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CISG CASE PRESENTATION

Australia 27 May 2004 Supreme Court of Western Australia – Appellate Court (Summit Chemicals v Vetrotex Espana)
[Cite as: http://cisgw3.law.pace.edu/cases/040527a2.html]

Primary source(s) of information for case presentation: Case text

Case Table of Contents


Case identification

DATE OF DECISION: 20040527 (27 May 2004)

JURISDICTION: Australia

TRIBUNAL: Supreme Court of Western Australia – Court of Appeal

JUDGE(S): Heenan J, Miller J

CASE NUMBER/DOCKET NUMBER: FUL 169 of 2003

CASE NAME: Summit Chemicals Pty Ltd v Vetrotex Espana SA

CASE HISTORY: Related proceeding: Aqua Technics (WA) Pty Lt [Buyer] v Summit Chemicals Pty Ltd & Ors [Seller], [2003] WASC 182

SELLER'S COUNTRY: Spain (third party defendant)

BUYER'S COUNTRY: Australia (first defendant) [bought from Spanish supplier; sold to Australian buyer]

GOODS INVOLVED: Fiberglass rovings used in construction of swimming pools


Classification of issues present

APPLICATION OF CISG: CISG appears to be applicable

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 35 ; 39

Classification of issues using UNCITRAL classification code numbers:

35A ; 35B [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law];

39B [Requirement to notify seller of lack of conformity: cut-off period of two years]

Descriptors: Conformity of goods ; Lack of conformity notice, timeliness

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Editorial remarks

Summit Chemicals Pty Ltd v Vetrotex Espana SA
[2004] WASCA 109 (27 May 2004)

EDITOR: Dr. Bruno Zeller

The facts are simple, [Seller], Summit Chemicals, the importer, has to defned an action by Aqua Technics, the [Buyer], for the supply of defective goods. The [Seller] wishes to join the Spanish manufacturer as a First third party to the litigation. In this matter, the [Seller] applied for leave to appeal as the court of first instance refused leave to amend third party statements of claim.

The appellant in the original statement of claim asked for damages for breach of contract and breach of duty of care. The legislation, which was relied upon, was the Sale of Goods Act and the Trade Practices Act, both domestic legislation. As this is an international sale, the CISG should have been applicable and not domestic legislation. Subsequently, article 35 of the CISG was added to the claim. The court did not appreciate the fact that the original claim was wrong and that the inclusion of the CISG does create a new claim, contrary to the view expressed by the court. [1] The court ought to have looked at Perry Enge, P/L v Bernold AG [2] where the court dismissed a claim as domestic law, namely the Goods Act was pleaded and not the CISG. The court did note that "an amendment will not be allowed to introduce a new cause of action not previously raised which would be time-barred under any applicable law of limitations ..." [3]

The point was that the domestic limitation period of six years as well as domestic law determining amendments was taken as being relevant without cognizance being taken article 39 of the CISG, which puts the outer limit of the notice period at two years. Of consequence is that the period to give notice "commences when the buyer discovered or ought to have discovered the lack of conformity." [4]

The purchases dated from mid-1996 to 4 April 1997. The [Seller]’s court action against its Spanish supplier started in July 1999, which is outside the two-year notice period. Amendment of claims are governed by domestic law as the CISG is silent on this issue, however, this cannot be done without cognizance being taken of article 39.

It appears that the goods were either not examined or no notice of lack of conformity was ever issued or raised pursuant to articles 38 and 39. The only reference is a question as to moisture content which was answered by the supplier. In essence the whole matter should have been argued on the question of the examination of the goods and whether a notice of lack of conformity was issued within a reasonbable time after discovery of the defects. Possibly article 40 could also be of relevance as it is not clear whether the supplier knew that the goods were faulty or he merely gave wrong advice.


FOOTNOTES

1.  At para. 41.

2.  [2001] SASC 15.

3.  At para. 42.

4.  CISG-AC Opinion no 2. Examination of the Goods and Notice of Non-Conformity. Articles 38 and 39. Rapporteur: Eric E. Bergsten.

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Editorial remarks

EDITOR: Lisa Spagnolo

Excerpt from analysis of Australian case law on the CISG. Reproduced with permission of 10 Melbourne Journal of International Law (2009) 193-197

Summit Chemicals Pty Ltd v Vetrotex Espana SA [357]

An Australian company (the buyer) was being sued by its customer for faults in pools allegedly caused by defective fibreglass that it had bought from a Spanish supplier. It therefore joined the Spanish seller, its Australian agent and related parties as third parties to the proceeding. The buyer then applied for leave to amend the third party statement of claim to include, inter alia, a pleading that the alleged defects amounted to breaches of terms implied by the CISG. If the CISG claim became statute-barred after the third party notice was issued on 2 July 1999, a grant of leave to amend would have precluded a limitations defence.

At the initial leave hearing, McKechnie J decided that the matter turned on the ambit of the third party notice.[358] This set out the principal claim made against [page 193] the buyer, and sought indemnity from the seller on the basis that the fibreglass caused 'swimming pools ... to blister and need replacement,' because it was 'contaminated and thereby not fit for purpose, or of merchantable quality' due to its moisture content.[359] It stated the claim against the seller 'will be based upon your breach of the terms of sale ... and in particular concerning the merchantable quality and fitness for the purpose of the [fibreglass]' as well as negligence and Trade Practices Act 1974 (Cth) provisions.[360] It also alleged the buyer had queried the moisture content and been reassured by the seller's Australian agent.[361]

The third party notice did not refer to the Sale of Goods Act 1895 (WA) or CISG.[362] McKechnie J held that it was wide enough to encompass the CISG claim in addition to the claims under the Sale of Goods Act 1895 (WA) already pleaded in the original statement of claim.[363] His Honour encouragingly acknowledged that the two laws were different, but did not elaborate beyond saying the CISG imposed 'like' obligations on the seller.[364]

The Court of Appeal observed that, strictly speaking, since this was a claim for indemnity, the third party's liability would not arise until judgment was awarded in the primary action.[365] In other words, time did not start to run until the principal matter was complete.

Nonetheless, the Court of Appeal's primary focus was on local procedural rules. It asked whether the proposed amendments could be characterised as radically altering the facts pleaded rather than the legal conclusions or causes of action to be drawn from those facts.[366] After noting that parties were not compelled to plead legal conclusions, but could argue any causes of action open on the facts pleaded,[367] the Court of Appeal concluded that the CISG claims could have been drawn from the facts indorsed in the original third party notice, and granted leave to amend. The decision rendered nugatory the question as to whether the CISG action became time-barred after the third party notice, because the Court essentially held that this was not a new cause of action at all.[368]

However, Zeller argues that leave to amend the statement of claim 'created a new claim contrary to the view expressed by the court',[369] and the period of [page 194] limitation should have been two years pursuant to art 39, not six years under domestic law.[370]

The reasoning in Summit should be understood in context. Certainly, the case betrays a level of misunderstanding about the operation of the CISG. Buyer's counsel sought to plead, inter alia, both the CISG and Sale of Goods Act as alternatives. Clearly, the CISG's application excludes that of the Sale of Goods Act, and had the seller's counsel made such an application, the Sale of Goods Act claims should have been struck out. However, the Court was never asked to consider the issue. Thus, unlike in Playcorp, its task was not to determine which law applied, but simply whether the CISG claim could be added to original pleadings.

These were interlocutory proceedings, concerned only with procedural rules on pleading amendments. The rule in Weldon v Neal, that prohibited amendments to add actions that had become statute-barred after proceedings commenced, has now been abrogated.[371] Pleadings can now be amended at any time with leave, provided any prejudice can be met by adjournments or cost orders. While case management powers and specialised list Practice Directions can intrude, leave is usually granted to ensure the real controversy between the parties is addressed, in some circumstances, even after the close of evidence.[372] Before trial, leave is normally refused only if the amendment involves substantial incurable prejudice, mala fides, or is so 'obviously futile' that it would be vulnerable to being struck out.[373] The new cause of action is deemed included in the original pleading, and loss of the time-bar defence is not a relevant prejudice.[374] An arguable claim is not futile even if it does 'not have much chance of success'.[375]

The focus in Summit on whether the CISG claim was supported by pleaded facts followed a line of authority that restricts the abrogation of Weldon v Neal,[376] perhaps due to the particular wording of rules in certain jurisdictions.[377] A more relaxed view might be found elsewhere, however some [page 195] rules require statutory provisions,[378] or legal conclusions to be pleaded.[379] In those cases, CISG provisions and CISG-styled conclusions may need to be pleaded in any event.

Clearly, an art 35(2) argument could be derived from the facts originally pleaded on contamination, blistering and moisture. In accordance with local rules and cases properly applicable to the procedural issue of pleadings, the ability to derive CISG claims from facts pleaded supported a conclusion that the CISG claim was not 'new.' This finding meant limitation periods fell into two categories, with commencement of third party proceedings as the dividing line. Those expiring afterwards were irrelevant altogether, and those expiring before were best left to a full hearing, since an interlocutory court will be slow to determine a limitation period has expired.[380]

Had the claim been 'new', or had a court of a different jurisdiction been seized of the matter, issues of futility might have been at stake, and therefore late notice might have been relevant. Deliveries occurred between October 1996 and May 1997. It is unclear whether the seller was notified before third party proceedings commenced in July 1999, so the right to rely on non-conformity might have been lost for late notice or due to the two year maximum in art 39(2). But was the claim 'obviously futile'? The CISG Advisory Council has stated that time pursuant to art 38 for inspection commences when 'signs of latent non-conformity become evident',[381] that is, when the buyer ought to have been aware. The pools were manufactured in 1997-98.[382] Principal proceedings commenced in April 1999. While it is unclear from the judgment, if the buyer did not become aware of the issue until late 1998-99, the period in art 39(1) might not have commenced until then. Thus it would be possible to argue notice to the seller was not late, even if comprised of the third party process in July 1999.

