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Tyrrell v McNab Constructions Pty Ltd[2013] QDC 165

Tyrrell v McNab Constructions Pty Ltd[2013] QDC 165

DISTRICT COURT OF QUEENSLAND

CITATION:

Tyrrell & Anor v McNab Constructions Pty Ltd & Ors [2013] QDC 165

PARTIES:

KELLIE TYRRELL

(first plaintiff)

and

MARK JOHN ROBERT

(second plaintiff)

v

McNAB CONSTRUCTIONS PTY LTD

ACN 073311681

(first defendant)

and

MICHAEL JON McNAB

(second defendant)

and

LISA McNAB

(third defendant)

FILE NO/S:

D30/2013

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Toowoomba

DELIVERED ON:

19 July 2013

DELIVERED AT:

Rockhampton

HEARING DATE:

10 July 2013

JUDGE:

Smith DCJ

ORDER:

  1. Application to strike out of the Statement of Claim is granted and the Statement of Claim is struck out.
  2. Application to strike out the action is refused.
  3. I give the plaintiffs 28 days to replead their case.
  4. I will hear the parties as to costs.

CATCHWORDS:

TORTS – Negligence – Pure economic loss – whether the test for the duty of care is proximity or vulnerability

PRACTICE and PROCEDURE – whether the Statement of Claim sufficiently pleads facts giving rise to the duty of care

Domestic Building Contracts Act 2000 (Q)

Uniform Civil Procedure Rules 1999 (Q) r 171

Bryan v Maloney (1995) 182 CLR 609

Caltex Oil v The Dredge “Willhemstad” (1976) 136 CLR 529

Coco v Ord Minnett Ltd [2012] QSC 324

Owners Corporation Strata Plan 72535 v Brookfield [2012] NSWSC 712

Perre and Ors v Apand Pty Ltd (1999) 198 CLR 180

Platinum United II Pty Ltd & Anor v Secured Mortgage Management Limited (in liq) [2011] QCA 162

Projects Company No. 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd & Anor [2011] QCA 102

Project Company No 2 Pty Ltd v Bovis Lend Lease Pty Ltd & Ors [2010] QSC 409

Spencer v The Commonwealth [2010] HCA 28

Tarangau Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd & Anor [2013] QSC 16

Woolcock Street Investments Pty Ltd v CDG Pty Ltd and Anor  (2004) 216 CLR 515

COUNSEL:

Mr T Matthews for the applicant defendants

The Hon M Foley for the respondent plaintiffs

SOLICITORS:

Holding Redlich for the applicant defendants

Clifford Gouldson Lawyers for the respondent plaintiffs

Introduction

  1. [1]
    This is an application by the defendants to strike out the plaintiffs’ Claim in its entirety pursuant to r171 of the Uniform Civil Procedure Rules.
  1. [2]
    Alternatively the application is to strikeout the Statement of Claim as against each defendant.

Principles to be applied

  1. [3]
    I bear in mind that the Applicant Defendants carry the onus of proof in this application.
  1. [4]
    When considering a strikeout application I bear in mind that which was stated by Fraser JA in Platinum United II Pty Ltd & Anor v Secured Mortgage Management Limited (in liq) [2011] QCA 162 at [13] where his Honour said:

“Issues in proceedings should ordinarily be decided at trial and should not be decided summarily unless there is a ‘high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way’ or a ‘demonstrated certainty of outcome’.”

  1. [5]
    The court needs to consider whether the facts pleaded are capable in law of giving rise to the relief sought (Coco v Ord Minnett Ltd [2012] QSC 324 at [18]).
  1. [6]
    In Projects Company No. 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd & Anor [2011] QCA 102 at [27] the Court noted that where the law is uncertain especially in a state of development, it is inappropriate to strike out a claim.
  1. [7]
    In the context of a summary judgment application French CJ and Gummow J in Spencer v The Commonwealth [2010] HCA 28 said at [24]:

“The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said:

‘The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.’

More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following:

"Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.’”

