Farriss v Axford

1. [1]

   HER HONOUR: By notice of motion filed 4 March 2019, the plaintiffs seek an order that leave be granted to file an amended statement of claim (“ASC”). The defendants did not oppose all the proposed amendments to the amended statement of claim (“PASC”). This judgment concerns only the amendments that were opposed.

2. [2]

   The first plaintiff is Timothy William Farriss. He is a founding member of INXS and its lead guitarist. The second plaintiff is Montana Productions Pty Ltd. Mr Farriss and his wife Beth are the directors of Montana Productions. Mr Farriss entered into some recording contracts as Montana Productions, which owns the publishing or other rights that might otherwise be assigned to him.

3. [3]

   The first defendant is John William Axford, and the second defendant is Jill Mary Axford (“the Axfords”). They are husband and wife. The third defendant is Church Point Charter and Shipping Pty Ltd (“Church Point Charter”).

4. [4]

   The plaintiff relied upon his evidentiary statement dated 18 September 2018 and the affidavits of his solicitor Lindsay Parker dated 26 February 2019 and 31 May 2019. The defendants relied upon the affidavits of their solicitor, Nancy Bakarat, dated 29 July 2019 and the director of Church Point Charter, Niels Storaker, dated 24 May 2019.

5. [5]

   The Axfords are the owners of a boat called “Omega”, a 10.3 metre clipper (“the boat”). Church Point Charter operates a charter boat business from the Princes Street Marina in Newport, New South Wales. Church Point Charter hired out the boat on behalf of the Axfords.

6. [6]

   On 23 January 2015, Mr Farriss hired the boat from Church Point Charter. On 24 January 2015, he cruised the boat into Akuna Bay, New South Wales. In the process of setting the anchor into the water at Akuna Bay, the chain of the anchor fell off the boat’s gypsy. Mr Farriss lifted the chain back onto the gypsy and noticed that the chain was prone to kinking and that the anchor motor had stopped operating. Mr Farriss says that he telephoned an employee of Church Point Charter for assistance in locating the boat’s circuit breakers. He reset the circuit breaker and the anchor motor resumed operation, but the chain of the anchor continued to kink. While he was attempting to realign the chain into the correct position relative to the gypsy, the chain began to move and lacerated his left hand.

Leave to amend - general principles

1. [7]

   The plaintiffs seek leave to file their ASC pursuant to ss 64 and 65 of the Civil Procedure Act 2005 (NSW).

2. [8]

   Sections 64 and 65 of the Civil Procedure Act relevantly read:

3. [9]

   The power under s 64 must be exercised subject to s 58 of the Civil Procedure Act. It reads:

4. [10]

   Subsection 58(2)(a) of the Civil Procedure Act provides that the Court must consider the matters in ss 56 and 57 in order to determine what the dictates of justice are in a particular case. The matters enumerated in ss 58(2)(b)(i)-(vii) may be taken into account by the Court in making its determination. It is not necessary to reproduce ss 56 and 57 of the Civil Procedure Act here.

5. [11]

   Senior counsel for the defendants referred to Aon Risk Services Australia Limited v Australia National University (2009) 239 CLR 175 (“Aon”). Although Aon concerned the application of r 21 of the Court Procedure Rules 2006 (ACT), that rule is in similar terms to s 56 of the Civil Procedure Act, and the observations of the High Court in Aon apply equally to these proceedings.

6. [12]

   In Aon, the plurality discussed the application of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. The plurality in Aon stated at [97], [102]-[103], [111]:

7. [13]

   It is by reference to these principles that I will consider the plaintiffs’ application for leave to amend the statement of claim in these proceedings.

8. [14]

   The defendants objected to the amendments contained in paras 9 and 9A of the PASC on four main grounds. They are firstly, that there has been no proper explanation for delay; secondly, that the amendments cause prejudice to the defendants; thirdly, that they raise a new cause of action; and finally, that they are futile. I will address each issue in turn, although some of the submissions overlap.

(1) The plaintiffs’ explanation for delay

1. [15]

   On 23 January 2018, the plaintiffs filed the statement of claim. On 25 January 2019, a copy of the proposed amended statement of claim was circulated to the solicitors for the defendants by email.

2. [16]

   The plaintiffs’ solicitor explained that the proposed amendments incorporate the opinions contained in the experts’ liability evidence served by the plaintiff. They are a report of Professor David Lyons dated 13 November 2018, and two reports of Geoff Grosskreutz dated 4 December 2018 and 21 January 2019. Counsel for the plaintiffs prepared a table that set out the paragraphs of the PASC and the corresponding paragraphs of the experts’ reports that relate to each amendment. I found the table helpful and have referred to it in this judgment.