Seen in its procedural and interlocutory context, the decision was not so flawed as it might seem. Unlike Perry, the decision in Summit anticipated a full hearing. Argument on expiry of limitations was still open before third party proceeding commenced.[383] Periods of limitation per se fall outside the CISG's ambit,[384] thus mention of domestic limitations legislation was appropriate, although it should have been arrived at by means of a determination to that [page 196] effect, followed by application of conflicts rules, at least for the CISG claims.[385] One might say that the controversy regarding late notice should have been aired in argument on futility, but, in any event, the futility question was made redundant by the Court's interpretation of its own procedural rules and its view of timing of liability for indemnity.[386]

Perhaps most remarkable is that there was no application to have alternative domestic sales law claims struck out at the interlocutory stage. The decision barely rated a mention internationally.[387]
_________________________

357. [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) ('Summit'). Also reported internationally at: Pace Law School, <http://cisgw3.law.pace.edu/cases/040527a2.html>; available from UNILEX, <http://www.unilex.info>; available from CISG-online, Search for Cases (Case No 860) <http://www.globalsaleslaw.org/index.cfm?pageID=29>.

358. Aqua Technics (WA) Pty Ltd v Summit Chemicals Pty Ltd [2003] WASC 182 (Unreported, McKechnie J, 19 September 2003) [24].

359. Ibid [23].

360. Ibid.

361. Ibid.

362. Ibid.

363. Ibid [24].

364. Ibid.

365. Summit [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) [66] (EM Heenan J).

366. See ibid [42] (EM Heenan J, noting the Court's discretion to allow amendments arising out of substantially the same facts advanced in the originating process or statement of claim), [58] (EM Heenan J, relying on Wheeler J's judgment in Morgan v Banning (1999) 20 WAR 474, 485-6, endorsing, pursuant to Rules of the Supreme Court 1971 (WA) O 21 r 5(5), amendments which amount to a 'change in the legal categorisation' as opposed those involving a 'change of facts').

367. Summit [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) [74]. See, in support, Butterworths, Civil Procedure Victoria (1987) vol 1 (at 232) [13.02.30] ('Williams').

368. Summit [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) [68].

369. Zeller, CISG Cases, above n 2, 3.

370. Ibid 3-4. See also Protocol Amending the Convention on the Limitation Period in the International Sale of Goods, opened for signature 11 April 1980, 77 UNTS 85 (entered into force 1 August 1988) ('Protocol'), which was adopted at the same time as the CISG. The Protocol would have introduced a limitation period of four years, however, the Convention and its Protocol have attracted only 28 and 20 Contracting States respectively, excluding Australia: see UNCITRAL, Status: 1980, above n 3.

371. See Weldon v Neal (1887) 19 QBD 394; Federal Court Rules 1979 (Cth) O 13, r 2(3); Court Procedures Rules 2006 (ACT) r 503(1); Uniform Civil Procedure Rules 1999 (Qld) r 376(4); Supreme Court Civil Rules 2006 (SA) r 54(7)(a); Supreme Court Rules 2000 (Tas) r 427(2A); Rules of the Supreme Court 1971 (WA) O 21, r 5(2); Supreme Court Rules 1987 (NT) r 36.01(6); Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 36.01(6); Civil Procedure Act 2005 (NSW) ss 64, 65(2).

372. Williams, above n 367, [36.01.120], [36.01.150].

373. Ibid [36.01.110], [36.01.155], [36.01.180].

374. Ibid [36.01.230].

375. Ibid [36.01.180].

376. See Morgan v Banning (1999) 20 WAR 474.

377. Some rules refer to actions arising from the same or substantially similar facts as those originally pleaded: see, eg, Federal Court Rules 1979 (Cth) O 13, r 2(7)(a); Civil Procedure Act 2005 (NSW) s 65(2)(c); Court Procedures Rules 2006 (ACT) r 503(4)(b); Rules of the Supreme Court 1971 (WA) O 21, r 5(5); Supreme Court Civil Rules 2006 (SA) r 54(7)(a); Uniform Civil Procedure Rules 1999 (Qld) r 376(4)(b).

378. Uniform Civil Procedure Rules 1999 (Qld) r 149(1)(e); Supreme Court Rules 1987 (NT) r 13.02(1)(b); Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 13.02(1)(b); Supreme Court Civil Rules 2006 (SA) rr 99(1)(b), 100(1)(d); High Court Rules 2004 (Cth) r 27.04(c); Court Procedures Rules 2006 (ACT) r 406(1)(e).

379. Supreme Court Civil Rules 2006 (SA) r 99(1)(a); Federal Court Rules 1979 (Cth) O 12, r 10; Court Procedures Rules 2006 (ACT) r 407(1). See also Supreme Court Rules 2000 (Tas) r 227(3).

380. Summit [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) [68] (EM Heenan J).

381. CISG Advisory Council, Opinion No 2, above n 74, art 38, º3.

382. Aqua Technics (WA) Pty Ltd v Summit Chemicals Pty Ltd [2003] WASC 182 (Unreported, McKechnie J, 19 September 2003) [3].

383. The Court made this point: Summit [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) [62] (EM Heenan J).

384. See, eg, Tombstones Case (Oberster Gerichtshof, Australia, 7 September 2000) <http://cisgw3.law.pace.edu/cases/000907a3.html>; Windows Elements Case (Oberlandesgericht Hamm, Germany, 9 June 1995) ºII(2)(d) <http://cisgw3.law.pace.edu/cases/950609g1.html>.

385. Again, whether or not a specific issue falls within an internal or external gap in the CISG was an important preliminary step skipped by the Court: see above n 301 and accompanying text (similar comments regarding interest rates in Ginza).

386. Summit [2004] WASCA 109 (Unreported, Miller and EM Heenan JJ, 27 May 2004) [66], [68] (EM Heenan J).

387. Bruno Zeller, 'Editorial Remarks' in Pace Law School, CISG Case Presentation: Summit Chemicals v Vetrotex Espana (2006) <http://cisgw3.law.pace.edu/cases/040527a2.html#ce>.

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CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1141&step=Abstract> [cited as 24 May 2004]

CITATIONS TO TEXT OF DECISION

Original language (English): Text presented below; see also <http://www.austlii.edu.au/au/cases/wa/WASCA/2004/109.html>; [2004] WASCA109

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

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Case text

Text available on the Internet courtesy of the AustLII website

Supreme Court of Western Australia – Court of Appeal

Summit Chemicals Pty Ltd [Appellant (Seller)]
v
Vetrotex Espana SA [Third party Respondent]

27 May 2004

-    [Introduction]
-    The Principal Action
-    The Third Party Proceedings
-    The Third Party Notice
-    First Third Party Statement of Claim
-    Proposed Amendmant to Third Party Statement of Claim
-    Outcome of the Application for Leave to Amend the Third Party Statement of Claim
-    The Proposed Introduction of the July 1996 Contracts for the Supply of Product
-    Accrual of the Causes of Action
-    Respondent’s Notice of Contention
-    Conclusion
[For references to CISG, see paragraph 35 and paragraph 41]

Last updated: 28 June 2003

[...]

[Introduction]

1    MILLER J: I have had the opportunity of reading in draft the reasons for judgment of E M Heenan J. I agree with those reasons and I agree with the orders proposed by his Honour.

2    EM HEENAN J: This is an application for leave to appeal from an interlocutory decision of McKechnie J, dated 19 September 2003, which refused leave to amend the [Seller]'s statement of claim in third party proceedings against the respondent. These third party proceedings are being prosecuted contemporaneously with the principal action. A further order was made by McKechnie J on 12 December 2003 directing, that if leave to appeal were to be granted, the appeal should be heard at the same time as the application for leave. That order also directed that the second and third third parties in the action should be served with the papers relating to the application for leave to appeal and might take such part in the appeal as the Full Court should direct. In the event counsel for the [Seller] and respondent on the application in the appeal appeared and were heard. Counsel for the second and third-named third parties also appeared but we did not consider it necessary to hear counsel for those interests, although counsel was permitted to be present throughout the hearing of the application and the provisional appeal.

3    The exact terms of the order made by McKechnie J dismissing the [Seller]'s application are:

"1. The defendants be refused leave to amend the third party statement of claim in the form proposed by the minute dated 10 December 2002.

2. Leave be given to the [Seller] to file within 21 days an amended third party statement of claim in accordance with the Reasons for Judgment of the Honourable Justice McKechnie delivered 19 September 2003 [Aqua Technics (WA) Pty Ltd [Buyer] v Summit Chemicals Pty Ltd & Ors [Seller] [2003] WASC 182].

3. Any amendment shall not include contracts entered into prior to December 1996 and may not expand the defects alleged beyond moisture content.

4. The parties have liberty to apply as to costs."

4    Because this order granted the [Seller] leave to file an amended third party statement of claim within a designated period it is, at first sight, not apparent why, even if the decision appealed from were wrong, substantial injustice would be done by leaving the decision unreversed. The [Seller] needs to show this in order to establish one of the criteria for the grant of leave to appeal from an interlocutory order: Wilson v Metaxas [1989] WAR 285 per Malcolm CJ at 294; The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 and Jingellic Minerals NL v Abi Group Ltd (1992) 7 WAR 566. In the [Seller]'s submission the answer to this point lies in the restrictions imposed by the order granting leave to reamend the third party statement of claim as contained in pars 2 and 3 of the order set out above. The impact of those restrictions can only be appreciated when the background of this litigation and the respondent's objections to the proposed amendments have first been described.

The Principal Action

5    In the principal action, to which these third party proceedings are ancillary, the plaintiff Aqua Technics (WA) Pty Ltd ("[Buyer]") is suing the present appellant ("[Seller]") as first defendant and two directors of [Seller], respectively the second and third defendants, for damages at common law for breach of contract and/or negligence and, in addition, for damages under s 82 of the Trade Practices Act (1974) (Clth) ("TPA") for alleged misleading or deceptive conduct contrary to s 52 and/or s 53(c) of the TPA. The [Buyer] also advances claims for damages for alleged breaches of s 87 of the TPA against the [Seller] coupled with a claim for "indemnity" pursuant to s 87 of the TPA against the second and third defendants. In addition, there are claims for damages against the second and third defendants (but not against the [Seller]) made by the [Buyer] in reliance upon s 79 of the Fair Trading Act (1987) (WA) but in respect of alleged breaches of s 10 of that Act by the [Seller]. There are further claims directly against the [Seller], as first defendant, based upon alleged breaches of s 10 of the Fair Trading Act (1987). Insofar as the [Buyer]'s claims involve claims against the [Seller] for "indemnity" under s 87 of the Trade Practices Act some special considerations arise which will be addressed later in these reasons.