The Statement of Claim

  1. [8]
    Turning then to the Amended Statement of Claim, the plaintiffs allege that on 23January 2002 they entered into a contract with the third defendant to purchase a property located at 7 Atkinson Street, Toowoomba, Queensland. Settlement of that contract occurred on 22 March 2002 ([5]-[6]).
  1. [9]
    It is alleged that in or about late 2007 the plaintiffs became aware that some building works for the dwelling house on the property conducted on the property between 1998 to 2001 were not approved works by the Toowoomba City Council ([7]-[8]).
  1. [10]
    It is further alleged that between August 2009 and March 2013 the plaintiffs became aware that there were latent defects present in the dwelling carried out by the defendants between 1998 and 2001 ([9]). Particulars of this alleged latent defect work are contained in Schedule B to the pleading.
  1. [11]
    It is then alleged that between August 2009 and March 2013 the plaintiffs became aware that building works for the house had been carried out but did not comply with the Building Code of Australia ([11]). Particulars of this alleged non compliant work are contained in Schedule C to the pleading.
  1. [12]
    It is then alleged:

“13. The first defendant and/or the second defendant and further or alternatively the third defendant carried out the building works for a dwelling house constituting:

  1. (a)
    Unapproved work;
  1. (b)
    Latent defect work; and
  1. (c)
    Non-compliant work at the property.
  1. The plaintiffs are the home owners of the property.
  1. As a consequence of the facts pleaded in paragraphs 13 and 14 of this pleading the first defendant and/or the second defendant and further or alternatively the third defendant owed the plaintiffs a duty of care.
  1. In breach of that duty the first defendant and/or the second defendant and further or alternatively the third defendant failed to take reasonable care in that building work for a dwelling house was carried out at the property which was:
  1. (a)
    Unapproved by the Toowoomba City Council or Toowoomba Regional Council as particularised in paragraph 7 of this pleading;
  1. (b)
    Contained latent defects as particularised in paragraph 9 of this pleading; and
  1. (c)
    Was non compliant with the Building Code of Australia as particularised in paragraph 11 of this pleading.
  1. The first defendant and/or second defendant and further or alternatively the third defendant knew or reasonably to have foreseen that:
  1. (a)
    The carrying out of the unapproved work;
  1. (b)
    The carrying out of the latent defect work; and
  1. (c)
    The carrying out of the non-compliant work;

at the property would result in a subsequent purchaser of the property, such as the plaintiffs, suffering loss and damage.”

  1. [13]
    It is then alleged in paragraph 18 that as a result of the negligence of the defendants the plaintiffs have suffered loss and damage to the extent of $443,965.

The submissions of the parties

  1. [14]
    The defendants submit:
  1. (a)
    That the Statement of Claim should be struck out on the grounds that as against each defendant the plaintiffs fail to plead necessary facts giving rise to the duty of care. The defendants submit that the rules of the pleading contained in UCPR 149 have not been fulfilled.
  1. (b)
    It is submitted that the claim and Statement of Claim should be struck out as the plaintiffs have failed to disclose a reasonable cause of action.
  1. (c)
    It was submitted that in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 that the finding of a duty of care “depends upon the anterior step of concluding that the builder owed the first owner a duty of care to avoid economic loss of that kind.”
  1. (d)
    It was submitted that the High Court in Woolcock established that a duty of care to prevent economic loss will not be made out unless the subsequent purchaser is sufficiently vulnerable.
  1. (e)
    It is submitted there is no pleading of any facts upon which it may be established that the plaintiffs were “vulnerable to the economic consequences of any negligence.”
  1. (f)
    It is submitted that the facts pleaded are incapable in law of establishing a duty of care and negligence.
  1. (g)
    It is submitted that the deficiency in the plaintiffs’ pleading cannot be rectified by amendment as the terms of the sale contract displace the required element of “vulnerability” and implied statutory warranties for a successor in title (under the Domestic Building Act 2000 (Q)) negate the existence of a duty of care.
  1. (h)
    It is submitted that as a consequence there is a fundamental deficiency in the pleading which cannot be rectified by amendment and leave to replead the Statement of Claim would be futile.
  1. [15]
    The plaintiffs on the other hand submit:
  1. (a)
    That to establish damages and negligence three elements must be present – duty of care, breach of duty and damage. These three elements have been pleaded.
  1. (b)
    It is submitted that in Bryan v Maloney (1995) 182 CLR 609 the High Court of Australia found as a matter of principle and policy that a negligent builder should be liable for ordinary physical injury caused by reason of the adequacy of foundations but there must exist a relationship of proximity between the parties with respect to both the relevant class of act or omission and the relevant kind of damage.
  1. (c)
    It was submitted that the law in this area is uncertain and it would not be appropriate to strikeout proceedings in such circumstances.
  1. (d)
    It is submitted that the case as pleaded discloses a cause of action in accordance with Bryan v Maloney (supra)

