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Klug v PW Woods (Builders) Pty Ltd QCAT 159
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Klug v PW Woods (Builders) Pty Ltd  QCAT 159
p w Woods (builders) pty ltd
4 June 2019
On the papers
Senior Member Brown
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JOINDER OF CAUSES OF ACTIONS AND PARTIES – PARTIES – GENERALLY – whether appropriate to join person as joint tortfeasor – where arguable that single ‘guiding mind’ behind contracting party and party sought to be joined – where arguable that contracting party and party sought to be joined are a single corporate organism – whether arguable that claim against proposed respondent a building dispute
Corporations Act 2001 (Cth), s 601AD(1).
Domestic Building Contracts Act 2000 (Qld) s 8(1), sch 2
Queensland Building and Construction Commission Act 1991 (Qld) s 77(1), sch 2
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 42(1).
Seiko Epson Corp v Calidad Pty Ltd (2017) 133 IPR 1
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
REASONS FOR DECISION
- Mr Klug and PW Woods (Builders) Pty Ltd (‘PWW’) entered into a contract for the construction of a residential dwelling. The parties fell into dispute. Mr Klug says that the building works were not performed in conformity with the contract, that certain items of work are defective requiring rectification and that certain items of work are incomplete.
- PWW is deregistered. Mr Klug has applied to join a respondent, From Concept to Completion Designs Pty Ltd (‘CCD’). The application for joinder falls for determination.
The factual background
- The parties entered into a ‘Construction Management Contract’ on 19 June 2012. The starting date for the works was one week after the approval of the plans and the completion date twelve weeks thereafter.
- In or about September 2013 the applicant appears to have made a complaint to the (then) Building Services Authority (‘BSA’) about the building work performed by PWW. The BSA advised the applicant that the items of complaint were contractual and that the BSA would not be issuing to PWW a direction to rectify.
- On 12 June 2014 PWW was placed into liquidation.
- In or about 2017 it appears that a further complaint was made by the applicant to the Queensland Building and Construction Commission (‘QBCC’). The QBCC issued a Resolution Services Initial Inspection Report referring to 18 items of complaint by the applicant in respect of the building work. On 14 July 2017 the QBCC wrote to the applicant advising him that PWW had been requested to rectify three of the complaint items.
- On 7 August 2017 the QBCC wrote to the applicant and advised that as a result of PWW being liquidated, the QBCC would not be issuing a direction to rectify to PWW.
- Attached to the Application for domestic building disputes is a report by an engineer. The report identifies defective floor framing. The report contains recommendations for rectification work and notes that further defects are likely to be encountered during the rectification process.
- At some point in time subsequent to the issuing of the engineer’s report a claim by the applicant under the statutory insurance scheme was approved. It appears that some building works were thereafter performed pursuant to the contract of insurance.
- On 28 January 2018 PWW was deregistered.
- On 24 September 2018 the applicant filed the Application for domestic building disputes. The applicant seeks an award of damages of $8,250, restitution in the amount of $14,063.65 and costs of $10,890.
What do the parties say?
- The applicant has filed submissions in support of the joinder application. CCD has not filed submissions.
- The applicant’s submissions may be summarised thus:
- (a)The construction contract was performed by PWW;
- (b)PWW undertook the works ‘as part of the family business also operating’ CCD;
- (c)The ‘Woods family” used PWW as the contracting entity;
- (d)There is commonality, to some extent, between the directors and shareholders of PWW and CCD;
- (e)PWW and CCD ‘interchanged assets’ to enable the operation of the family business;
- (f)PWW and CCD operated from the same premises at all times relevant to the present dispute;
- (g)There was a very close business connection between PWW and CCD;
- (h)The collective operations of PWW and CCD might be described as the operations of CCD;
- (i)PWW and CCD acted in concert to operate the family business;
- (j)Mr Peter Williams was the ‘guiding mind’ of PWW and CCD;
- (k)CCD should be considered jointly liable for any damages to which the applicant may be entitled.
