Queensland Building and Construction Commission v Sullivan
[2016] QDC 86
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- Queensland Building and Construction Commission v Sullivan[2016] QDC 86
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Queensland Building and Construction Commission v Sullivan[2016] QDC 86
Queensland Building and Construction Commission v Sullivan[2016] QDC 86
[2016] QDC 86
DISTRICT COURT OF QUEENSLAND
CIVIL JURISDICTION
JUDGE DORNEY QC
No 3082 of 2012
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSIONApplicant
and
SULLIVAN and OTHERSRespondents
BRISBANE
2.02 PM, FRIDAY, 8 APRIL 2016
JUDGMENT
HIS HONOUR: This application was filed on the 17th of March 2016. As set out in the early paragraphs of the plaintiff’s outline, the plaintiff seeks a declaration that the service of the claim and statement of claim in the proceeding (effected by the plaintiff upon the third and eighth defendants on or about 26 February 2016) is taken to be effectual. The reference is to rule 371 of the Uniform Civil Procedure Rules 1999. It’s also claimed, in the alternative, that the plaintiff seeks: first, relief against the requirements to comply with rule 372, rules 442 to 447 of the Uniform Civil Procedure Rules and rule 448 of the Uniform Civil Procedure Rules; secondly, an order pursuant to rule 7, or rule 367, of the Uniform Civil Procedure Rules to extend the time for renewal of the claim against the third and eighth defendants; and, thirdly, an order pursuant to rule 24 of the Uniform Civil Procedure Rules to renew the claim and statement of claim as against the third and eighth defendants. All stand or fall together.
The trial of the proceeding was set down by McGill SC DCJ on the 20th of November last year. The trial has been set down for eight days on and from the 26th of April 2016, which is just over two weeks away. On the 18th of March 2016, Andrews SC DCJ of this court adjourned this part of the application - it being one of several brought before him - to the 30th of March 2016. On that day, I sat in applications and heard the matter initially. It was then adjourned to the 7th of April 2016 (that is yesterday) because of the considerable affidavit material that was proffered at that time.
In brief terms, yesterday, the opening and oral evidence took about an hour and then further submissions took a further two and a-half hours.
The background of the matter is as follows. The claim and statement of claim were filed on the 8th of August of 2012. The originating document, which was a claim in this case, was served on – except for the third and eighth defendants and except for a deceased person – the rest of the defendants relatively soon after. It was only served on the third and eighth defendants on or about the 26th of February of this year when their solicitor accepted service pursuant to rule 115 of the Uniform Civil Procedure Rules. I’ll come to the effect, if any, of that later.
The background chronology of this matter is essentially set out in paragraphs 5, 6 and 7 of the written submissions of the third and eighth defendants. I will briefly refer to it. None of those facts at least seem to be in dispute.
As stated there, the case arises from allegations of defective work in a townhouse development which was built, pursuant to the provisions of the Building Units and Group Titles Act 1980, at Clear Island Waters on the Gold Coast. The third and eighth defendants were at times alleged to be material directors of companies said by the plaintiff to have “participated financially” in the development. The works themselves had finished in 2001 and a body corporate, under the Body Corporate and Community Management Act 1997, was established. Essentially, the allegations include the following. On 11 October 2004, the body corporate complained of defects, particularly in the fire-proofing between townhouses. On 10 August 2005, the plaintiff acknowledged the complaint. On 31 August 2005, a formal claim was made on the statutory insurance scheme by the body corporate. On 4 June 2007, the plaintiff decided to indemnify. In October of 2007, the plaintiff determined to indemnify in the amount of $361,519. In November 2007, the plaintiff decided to demand a separate claim from each of the lot holders.
In January of 2008, two things occurred. First, each of the lot holders authorised a Mr Walton to act as agent for the purposes of the insurance claims and, secondly, the plaintiff received a claim from each of those lot holders. On 9 April 2008, the Commission approved an indemnity of $3,012.65 per lot holder (that is, each lot holder’s share of the previously determined lump sum). On 9 May 2008, the body corporate entered into a contract to carry out the rectification works. And between 17 June 2008 and 8 October 2008, the Commission made progress payments to the contractor.
In summary, those payments made in 2008 are, according to the plaintiff, recoverable against the corporate defendants under section 71 of the relevant Act (the Queensland Building and Construction Commission Act 1991- as it is now named) and against the personal defendants in the capacity as its directors under section 111C of the Act. The limitation periods, pursuant to section 10(1)(d) of the Limitation of Actions Act 1974 expired progressively between June and October 2014.
