise, at the expiration of the period specified in Item 10 of the Schedule or if no date is specified on the expiration of one year from the completion of the Services, and the Client (and persons claiming through or under the Client) shall not be entitled to commence any action or claim whatsoever against the Consulting Engineer (or any employee of the Consulting Engineer) in respect of the Services after that date." 31No date was specified in item 10 of schedule 1. Hence, the limitation period appears to be one year after the services were performed. While I make no findings in relation to clause 4.3, it is arguable that the plaintiff's claim against Taylor Thomson Whitting is statute barred. Whether or not the plaintiff's claim in relation to this contract is statute barred, is a question for which the plaintiff seeks a separate determination. I shall refer to this topic later in this judgment. 32Allen Jack & Cottier submitted that by no later than 8 February 2011, the plaintiff's solicitor knew about the asserted limitation of liability, because it was pleaded by Taylor Thomson Whitting in their defence on that date. I do not agree. Before these amendments could be pleaded by the plaintiff, her solicitor needed to inspect the actual documents, particularly the one that showed Allen Jack & Cottier had knowledge of Taylor Thomson Whitting's terms of engagement. 33Documents were provided to the plaintiff's solicitor during the discovery process. I accept that voluminous documents were discovered by the parties and that it is unreasonable to expect solicitors to become aware of their contents and their relevance immediately upon receipt of them. Nevertheless, diligence is required throughout the discovery process. 34On 25 October 2011, the fee confirmation letter was provided by Kennedys' solicitors to the plaintiff's solicitor (Ex B), together with a copy of the Association of Consulting Engineers Australia 1991 Conditions of Engagement. However, one very relevant document was still missing, namely, the covering fax sheet that originally accompanied the "Fee Confirmation of Taylor Thomson Commission", which shows that Allen Jack & Cottier was aware of the terms of Taylor Thomson Whitting's engagement. 35Mr Tipple said that he first became aware of the covering fax sheet on 25 January 2013. The earliest date when the plaintiff's solicitor became aware of the contents of both documents that form the basis of the failure to advise amendment was on 25 January 2013. Mediation - general explanation for delay from 25 January 2013 to date 36The plaintiff's solicitor received two emails from the solicitors for Taylor Thomson Whitting on 23 January 2013. No action was taken by the plaintiff during the period from 23 January 2013 to 16 July 2013 to advise the defendants of the proposed amendments to the pleading in the further amended statement of claim. 37Mr Tipple explained that he did not seek to make these amendments shortly after receipt of the emails at the end of January 2013, because he had always intended to seek to have the matter mediated. Difficulties with the discovery process rendered that impossible. However, he said that one of the emails from Taylor Thomson Whitting of 23 January 2013 referred to the prospect of mediation. But for the prospect of mediation, Mr Tipple said that he would have sought to amend the statement of claim, but he decided an application to amend at that stage was likely to slow the matter down, particularly the mediation, and add to costs. 38Mediation was scheduled for 8 May 2013, but was abandoned as Allen Jack & Cottier advised that it could not, in the time available, deal with some evidentiary material served by the plaintiff. 39On 22 May 2013, a new date for mediation was scheduled for 24 July 2013. On 16 July 2013, all defendants were served with the proposed amendments to the statement of claim. On 24 July 2013, the mediation took place, but was unsuccessful. 40I accept that since 16 July 2013, the parties have had the amendments contained in the P2FASC. On 19 August 2013, the plaintiff filed this motion seeking to amend the statement of claim. After mediation failed, the plaintiff's solicitor did not unduly delay in filing this current notice of motion. Hence, the plaintiff's solicitor has properly explained the delay for the period between 25 January 2013 to date. 41It is my view that the plaintiff's solicitor has properly explained the delay in making these amendments, concerning the failure to advise the plaintiff in relation to the terms of engagement of Taylor Thomson Whitting. Hence, I grant leave to make these amendments. (ii) Failure to advise - competence of Taylor Thomson Whitting as against Allen Jack & Cottier and Greenwood Constructions 42On 4 March 2002, Mr Greenwood from Greenwood Constructions wrote to Allen Jack & Cottier concerning two issues that concerned him in relation to the construction of the dwelling. Mr Greenwood referred to errors he considered that Taylor Thomson Whitting made and listed six items of concern. (the Greenwood letter). The plaintiff alleges that both Allen Jack & Cottier and Greenwood Constructions knew of Taylor Thomson Whitting's lack of competence but did inform and advise her about them. The plaintiff's solicitor says that the plaintiff had no knowledge of the existence of this letter until it was provided to him during discovery and he became aware of it on 23 January 2013. 