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Gold Property Partners Pty Ltd v Dudzik[2022] QDC 245

Gold Property Partners Pty Ltd v Dudzik[2022] QDC 245

DISTRICT COURT OF QUEENSLAND

CITATION:

Gold Property Partners Pty Ltd v Dudzik & Anor [2022] QDC 245

PARTIES:

GOLD PROPERTY PARTNERS PTY LTD

(ACN 611 852 307)

(Plaintiff)

V

JONATHAN MICHAEL DUDZIK

(First Defendant)

AND

LISA MARIE DUDZIK

(Second Defendant)

AND

D J ROBERTS (CONSTRUCTION) PTY LTD

(ACN 110 631 331)

(Third Defendant)

FILE NO/S:

2996/2021

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane District Court

DELIVERED ON:

4 November 2022

DELIVERED AT:

Brisbane

HEARING DATE:

17 August 2022

JUDGE:

Prskalo A/DCJ

ORDER:

Application for summary judgment dismissed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR DEFENDANTS OR APPLICANTS – where there is an application by the defendants for summary judgment pursuant to r 293 UCPR – where the court is not satisfied that the statutory requirements of r 293 UCPR have been met, namely, the court is not satisfied that the plaintiff has no real prospect of succeeding on the challenged part of the claim, nor that there is no need for a trial – where the application for summary judgment is dismissed.

LEGISLATION:

Copyright Act 1968 (Cth), s 115

Property Law Act 1974 (Qld), s 199

Uniform Civil Procedure Rules 1999 (Qld) rr 5, 292, 293

CASES:

Bakewell v Anchorage Capital Master Offshore Ltd [2019] NSWCA 199

Bickford t/a Bickfords Solicitors v Briley [2006] QDC 187

Chan & Ors v Macarthur Minerals Ltd & Ors [2019] QSC 143

Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232

LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105

Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85

Willmott & Anor v McLeay & Anor [2013] QCA 84

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104

COUNSEL:

P Travis for the plaintiff

O Cook for the first and second defendants

SOLICITORS:

Axia Litigation Lawyers for the plaintiff

Sykronos Legal for the first and second defendants

  1. [1]
    This is an application brought by the first and second defendants for summary judgment against the plaintiff pursuant to r 293 of the Uniform Civil Procedure Rules 1999 (Qld).
  1. [2]
    The principles of summary judgment are well-established. Pursuant to r 293(2), the court may give judgment for the defendant against the plaintiff for all or part of the plaintiff’s claim and may make any other order the court considers appropriate if the court is satisfied that:
  1. (a)
    The plaintiff has no real prospect of succeeding on all or part of the plaintiff’s claim; and
  1. (b)
    There is no need for a trial of the claim or part of the claim.
  1. [3]
    In Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 at [17], Williams JA (with whom McMurdo P and Atkinson J agreed) stated:

“… ultimately the rules are there to facilitate the fair and just resolution of the matters in dispute. Summary judgment will not be obtained as a matter of course and the judge determining such an application is essentially called upon to determine whether the respondent to the application has established some real prospect of succeeding at a trial; if that is established then the matter must go to trial. …”

  1. [4]
    Once an applicant for summary judgment has made out a prima facie case the evidentiary onus shifts to the respondent. See LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105 at [22].
  1. [5]
    Rules 292 and 293 must be applied in the context of the overriding purpose of the Uniform Civil Procedure Rules to “facilitate the just and expeditious resolution” of the matter in dispute.
  1. [6]
    The proposition which emerges from the cases is that the court must exercise “great care” if it exercises a discretion to terminate proceedings prior to trial, bearing in mind that the consequence is to deprive a party of the chance to prove his or her claim or defence at trial. See Chan & Ors v Macarthur Minerals Ltd & Ors [2019] QSC 143 per Justice Flanagan at [71]. The power to dismiss an action summarily is not to be exercised lightly.
  1. [7]
    In circumstances where the facts are settled and the rights of the parties turn on construction of the contract, the matter can be readily and properly resolved by summary judgment. It may be accepted that there may be cases involving questions of law of such difficulty that an applications judge, faced with inadequate submissions and a lack of assistance as to authority, cannot resolve them. The imperative in r 5 of the Uniform Civil Procedure Rules 1999 for expeditious resolution of issues in civil proceedings would indicate, however, that any such class of cases must be very limited. See Willmott & Anor v McLeay & Anor [2013] QCA 84 per Holmes JA at [24].[1]
  1. [8]
    For the reasons that follow, I am not satisfied that the plaintiff has no real prospect of succeeding on the challenged part of the claim, nor am I satisfied that there is no need for a trial.