Turning, then, to the defendants. It’s clear that they moved to Dubai in 2005 (that is, in the United Arab Emirates). It is uncontested they remained there until August 2013 when they returned to Australia. Attempts at service on them in the United Arab Emirates were made by the plaintiff. Essentially, they’re set out in paragraph 10 of the written submissions of the third and eighth defendants. I will simply highlight some aspects of them.
Mr Sweet, who was the person who was engaged to attempt to locate the third and eighth defendants and, if necessary, arrange for service of the relevant originating processes, had gone to the United Arab Emirates in December 2012 and in January 2013. During that time he was unable to locate, in particular, the eighth defendant. The main problem appeared to be that he was looking in Abu Dhabi when the third and eighth defendants were in fact living in Dubai.
By 5th of February 2013, Mr Sweet had received a telephone call and an email from the eighth defendant requesting that he, Mr Sweet, email the documents he was trying to serve, but later on that particular day the eighth defendant, having come to understand the documents constituted legal process, demanded formal service of those documents on him.
While in Dubai itself, Mr Sweet gave evidence - which was reiterated in the evidence that he gave before this Court - that he had not personally used the phone for the contact with the place in Dubai that the eighth defendant was working at the time of his investigations, particularly in early 2013. It’s also clear that he did not visit the premises where the defendant was working and where it was understood that the company for which he worked had its place of business. I’m going to refer briefly to the transcript of Mr Philip with respect to this particular matter.
(From transcript passages T: 1-20, 1-21), after acknowledging that the eighth defendant’s employer, SBK Holdings LLC, had an office in the Fairmont Hotel in Dubai, on the following page Mr Philip acknowledged, in answer to the question, “Did you understand from the reference to SBK Holdings that it had been determined that the eighth defendant was now employed by that corporation in Dubai?” he gave the answer, “From the information that Mr Sweet had obtained, yes.” It is therefore abundantly clear that it was known to the plaintiff, through its agents, that that entity was the employer of the eighth defendant.
Mr Sweet was the subject of cross-examination yesterday in these proceedings. It is clear, from the affidavit itself - and made a little clearer in the cross-examination - what exactly the circumstances of his investigations were. I then turn to the matter of what happened after that.
As asserted – and I accept the assertion – in the third and eighth defendants’ written submissions, no serious step seems to have been taken after that time (in early February 2013) until about April 2014, when papers were sent to the address at which the third and eighth defendants had resided before they moved to Dubai in 2005. In August 2014, an email was sent, but as the eighth defendant has sworn – and I saw no retraction of it in cross-examination of him yesterday – although that was his email address, the email was not received by directly by him.
It’s important, then, to look at Mr Philip’s evidence - and because he was called and cross-examined - I will refer to several aspects of that in the evidence he gave yesterday.
He was asked at the bottom of T: 1-21 and gave an answer at the top of T: 1-22 to the following effect:
Did you make any decision whether to send the documents to him?
That’s the eighth defendant –
?‑‑‑I don’t recall making exact decisions to send it. I know it’s not good service to send it. It wouldn’t have been served because it wouldn’t have been deemed served, so I couldn’t see any utility in sending it that way.
And later on that page:
As far as you know, the –
That’s the originating proceedings –
...weren’t sent by email?‑‑‑I believe they weren’t. Correct.
And further down that page:
Was any decision made as to whether to apply to a court for an order permitting service via email?‑‑‑Yes, there was. I decided not to.
The following page, at T: 1-23, he was taken to paragraph [6] of his affidavit in which he had said:
Accordingly, I determined it was not sensible for the plaintiff to continue spending money pursuing the third and eighth defendants.
When his attention brought to that, he answered, “Yes, I made that call.” He was asked about the time of making that call and it was suggested to him it was probably about March 2013. He demurred to that, but when the question was put to him that it would’ve been shortly after the emails, he answered, “Correct.” Later on on that page, at transcript T: 1-23, in answer to a particular question he said as follows:
My decision went further than that. To serve any person in the United Arab Emirates, you have to do it through diplomatic channels. The time, cost and expense wasn’t – I’m mindful of budgets, I’m responsible for budgets.
And then gave particular reasons why in this particular case it wasn’t worth spending the money. The next question he was asked, “Did you obtain quotes as to what costs would be for effecting service through diplomatic channels?” to which he answered, “No”. When he was asked whether he got any firm figures, he also answered, “No”.
He was asked whether he communicated that decision about making that call to the solicitors, Rostron Carlyle, he answered, “Yes”. He was asked, “And it was effectively an instruction to cease further attempts to serve the third and eighth defendants”, he answered, “At that time, yes.” The question was then posed that that decision stood until February of 2016 - as he’d referred to in paragraph [7] of his affidavit - he answered, “That’s correct, when the solicitors for the two defendants contacted Rostron Carlyle.”