3. [17]

   The plaintiffs’ explanation is that from the letter of instructions to Mr Grosskreutz dated 20 November 2018, his report is not solely based on his inspection on 12 March 2015 but also on material that has since come into existence, or become available to the plaintiffs, after the commencement of the proceedings. Specifically, it is based on the pleadings, the evidentiary statement of Mr Farriss and statements of two independent witnesses, the report of Professor Lyons, documents produced under subpoena by the defendants and correspondence between the parties. Questions 6 and 8 of the letter of instructions to Mr Grosskreutz asked questions in relation to the plaintiff’s evidentiary statement dated 17 September 2018. Also, some of the amendments were consequent upon the report of Professor Lyons, whose inspections took place after commencement of proceedings in 2018.

4. [18]

   The supplementary report of Mr Grosskreutz compares photographs taken on his two inspections of the boat in 2015 and 2018. He notes that the defendants have installed a safety device since the 2015 inspection. This was new information not available in 2015 and forms part of the proposed amendments. To the extent that the proposed amendments relate to the installation of a “spurling pipe” and “chain stripper,” it is the photographs from the 2018 inspection showing the chain stripper installed sometime after the inspection in 2015 that are of particular relevance.

5. [19]

   In short, the plaintiffs’ explanation is that it was not until after the commencement of proceedings that they were able to properly instruct Mr Grosskreutz in relation to the preparation of his report. The reason for the amendments is to square the pleadings with the served evidence, particularly the experts’ evidence on liability.

6. [20]

   Counsel for the plaintiffs submitted that in Aon, the relevant amendments were:

7. [21]

   In the present case, the proposed amendments:

8. [22]

   The defendants submitted that the plaintiffs’ solicitor’s affidavit does not explain why, having had Mr Grosskreutz attend the boat and carry out an inspection in 2015, the plaintiffs did not obtain from him the evidence on which they now rely prior to the commencement of the proceedings. According to the defendants, the plaintiffs have failed to explain why they should be allowed to amend their statement of claim when the expert evidence relevant to those amendments was seemingly available prior to its filing.

9. [23]

   In the absence of a proper and complete explanation, the defendants argued that the Court is unable to weigh the effects of the delay and the objectives of the rules against what occurred, as is required by Aon, and the amendments should not be allowed.

10. [24]

    These current proceedings have not yet been listed for trial. As I understand it, the defendants have not yet served their liability evidence. There are also accountants’ reports on damages outstanding.

11. [25]

    While the defendants claim that they have suffered actual prejudice, I do not agree for the reasons that I set out under the heading “Prejudice” below. I accept that Mr Grosskreutz’s report is not solely based on his inspection in March 2015 (when representatives of the defendants were also present), but also upon evidentiary statements of two independent witnesses, the report of Dr Lyons, documents produced by the defendants under subpoena and correspondence between the parties. Mr Grosskreutz compares photographs taken at the 2015 and 2018 inspections of the boat. He has observed that the defendants have installed a safety device since the accident and the 2015 inspection. This new information forms part of the amendments. In these circumstances and in the exercise of my direction, I am satisfied that the plaintiffs have provided a satisfactory explanation for delay in amending their statement of claim.

(2) Prejudice

1. [26]

   The defendants say that at least some of these amendments prejudice them in their defence of these proceedings.

2. [27]

   Neither paragraph [9] nor [9A] contained in the PASC or all of the particulars that follow are objected to. The particulars of negligence that are in dispute are underlined as follows.

3. [28]

   Paragraph 9 pleads that the first and second defendants (via their agent the third defendant) and the third defendant were negligent in that they failed to take the following precautions:

4. [29]

   Paragraph [9A] pleads that the first and second defendants (via their agent the third defendant) and the third defendant breached their duty of care towards the first plaintiff by:

5. [30]

   In support of its claim for actual prejudice, the defendants rely on the affidavit of the director of the third defendant, Mr Niels Storaker, dated 24 May 2019, and in particular paras 10, 11 and 12. The basis for actual prejudice is asserted as being that the Mr Storaker is now only able to give evidence of his usual practice, without having a certain recollection of what took place on the morning that the hiring commenced.

6. [31]

   Mr Storaker is a director and owner of Church Point Charter. In his affidavit dated 24 May 2019, he deposes that on 23 January 2015, at the time of the hiring of the Omega, he was working at the third defendant’s premises at the Princess Street Marina and was responsible for handing over the boat to Mr Farriss.