In supplementary submissions it was submitted by the plaintiff:

  1. (a)
    That the defendants do not point to any case involving a single dwelling house where a pleading has been struck out for not specifically pleading “vulnerability” and it is submitted the defendants effectively invite the District Court to make new law on this point.
  1. (b)
    To illustrate this purpose the plaintiffs rely on Tarangau Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd & Anor [2013] QSC 16.
  1. (c)
    It is submitted that if the court is against the plaintiffs on the submissions that leave should be given to re-plead the relevant facts of vulnerability.
  1. (d)
    Finally it is submitted that it has not been established there is a “regulated contract” between the parties which is relevant to the defendants’ submission of the existence of statutory warranties and even if the contractual defence applied it could only apply to the third defendant and not to the first and second defendants.
  1. [16]
    Clearly enough, the submissions require an analysis of the authorities.

The duty of care- analysis

Bryan v Maloney

  1. [17]
    In Bryan v Maloney (1995) 182 CLR 609 a builder was found liable to a subsequent purchaser of a house where damage was caused because of inadequacy of its footings.
  1. [18]
    It was held (Brennan J dissenting) that only where there exists a relationship of proximity between the parties then a duty of care may arise (617.9).
  1. [19]
    At p 628.5 it was said by the majority:

“It is difficult to see why, as a matter of principle, policy or common sense, a negligent builder should be liable forordinary physical injury caused to any person or to other property by reason of the collapse of a building by reason of the inadequacy of the foundations but be not liable to the owner of the building for the cost of remedial work necessary to remedy that inadequacy and to avert such damage. Indeed, there is obvious force in the view expressed by LordDenning M.R. in Dutton v. Bognor Regis Urban District Council that, as a rational basis for differentiating between circumstances of liability and circumstances of no liability, such a distinction is an ‘impossible’ one.”

  1. [20]
    Brennan J in dissent said at 632.9 with reference of Chief Judge Cardozo that:

“For those reasons, the tort of negligence has not offered a remedy for the recovery of pure economic loss from a defendant against whom no more is proved than that his or her actions caused that loss and the loss was reasonably foreseeable.”

  1. [21]
    Since Bryan v Maloney the High Court has revisited the issue of duty of care in cases of pure economic loss.

Perre v Apand

  1. [22]
    In Perre & Ors v Apand Pty Ltd (1999) 198 CLR 180 the court was concerned with a case where infected seed had introduced a potato disease onto a grower’s land which in turn affected other potatoes grown near the grower’s land. This caused economic loss to the second grower and to others who had potatoes processed by the second grower.
  1. [23]
    Gleeson CJ at [4] accepted there is “no general rule that one person owes to another a duty to take care not to cause reasonably foreseeable financial harm.”
  1. [24]
    His Honour then stated at [10] that “knowledge (actual or that which a reasonable person would have) of an individual or of an ascertainable class of persons, who is or are reliant and therefore vulnerable, is a significant factor in establishing a duty of care. Vulnerability can arise from circumstances other than reliance (see [11]).”
  1. [25]
    McHugh J held at [50] that the approach taken in Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 was correct. He noted that Perre’s business was vulnerably exposed to Apand’s conduct as they were not in a position to protect themselves against the effects of Apand’s negligence aside from insurance.
  1. [26]
    His Honour at [111] noted that the common thread that may be drawn from the judgments in Caltex is that “more than reasonable foreseeability of harm to a person is required before the defendant comes under a duty of care. Knowledge of harm to the plaintiff is a minimum requirement.”
  1. [27]
    Then later at [118] McHugh J noted:

“In many cases there will be no sound reason for imposing a duty on the defendant to protect the plaintiff from economic loss where it was reasonably open to the plaintiff to take steps to protect itself. The vulnerability of the plaintiff to harm from the defendant’s conduct is therefore ordinarily a pre-requisite to imposing a duty. If the plaintiff has taken, or could have taken steps to protect itself from the defendant’s conduct and was not induced by the defendant’s conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss.”

His Honour observed that sophistication of the plaintiff may well be a relevant consideration.