The final passage I’ll read is from transcript T: 1-25. The question was put to him:
So there were no – so far as you were aware – no attempts to try and serve the third – or the eighth and third defendants between your decision in 2013 and February this year?‑‑‑Correct.
Then a further question:
There was also no application made to the court to try to renew the claim when it became stale after 12 months, was there?‑‑‑Correct.
He was then asked a further question and after saying that it wasn’t a matter of not being cost-effective, he answered:
It just wasn’t considered, to renew it, because the matter was proceeding as other defendants who were defending the matter.
It’s clear from the other affidavit material filed on behalf of the plaintiff that the decision not to take any further steps was persisted in until a new investigation occurred in early 2016 and when, in February of this year, the eighth defendant was located. It seems that no special efforts have been made to actually determine that location in Australia earlier.
In summary, then, the present position is there’s approximately now 17 months after the expiry of the limitation period and this in circumstances where the proceeding has been set down for trial. Again, I’ll deal with aspects of that a little later.
It is also clear that on 15 February 2016, counsel for the plaintiff told Andrews SC DCJ that the plaintiff ought to determine its position as to the third and eighth defendants, then indicating to the Court that an application for substituted service of the defendants would be made before the next mention of the matter. Of course, that didn’t occur because soon after that service was effected, even though it was of a stale originating proceeding.
It is clear, both from Mr Philip’s affidavit and that particular matter, that it was in the mind of the plaintiff that it had open to it to achieve – or at least apply for and perhaps achieve - an order for substituted service.
Reading the relevant affidavits, particularly those of the third and eighth defendants, and paying attention to the cross-examination of all persons who were cross-examined yesterday, I conclude that the third and eighth defendants were not what is called “avoiding”, much less “evading” service.
I do acknowledge that there were certain private matters that they refer to which were not open to public inspection. Nevertheless, I take those matters to show that they were living in the Australian community in a normal way and therefore it supports the conclusion of non-avoidance and certainly of non-evasion. I also take into account in determining those particular matters that, in particular, the eighth defendant’s actions in Dubai, such as receiving some phone calls and returning some emails, is indicative of that.
The eighth defendant, and as part of that the third defendant, were entitled to rely upon their legal rights to be served properly in accordance with the Uniform Civil Procedure Rules.
When one turns to the application itself, essentially it’s pursuant to rule 371(2)(d) of the Uniform Civil Procedure Rules determined in its relationship to rule 24. It’s a curious feature of rule 24 that the only reference to a Court is in subrule (4) of rule 24, referring to renewal on or after the fifth anniversary: nevertheless, that is not a matter that should be a worry here.
There are sufficient authorities about how this Court should act. It is clear from Gillies v Dibbetts [2001] 1 Qd R 596 that the Court of Appeal there permitted, by reference to rules such as 371 and in addition rule 367, a dealing with the application, in essence, to renew a stale writ, although essentially it’s not so much a renewal as an excusal that is given for the irregularity that flows from service of a stale writ.
The principles for renewal are set out in a few cases to which I will now make reference. The first is the Court of Appeal decision of IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2007] 1 Qd R 148. There are quite a few passages from the decision of Keane JA who gave the decision on behalf of the Court. They’re important and I intend to make reference to them.
The first appears at page 153 at paragraph [26]. It was stated that it will be noted that rule 24(1) establishes the general proposition that a claim is to be in force for the purpose of service for one year and that the principal purpose of rule 24(1) is obviously to afford a plaintiff ample opportunity to effect service upon the defendant.
The next paragraph, paragraph [27], importantly for the present case, stated that it must be borne in mind that the discretion conferred by rule 24(2) of the Uniform Civil Procedure Rules falls to be exercised in a context which includes rule 5, which states the philosophy of the Uniform Civil Procedure Rules. Rule 5 is then set out. There’s no need to, in fact, refer to its terms because it refers to such things as avoiding undue delay, expense and technicality.
At page 154, Keane JA, at paragraphs [31] and [32], referred to the earlier Court of Appeal decision of Muirhead v The Uniting Church of Australia Property Trust of Queensland (citation omitted). There was a reference in the first of those particular paragraphs that the plaintiffs must establish:
Some good reason why the case should be excepted from the general rule that the Court will not exercise its jurisdiction in favour of renewal.
In the following paragraph Keane JA referred to aspects in Muirhead with reference to a High Court case (which was cited) for the following propositions:
- (1)There is a tendency to relax rigid time limits where that is legally possible and where it can be done without prejudice or injustice to the parties.
- (2)The discretion may be exercised, although the statutory of limitation period has expired.