7. [32]

   He recalls that Mr Farriss and his wife attended the marina to take possession of the boat. As part of his usual practice, he ordinarily gives an induction to the hirer of the boat and others present. He says that the induction includes the operation of the winch and anchor, and that his practice is to conduct the induction irrespective of the hirer’s stated or known capability. As part of that explanation he always tells the hirer not to trust the anchor on its own because there are unknown variables in the anchor taking hold of the sea bed. He always recommends that the hirer pick up a mooring.

8. [33]

   On the occasion of 23 January 2015, he requested that Mr Farriss accompany him onto the Omega to walk through the boat from bow to stern so that he could familiarise himself with it and its controls.

9. [34]

   Mr Storaker specifically recalls that he advised Mr Farriss that wherever possible, he should moor the vessel instead of using the anchor, as the anchor could drag. He cannot now recall with certainty whether he demonstrated how the anchor was deployed and retrieved. The induction also included an explanation with words to the following effect (at [10]):

10. [35]

    He recalls that he showed Mr Farriss where the electric switches and the circuit breaker were located. He also showed him the flybridge controls and the general sleeping and storing areas around the boat. Mr Storaker recalls that around that point, Mr Farriss indicated that he had previously owned a Bertram and, Mr Storaker thinks, Mr Farriss also mentioned a sports cruiser. Mr Storaker recalls saying words to the following effect:

11. [36]

    Due to the passage of time, Mr Storaker says that he cannot recall whether he went through the operations manual page by page. He also says that he cannot now remember whether he provided an explanation regarding how to unjam or unkink the anchor chain in the unlikely event that it jammed, as a significant amount of time has now lapsed since the incident and he is no longer able to recall any further instructions or demonstrations he may have provided to Mr Farriss.

12. [37]

    Sometime on 24 January 2015, Mr Storaker understands that he was contacted by Mr Farriss enquiring about the location of the circuit breaker. He does not recall how this contact was made. Nor does he recall whether Mr Farriss telephoned him, or attempted to phone his mobile but could not get through due to poor reception in the Akuna Bay area.

13. [38]

    Mr Storaker says that Mr Farriss’ statement dated 19 September 2018 suggests that Mr Storaker sent him a text message saying, “Winch circuit breaker down low cupboard in front lower helm.” Mr Farriss’ statement shows that a short while later, Mr Storaker received a further text message from Mr Farriss saying, “There’s two? The winch was working, and then stopped. I’ve tried turning the circuit breaker off then on again.”

14. [39]

    Mr Storaker then responded by text saying, “2nd breaker in tall cupboard in front of bottom helm, remove small panel in bottom of cupboard and breaker #2 on floor with little reset lever on side. John Axford Omega owner will attend and return boat to Newport if required.” Mr Storaker does not recall receiving a response to this message or a request that John Axford attend to return the boat. It is important to appreciate that there are screen shots of those texts of those conversations reproduced in Mr Farriss’ evidentiary statement.

15. [40]

    While the defendants submitted that the proceedings were brought almost three years after the initial accident, they concede that it was brought within the limitation period. The plaintiffs noted that the limitation period is determined by the “date of discoverability”. The plaintiffs do not concede that this date would have necessarily coincided with the date of accident.

16. [41]

    While the defendants stop short of submitting that the plaintiffs were obliged to inform them of their case prior to proceedings being commenced, they do complain of “the lengthy delay between, on the one hand, the date of the accident and when the plaintiffs first had an expert inspect the boat and, on the other hand, the time when these amendments are sought there has obviously been created an element of prejudice to the defendants”.

17. [42]

    The plaintiffs noted that they are under no obligation to advise the defendants of their case, nor serve any evidence, prior to the commencement of proceedings. Accordingly, there can be no unfair prejudice suffered by the defendants from the timing of the filing of the plaintiffs’ original statement of claim, given that it did commence proceedings prior to the expiry of the limitation period.

18. [43]

    The evidence upon which the proposed amendments are based was either served in accordance with court orders, or after the plaintiffs had already been granted leave to rely on it. Mr Farriss’ evidentiary statement was filed on 18 September 2018, some 8 months after proceedings commenced. The plaintiffs’ expert evidence, which is based on the evidentiary statement and other evidence, was more or less completed by 6 December 2018, approximately 10 months after proceedings commenced.

19. [44]

    Further, the plaintiffs noted that Mr Storaker has prepared earlier statements in the context of an investigation. The plaintiffs have issued a subpoena to produce to the defendants’ calling for witness statements prepared during the period between 1 January 2010 and 24 January 2017. In response to the subpoena, the defendants have claimed privilege over two documents that were eventually disclosed to be two statements of Mr Storaker. These statements were prepared “in anticipation of legal proceedings attached to an investigation report.” The defendants have declined to disclose the date of these statements, despite such information being requested. It appears Mr Storaker has prepared two statements between 1 January 2010 and 24 January 2017, as a result of an investigation which was presumably undertaken by his insurer. In such a context, the plaintiff argued that any investigation would have enquired into his recollection of the circumstances of the boat hire, including any induction, interactions and conversations with Mr Farriss.