- Once a company is deregistered it ceases to exist as a legal entity. Unless PWW is reinstated, the applicant’s claim against PWW cannot proceed. Indeed, the proceeding as presently framed is susceptible to being immediately dismissed.
- The parties to the building contract were the applicant and Camila Klug and PWW. The applicant had no contractual relationship with CCD. The submission by the applicant that CCD ‘should be considered jointly liable for any damages eventually ordered to be paid’ is made on the basis that it is ‘the family business led by Peter William Woods.
- The applicant must be able to articulate a cause of action against CCD in relation to which the tribunal has jurisdiction. That action cannot be in contract for the reasons I have stated. The applicant concedes that CCD did not perform the building work the subject of the dispute. It is not contentious that the building work was performed by PWW. A homeowner may be entitled to pursue a claim against a builder in negligence for damages for breach of duty of care by the builder in the performance of building works. The duty of care owed in tort is, generally speaking, concurrent with the duties under the relevant contract. Here the applicant had no contract with CCD and CCD did not perform the building works.
- The applicant approaches the matter from a somewhat different angle. He submits that CCD should be joined as a respondent on the basis it is a joint tortfeasor. The applicant relies upon the decision of Burley J in Seiko Epson Corp v Calidad Pty Ltd (‘Seiko Epson’). Seiko Epson involved a claim for trademark infringement. Burley J considered the relevant authorities in relation to the liability of joint tortfeasors in the following passage:
The principles going to the liability of a joint tortfeasor are not in dispute. Each party referred to the decision of Moshinsky J in Playgro Pty Ltd v Playgo Art & Craft Manufactory Ltd (2016) 335 ALR 144; 117 IPR 489;  FCA 280, which at – usefully extracts the relevant principles:
150 The liability of a joint tortfeasor was considered in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574; 141 ALR 1. Brennan, Dawson and Toohey JJ said (at CLR 580; ALR 4):
As was said in The Koursk [ P 140 at 159–160], for there to be joint tortfeasors “there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage”. Principal and agent may be joint tortfeasors where the agent commits a tort on behalf of the principal, as master and servant may be where the servant commits a tort in the course of employment. Persons who breach a joint duty may also be joint tortfeasors. Otherwise, to constitute joint tortfeasors two or more persons must act in concert in committing the tort.
151 In the same case, Gummow J said (at CLR 600; ALR 19):
In England, Australia and New Zealand, criteria for the identification of joint tortfeasors are to be found in expressions used in The Koursk. Scrutton LJ there spoke of “two persons who agree on common action, in the course of, and to further which, one of them commits a tort”, saying that in such a case there is one tort committed by one of them “in concert with another”. Sargant LJ accepted the proposition that persons are joint tortfeasors when their “respective shares in the commission of the tort are done in furtherance of a common design” so that those who “aid or counsel, direct, or join” in commission of the tort are joint tortfeasors.
152 In Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1; 65 IPR 409;  FCA 972, which involved allegations of copyright infringement, Tamberlin J said (at –):
135 The authorities indicate that in order to make out a case of joint tortfeasor liability on the basis that copyright infringement is a statutory tort, it is necessary to establish that there has been a common design by the respondents to participate in or induce or procure another person to commit an act of infringement. In WEA International Inc v Hanimex Corp Ltd (1987) 17 FCR 274at 283; 77 ALR 456at 465; 10 IPR 349at 359, Gummow J points out that in circumstance where two or more persons assisted or concurred in or contributed to an act causing damage this is not of itself sufficient to found joint liability and there must also be some common design. In other words, there must be something in the nature of concerted action or agreed common action. It is not necessary that there must be an explicitly mapped out plan with the primary offenders. Tacit agreement between the parties is sufficient: see Unilever plc v Gillette (UK) Ltd  RPC 583 at 609 per Mustill LJ; Molnlycke AB v Procter & Gamble Ltd (No 4)  1 WLR 1112;  4 All ER 47at 52;  RPC 21 at 29 per Dillon LJ (with whom Leggatt LJ agreed). In Intel Corporation v General Instrument Corporation (No 2)  RPC 235 at 241, Aldous J stated that:
that capacity to control will not establish a common design. It is the extent of the control actually exercised or the involvement which is relevant and, in particular, whether it amounts to a common design to do the acts complained of.