6    All the causes of actions asserted by [Buyer] against the [Seller] arise from dealings leading to a series of contracts for the sale, by the [Seller], and the purchase, by the [Buyer], of consignments of "Vetrotex anti-static gun rovings" which is a trade description of continuous fibreglass rovings commonly used in the construction of swimming pools. [Buyer] alleges that, between 13 January 1997 and 29 April 1997, it entered into four contracts for the purchase of quantities of Vetrotex gun rovings from the [Seller] each of which constituted sales by description of the designated product. The four contracts, named in the pleading as the first, second, third and fourth consignments were agreed on 13 January, 13 February, 7 March and 29 April 1997 respectively. As a result, consignments of Vetrotex gun rovings were delivered by the [Seller] to the [Buyer] ranging in quantity from 2,000 kilograms to 6,000 kilograms. Four successive payments at the agreed rates for the quantities supplied were made by the [Buyer] to the [Seller] between 14 March 1997 and 14 May 1997.

7    In its statement of claim, as amended, [Buyer], alleges that each of the four consignments of Vetrotex gun rovings had become contaminated because of excessive moisture content and was thereby unfit, or only partially fit, for use in the manufacture of swimming pools. Further, and in the alternative, [Buyer] alleged that each of the consignments of gun rovings was not of merchantable quality in breach of a condition implied in each contract by operation of s 14(ii) of the Sale of Goods Act 1895. Those allegations give rise to the claims made by the [Buyer] for damages for breach of contract in respect of each of the four consignments of product delivered by the [Seller].

8    [Buyer] also alleges that it has suffered, or will suffer, economic loss as a result of the supply of the four contaminated consignments of gun rovings. This is said to have resulted because the [Buyer], as it is alleged that the [Seller] knew or should have known it would do, used the gun rovings to manufacture fibreglass swimming pools for sale to the [Buyer]'s customers and that, in doing so, a number of the swimming pools so manufactured and supplied turned out, or are likely to turn out, to be defective. As a result of these defects swimming pools manufactured by the [Buyer] and supplied to its customers are said to have been rejected by the customers resulting in the [Buyer] incurring, and in continuing to incur, legal liability to replace some of the swimming pools and to pay compensation to several of its customers with associated and consequential damage to its reputation and goodwill and with loss of custom in the trade. [Buyer] alleges that this economic loss (on the present pleadings yet to be particularised and quantified) was caused by the negligence of the [Seller] in various ways.

9    The particulars of negligence are to be found in par 57 of the amended statement of claim in the principal action but, essentially, consists of allegations that the [Seller] was negligent: in failing to ensure that the gun rovings supplied did not contain excess moisture; in failing to take certain specified precautions to prevent the product becoming contaminated by excess moisture; in failing to test the moisture content; and in failing to warn [Buyer] that the product had become contaminated or was at risk of being contaminated by excessive moisture.

10    These allegations of negligence are accompanied by a plea that the [Seller] knew, or ought to have known, that the gun rovings supplied would be used by [Buyer] in the manufacture of fibreglass swimming pools for sale to its customers; that [Buyer] relied on the [Seller] to ensure that the gun rovings were fit for use in that manufacture; and that [Buyer] would, or would be likely to, use the product in the manufacture of the swimming pools and thereby risk incurring economic loss if the product were not fit for use.

11    There are further allegations made by the [Buyer] to the effect that the [Seller] made various express or implied representations about the fitness of the product for use in the proposed manufacture of swimming pools in the knowledge that [Buyer] would rely on those representations and use the product in the manufacture of swimming pools for supply to its customers and thereby risk incurring economic loss if the representation should be untrue.

12    It can only be assumed from these allegations that [Buyer] desires to argue that the relationship between itself and the [Seller], in relation to the supply of the gun rovings by description in the various consignments, established a relationship between vendor and purchaser which, accompanied by the vendor's alleged knowledge of the purpose to which the product was to be put by the [Buyer], gave rise to a duty of care by the vendor to ensure that the product conformed to the express and implicit representations made about its suitability for use and, as well, to a duty of care to provide accurate information about the quality of the product or the fact or risk of its contamination.

13    Further, it is to be assumed that the other allegations contained in the statement of claim effectively make out a case that the product did not conform in these respects and that the [Seller], as vendor, was negligent in supplying the product in the condition in which it was supplied and/or, without warning of the fact or risk of its contamination. Perhaps this may be a generous construction of the allegations made by the [Buyer] in the statement of claim where there is no specific reference to a duty of care of the kind postulated but I am content to proceed on the footing that the relationship of the parties, and the consequences of their actions, as pleaded in the particular facts set out in the statement of claim are sufficient to allow a claim in negligence of this kind to be advanced - Karsales (Harrow) Ltd v Wallis [1956] 2 All ER 866; [1956] 1 WLR 936 at 941; Lever Brothers Ltd v Bell [1931] 1 KB 557 at 582 and Selangor United Rubber Estates Ltd v Cradock [1965] Ch 896. In each of these decisions can be found illustrations of the principle that if material facts are alleged in a pleading it is not necessary to plead the legal result or the existence of any particular liability or duty which arises from the facts explicitly alleged - see also Williams v Milotin (1957) 97 CLR 465 at 473; Fullarton v North Melbourne Electric Tramway & Lighting Co Ltd (1916) 21 CLR 181 at 190.

14    The [Buyer]'s causes of action in reliance upon the Trade Practices Act and the Fair Trading Act arise from a series of express or implied representations alleged to have been made when the various contracts of sale of the product were agreed upon. The plaintiff [Buyer], alleges against the [Seller] that:

(a)    as a result of complaints from other customers, the [Seller] arranged for tests of the gun rovings to be conducted at the University of Western Australia in December 1996 which confirmed that the moisture content in the fibreglass was too high to render it fit, or fully fit, for the use in the manufacture of swimming pools;

(b)    from observation it was apparent that the first, second, third and fourth consignments of product received were contaminated;

(c)    as a result of a test conducted by another customer on samples of the Vetrotex gun rovings the [Seller] had been informed that the test results were poor.

[Buyer] also pleads that, in accepting the orders for the various consignments of product and thereby making implied representations that the gun rovings were fit for the purpose which it was known it was to be used by the [Buyer]; further, because of the implied warranties of merchantability; and also because of the failure to disclose known problems with the product, this constituted misleading and deceptive conduct by the [Seller] in relation to each of the contracts of sale and the delivery on consignment of the product.

15    On this basis damages are sought for breaches of s 52 and s 53(c) of the Trade Practices Act and/or s 10 of the Fair Trading Act. In addition, [Buyer] specifically seeks "indemnity" pursuant to s 87 of the TPA against the [Seller]. This claim is an avenue to more extensive relief than could be granted if the [Buyer] succeeds in the common law causes of action or in its claim for damages under s 82 of the TPA. Those latter causes of action, if made out, would only entitle the [Buyer] to recover for actual loss or damage already suffered - Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 - whereas a successful claim under s 87 would allow the court to grant relief not only where loss or damage has been suffered but where it is likely to be suffered, as in this case, because of further complaints from customers in relation to problems later appearing or notified arising from the use of these gun rovings - Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31. Accordingly, by the principal proceedings the [Seller] is subject not only to claims for damages for established loss, but also to claims both in respect to damage not yet incurred or disclosed (s 87(2)(b)) and to a variety of other remedies that the court may consider to be appropriate (s 87(1)) including, but not limited to, those specified in s 87(2).

16    However, there is nothing ins 87 of the TPA which expressly recognises or confers a right to indemnity although, in particular instances, the plenitude of relief which may be granted under the section may have the effect of awarding damages to a claimant of such amount as will, in fact, indemnify that claimant for a liability which he or she has to a third party and which has resulted from the breach of provisions of Pt IV or Pt V of the TPA which are sued upon. For present purposes it is unnecessary and undesirable to embark upon any consideration of the controversy over whether or not a contribution or indemnity under s 87 of the TPA may be sought in reliance upon, or upon principles analogous to, the remedy established by s  of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA)). The [Buyer] was not heard on this appeal and no reliance upon that section was placed by any of the parties appearing. It has been held that that legislation does not apply to claims under the TPA - Re La Rosa; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83 and that there is no other mechanism in s 87 or elsewhere in the TPA which would enable the court to make orders for contribution or indemnity against other contraveners of that Act or persons involved in the primary contravention. That latter conclusion has since been outflanked in part by the decision of the High Court in Burke v LFOT Pty Ltd (2002) 209 CLR 282 which accepts that, in certain circumstances, persons concurrently liable for loss or damage under the provisions of the TPA may be entitled to claim contribution in equity from each other, or from other persons involved in the contravention.

17    This is enough to reveal that the claim by [Buyer] for relief against the [Seller] under s 87 of the TPA for "indemnity" may possibly be inaptly described but that, nevertheless, may well give access to awards of damages in respect of future losses or to other relief for the [Buyer] under that section. The [Buyer]'s amended statement of claim of November 2001 does not contain any particulars of the quantum of the damages sought to be recovered from the defendants (including the [Seller]), nor does it provide particulars of the other losses, potential losses or other prejudice or disadvantage caused by misleading conduct in respect of which relief under s 87 is sought. Accordingly, it is not possible to measure, in money terms, the dimension of the claims for damages brought by [Buyer] against the [Seller] and the other defendants or to distinguish these from the dimension of the claims advanced under s 87. This may be responsible in part for some of the difficulties which have been experienced in evaluating the impact of the third party claim.

18    It should also be noted that the claim by the [Buyer] against the [Seller] and the other defendants was brought by parties present or carrying on business in Western Australia and that the process was served within the jurisdiction and that the defendants appeared unconditionally.

The Third Party Proceedings

19    Faced with these claims the present [Seller], as first defendant in the principal proceedings, issued a third party notice against the respondent. The third party notice to the respondent, Vetrotex Espana SA, the first third party, is dated 2 July 1999 and is addressed to the respondent care of RF Services Pty Ltd, the second third party, at an address in North Melbourne, Victoria. In the statement of claim subsequently filed in the third party proceedings, the [Seller] alleges that the respondent, Vetrotex Espana, is a company incorporated under the laws of Spain, is a foreign corporation as defined by s 4 of the TPA, and by and through its agent, RF Services Pty Ltd, carried on the business of sale in Australia of P292S (the gun rovings) and other products which it manufactured in Spain and was thereby engaging in trade or commerce.