- (3)Matters to be considered include the length of the delay, the reasons for it, the conduct of the parties and the hardship or prejudice caused to the plaintiff by refusing renewal, or to the defendant by granting it.
- (4)There is a wide and unfettered discretion and there is “no better reason for granting relief than to see that justice is done”.
I then turn to the later part of that particular judgment. At page 159, paragraph [48], Keane JA adopted the argument (repeated by the plaintiff to this Court) to the effect that the question of prejudice was central in that case to a review of the Registrar’s decision under rule 24 of the Uniform Civil Procedure Rules.
At that particular page, at paragraph [51], he referred to the fact that there was a general principle that may be presumed to flow from the lapse of time, particularly bearing in mind the relevance of evidence from an identified source of evidence in relation to the causes of action alleged. It should be noted that the footnote to that is to the High Court decision of Brisbane South Regional Health Authority v Taylor (1996) CLR 541, particularly at 550 and, more importantly, at 555-556 (which is the decision of Justice McHugh in that case and often repeated).
Before I go on to the further references to IMB Group, I will briefly mention, as well as Taylor, the case of Tyson v Morgan, which is reported in [2000] 1 Qd R 100, a decision of Ambrose J of the Supreme Court. As the headnote accurately states, on such an application as a renewal, when considering delay as an aspect of prejudice to a defendant, the relevant period that elapses between the arising of the alleged cause of action and the making of the application, rather than that which has elapsed since, is what the Court should look at. The reference there is, of course, again to Taylor.
The footnote also accurately states that, on such an application, the fact that without renewal any fresh action instituted would be statute barred was one which ought to be given due weight in the context of the evidence adduced of prejudice.
Turning back then to Keane JA’s decision in IMB, later, in paragraph [51] he stated as follows:
If there is reason for concern that the lapse of time is a real impediment to the fair presentation of a party’s case, that is a deficit in the case of an applicant for the grant of an indulgence in the form of an exemption from the operation of “the general rule the Court will not exercise a discretion in favour of a renewal”.
Paragraph [52], which appears at pages 159 and 160, is as follows:
The course taken by the plaintiff denied the Court the opportunity to discharge its essential function of ensuring that litigation is conducted fairly to all parties. The plaintiffs having deliberately conducted themselves so as to put at risk the prospects of a fair trial of their action. The Court can hardly be expected to lend its aid to facilitate the continuation of proceedings towards a trial conducted with events which occurred so many years before that real doubts as to the prospects that a fair trial could be achieved cannot be dispelled.
Further on page 160, at paragraphs [53] and [54], reference was again made to rule 24(2) as facilitating the preservation of proceedings which might otherwise become stale through no fault of the plaintiffs. But a further remark was made, though, and I quote:
A party who deliberately chooses to refrain from serving a claim will rarely be able to show good reason to warrant the renewal of the claim.
The following paragraph then goes on to canvass the fact that no case was cited to the Court at that time in which that subrule or its analogues had been held to authorise a renewal of a claim in favour of the party who had deliberately chosen not to serve a claim where the facts of the case sufficient to enable the case to be pleaded were known to the plaintiff. Keane JA then stated as follows:
Whatever the position may have been in that regard in the absence of a provision such as rule 5(3) of the UCPR, the presence of rule 5(3) means that the approach pursued by the plaintiffs in the present case should not be vindicated by the Court.
In two final passages, at page 161, paragraph [57], Keane JA first said:
What the plaintiffs were plainly not entitled to do was unilaterally to arrogate to themselves the benefit of a stay of proceedings in the Supreme Court in defiance of rule 5(3) of the UCPR.
And then at paragraph [60] he stated that there was a strong public interest reflected in the terms of rule 5(3) of the UCPR.
My attention was drawn also to the New South Wales Court of Appeal decision of Arthur Andersen Corporate Finance Proprietary Limited v Buzzle Operations Proprietary Limited (in liq) [2009] NSWCA 104. I don’t intend to repeat much of that decision, but the major decision was given by Ipp JA.
He acknowledged in that case that there was a practical difficulty in serving 141 defendants but noted that that was a problem capable of being solved by readily obtaining an order for substituted service, as eventually was done. At paragraph [34], he noted that that case demonstrated - and he’s referring there to IMB – that a statute that confers what on its face appears to be broad in a general discretion may require criteria to be applied in its exercise that significantly limit its effect.