43Allen Jack & Cottier submitted that the plaintiff obtained discovery of the Greenwood letter in March 2012. Greenwood Constructions said that on 6 February 2012 it served its list of documents, of which the Greenwood letter was item number 4.64. I accept that the plaintiff's solicitor received the Greenwood letter during March 2012 at the latest. 44According to Allen Jack & Cottier, this allegation of failure to advise the plaintiff in relation to Taylor Thomson Whitting's competence, is now either very close to or substantially identical to the allegation the plaintiff pleaded in [19] of the statement of claim which was abandoned in 2011. However, the pleading in the 14 May 2010 statement of claim was not as refined as the current one. In one sense, Allen Jack & Cottier has already had an earlier opportunity to investigate the claim up until the time it was deleted. 45Finally, counsel for Greenwood Constructions referred to the contract between John Greenwood Constructions Pty Ltd and Rosemary Cave dated 26 July 2001. In Part A of the contract, the superintendent is named as Allen Jack & Cottier Architects Pty Ltd. The contract also incorporates the General Terms of Contract AS2124-1986. Clause 2 defines "Superintendent" as: "the person named in the Annexure as the Superintendent or other person from time to time appointed in writing by the Principal to be the Superintendent and notified as such in writing to the Contractor by the Principal and, so far as concerns the functions exercisable by a Superintendent's Representative, includes a Superintendent's Representative;" 46Mr Greenwood and his expert Christopher Mo'ane said that the builders deal with the superintendent, in this case Allen Jack & Cottier, the architect. Greenwood Constructions submitted that as it informed Allen Jack & Cottier about the level of Taylor Thomson Whitting's competence, it has discharged its contractual obligations to the plaintiff. Therefore, these proposed amendments are not arguable and should not be permitted to be made. While I accept there are contractual provisions that set out the relationship between Greenwood Constructions and the plaintiff's superintendent, it may be arguable Greenwood Constructions owed the plaintiff a duty of care in tort. I do not accept that the argument is hopeless. 47I have already accepted the plaintiff's solicitor's explanation for delay from 25 January 2013 to date as being a proper one. However, in relation to these amendments, there is absence of an explanation by the plaintiff for the delay between the period March 2012 and 25 January 2013. 48In addition to the general considerations, I have also taken into account firstly, that knowledge of the contents of the Greenwood letter is not new to the parties, as it had already been pleaded in the 2010 statement of claim; secondly, there has been a lack of explanation for some of the period of delay by the plaintiff; thirdly, Greenwood Constructions has not shown any actual prejudice, but there is some presumptive prejudice; and that the proceedings have not yet been allocated a hearing date and in the exercise of my discretion, I allow these amendments to be made. Failure to build in accordance with plans and specifications - building defects - Greenwood Constructions Footings 49A report of Douglas Partners dated 7 April 1998 at 5.3 states: "5.3 Founding Conditions It is suggested that all building foundations be taken to a uniform strata to avoid the potential for differential settlement. As rock is likely to be encountered during excavation to design levels, it is therefore recommended that all foundations be carried to rock. For design purposes the following maximum allowable bearing capacities are suggested. Material Maximum Bearing Capacity (kPa) Very low strength weathered sandstone/shale 700 Medium strength sandstone 3000 Founding conditions should be confirmed during construction by an experienced engineering geologist/geotechnical engineer." 50This Douglas Partners report was subject to confirmation by an experienced engineer. 51Greenwood Constructions submitted that the non-compliance with specifications issue was raised by Taylor Thomson Whitting on 8 February 2011 (in Taylor Thomson Whitting's defence) but was not investigated by the plaintiff's solicitor until February/March 2013. In Taylor Thomson Whitting's defence, it is not pleaded that the footings did not comply with specifications. 52The plaintiff's solicitor said that so far as the proposed amendment contained in [17AD] he was unaware that Greenwood Constructions had not complied with the specifications until some time well after March 2013, although he was unable to say precisely when. He said that it was necessary in the preparation of the matter to have bore holes dug to inspect the footings which was undertaken in March 2013. The plaintiff's solicitor was uncertain as to when he became aware that the work performed by Greenwood Constructions did not conform to Taylor Thomson Whitting's drawings. (Aff, 24/02/2014 [23] and [25]) 53On 4 March 2013, the plaintiff's expert dug bore holes in the property for the purpose of inspection. Mr Tipple said that this is when he ultimately became aware that the work performed by Greenwood Constructions did not conform with the drawings by Taylor Thomson Whitting. 