20    The [Seller] obtained an ex parte order from a Master of this Court on 29 June 1999 pursuant to RSC O 9 r 2 authorising service of the third party notice addressed to the respondent upon its Australian agent, RF Services Pty Ltd. The respondent then entered a conditional appearance, dated 28 July 1999, stating that it denied the jurisdiction of the court and reserved the right to apply to the court to set aside the third party notice or service thereof on the grounds of irregularity or that the court had no jurisdiction. However, no application was made by the respondent to have the question raised by the conditional appearance decided and, thereupon, pursuant to RSC O 12 r 6(2) the appearance became and operated as an unconditional appearance.

21    The objections made by the respondent to the application by the [Seller] for leave to amend the statement of claim in the third party proceedings, both originally before McKechnie J and again at the hearing of this application (including further reliance upon grounds rejected by McKechnie J but raised by the respondent's notice of contention) were to the effect that the proposed amendment:

22    It will be necessary to examine these grounds of objections in turn but, before doing so the details of the allegations in the third party proceedings must be recorded to begin the analysis.

The Third Party Notice

23    Omitting formal parts, the third party notice issued by the [Seller] against the respondent asserted:

"The defendant claims against you to be indemnified against the [Buyer]'s claim and the costs of the action, on the grounds that you were the manufacturer and supplier of the Vetrotex Fibreglass Gun Rovings to the defendant that the [Buyer] claims has caused swimming pools that it supplied to its customers to blister and need replacement. The Vetrotex Fibreglass Gun Rovings were supplied to the [Buyer] by the defendant in the condition that it was supplied by you to the defendant. The [Buyer] alleges that the Vetrotex Fibreglass Gun Rovings were contaminated and thereby not fit for purpose, or of merchantable quality. The contamination that the [Buyer] alleges relates to the moisture content of the Vetrotex Fibreglass Gun Rovings. The defendant queried the moisture content of the Vetrotex Fibreglass Gun Rovings with your Australian Agent, RF Services Pty Ltd ('RF') when the Vetrotex Fibreglass Gun Rovings were received in December 1996, and when further batches of the Vetrotex Fibreglass Gun Rovings were received from you in subsequent months. RF advised the defendant that it had consulted with you and that the Vetrotex Fibreglass Gun Rovings were suitable to sell to, inter alia, the [Buyer]. The defendant's claim against you will be based upon your breach of the terms of sale of the Vetrotex Fibreglass Gun Rovings to the defendant, and in particular concerning the merchantable quality and fitness for the purpose of the Vetrotex Fibreglass Gun Rovings. Further, the defendant claims you are in breach of your duty of care, and the terms of the Australian Trade Practices Act. If the [Buyer]'s contention that the moisture content of the Vetrotex Fibreglass Gun Rovings has caused it to suffer loss then you are liable to indemnify and/or pay damages to the defendant in an amount equal to any amount which the defendant may be found liable to pay to the [Buyer], plus costs."

First Third Party Statement of Claim

24    The [Seller] then issued a statement of claim in the third party proceedings against the respondent, as first third party and against RF Services Pty Ltd. This document, dated 2 September 1999, claimed against the respondent, and the second third party:

As is immediately obvious, by this pleading, the [Seller] did not advance any claim for relief under the provisions of the Fair Trading Act 1987 (WA), did not claim relief under s 87 of the Trade Practices Act, nor did it claim a contribution within the equitable jurisdiction in the manner recognized by Burke v LFOT Pty Ltd (supra).

25    The claim for indemnity or contribution as a concurrent tortfeasor can only be a reference to relief sought under s 7 of the Law Reform (Contributory Negligence and Joint Tortfeasors Contribution) Act (1948) WA and must be regarded as restricted to a claim for indemnity or contribution for any liability in negligence alone which the [Buyer], [Buyer], may establish against the [Seller]. Consequently, the causes of action relied upon by the [Seller] against the respondent in the third party proceedings differ in several respects from the claims being made against the [Seller] by the [Buyer] in the principal proceedings.

26    Notably the first statement of claim in the third party proceedings did not seek any relief against the respondent under s 87 of the TPA, as the [Buyer] had claimed against the [Seller], which, as previously explained, may extend to relief associated with damage or other harm which had not been suffered when the claim was commenced, and which may not have been suffered by the [Buyer] at the date of trial.

27    In the original third party statement of claim the [Seller] pleaded:

4. In late 1996 and before any contracts were entered into between the [Seller] and Vetrotex Espana the [Seller] by Mr Wayne Spencer made known to Vetrotex Espana by Mr Larry Beston of RF Services that the [Seller] required fibreglass rovings for re-supply to manufacturers of swimming pools and Vetrotex Espana by Mr Larry Beston recommended and suggested P292S for that purpose.

5. Between December 1996 and April 1997 by contracts made between Vetrotex Espana and the Seller] Vetrotex Espana agreed to sell by the description 'Anti Static Gun Rovings' and the [Seller agreed to buy from Vetrotex Espana certain quantities of P292S.

PARTICULARS

The [Seller] purchased the P292S from Vetrotex Espana by providing written purchase orders to RF Services. RF Services then provided the purchase order to Vetrotex Espana. Vetrotex Espana supplied the P292S on a CIF basis to the [Seller] by delivering the P292S by ship to Fremantle, together with Vetrotex Espana invoices and delivery documentation. The following are the relevant purchase order numbers and Vetrotex Espana invoice numbers relating to the P292S which was supplied by the [Seller] to the [Buyer] pursuant to those agreement set out in the [Buyer]'s statement of claim.

[Seller]'s
Order Number
Date P292S Received
By [Seller]
Vetrotex Espana
Invoice No
103501 18/12/96 00003240
103502 1/1/97 00003628
103503 4/3/97 00004223

103823 4/4/97 00004346

28    The pleading then makes reference to: an earlier supply of a consignment of gun rovings by Vetrotex Espana to the [Buyer] in October 1996; that there was a possible moisture problem associated with that consignment; but that in late December 1996 RF Services and Vetrotex Espana informed the [Seller] that the October 1996 shipment was suitable for sale. It goes on to allege that in reliance upon that representation the [Seller] sold to its customers, including the [Buyer], gun rovings from the October 1996 shipment and from subsequent shipments which also had moisture contents similar to those of the October 1996 consignment. The original third party statement of claim then alleged that each of the contracts for the purchase on consignment of gun rovings referred to in par 5 (above) contained an implied term that the goods would be of merchantable quality and fit for the purpose of supply to manufacturers of swimming pools as a result of the application of s 14 of the Sale of Goods Act 1896. It then alleged that because the consignments of gun rovings contained excessive water, they were defective and not fit for the purpose and were not of merchantable quality as a result of which the [Seller] suffered loss and damage being the extent of its liability to [Buyer] and other manufacturers of swimming pools.

29    The original statement of claim in the third party proceedings also contains allegations asserting the existence of a duty of care by Vetrotex Espana to the [Buyer] to exercise reasonable care to avoid manufacturing and supplying fibreglass rovings which might cause damage when used in the manufacture of swimming pools. It then goes on to assert breaches of that duty of care and consequent loss and damage. Similar allegations are made in relation to the existence of the duty of care and consequent loss in relation to a duty of the [Buyer] to exercise reasonable care to ensure that the fibreglass rovings supplied were suitable for the use in the manufacture of swimming pools and in advising the [Seller] on the suitability for sale of the October 1996 shipment. Then follow pleas that, on the allegations already summarised, the respondent engaged in conduct that was misleading or deceptive or likely to mislead or deceive and that the [Seller] has suffered loss and damage being the extent of its liability to the [Buyer] and to other manufacturers of swimming pools so giving rise to the claims for damages under s 82 of the TPA. There has been no submission by the respondent that the original statement of claim in the third party proceedings was beyond the scope of the claim made in the third party notice itself.

30    This original statement of claim in the third party proceedings was a third party claim by [Seller], then the sole defendant in the principal action, against the two third parties Vetrotex Espana and RF Services Pty Ltd.

Proposed Amendment to Third Party Statement of Claim

31    By a chamber summons dated 30 April 2002 the [Seller] sought leave to amend its statement of claim in the third party proceedings. By then, however, two new parties had been added as defendants in the principal action. [Buyer], the plaintiff, joined Wayne Lloyd Spencer and Peter Kingsley Phillips, directors of the [Seller], as second and third defendants respectively to the original action on 11 April 2001.

32    Accordingly, one feature of the amendments desired on the application to amend the third party statement of claim was to include Spencer and Phillips, the new second and third defendants, as co-claimants with [Seller] Pty Ltd in the third party claims.

33    A second feature of the proposed amendment was to add a new party as respondent to the third party claims. This is Laurence Alan Beston, nominated as the third third party. It was alleged that at all material times he was a director and agent of RF Services. As already described, the original third party statement of claim alleged that the [Seller] had communicated with Vetrotex Espana through Larry Beston of RF Services. This proposed amendment alleged that at all material times Beston knew that the fibreglass gun rovings PS292S were not suitable for use in fibreglass products and was of the opinion that RF Services should not allow [Seller] to use it.

34    A third feature of the amendments proposed by the [Seller] to the third party statement of claim are changes to the dates and numbers of the contracts between it and Vetrotex Espana for the consignment of the anti-static gun rovings. Instead of the allegation that there were four contracts entered into between December 1996 and April 1997 for the delivery of four consignments of the product, the amendment proposed alleges that, between July 1996 and April 1997, there were seven contracts for the supply of the product comprising the four consignments previously mentioned in the first third party statement of claim and three earlier consignments resulting from verbal orders made by the [Seller] with Vetrotex Espana via RF Services on 26 July 1996. It pleads that these were satisfied by the respondent by deliveries to Fremantle on or about 14 October, 3 November and 18 December 1996.

35    A fourth feature in the changes sought to be introduced by the proposed amended third party statement of claim is that, in addition to reliance upon breach of implied terms of merchantable quality and fitness for purpose resulting from the application of s 14 of the Sale of Goods Act 1896, the [Seller] wishes to plead that there were similar implied obligations together with a further implied obligation to ensure that the product was packaged in a manner adequate to preserve and protect it, resulting from the operation of the Sale of Goods (Vienna Convention) Act 1986 and Article 35 of the United Nations Conventions on Contract for the International Sale of Goods which are also to be relied upon to support the claims for breach of contract, breach of duty of care and for damages under s 82 of the TPA.