  1. [28]
    At [123] his Honour continued:

“… the vulnerability of the plaintiff may often be a justifiable, but not sufficient, reason for imposing a duty of care in cases of negligence resulting in pure economic loss where the plaintiff could not have protected itself in contract. One of the assumptions of the law of contract, for example, is that the parties can bargain to protect their interests. A plaintiff who is vulnerable – for whatever reason – cannot do this in any meaningful way …

  1. [124]
    Vulnerability will often include, but not be synonymous with, concepts of reliance and assumption of responsibility. …”
  1. [29]
    Gummow J at [198] noted that the question was whether the salient features of the matter gave rise to a duty of care. Attention needs to be paid to the particular connections between the parties.
  1. [30]
    At [201] Gummow J preferred the approach taken by Stephen J in Caltex Oil where the judge had isolated a number of “salient features” which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its pure economic loss.
  1. [31]
    His Honour noted that the Perres had no way of appreciating the risk to which they were exposed and had no avenue to protect themselves (see [216]). The relevant risk to the commercial interests of the Perres was in the exclusive control of Apand.
  1. [32]
    Gaudron and Kirby JJ thought that three questions needed to be asked:
  1. (a)
    Was it reasonably foreseeable to the wrongdoer that the conduct or omission would be likely to cause harm to persons who have suffered damage?
  1. (b)
    Does there exist between the wrongdoer and the “victim” a relationship of proximity?
  1. (c)
    If so it is fair, just and reasonable for the law to impose a duty? (see [26] and [259]
  1. [33]
    Hayne J held that the test of “proximity” was attended by great difficulty (see [330]).
  1. [34]
    His Honour thought that Caltex Oil should continue to be followed (see [341]). In that decision pure economic loss was recoverable if the defendant had the knowledge or means of knowledge that a particular person would be likely to suffer economic loss as a consequence of the defendant’s negligence ([342]).
  1. [35]
    Callinan J at [387] observed that in Caltex the court held that although as a general rule damages are not recoverable for foreseeable economic loss damages may be recoverable in a case where the defendant had knowledge or the means of knowledge that a particular plaintiff would be likely to suffer economic loss as a consequence of the defendant’s negligence. The application of this principle requires a careful marshalling of all the relevant facts and circumstances and on occasions involves the weighing of relevant policy considerations.
  1. [36]
    His Honour noted that for policy reasons there is a need for a controlled mechanism to limit the availability of relief of pure economic loss [402]. Of course it was noted that the “controlling mechanisms” have not been stated identically.

Woolcock Street Investments

  1. [37]
    In Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 the court was concerned with a case stated to the Court of Appeal asking whether the purchaser’s Statement of Claim disclosed a cause of action in negligence against an engineering company.
  1. [38]
    An engineering company had designed foundations of a warehouse and office complex. Some years after the building was completed the property was sold. The contract of sale did not include a warranty that the building was free from defect. It was after the purchaser had taken possession it became apparent the building was suffering substantial structural distress. The purchaser sued the engineering company for negligence.
  1. [39]
    It was held by the majority that the engineering company did not owe a duty of care to the purchaser.
  1. [40]
    In the majority judgment of Gleeson CJ, Gummow, Hayne and Heydon JJ it was noted at [4] that:

“The critical paragraphs of the appellant’s statement of claim asserted that the respondents had owed it a duty of care but said very little about why that was so.”

  1. [41]
    The court noted that the Queensland Court of Appeal concluded that those who built or designed commercial buildings (as distinct from a dwelling) did not owe any duty of care to any subsequent purchasers ([8]).
  1. [42]
    At [15] the majority noted that the principles said to be engaged in Bryan v Maloney did not depend for their operation upon any distinction between particular kinds of or uses for buildings.

“They depended upon considerations of assumption of responsibility, reliance and proximity. Most importantly, they depended upon equating the responsibilities which the builder owed to the first owner with those owed to a subsequent owner.”