54On 26 April 2013, the plaintiff obtained a report from Baker Harle. At [38], it states: "The base of a section of the footings was located within each of the testpits excavated on 4 March 2013 (TP1 to TP6). Each exposed section of footing was founded in soil. The footings exposed in TP1, TP2 and TP6 were founded in orange gravelly sandy Clay. The footings exposed in TP3 and TP5 were founded in cream sandy Clay, which underlay the orange gravelly Clay. The pad footing exposed in TP4 was found in brown sandy gravel Fill which contained building debris below the underside of the footing." 55On the basis of the expert opinion of Baker Harle, it became clear that some of the sections of the footings were founded on clay and not carried down to the rock. 56I accept that the plaintiff's solicitor only became aware that the footings did not comply with the specifications in March 2013. A proper explanation for delay has been given and I allow these amendments. Wind forces and tie downs 57Greenwood Constructions referred to an affidavit sworn 19 July 2011 by the plaintiff's solicitor (Exh JH-1 Tab Q Aff, Jonathan Hunt 23/10/2013), where the plaintiff's solicitor said that there is a high likelihood that there will be an issue about whether the building could withstand wind forces, which Greenwood Constructions said is the issue raised in the current P2FASC. It was contended by Greenwood Constructions that the plaintiff was aware of this issue, but did nothing from at least 26 August 2011 until June 2013, where there was investigation of the ties carried out by Taylor Thomson Whitting. 58The plaintiff's solicitor (Aff 19/07/2011 at [4]) stated: "4. I note that in the submissions filed on behalf of the First Defendant query is raised as to an explanation as to what is described as the delay in pleading the case. The answer is that the need to amend only became evident to me this year. Late last year I received information which suggested that there was highly likely to be an issue arise about whether the building had been built so as to withstand wind forces (the building being on the side of a hill overlooking the sea) but the issue became only sufficiently clear earlier this year to warrant my seeking an amendment consistent with my obligations as a solicitor." 59The original statement of claim alleges that Taylor Thomson Whitting's design did not provide for members and connections of adequate strength and rigidity to properly support roof and floor structures. The recent proposed amendments now make a similar allegation against Greenwood Constructions that it did not ensure that there were adequate tie downs and the property was able to resist wind actions. 60In the earlier further amended statement of claim filed 7 November 2011, the plaintiff at [17A] to [17C] pleaded that Greenwood Constructions was aware, or ought to have been aware that the windows and doors specified by Allen Jack & Cottier were liable to deform or break by reason of wind pressure and that the home, when completed, was or was likely to be structurally unsafe and unsound and liable to collapse in the event of high wind. More relevantly at [17C(ii)] the plaintiff pleaded that Greenwood Constructions did not provide for the roof framing of the home to be (a) adequately braced to resist wind forces; (b) adequately tied down to resist wind uplift forces; and (c) adequate to support loads imposed or likely to be imposed upon it. In other words, the issue of inadequate tie downs had already been pleaded as at 7 November 2011. 61Mr Tipple's explanation, in relation to the issue of inadequate ties, is that it only emerged following investigations by Mr Forbes and Joe Tropiano (for Taylor Thomson Whitting) in late June 2013. Subsequent to the investigation in late June 2013 and a further one that took place on 25 September 2013, Jim Forbes prepared reports for Taylor Thomson Whitting, dated 16 July 2013 and 25 October 2013, which were served by Taylor Thomson Whitting on the plaintiff. 62Mr Tipple said that he only became aware of these defects when he read the reports of Jim Forbes (the Hyder reports) dated 16 July 2013 and 25 October 2013 (Ex A) that were served by Allen Jack & Cottier. In the report dated 16 July 2013, (at page 2, [3]) in addressing the walls and ceilings of bedroom three, it states: "In some longer walls, stability may be compromised if the corners are not tied or the walls not connected to the floor at the top." 63Under the heading "Wall Ties" (at 3.1) the 25 October 2013 report states: "... This situation of the first tie being located well below the top of the wall is consistent with other investigations in the bathroom and in the south west corner of Bedroom 3. It is noted also that the top of these walls is the location of the greatest width of cracking, and it is my opinion that the absence of ties in these critical areas is a primary cause of the observed cracking." [absence of ties] 64It is my view that Greenwood Constructions was on notice as at 7 November 2011 that an allegation concerning the tie downs was being made against it. This amendment should be allowed. Building defects - Greenwood Constructions 65So far as the building defects are concerned, in June 2013, the plaintiff informed Mr Tipple for the first time that her house had started to leak badly in heavy rain. Mr Tipple then authorised Geoffrey Ball to prepare a further report which became available on about 12 July 2013. This report was served on about 16 July 2013. 66Greenwood Constructions submitted that the amendments in relation to building defects includes entirely new causes of action in circumstances where has been no adequate explanation for delay given; and by allowing the application would cause Greenwood Constructions substantial and irremediable prejudice. 