36    A fifth feature in the changes proposed by the amendments sought is the introduction of a new par 13 containing allegations about the defects in the product supplied by the respondent under the various consignments. The proposed new par 13 is in the following terms:

"13. The P292S supplied by Vetrotex Espana to the [Seller] was defective in that:

13.1 when the rovings were used to create a fibreglass product by combining the rovings with resin using an applicator gun:-

13.1.1 immediately upon the fibreglass strand leaving the rovings cheese it unbundled into filaments;

13.1.2 the combination of resin and fibreglass formed clumps rather than a smooth layer on the surface on which it was sprayed;

13.1.3 air became entrapped within the resin and fibreglass that could not be removed with rollings;

13.2 it contained excessive water; and

13.3 it caused damage to the swimming pools manufactured by the [Buyer].

Defects may be inferred from the water content of the P292S and the fact that damage occurred when it was used to manufacture swimming pools."

One particular objection to this proposed change is that it is said to introduce, for the first time, defects in the fibreglass gun rovings additional to excessive water or moisture contamination (in short, the allegations contained in sub-par 13.1). Another objection is that the allegations proposed to be inserted by sub-par 13.3 would introduce, impermissibly, a claim in the nature of res ipsa loquitur.

37    A sixth feature in the changes proposed by the amendment sought by the [Seller] is the introduction, in the claim for relief, of a claim for indemnity from each of the respondents to the third party claim for any liability which any of the three defendants might be found to have to the [Buyer] or to other manufacturers of swimming pools in reliance upon s 87 of the TPA. This use of the term "indemnity" for relief claimed under s 87 of the TPA is obviously subject to the same criticisms of the use of that same term by the plaintiff [Buyer] in its statement of claim in the principal action and, presumably, the use of this vernacular owes something to its similar employment by the [Buyer]. Nevertheless, the change proposed is significant, extending as it does beyond matters of form to issues of substance, in relation to the potentiality for relief for damage or harm not yet suffered by the claimants, as has been explained before.

38    The proposed amendment to the [Seller]'s statement of claim in the third party proceedings also contains additional alterations which, however, I regard as all being derivative from the six features of change which I have identified and which, consequently, do not require specific description or consideration. In this category I also place the addition of a claim for damages under the TPA against the proposed additional third party, Laurence Alan Beston, for being knowingly concerned in the alleged misleading or deceptive conduct of Vetrotex Espana and RF Services Pty Ltd or in conduct which was likely to mislead or deceive.

Outcome of the Application for Leave to Amend the Third Party Statement of Claim

39    Before McKechnie J the respondent opposed the application for leave to amend the third party statement of claim on three grounds. These were, first, the absence of consent by the respondent to submit to the jurisdiction of the court in respect of the new issues; second, delay by the [Seller] in making the application for leave to amend; and third, failure to provide adequate particulars to allow the respondent to defend the proceedings.

40    His Honour rejected each of those grounds of opposition concluding that claims for relief in respect of alleged defects arising from moisture contact of the fibreglass gun rovings supplied were within the third party notice and that it was therefore unnecessary to consider whether or not the third party notice itself should be amended. That meant that any controversy about the extent to which the respondent had submitted to the jurisdiction of the court, such as had been discussed in Marlborough Harbour Board v Charter Travel Co Ltd (1989) 18 NSWLR 223 did not arise.

41    His Honour also concluded (at [24]) that the reference in the third party notice that the fibreglass gun rovings supplied on consignment were contaminated and thereby not fit for purpose or of merchantable quality was sufficient to allow any claim relying upon breaches of an obligation to supply goods which were fit for the purposes proposed or were of merchantable quality, whether that obligation arose from an implied term in any relevant contract or otherwise. Hence, the third party notice supported the plea in the original third party statement of claim for damages for breach of implied conditions of fitness and merchantable quality arising from s 14 of the Sale of Goods Act and, similarly, the third party notice supported associated claims for breaches of obligations arising from the Sale of Goods (Vienna Convention) Act 1986. His Honour concluded that both were encompassed within the third party notice and that the pleading of the Vienna Convention did not raise a new claim.

42    However, McKechnie J concluded that the amendments proposed to par 8 of the third party statement of claim, by introducing claims in respect of contracts for three earlier consignments of product entered into in July 1996, "exceeds the four corners of the third party notice in respect of those first three contracts". His Honour observed (at [17]):

"The proposed statement of claim is dated December 2002. Any claims prior to that time are barred, so an amendment would be ineffective: Morgan v Banning (1999) 20 WAR 474. The contracts were CIF contracts complete at the ships' rail in Valencia."

His Honour's reference to the proposed statement of claim as being dated in December 2002 can only be a reference to the [Seller]'s minute of proposed amended statement of claim against the first and second, and the new third, third parties which is dated 10 December 2002 and which had later been filed as part of the materials for consideration on the chamber summons for leave to amend the third party statement of claim dated 30 April 2002. Although no longer contentious, the delay between April and December 2002 was satisfactorily accounted for by the explanation that the parties had been resorting to mediation in the interim and that the [Seller] had held off making the application for leave to amend the third party statement of claim, until that process had run its course. Fundamental to his Honour's conclusions, as indeed was submitted by the respondent on the present application, is the proposition that, subject to the power of the court under RSC O 21 r 5(5) to allow amendments which arise substantially out of the same facts as originally advanced in the writ or other originating process or in the statement of claim, an amendment will not be allowed to introduce a new cause of action not previously raised which would be time-barred under any applicable law of limitations if the writ or originating process advancing that claim had been issued at the date the amendment was sought. This is the principle for which the decision in Weldon v Neal (1887) 19 QBD 394 is customarily cited and it has given rise to much detailed discussion and to a number of specified exceptions which need not be discussed on this occasion (see, generally, Campbell, "Amendments and Limitations: The Rule in Weldon v Neal" (1980) 54 ALJ 643).

43    The need for the rule arises from the principle that an amendment to a writ, originating process or other pleading "relates back" to the date when the proceedings were commenced, and it is that date, to which the amendment relates back, which is the critical date for the calculation and application of any relevant period of limitation - Sneade v Wotherton Barytes & Lead Mining Co Ltd [1904] 1 KB 295 and Morgan v Banning (1999) 20 WAR 474 per Wheeler J at 480. This is indeed the position when the amendment sought only involves the parties first joined in the originating process. A different rule, however, applies where an amendment introduces a new party to the proceedings. In that case, as so far as concerns the party newly joined, there is no relation back of the effect of the amendment and the calculation of any relevant period of limitation, as it may apply to that new party, dates from the time of his or her joinder: Liff v Peasley [1980] 1 All ER 623; 1 WLR 781; confirmed by the House of Lords in Ketteman v Hansel Properties Ltd [1988] 1 All ER 38; and Morgan v Banning (supra) 481 - 482.

44    In the present litigation this means that the proposed amendments to the third party statement of claim would have different consequences for different parties and these were not addressed by his Honour's observations. In the first place, the proposed amendments to the third party statement of claim, insofar as they affected the respondent, one of the original third parties, would relate back and take effect from the date of the third party notice of 2 July 1999 rather than from December 2002.

45    Because of this the application of the rule in Weldon v Neal (supra) would need to be observed and could not be waived by the court - Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 per Toohey J at 559 - 562. On the other hand, so far as the amendments sought concerned the position of the new third party, Laurence Alan Beston, they would only take effect from the date when he is joined as an additional third party. Because that would occur at the time that the amendment was made, if leave to amend and join him were to be granted, no possible prejudice to his interests would be caused as he would not be deprived of the right to rely upon any applicable limitation defence. Nevertheless, that still leaves the need to scrutinise the proposed amendment to consider whether there is any infraction of the Weldon v Neal principle for his Honour held that any amendment to the pleading to include contracts for the consignment of the product entered into before December 1996 would not be permitted because to do so, would infringe that rule.

46    McKechnie J also observed (at [16]) that the third party notice incorporated, by reference, [Buyer]' statement of claim. In this regard his Honour was plainly adverting to the reference in the third party notice that the contamination which the [Buyer] alleges in the principal action related to the moisture content of the Vetrotex fibreglass gun rovings and that the [Seller] queried this with the respondent's Australian agent when the product was received in December 1996 and again when further batches of the fibreglass gun rovings were received in subsequent months. While the third party notice incorporates, by reference, the statement of claim in the principal action that does not mean that the [Seller]'s third party claim against the respondent is, in every respect, identical or coterminous with the [Buyer]'s claim against the [Seller], still less that any relevant cause of action by the [Seller] against the respondent accrues at the same date as the accrual of all or any of the causes of action raised by the [Buyer] against the [Seller] third party claimant. This is a matter of principle but it also appears from the terms of the third party notice itself which includes the passage:

"The [Seller]'s claim against you will be based upon your breach of the terms of the sale of the Vetrotex Fibreglass Gun Rovings to the [Seller], and in particular concerning the merchantable quality and fitness for the purpose of the Vetrotex Fibreglass Gun Rovings."

This is in accord with the ability of the [Seller] to make a third party claim under RSC O 19 r 1, not merely when the claimant is entitled to a contribution or indemnity, but also where the claimant is entitled to any relief or remedy relating to, or connected with, the original subject matter of the action and substantially the same as some relief or remedy claimed by the [Buyer] or where any question or issue relating to, or connected with, the original subject matter of the action is substantially the same as some question or issue arising between the [Buyer] and the [Seller].

47    Accordingly, while it is true that the plaintiff [Buyer], advances its first claim against the [Seller] relying on various causes of action alleged to arise from a contract entered into on or about 13 January 1997 (the first of the four consignments of product from the [Seller] to the [Buyer]), that does not mean that the [Seller]'s third party claim against the respondent accrues on the same date or as a result of the same cause of action. Indeed, as the examination of the pleadings already undertaken reveals, there are notable differences in the details of the [Seller]'s third party claim against the respondent as compared to the [Buyer]'s claim against the [Seller]. These occur not only in relation to the dates when various representations are alleged to have been made or when other obligations are alleged to have arisen but also in relation to the causes of action being advanced by the two respective claimants.

48    Before examining whether or not the proposed amendments involving the proposed introduction of the three contracts for the supply of product by the respondent to the [Seller] in July 1996 are undertaken, there is a further part of the decision of McKechnie J from which the applicant/[Seller] seeks leave to appeal. This is his Honour's decision that the amendment to par 13 of the third party statement of claim:

resulting in his Honour's conclusion that, when exercising the leave which he granted to reamend, no amendment expanding the defects alleged in the product beyond moisture content would be permitted.