He went on to say that such criteria in recent times are frequently found in connection with discretionary powers to cure irregularities, amend pleadings or add parties with retrospective effect. In later passages he referred to the fact that regard must be had to the policy behind the limitation periods. I don’t intend to refer in detail to that, but there are significant passages in his decision which refer to that particular matter. There is, nevertheless, a particular section dealing with that, at paragraphs [68] to [71] (inclusive), and again I’ve had reference to that. Those particular paragraphs also deal with the difficulties posed in serving the statement of claim. I finally turn to one particular passage - that’s in paragraph [82]. He stated as follows:
In my view, it would be inappropriate to allow an extension of time for the service of writ or statement of claim where a significant cause of the delay has been the willingness of the plaintiff to do nothing about service while awaiting a decision from the litigation funder as to whether or not to provide the necessary funds. Were that to be regarded as a good reason to extend time, the Court would be allowing plaintiffs to arrogate to non-parties the right to decide the period by which the time for service of writ should be extended. That would be fundamentally in conflict with the court’s duty to exercise alone the discretion conferred upon it.
Obviously the factual background is different - but the same principles as were acknowledged in IMB apply.
I then turn to the first limb of rule 24, which deals with “reasonable efforts”. As appears clearly from the decisions that I have canvassed, there is an important overlay here of the provisions in rule 5 of the Uniform Civil Procedure Rules. I take it to be important that the third and eighth defendants returned to Australia as early as August 2013 and have resided as tenants in the same place since. It can also be inferred that they had a telephone listing in the White Pages from at least 2014 onwards.
Next, as I have explored earlier, a new investigation in 2016 produced a speedy outcome about their residence, or at least their location. As I’ve earlier referred to, I’ve taken account of Mr Philip’s evidence, of no application being made for substituted service and of no instructions being given to make such an application. I accept that what’s called “the effluxion of time” in those particular authorities ought to have been in the plaintiffs’ mind given the earlier chronology that I have canvassed. I, therefore, find that, with respect to reasonable efforts, that reasonable efforts were not taken.
That means that I must consider the second limb of rule 24, according to the authorities, even when a consideration is done under rule 371, and that deals with “another good reason”. It’s important, when considering this issue from all the factors which I have mentioned in the authorities, to consider the issue of time first.
As submitted to the Court - which submission I accept - the third and eighth defendants point to the fact that the plaintiff took three years to process the claims in this case, four years then to commence proceedings and 3.5 years before service was effected, even though of a stale originating proceeding.
It’s clear from IMB’s and Taylor’s cases that is the whole time that is brought into account in the matter of prejudice and, of course, as is clear particularly from McHugh J’s decision in Taylor that it is a matter of presumptive prejudice as well as real prejudice.
Accordingly, before I consider other issues of whether there was actual prejudice, I reach the conclusion that, in the circumstances of this particular case where there was no attempt to get an order for substituted service and no attempt to effect service through diplomatic channels - although I acknowledge that the residence in the United Arab Emirates would have had to have been obtained, although that would not have seemed to be difficult given the presence in Dubai of the third and eighth defendants - that no good reason is shown.
In a moment I will go through the issues as to whether there is, in addition, actual prejudice. Before I do that, though, I will mention some other issues which go to the matter of no good reason and are apart from real prejudice.
The first aspect of that is the issue of the interests of other defendant parties. As I indicated during argument, I find that to be irrelevant. Third party claims seem to be already existing, though, of course, they probably have not been served, but it is no argument for the plaintiff to raise to say that the interests of parties other than it might be served by the matter of joining these two defendants. I, therefore, do not take it as being applicable to this particular case.
There is then the issue of what is called the Aon Risk principles. To attempt to address that, the plaintiff was able to obtain the consent of all existing defendants in the proceedings - the third and eighth defendants apart - to agree to an adjournment if necessary. But what is clear from the High Court’s decision in Aon Risk Services is that it is a matter for the Court as to what it should do.
The Court has set aside eight days in just over two weeks time to hear this particular matter. It is not without some significance that allowing this particular application would set to one side that particular time period and one must bear in mind in this day and age, particularly in Commercial List matters, that the time of the Court is important. It’s an issue in this case. It doesn’t bear in a major way, but I also find that it supports the no good reason argument.
It is then that weight - if so, any - is to be attached to the fact that the third and eighth defendants’ solicitors made use of rule 115 of the Uniform Civil Procedure Rules and accepted service? Despite the plaintiff’s counsel’s attempt to rely upon Foxe v Brown to establish waiver, I’m not satisfied at all that it is a matter of a waiver. The third and eighth defendants contended that the matter was irrelevant because the originating proceeding was stale. The very purpose of holding service of a stale proceeding to be a mere irregularity, though, to my mind, does not make it irrelevant. Therefore, I take it into account as a factor, but I assess its significance as being fairly minor in this particular case and not sufficient in any way to upset the finding I have generally made about no good reason. It might be remarked that such a use by the third and eighth defendants’ solicitors, perhaps, is more a sign of their general good faith and the significance, as indicated back in 2013, I believe, that they would have been happy to accept service at any time by service on their solicitor if, in fact, proper attempts had been made to that effect.