  1. [43]
    The majority then noted various criticisms of Bryan v Maloney ([16]-[18]). These were summarised as:
  1. (a)
    It may be doubted that the decision should be understood as depending upon drawing a bright line between cases concerning the construction of dwellings and cases concerning the construction of other buildings.
  1. (b)
    Decisions of the High Court after Bryan v Maloney reveal that proximity is no longer seen as a “conceptual determinant” in this area.
  1. [44]
    The majority then referred to Brennan J’s decision in Bryan v Maloney and added:

“That is why damages for pure economic loss are not recoverable if all that is shown is that the defendant’s negligence was a cause of the loss and the loss was reasonably foreseeable.” ([21])

  1. [45]
    The majority then referred to Caltex Oil noted that Stephen J isolated a number of salient features which combined to constitute a sufficiently close relationship to give rise to a duty of care owed to Caltex for breach of which it might recover its purely economic loss. [22]

“Chief among those features was the defendant’s knowledge that to damage the pipeline which was damaged was inherently likely to produce economic loss.”

  1. [46]
    It was then noted at [23]:

“Since Caltex Oil, and most notably in Perre v Apand Pty Ltd the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. Vulnerability in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather vulnerability is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.”

  1. [47]
    Their Honours noted in Perre the plaintiffs could do nothing to protect themselves.
  1. [48]
    It was noted at [31] that the facts alleged in the Statement of Claim did not show that the appellant was vulnerable to the economic consequences of any negligence of the respondents in the design of the foundations of the building:

“… Those facts do not show that the appellant could not have protected itself against the economic loss it alleges it has suffered. It is agreed that no warranty of freedom from defect was included in the contract by which the appellant bought the land, and that there was no assignment to the appellant of any rights which the vendor may have had against third parties in respect of any claim for defects in the building … The appellant’s pleading … [is] silent about whether the appellant could have sought and obtained the benefit of terms of that kind in the contract.

  1. [32]
    … It is not alleged or agreed, however, that the defects of which complaint now is made could not have been discovered.”
  1. [49]
    It was then noted that the case stated that before completion the Appellant sought and obtained a certificate that the building complied with the Building Act.
  1. [50]
    At [33] their Honours said:

“Finally, if it is relevant to know, as was assumed to be the case in Bryan v Maloney, whether buying the building represented a very significant investment for the appellant, there is nothing in the case stated or the appellant’s pleading which bears on that question.”

  1. [51]
    McHugh J held at [71]:

“I do not think that the ratio decidendi in Bryan v Maloney applies to the case of commercial premises. The ratio can be put no higher than that the builder of a dwelling house owes a duty to a subsequent purchaser to take reasonable care to avoid reasonably foreseeable decreases in its value arising from the consequences of latent defects caused by the house’s defective construction.”

  1. [52]
    His Honour also noted at [85]:

“A subsequent purchaser of a commercial building also has means of protecting him or herself against economic loss arising from the condition of the building. That person can obtain warranties from the vendor. The subsequent purchaser can also have the building examined by relevant experts. But even expert examination may not reveal the presence of latent defects. Moreover, some areas of concern – such as the stability of the foundations of the building – may be examined and tested only at considerable expense.

  1. [86]
    Although the first and subsequent owners may take steps to protect themselves contractually, it is clear that in some cases contractual remedies may not be sufficient to protect an owner against pure economic loss. In these cases, the owner will be compensated for economic loss only if the law of torts provides a cause of action.”
  1. [53]
    Then his Honour noted at [94]:

“The better view in all the cases – not merely building cases – is that the capacity of a person to protect him or herself from damage by means of contractual obligations is merely one – although often a decisive – reason for rejecting the existence of a duty of care in tort in cases of pure economic loss.”

  1. [54]
    Callinan J at [208] found that what was said by Brennan J in dissent in Bryan v Maloney was more persuasive than the majority he stated at [210]:

“I regard myself as free to adopt that passage in this, a case of commercial structure, to which it has in my opinion, a particular relevance, even though his Honour’s judgment was a dissenting judgment. This case is distinguishable by it from Bryan v Maloney, and, if the appellant’s claim here were to be allowed, would represent a marked and an unwarranted extension of it.

  1. [211]
    There is in my respectful opinion, in any event, reason to question the correctness of Bryan v Maloney itself. It was decided at a time when the jurisprudence of this Court in cases of tort was more heavily influenced by notions of proximity than it currently is. But it is not the only reason that I would question its correctness.
  1. [212]
    Neither the appellant here, nor indeed a purchaser of any premises, whether a dwelling or otherwise, is especially vulnerable, and unable to protect itself as the appellant contends. Here the appellant chose to seek an inspection and report by the local authority under s 53 of the Building Act …”
  1. [55]
    At [213] His Honour noted there might be an action against the local authority. The fact is a purchaser has several means of protecting themselves namely by insisting warranties and conditions be included in the contract of sale or by seeking the report of an expert.
  1. [56]
    Ultimately by implication his Honour disagreed with the decision in Bryan v Maloney ([215]-[218]).

