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  • Unreported Judgment

Somerset Civil Pty Ltd v Sugarbag Road Pty Ltd

 

[2020] QSC 203

SUPREME COURT OF QUEENSLAND

CITATION:

Somerset Civil Pty Ltd v Sugarbag Road Pty Ltd [2020] QSC 203

PARTIES:

SOMERSET CIVIL PTY LTD ACN 123 944 178 AS TRUSTEE FOR THE BELL FAMILY TRUST

(plaintiff)

v

SUGARBAG ROAD PTY LTD ACN 128 458 882 AS TRUSTEE FOR SUGARBAG UNIT TRUST ABN 85 049 309 815

(defendant)

FILE NO/S:

BS No 8939 of 2017

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

2 July 2020

DELIVERED AT:

Brisbane

HEARING DATE:

1 April 2020

JUDGE:

Martin J

ORDER:

  1. Paragraph I(x) – (dd) of the amended further and better particulars of the second further amended statement of claim are struck out.
  2. The application by the plaintiff is dismissed.
  3. The plaintiff is to pay the defendant’s costs of and incidental to each of the applications.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – EMBARRASSING, TENDENCY TO CAUSE PREJUDICE, SCANDALOUS, UNNECESSARY ETC OR CAUSING DELAY IN PROCEEDINGS – where the plaintiff claims payment of approximately $1.1 million from the defendant for work performed – where the defendant says that the plaintiff did not hold the requisite licence and therefore, pursuant to s 42 of the Queensland Building and Construction Commission Act 1991, it is not required to pay the plaintiff and is entitled to a return of moneys already paid – where the plaintiff says that the amended particulars allege a number of matters that support a finding that the defendant knew or ought to have known that the plaintiff did not hold the licence – where the defendant brought an application to strike out some of the particulars which contain allegations about a contract between the defendant and another company – where the plaintiff issued a notice of non-party disclosure under r 244 of the UCPR seeking disclosure of the contract – where the plaintiff contends that the contract will tend to prove that the defendant was in pari delicto with the plaintiff by the defendant’s actual or imputed knowledge, by the defendant’s carelessness or recklessness in having the knowledge to check and understand licencing issues but not properly checking the licensing regime before entering the contract, or otherwise that the defendant intended to pay the plaintiff for the work notwithstanding any licence issues – whether the particulars provide a basis for the plaintiff’s argument and whether the court should strike out the particulars pursuant to r 162 of the UCPR

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – PRODUCTION AND INSPECTION OF DOCUMENTS – OTHER MATTERS – where the plaintiff issued a notice of non-party disclosure under r 244 of the UCPR seeking disclosure of a contract between the defendant and another company – where the defendant objected to the production of the contract – where the effect of r 246 of the UCPR is to act as a stay of the notice of non-party disclosure – where the plaintiff seeks an order lifting the stay under r 247(2) – whether the court should order that the stay be lifted

Queensland Building and Construction Commission Act 1991, s 42

Uniform Civil Procedure Rules 1999, r 162, r 244, r 245, r 246, r 247(2)

Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly t/as Stork Food Systems Australasia Pty Ltd) (2009) 254 ALR 661; [2009] QCA 75, cited

D F Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 28 FCR 597, cited

COUNSEL:

S B Whitten for the plaintiff

M S Trim for the defendant

SOLICITORS:

McInnes Wilson Lawyers for the plaintiff

Broadley Rees Hogan for the defendant

  1. [1]
    The Queensland Building and Construction Commission Act 1991 (the Act) establishes, among other things, a licensing regime for building contractors. An important aspect of that regime is that it provides that unlicensed contractors may not undertake building work and that, if they do, they are not entitled to any compensation for doing so.[1] Section 42 is the basis for the defence in this case. The plaintiff (Somerset) claims payment of approximately $1.1 million from the defendant (Sugarbag) for work performed at a subdivision development at Little Mountain (the project). Sugarbag says that Somerset did not hold the requisite licence and, so, it is not required to pay Somerset and is entitled to the return of money it has already paid.
  2. [2]
    This application revolves around the state of Sugarbag’s knowledge of Somerset not holding the requisite licence. Somerset says that Sugarbag knew (or ought to have known) that it did not hold the licence and in the Amended Particulars alleges a number of matters said to support a finding to that effect.
  3. [3]
    Sugarbag applies to strike out some of those particulars. In those particulars, there are allegations about a contract between Sugarbag and CLD Civil & Earthmoving Pty Ltd (CLD). Somerset issued a notice of non-party disclosure under r 244 of the Uniform Civil Procedure Rules 1999 seeking disclosure of that contract from CLD. Under r 245, Sugarbag objected to production of that contract. The making of such an objection operates, pursuant to r 246, as a stay of the notice of non-party disclosure. In its application, Somerset seeks an order lifting that stay under r 247(2).