I then turn to the issue of actual prejudice. The first issue that was addressed - and it should be noted at this time that the plaintiff’s outline covered many more issues than that which the third and eighth defendants contested – is governed by the fact that I have limited my consideration to those issues that are set forth as contested issues by the third and eighth defendants.
Therefore, the first of such issues is whether, as a result of the time that has elapsed, some issue arises with respect to determination of the actual joint venture relationships between the parties in question. The plaintiff countered that this issue really could be covered by the fact that there was previous litigation in an associated case and that an application had been made to use affidavits in that case as evidence in this particular case and, perhaps, even to use the findings in such cases should they be of use.
The problem that poses for me is that no decision has been made on that at this time. I, therefore, have to look at it in terms of the fact that it may arise that such leave is not given, or the Court is not convinced that decisions in other cases that do directly involve parties that are not parties to this proceeding can be lead. There is, in addition, the fact that an important actor in the circumstances, namely, Mr McLean, has died.
In paragraphs [34] to [37] of the third and eighth defendants’ written submissions, they canvass the particular issue. They go to such matters, which are taken from affidavits filed on behalf of the Commission about the difficulties that had emerged for the plaintiff by relevant events, for instance, as taking place up to 16 years ago and relevant documents that appear to have been destroyed. In addition, there’s reference to key witnesses who are dead or who are not locateable and the fact the existing defendants, who are likely to hold direct knowledge of relevant facts and matters, may elect not to expose themselves to cross-examination. It was also added that the plaintiff itself took the view that after 16 years, memories would have deteriorated.
The issue goes to the relationship that existed between the joint venture parties. Although, as I will canvass later, the jurisprudence in this area limits an examination of the plaintiff’s discretion making decisions to the matters of judicial review, it does appear to me that this is a particular matter that may bear upon the issue of what responsibility these particular parties could have in that joint venture relationship for what occurred. Mr Hawthorn’s affidavit - he being a solicitor for the third and eighth defendants - has also indicated in some detail problems that would be concerned with getting evidence together.
It is difficult to form a final conclusion as to the extent to which those particular matters may bear upon what can properly be admissible in a case such as this, which is brought by the plaintiff pursuant to the sections of the statute in question, but it appears to me at least to be reasonably arguable that the relationships may bear upon actual responsibility at least as between the parties themselves, and for that reason the matters that I have just referred to about difficulties of evidence, in circumstances where the plaintiff is unable to rely upon either previous affidavits or previous decisions, might accrue.
The second potential matter of real prejudice is when the building work was done. This goes, of course, particularly to the responsibility of the third defendant as a director of - and I will use the terminology used by the parties - PEC, which was the builder involved with the construction work that was originally carried out. The third defendant was a director of that company from the 28th of January of 2000 until the 19th of June 2001.
It was contended by the third and eighth defendants that that was a limited duration directorship, and there would be difficulties in determining when the relevant building work was done so as to identify the liability that the third defendant would have for that, particularly given the lapse of time and in circumstances where contemporaneous records appear to be incomplete.
The plaintiff responded to those particular contentions by referring to certificates of classification in which compliance dates were stated. It was contended by the plaintiff that those certificates with dates within that particular time period that I have just mentioned of directorship would be held as those which wholly apply to the third defendant and that other certificates of classification would not be used. The issue, of course, raises matters of what the evidential reference is open to this Court in order to determine, in terms of the evidence, what it can look at.
In the most recent of the Court of Appeal decisions dealing with the scope of investigation of cases such as this (which is Samini and anor v Queensland Building and Construction Commission [2015] QCA 106) in the decision of Justice Boddice he refers to other earlier Court of Appeal decisions and states that it is possible in these kinds of cases to make some investigation. The investigation, though, seems to be limited to the existence of reasons, for instance, to question whether the payment was made in accordance with the terms of the relevant policy; and that raises the issue of whether, in fact, there was, therefore, a valid payment under the scheme which is apart from the administrative processes anterior to the payment that was engaged in by the plaintiff.
The potential problem here is that this is not one of those insurance issues. There is, of course, a concern here as to whether the information which is contained in these sorts of classifications deal with the time of directorships. Nevertheless, if only those certificates of classification which have the relevant compliance dates up to and including 19 June 2001 are used, I accept that this may not be a matter of prejudice which will affect the third defendant.
I then turn to the next issue, which, in fact, raises directly the matter of the relevant insurance policy. It deals with clause 4.4(a) of the policy, which I will read briefly.