Project Company No 2 Pty Ltd v Bovis Lend Lease

  1. [57]
    The Court of Appeal in Projects Company No. 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd & Anor [2011] QCA 102 allowed an appeal where the primary Judge had dismissed an application to join a second plaintiff.
  1. [58]
    Muir JA referred to Woolcock at [6] to [13].
  1. [59]
    His Honour noted at [14]:

“It is clear from the High Court decision in Woolcock that Bryan v Maloney is a decision of doubtful authority which cannot be taken as excluding claims against builders of commercial premises for economic loss suffered by consequent owners of the premises. Not surprisingly, the decisions of this court in Fangrove and Woolcock were based on the now discredited principles stated in Bryan v Maloney. In holding, in effect, that the principles stated in Fangrove prevented a subsequent purchaser of commercial premises recovering from the builder damages arising from the faulty construction of the building, the primary judge exercised his discretion on an erroneous basis. Consequently, it is open to this court to exercise the discretion afresh.”

  1. [60]
    Then at [15]:

“There are other reasons why cases such as Bryan v Maloney and Fangrove provide a less than satisfactory guide to liability in this case. Bryan v Maloney, as the above discussion shows, insofar as it is said to be regarded as authoritative, established principles applicable to residential buildings.”

  1. [61]
    His Honour then referred to the concept of vulnerability at [17].
  1. [62]
    The court permitted joinder of the plaintiff but at [30] noted:

“It is difficult to accept that DDF and KRC could not formulate a statement of claim which would survive a strike out application. That may have been done already but I do not wish to express any view on the new proposed pleading which was not before the primary judge. To my mind, it is preferable for leave to be given for KRC to be joined as a plaintiff and for an order to be made that an amended statement of claim be delivered. If, having regard to these reasons and other considerations, the respondents wish to seek to have all or part of the amended statement of claim struck out, they can bring an application in the trial division in the usual way.”

Tarangau Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd & Anor

  1. [63]
    Jackson J in Tarangau Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd & Anor [2013] QSC [16] permitted a plaintiff to amend a Statement of Claim and dismissed a defendant’s application for judgment.
  1. [64]
    His Honour commenced a discussion of the duty of care at [55].
  1. [65]
    His Honour discussed the issue of Bryan and Woolcock from paragraphs [107] to [113].
  1. [66]
    His Honour formed the view that the dispositive reasoning in Bryan deploying the concept of proximity as a conceptual determinant of the existence of a duty of care was rejected by later cases.
  1. [67]
    At [111] his Honour noted:

“The most important ‘salient factor’ [no doubt a reference to Caltex Oil] in Woolcock was the discussion of the concept of vulnerability. Vulnerability in this context refers to a plaintiff purchaser’s inability to protect themself by appropriate contractual provisions from their vendor. In Woolcock, the absence of vulnerability negated a duty of care. That factor was not given significance in Bryan.”

Owners Corporation Strata Plan 72535 v Brookfield

  1. [68]
    In Owners Corporation Strata Plan 72535 v Brookfield [2012] NSWSC 712 McDougallJ held that no duties of care were owed by builders of a strata title development. There were 52 residential lots.
  1. [69]
    His Honour found that there were statutory warranties implied into the building contract under the Home Building Act 1989 (NSW).
  1. [70]
    His Honour held that no duties of care were owed as:
  1. (a)
    The Owners Corporation had the benefit of statutory warranties (see [144]).
  1. (b)
    The concept of “proximity” referred to in Bryan v Maloney has been discarded (see [146]).
  1. (c)
    In this case the parties had bargained on an equal footing and there was no basis to usurp the bargain (see [147]).
  1. (d)
    It may be the owners were not “vulnerable” as they had the benefit of the implied statutory warranties although his honour did not go further (see [149]).

Conclusion as to duty of care

  1. [71]
    Having considered all of the cases, it is my respectful view, that the preponderance of opinion is that the determining factor of “proximity” has lost favour and the factor of “vulnerability” seems to be the touchstone.
  1. [72]
    I reach the conclusion that I am bound by the majority decision in Woolcock.
  1. [73]
    I hasten to add there would need to be consideration of the “salient features” as discussed in Caltex Oil to determine whether a duty of care is owed.