The Queensland Building and Construction Commission Act 1991

  1. [4]
    Section 42 of the Act provides:

42 Unlawful carrying out of building work

  1. (1)
    Unless exempt under schedule 1A, a person must not carry out, or undertake to carry out, building work unless the person holds a contractor’s licence of the appropriate class under this Act.

Maximum penalty—

  1. (a)
    for a first offence—250 penalty units; or
  1. (b)
    for a second offence—300 penalty units; or
  1. (c)
    for a third or later offence, or if the building work carried out is tier 1 defective work—350 penalty units or 1 year’s imprisonment.
  1. (2)
    An individual who contravenes subsection (1) and is liable to a maximum penalty of 350 penalty units or 1 year’s imprisonment, commits a crime.
  1. (3)
    Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
  1. (4)
    A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed—
  1. (a)
    is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
  1. (b)
    does not include allowance for any of the following—
  1. (i)
    the supply of the person’s own labour;
  1. (ii)
    the making of a profit by the person for carrying out the building work;
  1. (iii)
    costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and
  1. (c)
    is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and
  1. (d)
    does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.”
  1. [5]
    Section 8 of Schedule 1A of the Act provides:

8 Head contracts to carry out building work

  1. (1)
    An unlicensed person who enters into a contract to carry out building work does not contravene section 42(1) merely because the person entered into the contract if the building work—
  1. (a)
    is not residential construction work or domestic building work; and
  1. (b)
    is to be carried out by a person (an appropriately licensed contractor) who is licensed to carry out building work of the relevant class.
  1. (2)
    Also, the unlicensed person does not contravene section 42(1) merely because the person—
  1. (a)
    directly or indirectly causes the building work to be carried out by an appropriately licensed contractor; or
  1. (b)
    enters into another contract, with an appropriately licensed contractor, to carry out the work.
  1. (3)
    However, subsection (1) ceases to apply to the unlicensed person if the person causes or allows any of the building work to be carried out by a person who is not licensed to carry out building work of the relevant class.”

The pleadings

  1. [6]
    Paragraph 12 of the second further amended statement of claim pleads:

“The Defendant, in purporting to enter into the Contract with the Plaintiff, knew or ought to have known that the Plaintiff did not hold a contractor’s licence of the appropriate class under the QBCC Act to carry out or to undertake to carry out the Building Work.”

  1. [7]
    Earlier in the statement of claim, it is pleaded that the plaintiff and the defendant purported to enter into the contract in or about October 2015 and the plaintiff carried out the work the subject of the action between November 2015 and October 2016.
  2. [8]
    The particulars the subject of the application by Sugarbag were provided in a document entitled “Amended Further and Better Particulars of the Second Further Amended Statement of Claim”.  The particulars relevant to this application are:

“1. The conclusion of fact that the defendant knew or ought to have known that the plaintiff did not hold a contractor’s licence of the appropriate class under the QBCC Act to carry out or to undertake to carry out the Building Work is to be inferred from the following facts:

  

x. By written contract dated 31 October 2016, the defendant purported to enter into a contract with RDS Contracting Pty Ltd (‘RDS Contracting’) for Mon Terre Ridge, Stage 2 which obliged RDS Contracting to execute and complete inter alia, the construction of concrete access driveways (125mm thk, F 82 Mesh) including crossovers and joints and retaining walls, being boulder walls and sleeper walls, including RPEQ certification of the construction.