If any loss insured by this policy is covered by any other policy or policies of insurance (“relevant policies”), the BSA will pay only the amount in excess of the amount payable under any relevant policies.
Of course, the BSA refers to the plaintiff in this particular case. The plaintiff argues that, in this particular case, the claimant is either the relevant body corporate or the lot holders. This argument is developed in paragraphs [61] to [69] of the plaintiffs’ outline of submissions. It does not appear to me that the third and eighth defendants contest that particular issue. Nevertheless, their assertion is that there could have been in existence a joint venture policy of insurance the ambit of which was wide enough in the definition of “insured” to cover either the body corporate or the lot holders.
There was much debate about the existence of whether such an “all risks” policy would contain such term. Unfortunately no evidence was presented to me about the ambit of any such clause. But it does raise for concern, given the issues discussed as I’ve indicated in Samini, as to whether the policy answers the matter in question.
Because I have such concerns about the non-presentation of any such policy to the Court, even though I acknowledge that some investigation ought be made, I think there at least is an evidential onus on the defendants in this case to indicate that such policies could contain such terms. So, again, I don’t accept this matter as one of actual prejudice.
The next issue deals with clause 5.1(e) of the policy. Again I will read it:
The insured is not entitled to payment for loss under any section of this policy where a claim is not made within the time limit specified in clause 7.2 of this policy.
When reference is had to the relevant parts of clause 7.2, there is a reference to a category 1 defect - which it is acknowledged this is - and that a claim must be made within three months of that defect first becoming evident, of course, in the opinion of the authority.
The argument on this appears to me to have been limited to the words, “or within such further time as the BSA may allow”. This reference to such further time raises the issues that were agitated by the third and eighth defendants about there being no evidence of any such opinion formed, no evidence of any such actual decision reached and, by reference to the affidavit of Mr O'Holloran, no specific reference to such an opinion or such a decision where it might be expected.
It was, nevertheless, submitted by the plaintiff in response in its outline, especially at paragraphs [59] and [60], that it could be inferred from the evidence, particularly that of Mr O'Holloran, that there was a discretion exercised to extend within such further time if only because the decision had been made. Nevertheless, as was pointed out, his evidence is simply a discussion of a general use of discretionary decisions and opinion forming. It does not descend to particularity in this case.
Reference was made to a decision of mine of Cummings v Queensland Building & Construction Commission [2015] QDC 312 in which I was concerned with the width by which Samini left open to a Court such as this to make a decision. In this regard, I will just read briefly the submissions made by Mr O'Donnell on this particular issue: and I read from pages T: 1-74 to T: 1-75.
He stated that if there was absolutely no evidence at the trial, the trial Judge might be invited to infer that there must have been a decision and that necessarily meant that the present situation was anterior to that. He stated that the defendants were entitled to investigate whether the plaintiff actually made a decision to extend time and noted, as I’ve just noted as well, that the plaintiff did not put in any evidence that such a decision was made or there was a record of any such decision or of anyone within the Commission having a recollection of such a decision being made.
He then referred to the affidavit of Mr O'Holloran, and on the following page, T: 1-75, stated that the evidence of Mr O'Holloran was simply or purely, as he stated, “in the abstract”. He then developed the argument that it was, therefore, open to the third and eighth defendants to attack the case on the basis that no decision to extend time was, in fact, made by the Commission and that left the claim back on the three month time limit.
Reference was then made to the existence of evidence that defects had emerged at least by October 2004 when the body corporate first started writing letters complaining about the fireproofing and that the claim wasn’t made until years after that. The submission was then made that it is a live issue whether there was a decision to extend time or whether the Commission formed an opinion as to whether the defects became evident and that those were matters the third and eighth defendants were entitled to investigate. He then turned to the case that, if, in fact, it turned out that there was no record of any decision and no record of the plaintiff ever actually turning its mind to whether the claims were inside the time or even outside the time, then it fell to the Court to determine whether defects became evident. It’s clear from those submissions that the third and eighth defendants were contending that it wouldn’t be within the proper inferences open to the Court on proper inferential decision-making of the Court to infer that because the authority had made some decision, therefore, it had considered the issue. I’m concerned that such general reasoning appears to be used by the plaintiff.
It is equally open, if the Commission made a decision, that it did turn its mind to the matter as that it did not turn its mind to the matter. On the present information before me, in the absence of the evidence which was identified by counsel for the third and eighth defendants, I cannot say that either inference is more probable than the other, in which case this may well raise at trial the difficulties inherent in this determination and necessarily this would lead to specific prejudice on the third and eighth defendants’ part.