Is the claim salvageable?

  1. [74]
    The defendants submit that this court should apply the decision of Pickering v McArthur [2005] QDC 81 where McGill SC DCJ held at [10] that if there is a fundamental deficiency in the plaintiff’s case then the whole of the action should be struck out.
  1. [75]
    The defendants rely on the contract which is exhibited to Mr Kemp’s affidavit.
  1. [76]
    There is no doubt there are a number special conditions which were for the benefit of the purchaser which relate to the obtaining of building reports and government clearances.
  1. [77]
    This no doubt will be a relevant factor in a determination of “vulnerability” as between the third defendant and the plaintiffs and in a factual determination of whether a duty of care was owed by the third defendant or indeed the other defendants.
  1. [78]
    Absent representation evidence, the case against the third defendant (the vendor) may well be difficult.
  1. [79]
    It might not be so concerning the first and/or second defendants.
  1. [80]
    Also this may well be a case where the warranties in the Domestic Building Contracts Act 2000 (Q) are applicable. It may be that the implied warranties which run with the building negate the existence of the duty of care.
  1. [81]
    It has not yet been established that this is a regulated contract.
  1. [82]
    But these are factual matters which will need to be considered once the pleadings are in order and the issues crystallised.
  1. [83]
    My determination is that this is not a case where the entire action should be struck out.
  1. [84]
    There may well be facts which can be pleaded by the plaintiffs which give rise to a conclusion of “vulnerability”.
  1. [85]
    Salient features such as the following may be present:
  1. (a)
    It may be that representations were made by the defendants
  1. (b)
    The defendants may have had particular knowledge which was concealed
  1. (c)
    The plaintiffs themselves for whatever reason may have been particularly vulnerable.
  1. [86]
    In my respectful opinion the pleading (like that in Woolcock) is presently defective.
  1. [87]
    Presently I find there are insufficient facts pleaded to reach a conclusion that a duty of care was owed.
  1. [88]
    Even if I am wrong as to my conclusion as to “vulnerability” I am of the view that the facts giving rise to “proximity” has not been sufficiently pleaded.
  1. [89]
    As Martin J found in Project Company No 2 Pty Ltd v Bovis Lend Lease Pty Ltd & Ors [2010] QSC 409 at [28] the failure to plead an allegation of vulnerability has lead to findings that there was no duty or to the striking out of the pleading.
  1. [90]
    Additionally it seems to me that there are insufficient particulars of the alleged latent defects which underpins much of the claim.
  1. [91]
    It seems to me that whether a particular defect was undiscoverable is a very important factor in this case. There would need to be a pleading as to how it was undiscoverable.
  1. [92]
    Was there a competent building inspection and yet despite this the defect could not be seen?
  1. [93]
    In those circumstances I propose to strikeout the Amended Statement of Claim.
  1. [94]
    I do not strike out the action or the claim.
  1. [95]
    I will permit the plaintiffs to re-plead their case bearing in mind the reasons I have given.
  1. [96]
    I propose to allow the plaintiffs 28 days in which to re-plead their case.
  1. [97]
    I will hear the parties on the question of costs.
Close

Editorial Notes

  • Published Case Name:

    Tyrrell & Anor v McNab Constructions Pty Ltd & Ors

  • Shortened Case Name:

    Tyrrell v McNab Constructions Pty Ltd

  • MNC:

    [2013] QDC 165

  • Court:

    QDC

  • Judge(s):

    Smith DCJ

  • Date:

    19 Jul 2013

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2013] QDC 16519 Jul 2013The plaintiff purchased a property with a dwelling on it. It was subsequently revealed that there were latent defects in the dwelling and the plaintiff sought to sue the builder for damages. The builder applied to strike out the statement of claim. Application granted with leave to replead: Smith DCJ.
Primary Judgment[2013] QDC 18209 Aug 2013Costs orders: Smith DCJ.
Appeal Determined (QCA)[2014] QCA 5221 Mar 2014Appeal dismissed. Cross-appeal dismissed: Fraser JA, Gotterson JA, Daubney J.