y. At the time it purported to enter into the contract with RDS Contracting, the defendant knew or ought to have known that:

i. a ‘concreting class’ licence was required to carry out construction of concrete access driveways; and

ii. a ‘Builder - restricted to structural landscaping’ class licence was required to carry out construction of retaining walls being boulder walls and sleeper walls.

z. RDS Contracting did not hold a licence of any class under the Act at any time.

aa. The defendant knew or ought to have known that RDS Contracting subcontracted the construction of the boulder retaining walls to Cornerstone Boulder Walls Pty Ltd, an unlicensed entity.

bb. In 2019, the defendant purported to enter into a contract with CLD Civil & Earthmoving Pty Ltd (‘CLD Civil’) for Mon Terre Ridge, Stage 3 which obliged CLD Civil to execute and complete inter alia, the construction of concrete access driveways and retaining walls.

cc. At the time it purported to enter into the contract with CLD Civil, the defendant knew or ought to have known that:

i. a ‘concreting class’ licence was required to carry out construction of concrete access driveways; and

ii. a ‘Builder - restricted to structural landscaping’ class licence was required to carry out construction of retaining walls being boulder walls and sleeper walls.

dd. RDS Contracting did not hold a licence of any class under the Act at any time.”

  1. [9]
    In its defence, Sugarbag pleads that it believed that Somerset held a contractor’s licence of the appropriate class under the Act. In its counterclaim, Sugarbag says that it paid the sum of approximately $1.5 million as a result of a mistaken belief that Somerset was entitled to the payments under the contract. It says that the mistaken belief was that Somerset was entitled to claim and Sugarbag was obliged to pay whereas the true case was that there was no entitlement because of the operation of s 42(1) of the Act.

The issues

  1. [10]
    For the purposes of this application, the issue is whether Sugarbag knew or ought to have known that Somerset held at the relevant contractor’s licence.
  2. [11]
    In its written submissions, Somerset contends that the contract sought to be obtained from CLD will, in accordance with the particulars referred to above, tend to prove that Sugarbag “was in pari delicto with [Somerset], by [Sugarbag’s] actual or imputed knowledge, or by its carelessness or recklessness in having the knowledge to check and understand licensing issues, but in not properly checking the licence regime under the QBCC Act when it made enquiries of [Somerset’s] licence before entering into the contract, or otherwise that it intended to pay [Somerset] for the work notwithstanding any licence issues.”
  3. [12]
    The nature of the particulars in question and of the contract sought to be disclosed cannot assist in establishing that part of the case which concerns whether or not Sugarbag carelessly or recklessly checked on licensing issues and so on. The particulars do not assert any conduct related to checking on Sugarbag’s licence status. These particulars go only to the question of knowledge at the relevant time.
  4. [13]
    The issue of whether or not Sugarbag was in pari delicto with Somerset arises out of the analysis of s 42 undertaken by Keane JA in Cook’s Construction Pty Ltd v SFS 007.298.633 Pty Ltd (formerly t/as Stork Food Systems Australasia Pty Ltd)[2] where, after considering the analysis of McPherson JA in an earlier decision, his Honour said:

[58] On the analysis of McPherson JA referred to in the passage cited in para [38] above, mistake on the part of the payer as to its obligation on the payee’s entitlement is not an essential element of the builder’s disentitlement to receive or retain payment or the payer’s reciprocal entitlement to recover. On this analysis, unless the respondent was in pari delicto with the appellant, the respondent was entitled to recover the moneys paid by it to the appellant as moneys had and received by the appellant to the use of the respondent.

[59] It may well be that a payer who knowingly engaged an unlicensed builder to carry out building work in contravention of s 42 would be held to be in pari delicto with the builder so as to be outside the class of persons for whose benefit a right of recovery is made available in consequence of the operation of s 42(3) of the Act. So far as the present case is concerned, that would mean that, even if the respondent’s payments were not made by mistake, on no view of the pleadings or the evidence could it be held that the respondent was in pari delicto with the appellant. The appellant had given the respondent an express contractual promise that it, the appellant, held all necessary licences, and there was no suggestion in the appellant’s pleadings that the respondent knew that the appellant was unlicensed. In the case made by the appellant at trial there was, to adopt the words of McPherson JA, simply no identifiable basis on which it could, as against the respondent, claim to keep or retain the payments made by the respondent or their equivalent.” (emphasis added)