49    On one reading, par 13 of the proposed third party statement of claim advances three alleged defects in the P292S, the first being that on use it unbundled into filaments, formed clumps and entrapped air; the second being that it contained excessive water; and the third being that it caused damage to swimming pools manufactured from its use and that this, together with its water content, gives rise to an inference that it was defective. It is at this point that the dual feature of the third party notice, first as an outline of the [Buyer]'s claim against the [Seller], and second in describing the [Seller]'s third party claim against the respondent, becomes significant.

50    The third party notice does outline the [Buyer]'s claim as being an allegation that the fibreglass gun rovings were contaminated and were thereby not fit for the purpose or were not of merchantable quality because of the moisture content. Further, the ultimate claim for "indemnity" proceeds on the basis that an obligation to "indemnify" would arise if the [Buyer]'s contention that the moisture content of the product has caused it to suffer loss and damage and the defendant ([Seller]) is found liable to pay to the [Buyer] damages so caused. On the other hand, the only reference in the third party notice to the [Seller]'s claim against the respondent is that the [Seller]'s "claim against you will be based upon your breach of the terms of the sale of the Vetrotex Fibreglass Gun Rovings to the [Seller], and in particular, concerning the merchantable quality and fitness for the purpose of the Vetrotex fibreglass gun rovings. Further, the defendant claims you are in breach of your duty of care, and the terms of the Australian Trade Practices Act".

51    I consider that this formulation is broad enough to support any claim for breach of contract, breach of duty of care, or breach of the provisions of the TPA which the [Seller] may wish to advance which relates to, or is associated with, alleged obligations by the respondent to provide product of merchantable quality and fitness for the purpose intended for the product, without necessarily confining this to allegations concerning moisture content. So, for example, if the alleged unbundling into filaments of the fibreglass strands, alluded to in sub par 13.1.1 of the proposed amended third party statement of claim, were in fact to be a defect independent of excessive moisture content, I consider that it would be within the scope of the third party notice.

52    However, because the [Buyer] is not alleging that any such independent defect in the product supplied caused it loss or damage, and because the [Seller] is seeking no more than an indemnity for any liability which it may be found to have to the [Buyer], such an allegation in the third party statement of claim does not appear to lead anywhere. In other circumstances it might do so if the [Seller] were seeking relief from the respondent for damages on its own behalf, beyond any liability which the [Seller] might have to the [Buyer] or, possibly, if the [Buyer] were ever to amend its statement of claim against the [Seller] to allege breach of obligations by the [Seller] in providing a product which was defective for reasons beyond containing excessive moisture content. There is always a possibility that that may yet happen in these proceedings and that, in such an event it would precipitate action by the [Seller] to make further amendments to the proposed third party statement of claim. It seems to me that those would not be precluded by the terms of the present third party notice subject, always, to the observance of the rule in Weldon v Neal (supra) which might then have to be considered in the new context.

53    At present, in the light of the submissions made by counsel for the [Seller], it seems unlikely that the [Seller] truly intends, by par 13 of the proposed amended third party statement of claim, to advance a case of defects in the product unrelated to its moisture content. It appears that the current formulation of the pleading is intended only to describe, in more particular detail, the defects and their consequences which follow from the alleged excessive moisture content. If that is so, then some minor redrafting of par 13 to remove this apparent ambiguity should occur and, in that event I can see no objection to this aspect of the proposed amendment. Indeed, it is evident that this is what McKechnie J contemplated in respect of this part of the proposed pleading when his Honour granted leave to reamend on terms.

54    These conclusions apply also to the amendment proposed by subpar 13.3 of the proposed re-amended statement of claim which is subject to a similar ambiguity about whether or not the defects alleged arise from, or in association with, the alleged excessive moisture content of the product or because of some other reason. In this regard it is to be noted that his Honour observed that this subparagraph pleads a form of res ipsa loquitur which is a plea sufficiently removed from the third party notice as to constitute a new claim. With respect, I am unable to accept this conclusion. As explained in Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121, the doctrine of res ipsa loquitur is merely descriptive of a method of reasoning by which, in appropriate cases, a prima facie case of negligence may be made out. This proposed plea in subpar 13.3 is no more than notification that the claim for damages in negligence will be advanced, at least in part, by this process of inferential reasoning - per Gleeson CJ and McHugh J at 133. In fact the [Seller] does not expressly refer to the doctrine of res ipsa loquitur. The process of inferential reasoning of the existence of a defect because of unsatisfactory consequences arising from the use of the product, in the absence of any other explanation for the occurrence of the problem, may also be a legitimate use of circumstantial evidence in support of the causes of action other than in negligence. A claim for damages for negligence, formulated in the form of a claim for damages for breach of a duty of care, already exists in the third party statement of claim delivered by the [Seller] on 2 September 1999 (see pars 13 - 21 and subpar 24.2) and is also expressly mentioned in the third party notice of 2 July 1999. Therefore, subject to the elimination of the ambiguity in par 13.3, which suggests that there may be defects other than moisture content responsible for the alleged damage, I can see no reason to refuse leave to amend to allow the introduction of an allegation substantially as proposed in subpar 13.3, but devoid of that ambiguity.

55    On the other hand, if the [Seller] intends by the proposed par 13, or any part of it, to advance a case that the consignments Vetrotex fibreglass gun rovings were contaminated, and thereby not fit for purpose or were not of merchantable quality, by reason of some defect other than, and independent of, alleged excessive moisture content I would, on the pleadings as they presently stand, refuse leave to make any such amendment. The reason for this refusal is because such an allegation would be irrelevant in a case where the [Seller] is only seeking indemnity for any liability which it may be found to have to the [Buyer] in circumstances where the [Buyer] makes no allegation about the unsuitability of the product other than alleged excessive moisture content. I have already concluded that the allegation proposed, if in fact it is intended to advance the existence of a defect of a character other than excessive moisture content, is, in my opinion, within the scope of the third party notice, but it is not relevant, at present, to the [Seller]'s claim for indemnity in respect of the particular case being advanced by the [Buyer]. That circumstance might possibly change and if it does the situation could then need to be reconsidered. It follows, therefore, that I consider with respect that McKechnie J was correct in the ultimate conclusion that an amendment, as proposed by par 13 of the minute of amended statement of claim, could not introduce an allegation of the existence of a defect in the product independent of, or unrelated to, the alleged excessive water content of the gun rovings.

The Proposed Introduction of the July 1996 Contracts for the Supply of Product

56    I have already noted how the changes proposed by the amendment sought to the third party statement of claim include an alteration to par 8 to add three earlier shipments of the product resulting from oral contracts entered into in July 1996, whereas the earliest contract in the existing third party statement of claim is alleged to have been made in December 1996 with delivery of the product to the [Seller] in Fremantle occurring on or about 18 December 1996. The proposed amendment seeks to include three earlier contracts made on or about 26 July 1996 with delivery to the [Seller] at Fremantle occurring on or about 14 October, 3 November and 18 December 1996.

57    For reasons already given, I consider that each of these proposed amendments is within the scope of the original third party notice but, plainly, each is outside the original third party statement of claim of 2 September 1999. Consequently, the respondent submits that notwithstanding that such an allegation would have been possible originally under the third party notice, the fact that such allegations were not advanced in the original statement of claim means that such claims have been abandoned and cannot now be introduced - Renowden v McMullin (1970) 123 CLR 584 and Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431.

58    This immediately gives rise to the longstanding problem of identifying the meaning of "cause of action" for the purposes of the Weldon v Neal (supra) rule in order to determine whether the proposed amendment in fact seeks to add a "new" cause of action. This issue was discussed and analysed in detail by Wheeler J in Morgan v Banning (1999) 20 WAR 474 at 484 - 487 and Ipp and Owen JJ expressly agreed with this analysis which, with respect, I consider must be applied in this present situation. In her judgment Wheeler J adopted the analysis of the long series of cases discussing and applying Weldon v Neal undertaken by S Campbell in her article at (1980) 54 ALJ 643 already mentioned, and, in summarising that approach, her Honour said (at 485 - 486):

"In that article, it is suggested that the amendments which are significant enough to raise the possible application of the rule in Weldon v Neal fall into two broad categories, the first consisting of a 'change of facts' category in which significant new allegations of fact are raised (for example where a [Buyer] suing in negligence for personal injury seeks to amend radically the story of how the accident happened) and the second in which there is a change in the legal categorisation which may not necessarily involve any alteration of substance to the facts upon which the [Buyer] relies to support the claim. Of course there will be overlap between these categories, and other types of amendments not falling necessarily into either of them."

And, further, at 486 her Honour said:

"The position now as I understand it is that the rule in Weldon v Neal applies to a cause of action which is truly new, and may not be abrogated without statutory authority. At least in a clear case, the court should refuse to allow the addition of a new cause of action in that sense. There may of course be circumstances where it is not clear how the amendments relate to the original cause of action and in such a case, it may be preferable that the issue be left for trial, just as the issue may be left for trial where it is not clear from the pleadings whether an action is time barred. If there is no new cause of action in that sense, but is rather a re-labelling addition, modification or clarification of an existing cause of action raised in the indorsement, O 21 r 5(5) is applicable. When the discretion is exercised in that case, it is of course to be remembered that the effect of a refusal to permit amendment may be that a [Buyer] will be unable to bring an issue before the court at all, and questions of justice to the [Buyer], delay, reasons for delay, prejudice to the defendant or other persons, possible abuse of process, among others, will be relevant."

59    The amendment sought by the [Seller] by the introduction of the July 1996 contracts and their delivery assert a breach of contract, negligence or breach of the provisions of the TPA by the respondent of the same nature as first alleged in the third party notice and then advanced in the original third party statement of claim. In that limited and technical sense they are not new, but that restricted sense of the term "cause of action" was rejected by Wheeler J and the Court in Morgan v Banning (supra). The question is whether it is a radical amendment of the facts of how the cause of action arose. I do not consider that it is. What is proposed is within O 21 r 5(5) in that it arises out of the same facts or substantially the same facts as the causes of action in respect of which relief has already been claimed.