136 The relevant authorities were considered by the High Court in Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574at 580–1; 141 ALR 1at 4–5, where the joint judgment referred to the necessity for two or more persons to act in concert in committing the tort. At 600, Gummow J cited with approval the comment of Sargent LJ in The Koursk  P 140 at 159–60 that persons are joint tortfeasors when their respective shares in the commission of the tort are done in furtherance of a “common design” so that those who aid or counsel, direct or join in the commission of the tort are joint tortfeasors.
153 See, on appeal, Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380; 237 ALR 714; 71 IPR 1;  FCAFC 187 at  per Branson J,  per Kenny J. In Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (2016) 329 ALR 522; 121 IPR 150;  FCAFC 22, Nicholas, Yates and Wigney JJ set out the above passage from Universal Music v Cooper and said (at ):
We respectfully agree with Tamberlin J’s summary of the authorities. We would add that it is not necessary that the parties to the common design intend to infringe. As Mustill LJ (with whom Ralph Gibson and Slade LLJ agreed) observed in Unilever Plc v Gillette (UK) Ltd  RPC 583 at 602, it is not necessary to show “a common design to infringe … it is enough if the parties combine to secure the doing of acts which in the event prove to be infringements”: see also Unilever v Chefara Properties Ltd  FSR 135 at 138.
See also Caterpillar Inc v John Deere Ltd (1999) 48 IPR 1;  FCA 1503 at – per Carr, Sundberg and Kenny JJ.
- There is nothing before me to suggest a relationship of principal and agent between PWW and CCD nor is there any master/servant relationship. For the reasons I have outlined there was no joint duty owed by PWW and CCD to the applicant. That leaves the only matter for consideration whether it is reasonably arguable by the applicant that PWW and CCD acted in concert in respect of the alleged negligence of PWW in the performance of the building work such that it is appropriate for CCD to be joined as a respondent.
- In Seiko Epson Burley J found that the four respondents owned assets or operated their businesses in concert, such that their collective operations might generally be described as the operations of a single entity. But, as Burley J observed, his description of the conduct of the business indicating that each of the companies joined in the operation of the business did not lead inevitably to the conclusion that they were engaged in a relevant common design in respect of the alleged infringements. His Honour found that, on the facts before him, the objective evidence indicated that each of the four respondents acted in concert to produce one business outcome which was the successful operation of the family business.
- The evidence before the Tribunal may be summarised as follows:
- (a)PWW was registered in 2002;
- (b)At the time the contract was entered into and the building works performed, the directors of PWW were Peter William Woods, Ross Vincent Woods and Paul William Woods and the secretary was Peter William Woods;
- (c)CCD was registered in 2003;
- (d)At the time the contract was entered into and the building works performed, the directors of CCD were Martin Ernest Morrow-Woods and Peter William Woods and the secretary was Peter William Woods;
- (e)At the time the contract was entered into and the building works performed, PWW and CCD did not share a registered office or principal place of business;
- (f)The shareholders in CCD are PWW and Martin Ernest Morrow-Woods;
- (g)The shareholders in PWW were PWW (as trustee), Paul William Woods, Ross Vincent Woods, Maria Josephine Woods, Sarah Woods and Martin Ernest Morrow-Woods;
- (h)There has been, to an extent and from time to time, commonality of the registered offices and principal places of business of PWW and CCD.
- It is unclear from the ASIC search relied upon by the applicant what the dates of the various shareholdings were.
- Apart from the commonality of persons outlined, the applicant relies upon the following:
- (a)Mr Peter William Woods is the Chief Executive of CCD;
- (b)The Construction Management Contract entered into between the parties contains, on the front page, the CCD name and logo and refers to ‘Concept2Conclusion Construction Management Contract’.