20. [45]

    Given the three years between the date of the accident and the filing of proceedings, and the eight to ten months between the commencement of proceedings and the service of evidence, the plaintiff argued that it is highly unlikely that the defendants have suffered any (or any significant) actual prejudice from the plaintiffs failure to particularise its case in the manner proposed by the PASC at the time of their filing the statement of claim.

21. [46]

    There were representatives of the defendants present at the inspection of the gypsy in March 2015. To my mind, Mr Storaker has a clear recollection of the relevant events. The plaintiff contacted Mr Storaker about the problems with the windlass. Copies of the text messages are contained in Mr Farriss’ evidentiary statement. Mr Storaker had the opportunity to prepare a statement after March 2015 because from that time, the defendants were on notice that the plaintiffs were contemplating commencing legal proceedings. Mr Storaker had prepared two earlier statements between 1 January 2010 and 24 January 2017 which are currently subject to legal professional privilege. There are also statements of two independent witnesses, Daniel Littlepeace filed 10 October 2019 and John Thorogood dated 22 September 2018, who came on board the Omega shortly after the plaintiff had been injured. They attempted to engage the windlass and pull the anchor chain up. They manually raised the anchor until the windlass suddenly engaged and the anchor chain came up. Once the anchor was back on board, Mr Littlepeace drove the Omega to Akuna Bay marina where the sea rescue assisted in stabilising Mr Farriss until the ambulance arrived. In these circumstances, it is my view that there is no actual prejudice to the defendants, but I accept there may be some presumptive prejudice.

(3) New causes of action?

1. [47]

   The defendants submitted that the proposed amendments to the statement of claim not only greatly expand the scope of the claim but, in some instances, effectively create a new cause of action. The paragraphs of the PASC in dispute here allege that the defendants were negligent in the following ways:

2. [48]

   The plaintiffs submitted that the particular paragraphs complained of are in fact amendments to particulars, and that ordinarily the Court would grant a plaintiff leave to make such an amendment in circumstances such as these.

3. [49]

   If the amendments are found to be new causes of action, the plaintiffs rely on s 65(2)(c) of the Civil Procedure Act. The plaintiffs argue that the defendants made no written submissions on this issue. When s 65 of the Civil Procedure Act is triggered, the effect of the amendments is taken to be the date of the original filed statement of claim, according to which no limitation issue would arise.

4. [50]

   Whether the particulars can be said to arise from substantially the same set of facts is a matter of general impression, and does not require precise similarity of factual circumstances. It is not necessary that all the facts be material to each separate cause of action.

5. [51]

   In this case, the plaintiffs argued that the general factual impression (i.e. the boating accident where Mr Farriss’ finger was detached in a windlass), shown in the diagram reproduced earlier in this judgment, has not changed. Accordingly, the general impression of the matters raised is sufficiently close to be found to be arising out of substantially the same facts.

6. [52]

   The defendants argued that each of those particulars of precautions or breach move from a case where the plaintiffs assert generally that the defendants failed to instruct or warn Mr Farriss in using of the anchor and windlass, to a case where they assert that the defendants ought to have caused a redesign and/or a rebuild of the windlass system to take place. Those are not allegations made in the original statement of claim, and they amount to a case that is separate and distinct from the case which the plaintiffs initially sought to bring. They do not simply seek to clarify the relief sought, as suggested in the plaintiffs’ submissions.

7. [53]

   That being the case, the defendants argued that leave should only be granted if the provisions of ss 50C and 50D of the Limitation Act 1969 (NSW), are complied with. In essence, the plaintiffs would need to demonstrate to the Court that the proposed causes of action were not discoverable by the plaintiffs between the expiration of the three year period and when this motion was filed or at any time before.

8. [54]

   The defendants argued that there are two problems that the plaintiffs face in this regard. Firstly, there is no evidence on which a Court could find when such causes of action became discoverable. The evidence in Mr Parker’s affidavit at [5] is that on 9 October 2018, he sent a letter to Mr Storaker’s solicitor seeking details of the documents over which privilege was claimed, including the date of each document. The defendants submitted that this is far from adequate to inform the Court of any matters relevant to that issue.

9. [55]

   Secondly, given that at least one expert retained by the plaintiffs attended an inspection on the boat within two months of the accident, and Mr Parker’s evidence is that the proposed amendments incorporate that expert’s opinions, the proposed amendments ought to have been well within the knowledge of the plaintiffs and their legal advisors for years.