The next issue is clause 6.2. Clause 6.2 is, again, and I read, “(w)here the insured purchased the land on which residential construction work has been performed, the insured is NOT ENTITLED to payment for loss under sections 2 or 3 of this policy where such defect or subsidence or settlement was, in the opinion of the BSA, evident prior to completing the contract to purchase the land.”
There was some initial skirmishing over the width of the word “insured”, even though in clause 10.1 of the policy “insured” has a wide meaning, particularly in its reference to an owner where the definition of “owner” includes, of course, a body corporate. The exclusionary aspect of clause 6.2, of course, is that it needs to be the purchaser of land, and I think it’s readily conceded by the plaintiff in this case that the body corporate could, therefore, not be an owner.
This raised a number of matters. According to the third and eighth defendants’ contentions, the body corporate was aware of the defects by 11 October 2004 - and I don’t think that’s in issue because, in fact, it’s pleaded in paragraph 27 of the amended statement of claim. It’s not in contest that there were some 120 lots that had been inspected for defects in fireproofing by 28 March 2006. It’s asserted by the third and eighth defendants that between that date and the approval of the individual lot holders’ claims in April of 2008 at least 16 of the lots appear to have changed hands. So it’s at least possible that those purchases took place in circumstances contemplated by clause 6.2.
To the extent to which the Court finds that the lot owners are claimants in this case, that, of course, is a matter for the trial Judge in question, it being necessary to determine to what extent any of those lot owners were not entitled, pursuant to the terms of clause 6.2.
Mr Hawthorn, a solicitor for the third and eighth defendants, has gone through in some detail an examination of what records he could find. I don’t intend to refer to many of those particular paragraphs. They include paragraphs 5, 8, 9, 12 to 19 (inclusive), 23, 26 and 27. Paragraph 27 in particular revealed difficulties in investigation. The response by the plaintiff, in my understanding of it, appears to suggest that if, in fact, at trial it was shown that 16 of the 120 lot owners fell within the exclusions under clause 6.2, then those amounts would not be sought to be part of the judgment which the plaintiff would claim.
The problem about that is that if the third to eighth defendants are required to defend this matter, they would have to investigate such matters, and for reasons shown in Mr Hawthorn’s affidavit, there are considerable difficulties in that investigation.
I also infer that there may be more than those 16. Even if there were not, it seems to me that the third and eighth defendants should not be exposed to the difficulties of obtaining that where there has been no amendment to the amended statement of claim and, therefore, no assurance to this Court that those particular 16 people will not be the subject of evidence and arguments at trial. I, therefore, find to that particular issue there is a matter of prejudice. This should be viewed, of course, also in the context that the statement of claim (in paragraphs 19, 50 and 55, the last by implied reasoning) means that circumstances for each and every one of the 120 lot owners will be the subject of evidence at trial.
In the general understanding which arose in the consideration of the amended statement of claim and the fact that the body corporate is joined as a claimant as well as the lot owners, I do accept the arguments of the plaintiff that the references in the relevant legislation, which is the Body Corporate and Community Management Act, to the authorisation of the body corporate to remedy defective building work where there is “shelter or support adversely affected” would give an interest to it as a claimant.
There was some argument as to whether, in fact, the firewalls were or were not part of individual lot owner’s title, but it appears to me that matters such as shelter and support that are relevant to affected lot owners would give some support to that particular proposition. I also accept the plaintiffs’ argument that when one has a look at the actual evidence about the damage which was caused above the ceiling line, that that fell within the ambit of responsibility of the body corporate as owner of the common property. I have serious doubts, though, as to whether the body corporate has some kind of co-ownership entitlement which will permit it to be a complainant. Nevertheless, it’s unnecessary to make a decision on that.
So with respect to the issue of clause 6.2, I accept that the evidence led by Mr Hawthorne does raise the potential matter of significant prejudice as to how to properly investigate the numbers and details of such lot owners who might fall within the ambit of that definition.
I then turn to the conclusions. As I have indicated, I do not find that reasonable efforts have been made within the terms of the first limb of rule 24. With respect to the second limb in dealing with another good reason, I am content simply on the matter of presumptive prejudice, as explained in Taylor, that, in the circumstances that I have already canvassed, good reason is not shown in this case for the matters that I have examined in some detail. Furthermore, if the matter of additional prejudice is relevant because my decision as to the matter of presumptive prejudice is insufficient in this case, I have, as I have indicated, found that there are several aspects of actual prejudice which bear upon the outcome of this particular case.
Therefore, I make the following orders:
- (1)I dismiss the plaintiffs’ application filed 17 March 2016.
- (2)I give leave to both sets of parties to file and serve submissions on all relevant issues of costs by 4 pm on 15 April 2016.
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