- The commonality of individuals as office holders and shareholders of PWW and CCD does not, as Burley J observed in Seiko Epson, inevitably lead to the conclusion that the two companies were engaged in a common design in respect of the building works undertaken by PWW.
- The applicant relies upon an extract from CCD’s webpage. The webpage refers to ‘Peter Woods, Co-Founder and CEO from Concept2Completion’ and states:
The C2C System forms a collaboration network between Customers, Building Designers, Builders, Suppliers, Trades and Consultants in order to deliver predictable and transparent construction solutions. Solutions that focus on cost savings, financial security and outstanding service to Customers, no matter what type of project.
- The business undertaken by CCD appears from the webpage relied upon by the applicant to include project management. A building contractor includes a person who manages or who has managed the carrying out of domestic building work. A domestic building dispute includes a claim or dispute in negligence related to the performance of reviewable domestic work. Reviewable domestic work means domestic building work. Domestic building work includes the erection or construction of a detached dwelling. It is at least arguable that CCD is a building contractor. The building dispute, the subject of the proceeding, relates to the performance of domestic building work.
- It is, in my view, at least arguable by the applicant that CCD may be liable as a joint tortfeasor in respect of any breach of duty by PWW in the performance of the building works. It is at least arguable, as the applicant submits, that the ‘guiding mind’ behind the business operations of PWW and CCD was Mr Peter William Woods. It is at least arguable that PWW and CCD was effectively a single corporate organism. CCD has had the opportunity to file submissions in respect of the joinder application and address the various matters raised by the applicant and has not done so.
- I am satisfied that it is at least arguable that the proposed claim by the applicant against CCD is in respect of a building dispute the tribunal has jurisdiction to hear and decide.
- The tribunal may make an order joining a party if the person should be bound by, or have the benefit of, a decision of the tribunal or for another reason it is desirable that the person be joined as a party to the proceeding. I need not be satisfied that, on the balance of probabilities, the applicant will succeed in the claim against CCD. I need only be satisfied that the applicant has established a sufficiently arguable case against CCD that it is appropriate for CCD to be joined as a respondent. I am so satisfied.
- For the reasons outlined, it is appropriate that CCD is joined as a respondent and I order accordingly.
- As PWW is deregistered the applicant cannot maintain any claim against it. The tribunal does not have the general power to remove a party. In circumstances where a proceeding or part of a proceeding is frivolous, vexatious or misconceived, lacking in substance or otherwise an abuse of process, the tribunal may dismiss the proceeding or part thereof. The appropriate order is that the part of the proceeding against PWW is dismissed.
- I direct that the applicant file and serve an amended application for domestic building disputes naming CCD as the respondent and clearly setting out the basis of the claim by the applicant against CCD. I will make directions for the filing of a response and the matter will proceed to a compulsory conference.
 Attachment 9 to Application for domestic building disputes filed 24 September 2018.
 ASIC search 5 September 2018
 Report of Colin Renfall dated 14 July 2017
 Report of Cornell Engineers dated 6 December 2017.
 ASIC search 5 September 2018.
 Corporations Act 2001 (Cth), s 601AD(1).
 (2017) 133 IPR 1.
 Ibid, 87 – 89 .
 Domestic Building Contracts Act 2000 (Qld) (‘DBCA’), sch 2 Dictionary (definition of ‘building contractor’).
 Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’), sch 2 (definition of ‘reviewable domestic work’).
 Op cit 9, s 8(1)(a)
 DBCA, s 8(1).
 QBCC Act, sch 2 (definition of ‘building dispute’); s 77(1).
 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 42(1).
- Published Case Name:
Klug v PW Woods (Builders) Pty Ltd
- Shortened Case Name:
Klug v PW Woods (Builders) Pty Ltd
 QCAT 159
Senior Member Brown
04 Jun 2019