10. [56]

    In these circumstances, the defendants submitted that the amendments are statute barred and should not be allowed.

11. [57]

    The plaintiffs’ allegations of negligence against the defendants in the original statement of claim are that the defendants were negligent in that they failed to take any or any adequate precautions against the risk of harm ([8]).

12. [58]

    Originally at [9], the plaintiffs pleaded:

13. [59]

    The original pleading was one of negligence. The particulars concern failure to instruct on the operation of the anchor and the hazards of the boat; the anchor’s propensity to fail and the appropriate procedures upon failure of the anchor; failure to properly maintain a working anchor and chain; failure to provide Mr Farriss with a boat that was reasonably free from defect; and causing and/or directing Mr Farriss to engage in a dangerous and difficult report of the anchor, the chain, the gypsy and its controls with regard for Mr Farriss’ circumstances and relative inexperience in repairing and operating such mechanisms.

14. [60]

    The other paragraphs are further particulars of negligence that arise out of the same, or substantially the fame facts, as those giving rise to the existing cause of action in negligence. Even if paragraph [9(o)] or any other paragraphs is considered a new cause of action, they arise from the same or substantially the same facts as those giving rise to the same cause of action and claim for relief set out in the originating process. Even if the limitation period has expired, s 65(2) of the Civil Procedure Act provides that the amendment can be made after the limitation period has expired with the leave of the Court. In the exercise of my discretion, the plaintiffs should be granted leave to make these amendments to the statement of claim pursuant to s 65(2)(c). These amendments are taken to have effect as from the date on which the proceedings were commenced, namely 23 January 2018: see s 65(3).

(4) Futility

1. [61]

   Paragraph [35] asserts that the defendants are entitled to some sort of independent contractor defence, but provides no evidence in support. Such a defence is normally pleaded and made out with evidence and is a triable issue. In this regard, the defendants are seeking to succeed “on the merits” of their case without having to put on evidence.

2. [62]

   The defendants at [38] of their submissions say that the proposed amendments including 9(t), 9(u), (9A(c), 9A(d), 9A(f), 9A(w) and 9A(x) are general and meaningless in the context of the case the plaintiffs seek to bring. They are not proper particulars as required by UCPR 15.1. Rather, they are general assertions of some statement of principle with no particular relationship to the facts of the matter.

3. [63]

   No doubt, the defendants will ultimately raise these issues in its defence and will put on evidence of its assertions contained in its written outline, but at this stage it is nothing more than an assertion to an entitlement to a defence in law.

4. [64]

   The defendants submitted that the paras referred to at [35] and [38] are futile and should be rejected. The plaintiff argued that ultimately, this will come down to a contest as to the scope of the defendants’ duty under the Civil Liability Act and the Australian Consumer Law, all of which are triable issues. Accordingly, the plaintiff should have it case heard and decided on the merits.

5. [65]

   The defendants argued that some of the plaintiffs’ proposed amendments contain allegations against the various defendants that could not legally be made out against them.

6. [66]

   These allegations generally assert that the defendants ought to have undertaken redesigning or rebuilding the windlass. The first and second defendants are the owners of the boat. The third defendant is the hirer. The windlass system on the boat forms an intricate part of the boat as designed and manufactured. There is no evidence to suggest, nor could there be, that any of the three defendants had any role in designing or building the boat and its windlass system.

7. [67]

   The defendants submitted that in those circumstances, they are entitled to rely upon the expertise and skill of the designers and builders of the boat and the windlass system. There are many cases where a Court has held the principal will be not responsible for the acts of a contractor retained by the principal where the contractor has specialised knowledge. There is no suggestion that any of the three defendants has any particular expertise in such area and there is, of course, no evidence that the defendants were aware of any problem with the windlass before the date of this accident. Accordingly, the amendments are futile and should not be allowed.

8. [68]

   Whether the defendants had prior knowledge that the operation of the windlass was faulty will depend on the facts and circumstances elicited at trial. In my view, the amendments to the plaintiffs’ statement of claim cannot be said to be futile or hopeless.

Result

1. [69]

   Taking into account these circumstances set out in my reasons, including that the defendants may suffer some presumptive prejudice, I grant leave. I make an order pursuant to ss 64(1) and 65(2)(c) of the Civil Procedure Act that the plaintiffs are granted leave to amend their statement of claim. This means that the real issues in dispute will be ventilated at trial. The plaintiffs are to file and serve their ASC within 14 days.

2. [70]

   Costs are discretionary. Costs are reserved.