60    The situation is that the [Seller] was dealing with the respondent, through its alleged agent the second third party, continuously over a period and was obtaining supplies, on consignment, of the requisite product which were delivered in a series of successive shipments to the [Seller] at Fremantle. Dealings between the [Seller] and the respondent are alleged to have occurred in late 1996 and before any contracts were entered into between the [Seller] and the [Buyer] (see par 4 of the original third party statement of claim). The continuous process of periodic trading now alleged in par 8 of the amendment sought involved the supply of a product by its manufacturer (the respondent) to the [Seller] (for use in industry) for purposes which it is alleged were known to the respondent as originally pleaded. Concerns about the contamination of the product due to water content had arisen during the latter part of 1996, although it is alleged that these were not disclosed to the [Seller]. The [Seller] then supplied product to the [Buyer] which it is alleged were defective and the first of such consignments complained of by the [Buyer] was ordered on 13 January 1997.

61    This pattern of supply of product by the respondent to the [Seller] by deliveries occurring between 14 October 1996 and 4 April 1997 is what is sought to be raised by the proposed amendment, in a situation where the [Buyer] complains of defective product delivered to it under contracts made between 13 January and 29 April 1997. In the original third party statement of claim the [Seller] alleged that the supply of the defective product of which the [Buyer] complains resulted from deliveries to the [Seller] from the respondent occurring between December 1996 and April 1997 but the effect of the proposed amendment is to allege that the sources of those alleged contaminated products included deliveries from the respondent in Fremantle in October 1996 resulting from the July 1996 orders. Of particular significance are the allegations by the [Seller], made in the original third party statement of claim (par 6) and still maintained, that there had been a delivery of product to Fremantle from the respondent in October 1996, that the [Seller] had queried possible moisture contamination of this shipment with the respondent's agent in early December 1996 but had been assured that the October 1996 shipment was suitable for sale.

62    It is for this reason that I consider that the new allegations of fact proposed by the [Seller] in the amendment sought arise out of the same facts or substantially the same facts as the cause of action in respect of which relief was originally sought, namely the continuous trading process between the [Seller] and the respondent which occurred in the second half of 1996 and during the early part of 1997. Accordingly, I consider that the amendment sought to par 8 of the proposed third party statement of claim is permissible and should have been allowed. I reach this conclusion on the hypothesis that, if this aspect of the [Seller]'s claim had first been made by this proposed amendment, it could have been met by a successful limitation defence by the respondent, but that hypothesis has not been established and itself requires examination.

Accrual of the Causes of Action

63    For any of the proposed amendments to be refused because of the application of the principle in Weldon v Neal (supra) it must, of course, first be established that if those claims were to be made in new proceedings to be commenced at the date when the amendment sought is made, the respondent would have available an effective limitation defence so that, allowing the amendment, with the associated process of relation back, would deprive the respondent of the right to rely on the limitation plea. To ascertain whether the right to rely on a limitation defence would be lost it is necessary to identify any relevant limitation period or periods and the date or dates when the causes of action relied upon first accrued.

64    The limitation periods in respect of the actions for damages for breach of contract and in negligence are six years - Limitation Act (1935) (WA), s 38.

65    The limitation period applying to the claim for damages under s 82 of the TPA is now six years, but was three years at the date of the conduct complained of - see Miller's "Annotated Trade Practices Act" (1994), 24th ed 2003 at pars 1.82 and 1.82.45. However, time only runs from when damage occurs and not from the stage at which there is a potentiality for loss - Wardley Australia Ltd v Western Australia (supra). For claims under s 87 of the TPA the situation is more complex because a cause of action under that section can accrue before damage has been suffered. As there was no argument on this appeal regarding when any cause of action under s 87 first accrued in this case, I consider that I should not reach any conclusion about that issue but, rather, simply proceed on the hypothesis most favourable to the respondent, and which may well be subject to correction, that the relevant limitation period applying at the material times was three years and that it dated from the delivery of the product to the [Seller] in Fremantle, rather than from when the product was on-sold by the [Seller] to the [Buyer] or from when damage was caused to the swimming pools manufactured by the [Buyer].

66    Plainly, more than three years has elapsed since the delivery of the shipments complained about by the respondent to the [Buyer] at Fremantle in 1996 and 1997 and more than six years had passed from those deliveries and the decision of McKechnie J to refuse leave to amend on 19 September 2003 which is now subject to this application for leave to appeal. But there is a further complication in that a cause of action for an indemnity does not accrue, for any limitation purpose, until the person seeking the indemnity is held to be, or admits to be, liable on the principal obligation for which indemnification is sought - Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213 and as yet the [Seller] has not been held liable to the [Buyer]. To the extent, therefore, that any of the causes of action relied upon by the [Seller] in the third party proceedings do not accrue until damage has been suffered by the [Seller], it may be the case that the [Seller] will not suffer damage unless and until the [Buyer] succeeds in its present action.

67    Damage is the gist of the causes of action advanced in negligence and under s 82 of the TPA but not in relation to claims for breach of contract or, in some circumstances, for relief under s 87 of the TPA. Counsel for the respondent submits that, at least in relation to the causes of action relying upon an alleged breach of contract, the causes of action accrue at the date of the breach which, according to the submissions of the respondent, took place, if at all, when contaminated products were delivered to the [Seller] at the Port of Fremantle and that, on any reckoning, the limitation period in respect of such claims has expired. It must be accepted that these submissions raise significant issues about the time when any relevant cause of action first accrued; when damage, if essential to the cause of action was first suffered; and, indeed, whether the alleged breach of obligation gave rise to other losses or damages by the [Seller] which, while not the subject of the present proceedings, caused the accrual of any relevant cause of action and started time to run.

68    The complexity of the issues renders timely the warning of Mason CJ, Dawson, Gaudron and McHugh JJ in Wardley Australia Ltd v Western Australia (supra) at 533 - 534 that it is undesirable that limitation questions of this kind should be decided in interlocutory proceedings in advance of the hearing of the action except in the clearest of cases because, usually, there is insufficient knowledge of the damage sustained by the claimant and of the circumstances in which it was sustained to justify a confident answer to the question. While I appreciate that the question of whether or not a particular cause of action may otherwise be time barred is a relevant consideration when determining whether or not an amendment should be permitted in conformity with the Weldon v Neal (supra) rule, it is unnecessary in this case to reach a conclusion about the dates of the accrual of the various possible causes of action in light of my earlier conclusion that the proposed addition of reference to the three contracts for the supply of product in July 1996 sought by this amendment does not introduce a new cause of action in the sense in which that term is used by that rule.

69    Because the interlocutory decision of McKechnie J refusing the [Seller] leave to amend the third party statement of claim in the form proposed by the minute of 10 December 2002, but granting restricted leave to reamend on limited terms, would have the practical operation of finally preventing the [Seller] from placing any reliance upon the earlier contracts for Vetrotex gun rovings under the orders made in July 1996 and delivered in the period October to December 1996, I consider that this is an occasion where leave to appeal from an interlocutory decision should be granted: Ex parte Bucknell (1936) 56 CLR 221 at 225; Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400 and Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564 at 584.

Respondent's Notice of Contention

70    There remain for consideration issues raised by the respondent's notice of contention. The first of these is the respondent's submission that the proposed amendment relates to rovings delivered before December 1996 and for breaches other than contamination by moisture content. These have already been dealt with and need not be addressed again.

71    The second ground in the notice of contention is that the court should not exercise its discretion to amend the third party statement of claim because the [Seller] unduly delayed in seeking to make the proposed amendments. A similar submission was considered and rejected by McKechnie J in [8] of his Honour's reasons, where it was pointed out that the aspects of delay were not sufficiently weighty to refuse the application to amend, especially where the application had been brought about following discovery. With respect, I agree with that analysis and do not consider that the application for leave to amend should be refused in the exercise of that discretion because of any alleged delay.

72    Thirdly, the respondent contends that leave to re-amend the third party statement of claim should not be permitted because it is defective in certain respects. Paragraphs 13, 15, 18 and 24.1 are alleged to be embarrassing because of a failure to disclose the alleged defect in the rovings. I do not accept that proposition because it is plain that the [Seller]'s case is that the rovings were defective because of excessive moisture content and that the defect meant that they were not of merchantable quality and were unfit for the purpose intended. As already canvassed earlier in those reasons, par 13 purports to elaborate, in certain respects, upon the manner in which those defects affected the use of the product, including an allegation that the unsuitability of the product could be inferred from its failure in use. The principal allegation is that the Vetrotex gun rovings were defective because of excessive moisture content and this is a specific allegation which plainly puts the respondent on notice of the case against it and which, if made out, would be a good cause of action.

73    The notice of contention also asserts that par 17 of the proposed amendment fails to disclose a reasonable cause of action and is embarrassing because it contains no plea that the respondent breached the alleged duty to advise the [Seller] of the unsuitability of the rovings for the manufacture of swimming pools, nor does it make out a case that a duty of care was owed by the respondent to the [Buyer] to advise the defendant ([Seller]) of the unsuitability of the rovings.

74    I consider that the proposed amended third party statement of claim does sufficiently allege a breach of the defendant's [sic] obligations to the [Seller] to disclose defects in the Vetrotex gun rovings. This emerges from pars 3.2, 6, 7, 11, 12, 17 and 18 of the proposed pleading which, taken together, disclose that the respondent supplied the consignments of Vetrotex gun rovings to the [Seller] without advising or disclosing the high moisture content of the product and without warning of the possibility that this condition may exist. It is indeed highly questionable whether the respondent owed any duty of care to the [Buyer] to avoid manufacturing and supplying fibreglass rovings which might cause damage as alleged in par 17 of the proposed statement of claim or, even if it did, that this is of any significance to the [Seller] beyond, perhaps, making the respondent a concurrent tortfeasor with the [Seller] and so liable to a claim for indemnity or contribution under s 7 of the Law Reform Act 1947 - a remedy sought under par 28.3 of the proposed amended third party statement of claim. However that seems, with all respect, to be a side issue because par 17 of the proposed amendment alleges an additional duty by the respondent to advise the [Seller] about the unsuitability of the rovings for that purpose and it is that duty which supports the claims proposed in par 18. Furthermore, as mentioned earlier, it is not essential for the claimant to plead the legal effects or the existence of alleged duties or liabilities, which may flow from the primary facts advanced in a pleading. Even if, for convenience, a claimant does allege a legal result of a fact or facts pleaded, that claimant is not precluded from seeking to persuade the court to draw legal consequences other than those pleaded: Re Vandervels' Trusts (No 2); White v Vandervel Trustees Ltd [1974] Ch 269 and Karsales (Harrow) Ltd v Wallis (supra) at 869. Accordingly, while there may be some awkwardness about the proposed par 17 of the amendment sought I do not consider that it is formally defective or that those problems should result in leave to amend being refused.