67Greenwood Constructions said that it subcontracted with Kim Patrick Ginnane, a licensed bricklayer and stonemason, to carry out the blockwork and brickwork in the construction of the property. The work performed by Mr Ginnane included the construction of the lower level masonry internal and external (block) walls at the property and the installation of wall ties in those walls. The subcontract was an oral arrangement and that upon receipt of a weekly invoice from Mr Ginnane, Greenwood Constructions would attend to its payment. I accept that there were oral conversations between Mr Greenwood and the subcontractors, of which there may be no written records. However, Greenwood Constructions has not relied upon any evidence to suggest that it is unable to locate Mr Ginnane, nor that the invoices cannot be located. 68Greenwood Constructions has previously served a report of Christopher Mo'ane, builder, in these proceedings. In order for Mr Mo'ane to (a) examine the manner in which the upper level timber framed floor of the property is tied down; and (b) examine the wall ties used in the lower level masonry internal and external walls of the property, it is necessary to remove roofing sheets and wall sections to obtain inspection access to the wall cavities for both the upper level and lower level walls. A cavity camera can be used to inspect inside the wall cavities. It will take approximately two days to carry out such inspections, including remedial work to restore roofing sheets and wall sections. 69I have taken into account one general consideration referred to earlier in this judgment. It was as at June 2013 that the plaintiff first became aware that her house had started to leak. Obviously she could not have made any of these allegation prior to June 2013. The plaintiff's solicitor obtained a report from Mr Ball expeditiously. It may be that some of the work in places where the house is leaking were carried out by a subcontractor. There were invoices prepared and they should set out the work that was done and where it was done. I accept that Greenwood Constructions will have to carry out further inspections. Taking all these factors into account, and in the exercise of my discretion these amendments should be allowed. 70The result is that the plaintiff is granted leave to file the second further amended statement of claim. It should be noted that the plaintiff has now been granted leave to amend her statement of claim on three occasions. Date amendments take effect 71The defendants submitted that if I allow amendments to be made, then I should make an order that pursuant to s 65(3) of the Civil Procedure Act 2005 (NSW) that the question of the date on which the amendments take effect are reserved to the trial judge. Their reason is that it accords with the order that Adams J made on 26 August 2011 when he granted leave to the plaintiff to file the further amended statement of claim. The plaintiff opposes this order on the basis that s 65(3) contains the words "otherwise orders" and says the defendants have not provided a reason why this Court should "otherwise order". 72Section 65(3) of the Civil Procedure Act reads: "65 Amendment of originating process after expiry of limitation period ... (3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced." 73As the limitation periods are hotly contested in these proceedings and to accord with Adams J's approach, I make the order as sought by the defendants. In any event, I am not making an "otherwise order" but reserving the question of the date or dates upon which the amendments should take effect. (b) Separate questions 74The plaintiff seeks that a number of questions be determined at a separate trial and before the trial takes place. The defendants oppose this order, except so far as Taylor Thomson Whitting neither consents to nor opposes question i(a) and (b) being determined separately. 75Uniform Civil Procedure Rule 28.2 states: "28.2 Order for decision The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings." 76There are many authorities on this topic which include Tepko Pty Limited v Water Board [2001] HCA 19; (2001) 206 CLR 1; Perre v Apand Pty Limited [1999] HCA 36; (1999) 198 CLR 180 at [436]; State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511 at [187]; Dunstan v Simmie & Co Pty Ltd [1978] VR 669 at 671.30; and per Rolfe J in ABB Engineering Construction Pty Limited v Freight Rail Corp [1999] NSWSC 1037. In Idoport Pty Limited v National Australia Bank Ltd [2000] NSWSC 1215, Einstein J at [7]-[8] helpfully provides a compendium of cases upon this topic, which I need not reproduce here. 77In Tepko, Kirby and Callinan JJ cautioned against the severing of issues by the Court. Their Honours stated (at [168] - [170]): "[168] ... we should not leave this case without making four comments. Both Mason P and Fitzgerald JA were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap. [169] The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests. [170] Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question." [Footnotes omitted] 78The Court should also consider the overriding purpose, objects of case management and the proportionality of costs (Civil Procedure Act, ss 56, 57 and 60). 