  1. [14]
    It is unnecessary to consider the proposition in his Honour’s reasons – there is no cause to doubt them – for in this case it is only necessary to recite them in order to understand the basis of Sugarbag’s pleading.
  2. [15]
    What Somerset seeks to do is to put itself in the position where it can argue that, on the basis of similar facts, the court should find it easier to conclude that Sugarbag was more likely to enter into a contract with Somerset, knowing it to be unlicensed and thus engage in a course of conduct which would work to exclude Somerset from the consequences of failing to hold the requisite licence.
  3. [16]
    The particulars do not provide a basis for such an argument and are not in a form which allows for a contention that the CLD contract is relevant.
  4. [17]
    Somerset does not plead that Sugarbag knew, when it entered into contracts with either RDS Contracting Pty Ltd (RDS) or CLD, that either of them did not hold the appropriate licence. It is alleged that Sugarbag “knew or ought to have known that RDS Contracting subcontracted the construction of the boulder retaining walls to Cornerstone Boulder Walls Pty Ltd, an unlicensed entity.” But that is not what is alleged against Sugarbag in the case of Somerset. If, by its pleading, Somerset seeks to set up a situation where it can lead evidence, on a similar facts basis, of Sugarbag entering into contracts in a similar way then it should have been pleaded that that had occurred. It is not. It is not alleged that Sugarbag knew, or ought to have known, when it entered into the contract with RDS or CLD that either entity did not hold a licence.
  5. [18]
    There are other problems with the particulars. It is not alleged when Sugarbag held or ought to have held knowledge of the lack of licences. In order for Somerset to attempt to prove that Sugarbag had the relevant knowledge, it needs to allege that the knowledge was held by an individual or individuals. That has not been done.
  6. [19]
    Even if the problems already described did not exist, before evidence (such as the CLD contract) could be led it needs to be demonstrated that there is a “striking similarity” between the conduct the subject of the action and the “similar facts”.[3] There is a substantial difference between the way in which the case is presented in paragraph 12 of the second further amended statement of claim and the way in which the particulars are set out.
  7. [20]
    Rule 162 of the UCPR allows the court to strike out a particular if it:
    1. (a)
      has a tendency to prejudice or delay the fair trial of the proceeding; or
    2. (b)
      is unnecessary or scandalous; or
    3. (c)
      is frivolous or vexatious; or
    4. (d)
      is otherwise an abuse of the process of the court.
  8. [21]
    The particulars the subject of the application are, at least, “unnecessary” because they do not afford any basis for the case sought to be advanced by Somerset. They do not provide a basis upon which it can be said that the CLD contract is relevant and therefore liable to be disclosed. Apart from that, the particulars, by their nature described above, will tend to prejudice or delay a fair trial of the proceeding.
  9. [22]
    It follows, then, that paragraph I(x) – (dd) of the amended further and better particulars of the second further amended statement of claim are struck out.
  10. [23]
    As the case for the lifting of the stay under r 247(2) of the UCPR depended entirely on the particulars which have been struck out, the application must be dismissed.

Orders

  1. [24]
    I make the following orders:
    1. (a)
      Paragraph I(x) – (dd) of the amended further and better particulars of the second further amended statement of claim are struck out.
    2. (b)
      The application by the plaintiff is dismissed.
    3. (c)
      The plaintiff is to pay the defendant’s costs of and incidental to each of the applications.

Footnotes

[1] Queensland Building and Construction Commission Act 1991, s 42. There are some exceptions to this rule in s 42(4).

[2] (2009) 254 ALR 661; [2009] QCA 75.

[3] See D F Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 28 FCR 597 at 605.

Close

Editorial Notes

  • Published Case Name:

    Somerset Civil Pty Ltd v Sugarbag Road Pty Ltd

  • Shortened Case Name:

    Somerset Civil Pty Ltd v Sugarbag Road Pty Ltd

  • MNC:

    [2020] QSC 203

  • Court:

    QSC

  • Judge(s):

    Martin J

  • Date:

    02 Jul 2020

Litigation History

No Litigation History

Appeal Status

No Status