75    Finally, the respondent's notice of contention submits that par 28 of the proposed amendment fails to disclose a reasonable cause of action or is embarrassing because an indemnity cannot be obtained under s 87 of the TPA in respect of a contravention of s 52 by the [Seller] and, further, because the [Seller] seeks an indemnity, not merely in respect of its potential liability to the [Buyer] but also in respect of liability to other manufacturers. Previously I have dealt with the unconventional use of the term "indemnity" by the [Seller] in relation to relief sought under s 87 of the TPA and have traced that usage to the [Buyer]'s statement of claim in the principal action. That examination acknowledged that an indemnity cannot be obtained under s 87 in respect of a contravention of s 52 of the TPA by the [Seller] - Re La Rosa; Ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83 - but went on to recognise that that was not the sense in which the term "indemnity" was employed in these pleadings either by the [Buyer] or by the [Seller]. Relief under s 87 of various kinds would be available to the [Seller] if it established its case on the facts in these proceedings and this is sufficient to entitle the [Buyer] to advance a claim for which effect, so far as it is possible at law, should be given by the court - Supreme Court Act, s 24(7) - especially when it comes to any entitlement to damages: London, Chatham & Dover Rly Co v South Eastern Rly Co [1892] 1 Ch 120 at 152.

76    Insofar as par 28 of the proposed amendment seeks an indemnity in respect of liability to manufacturers of swimming pools other than the [Buyer], that is unnecessary and irrelevant surplusage and can be ignored, in the absence of any allegations of fact elsewhere within the proposed pleading setting out the existence of such a potential liability. I accept that the reference to a claim for indemnity in respect of a potential liability to other manufacturers has no place in this proposed amended pleading and should be deleted. Presumably the [Seller] will do so now that objection has been made to that passage for the first time, but it is such a minor issue in these proceedings that I do not consider that it should be permitted to stand in the way of the amendment proposed. Obviously, the [Seller] should delete that reference at the first opportunity.

Conclusion

77    For these reasons I consider that leave to appeal from the order of 19 October 2003, refusing leave to amend the third party statement of claim as proposed by the minute dated 10 December 2002 but granting restricted rights to reamend on limited terms should be granted. I would allow the appeal and grant leave to the [Seller] to amend the third party statement of claim in the form proposed by the minute dated 10 December 2002 on the following conditions:

(a)    that the proposed par 13 of the third party statement of claim be revised in order to remove any implication that the defective condition of the P292S supplied was due to a defect other than, or unrelated to, its alleged excessive moisture content and, failing this, no amendment to allege the existence of a defect other than or independent of the alleged excessive moisture content is permitted;

(b)    the amendment proposed by par 28 of the minute be revised to exclude any claim for an indemnity in respect of any actual or potential liability of the [Seller] to manufacturers of swimming pools other than the [Buyer], [Buyer] (WA) Pty Ltd.

[...]

1    MILLER J: I have had the opportunity of reading in draft the reasons for judgment of E M Heenan J in relation to the issue of costs. I agree with those reasons and with the orders proposed by his Honour. There is nothing further I wish to add.

2    EM HEENAN J: On 27 May 2004 this Court granted the [Seller] leave to appeal from the order of McKechnie J of 19 October 2003, allowed the appeal and granted leave to the [Seller] to amend its third party statement of claim as sought subject to two conditions. When doing so this Court also made orders relating to the costs of the application for leave to appeal, of the appeal, the costs of the application for leave to amend, and for any costs thrown away by reason of any resulting amendment. However, counsel for the respondent sought an order dealing with the costs of the [Seller]'s application for an extension of time within which to institute the application for leave to appeal. The costs of that application had been reserved for consideration of this Court by McKechnie J when his Honour made the order extending time in that respect on 12 December 2003. Because that application was contentious and there was no opportunity for it to be fully argued when the decision of this Court was delivered on 27 May 2004, the parties were directed to file written submissions dealing with that remaining issue so that these could be considered and the matter resolved by later order. These are my reasons for the orders which are now proposed in relation to that outstanding costs issue.

3    The background and the details of this action, and the associated third party proceedings, are set out in the reasons given for the decision of this Court on 27 May 2004 and need not be repeated. It is therefore only necessary to mention briefly the history of the proceedings between the date of the order of McKechnie J of 19 September 2003 (the subject of the appeal) and the subsequent order of McKechnie J of 12 December 2003 dealing with the application for an extension of time within which to apply for leave to appeal.

4    [Seller] had 21 days following 19 December 2003 within which to apply for leave to appeal from that decision - RSC O 63A r 3(1). However, the application for leave to appeal, including an application for an extension of time within which to apply for such leave, was not filed until 21 November 2003 by a notice of motion of that date. This was, therefore, 42 days late. The notice of motion seeking leave to appeal and an extension of time was served upon the respondent on or about 3 December 2003. By letter of that date the solicitors for the respondent were asked whether they had any opposition to the application to extend time. They replied by letter of 5 December 2003 notifying [Seller] of their client's opposition to the application. Further correspondence followed comprising a letter from the respondent's solicitors dated 8 December 2003 pointing out an alleged absence of any sufficient explanation for the delay and seeking all detailed information which might support the application for the extension of time. [Seller] filed a supplementary affidavit sworn 10 December 2003 in further support of the application for an extension of time dealing with the queries raised by the respondent and also filed and served written submissions. The respondent, Vetrotex, filed written submissions dated 11 December 2003 in opposition to the application for an extension of time.

5    On 12 December 2003 the application for the extension of time within which [Seller] could apply for leave to appeal from the decision of 19 September 2003 was heard and determined by McKechnie J. His Honour refused an application by the second and third defendants for an extension of time within which they might apply for leave to appeal against the 19 September 2003 decision but, otherwise, was satisfied with the explanation for the delay which had been given by [Seller]. His Honour granted the [Seller] an extension of time within which to apply for leave to appeal as sought. However, in view of submissions made by the respondent that it had been prejudiced as a result of the delay in instituting the application for leave to appeal, McKechnie J also ordered that [Seller] should pay the respondent's costs, if any, properly thrown away for a period of 21 days after 19 September 2003 - being the period within which an application for leave to appeal from the order of 19 September 2003 could have been brought in the time provided by the Rules.

6    As previously noted, the costs of the application for an extension of time were reserved by McKechnie J for consideration by the Full Court at the hearing of the substantive application for leave to appeal. His Honour also ordered that the application for leave to appeal and any appeal, if leave were to be granted, were to take place contemporaneously. These are some indications that his Honour regarded any entitlement to costs on the application for an extension of time as being associated, at least to some degree, with the merits of the proposed appeal.

7    The order of McKechnie J of 19 September 2003 was, undoubtedly, interlocutory in character and, therefore, not subject to appeal without the grant of leave. However, as said in the principal reasons on this appeal, it is important to recognize that this is one of that category of interlocutory decisions which, although not final in legal character, in practical effect puts the [Seller] out of court - Dousi v Colgate Palmolive (1987) 9 NSWLR 374 at 379 in the sense that it was one of those "procedural decisions [which] may effectively prevent a party from proceeding with a cause of action, or limit the cause of action upon which the party may sue ... " (at 379). See also Ex parte Bucknell (1936) 56 CLR 221 at 225 - 256. While this serves to explain the greater practical effect of such an interlocutory decision, and, hence, the greater readiness with which leave to appeal may be granted in an appropriate case, it still does not serve to justify the delay in instituting proceedings intended to lead to an appeal because, if the decision were final instead of interlocutory, any appeal would still need to have been brought within 21 days - RSC O 63 r 4.

8    Even so, where there is an issue of substance sought to be raised on an appeal which is likely to have a material effect upon the proper determination of the issues between the parties the court will usually, in the absence of prejudice which cannot be alleviated by some other means, be astute to ensure that there should be a fair and just determination of the issues bona fide in contention between the parties - RSC O 1 r 4A and that this should be accomplished as expeditiously as possible.

9    The costs of an application or an action are in the general discretion of the court. This discretion must be exercised judicially, according to established principles, but having regard to the circumstances of the individual case. Generally speaking a successful party is entitled to his or her costs but the Court must undertake a broad judgment to consider what is just in the particular circumstances.

10    In the present case the [Seller] was successful in obtaining the extension of time sought to enable the application for leave to appeal and this appeal to be brought. Furthermore, the [Seller] succeeded in obtaining a grant of leave to appeal and then succeeded on the appeal. This is a demonstration that, in order for the proper resolution of this case, the [Seller] showed that it was entitled to make amendments along the lines sought in the original application and was justified in seeking to appeal from the decision of 19 September 2003. Unquestionably, the [Seller] was late in instituting that application for leave to appeal but its delay in doing so does not appear to have caused any significant prejudice beyond that which has already been addressed. As the reasons given for allowing the appeal have explained, it was not possible for the third party proceedings to go ahead on the real issues which the [Seller] sought to have determined without the appeal succeeding. This has been recognised in the orders for costs which were made on the application for leave to appeal and on the appeal.

11    The costs, if any, occasioned by the delay in instituting the application for leave to appeal have already been partly addressed by the order made by McKechnie J on 12 December 2003 in directing the [Seller] to pay the respondent's costs thrown away for the initial 21 day period. There has been no attempt to challenge that order.

12    It is, also, plainly the case that a party who seeks to obtain a procedural indulgence by an application of the court as, for example, in an application for an extension of time or for an amendment of a pleading, will usually be required to pay the costs of the application - Golski v Kirk (1987) 14 FCR 143 at 157. I consider that that principle has been accommodated sufficiently by the order which McKechnie J made on 12 December 2003 which has already been noted.

13     As it was necessary for this interlocutory appeal to be heard and determined I consider that, in the particular circumstances, no further order as to the costs of the application for an extension of time should be made beyond the provisions of the order which McKechnie J did make when granting the extension of time sought. Therefore, on the outstanding issue of the costs of that application which was reserved for the consideration of this Court I am of the opinion that, in so far as those costs have not already been dealt with, the order should be that the [Seller] and the respondent each must bear its own costs of that application.

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Pace Law School Institute of International Commercial Law - Last updated July 31, 2009
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