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Bryan v Maloney (1995) 182 CLR 609
6 citations
Jump To
Cite 1 - (1995) 182 CLR 609
Cite 2 - (1995) 182 CLR 609
Cite 3 - (1995) 182 CLR 609
Cite 4 - (1995) 182 CLR 609
Cite 5 - (1995) 182 CLR 609
Cite 6 - (1995) 182 CLR 609
Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
2 citations
Jump To
Cite 1 - (1976) 136 CLR 529
Cite 2 - (1976) 136 CLR 529
Coco v Ord Minnett Ltd [2012] QSC 324
2 citations
Jump To
Cite 1 - [2012] QSC 324
Cite 2 - [2012] QSC 324
Darling Downs Foods Pty Ltd v Bovis Lend Lease Pty Ltd [2010] QSC 409
2 citations
Jump To
Cite 1 - [2010] QSC 409
Cite 2 - [2010] QSC 409
Nolan v Nolan (No 2) [2013] QSC 165
1 citation
Jump To
Cite 1 - [2013] QSC 165
Owners Corporation Strata Plan 72535 v Brookfield [2012] NSWSC 712
2 citations
Jump To
Cite 1 - [2012] NSWSC 712
Cite 2 - [2012] NSWSC 712
Perre v Apand Pty Ltd (1999) 198 CLR 180
16 citations
Jump To
Cite 1 - (1999) 198 CLR 180
Cite 2 - (1999) 198 CLR 180
Cite 3 - (1999) 198 CLR 180
Cite 4 - (1999) 198 CLR 180
Cite 5 - (1999) 198 CLR 180
Cite 6 - (1999) 198 CLR 180
Cite 7 - (1999) 198 CLR 180
Cite 8 - (1999) 198 CLR 180
Cite 9 - (1999) 198 CLR 180
Cite 10 - (1999) 198 CLR 180
Cite 11 - (1999) 198 CLR 180
Cite 12 - (1999) 198 CLR 180
Cite 13 - (1999) 198 CLR 180
Cite 14 - (1999) 198 CLR 180
Cite 15 - (1999) 198 CLR 180
Cite 16 - (1999) 198 CLR 180
Pickering v McArthur [2005] QDC 81
1 citation
Jump To
Cite 1 - [2005] QDC 81
Platinum United II Pty Ltd v Secured Mortgage Management Ltd (in liq) [2011] QCA 162
2 citations
Jump To
Cite 1 - [2011] QCA 162
Cite 2 - [2011] QCA 162
Project Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd [2011] QCA 102
8 citations
Jump To
Cite 1 - [2011] QCA 102
Cite 2 - [2011] QCA 102
Cite 3 - [2011] QCA 102
Cite 4 - [2011] QCA 102
Cite 5 - [2011] QCA 102
Cite 6 - [2011] QCA 102
Cite 7 - [2011] QCA 102
Cite 8 - [2011] QCA 102
Spencer v Commonwealth of Australia [2010] HCA 28
2 citations
Jump To
Cite 1 - [2010] HCA 28
Cite 2 - [2010] HCA 28
Tarangau Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd [2013] QSC 16
6 citations
Jump To
Cite 1 - [2013] QSC 16
Cite 2 - [2013] QSC 16
Cite 3 - [2013] QSC 16
Cite 4 - [2013] QSC 16
Cite 5 - [2013] QSC 16
Cite 6 - [2013] QSC 16
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
18 citations
Jump To
Cite 1 - (2004) 216 CLR 515
Cite 2 - (2004) 216 CLR 515
Cite 3 - (2004) 216 CLR 515
Cite 4 - (2004) 216 CLR 515
Cite 5 - (2004) 216 CLR 515
Cite 6 - (2004) 216 CLR 515
Cite 7 - (2004) 216 CLR 515
Cite 8 - (2004) 216 CLR 515
Cite 9 - (2004) 216 CLR 515
Cite 10 - (2004) 216 CLR 515
Cite 11 - (2004) 216 CLR 515
Cite 12 - (2004) 216 CLR 515
Cite 13 - (2004) 216 CLR 515
Cite 14 - (2004) 216 CLR 515
Cite 15 - (2004) 216 CLR 515
Cite 16 - (2004) 216 CLR 515
Cite 17 - (2004) 216 CLR 515
Cite 18 - (2004) 216 CLR 515

Cases Citing

Case NameFull CitationFrequency
Tyrrell v McNab Constructions Pty Ltd (No 2) [2013] QDC 1821 citation
1

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