79The separate questions are questions (i)(a) and (b) and (ii). They read: "(i)(a) Is the plaintiff bound by the "Conditions of Employment" pleaded at paragraph 20 of the second defendant's defence filed on 18 November 2011? (b) If the answer to paragraph (a) is in the affirmative, has the second defendant been discharged from any or all liability to the plaintiff in respect of the "Engineering Contract" referred to in paragraph 7 of the further amended statement of claim filed herein? (ii) Is the whole of, or any part or parts of the plaintiff's action, not maintainable against the defendants by operation of s 14 of the Limitation Act 1969 (NSW)?" 80As to the determination of the separate questions, the plaintiff submitted that as Taylor Thomson Whitting has pleaded a contractual limitation, which, if successful, would exculpate it from all liability; and the other defendants, by way of defence, have pleaded the Limitation Act, these questions should be determined before the trial. 81In relation to question (i)(a) and (b) the plaintiff submitted that Taylor Thomson Whitting was under a common law duty of care to her, or else was liable under the statutory warranties under the Home Building Act 1989 (NSW). The plaintiff said that Allen Jack & Cottier did not advise her as to the possible effect of the above words, or of the terms or possible effect of the "Association of Consulting Engineers Australia, 1991, Condition of Engagement." Taylor Thomson Whitting's defence pleads that the effect of the above words is to create a limit of liability and a time limitation in any action against it. Taylor Thomson Whitting's contract contained a notation as follows: Terms of Engagement: In accordance with the Association of Consulting Engineers Australia, 1991, Conditions of Engagement. 82I have referred to Clause 4.3 and Schedule 1 Item 10 of the Conditions of Engagement earlier in this judgment. If the limitation period specified in the Terms of Engagement is one year, the plaintiff's case against Taylor Thomson Whitting in contract may be statute barred. However, if this question is to be determined separately, it will not finalise the case against it, because the plaintiff alleges a cause of action in tort. 83Section 14 of the Limitation Act relevantly reads: "14 General (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed, (b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty, (c) ... (d) ... (2) ..." 84So far as the limitation period defences are concerned, Allen Jack & Cottier submitted that the limitation defence of the sort pleaded by the plaintiff are inappropriate for summary determination: see Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 533-534. I agree. To ascertain whether or not the claims against the defendants are statute barred, will depend on a finding as to when the first damage occurred and then the date upon which cause of action crystallised. In my view, the determination of the limitation periods will depend on the trial judge making findings of fact on disputed evidence. 85According to the plaintiff, if all matters were to go to trial it may take many weeks of Court time and, so if the defences were successful, it would be in the interests of all parties that the time and costs of a trial be avoided or minimised. The plaintiff estimates that if the matter were to proceed to trial, it would occupy at least four weeks to perhaps six weeks. I accept that the determination of separate questions may save Court time. 86However, that approach will not completely resolve all of the issues in these proceedings. It means that there may be two appeals instead of one. There will be overlap of witnesses who will have to give evidence in relation to the separate issues and at the trial. If a finding is made in relation to the plaintiff's credibility in the determination of the separate questions, it may mean a different judicial officer will preside over the trial. The plaintiff will then be subject to cross examination in relation to the evidence that she gave at the earlier hearing. But more importantly, there is no bright line separating the separate determination of these questions and the issues that will have to be determined at trial. In the exercise of my discretion, it is my view it is undesirable that these questions be determined separately. 87I refuse to order separate determination of the issues identified by the plaintiff. 88Costs are reserved. The Court orders that: (1) The plaintiff is granted leave to file and serve the second further amended statement of claim within 14 days. (2) Pursuant to s 65(3) of the Civil Procedure Act 2005 (NSW) the question of the date on which the amendments take effect are reserved to the trial judge. (3) I refuse to order separate determination of the following questions: (i)(a) Is the plaintiff bound by the "Conditions of Employment" pleaded at paragraph 20 of the second defendant's defence filed on 18 November 2011? (b) If the answer to paragraph (a) is in the affirmative, has the second defendant been discharged from any or all liability to the plaintiff in respect of the "Engineering Contract" referred to in paragraph 7 of the further amended statement of claim filed herein? (ii) Is the whole of, or any part or parts of the plaintiff's action, not maintainable against the defendants by operation of s 14 of the Limitation Act 1969 (NSW)? (4) Costs are reserved. (5) The matter is listed for directions before the Registrar at 9.00 am on Monday, 21 April 2014. ********** 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: 01 April 2014