The contract

  1. [9]
    On or about 22 April 2020, Homes by CMA delivered plans to the first and second defendants (the Dudziks) for the construction of a residence. The plans were subsequently amended. The plans and amended plans contained a notation to the effect that the drawings were subject to copyright and that all rights were reserved to Homes by CMA.
  1. [10]
    On or about 21 June 2020, the Dudziks entered into a written contract with Homes by CMA for the construction of a residence.
  1. [11]
    On 7 July 2020, the Dudziks were notified by their prospective lender that their application for finance had been declined.

The assignment

  1. [12]
    By deed dated 19 July 2021 (and amended 31 May 2022) Homes by CMA assigned to the plaintiff:
  1. (1)
    Any claims, intellectual property, property, right, title and interest (both legal and beneficial) held by either the Builder (whether legally or beneficially) in and to the Plans;
  2. (2)
    Any accrued claims or causes of action (both legal and equitable) that the builder has (legally or beneficially) in relation to copyright in the plans and / or the contract.[2]

Contract clauses

  1. [13]
    Clause 4.2 provides that:

The owner must pay the deposit stated in Schedule 2 when the owner signs the contract.

  1. [14]
    Clause 7.2 applies where the parties have nominated that the contract is subject to finance:
  1. (a)
    this contract is conditional upon the owner within 10 working days from the date of this contract obtaining written approval from the lending body … for a loan in an amount sufficient to enable the owner to pay the contract price;
  1. (b)
    ….
  1. (c)
    the owner must within the time specified in Clause 7.2(a) give to the builder a notice stating whether the lending body has either approved or refused to approve the loan;
  1. (d)
    unless the owner notifies the builder that the lending body has refused to approve the loan, this contract will cease being conditional upon such approval; and
  1. (e)
    if the owner gives the builder a notice that the lending body has refused to approve the loan, then this contract will be at an end ….
  1. [15]
    Clause 12.3 provides that:

Where the builder draws the plans, the owner agrees that the builder retains copyright in those plans but the builder grants to the owner a licence to cause the construction of the works by the builder in accordance with those plans.

  1. [16]
    Clause 12.4 provides that:

The parties agree that the reasonable fee for the licence granted to the owner is 5% of the contract price.  It is acknowledged that the contract price includes this licence fee.

  1. [17]
    Clause 12.5 provides that:

If the owner uses the builder’s plans without the builder’s written consent, other than under the above licence, the owner must pay to the builder on demand the licence fee referred to in Clause 12.4.[3]

The Plaintiff’s claim

  1. [18]
    By amended claim, the plaintiff claims as against the first, second and third defendants, declarations that the plaintiff is the owner of copyright in the amended plans, and that copyright has been infringed. Pursuant to section 115 of the Copyright Act 1968 (Cth) the plaintiff claims damages, or alternatively an account of profits.
  1. [19]
    As against the first and second defendants, the plaintiff claims liquidated sums for breach of contract. The pleadings allege that the first and second defendants breached Clauses 4.2 and 12.5 of the contract.
  1. [20]
    The plaintiff pleads that, pursuant to Clause 4.2, the first and second defendants were required to pay the deposit on signing the contract and have refused or otherwise neglected to pay the deposit.
  1. [21]
    The plaintiff pleads that the first and second defendants reproduced the amended plans by delivering a copy to the third defendant and by causing the creation of another set of plans that substantially reproduced the amended plans (the infringing plans). A house was constructed which substantially reproduced the infringing plans in three-dimensional form.
  1. [22]
    The plaintiff pleads that on or about 7 July 2020 the first and second defendants purported to terminate the contract pursuant to Clause 7.2(e) due to a failure to obtain finance. It is pleaded that the purported termination was invalid because notice had not been provided within the time frame nominated by Clause 7.2(c).

The First and Second Defendants’ case

  1. [23]
    By notice of intention to defend, the first and second defendants deny that copyright has been infringed and deny that they are in breach of contract. By the pleadings, the first and second defendants allege that the contract was validly terminated and otherwise rely on the full terms and effect of the contract.

The assignment clause

  1. [24]
    Clause 30.1 states:

Neither party may assign this contract or any payment or any other right, benefit or interest under this contract without the prior written consent of the other party.

  1. [25]
    The first and second defendants have not pleaded reliance on Clause 30.1. But an application for summary judgment looks to the outcome of a future trial and in doing so ought to take into account the possibility that, before the trial, or even at the trial, the pleading might be amended. An application for summary judgment is not strictly confined to the cause of action expressed in the pleading. See Bickford t/a Bickfords Solicitors v Briley [2006] QDC 187 per McGill SJ at page 6.

The application for summary judgment

  1. [26]
    The plaintiff was not a party to the contract. By written outline, the first and second defendants submit that:
  1. (a)
    the purported assignment of CMA’s rights under the contract was ineffective;
  1. (b)
    the purported assignment of CMA’s copyright in the plans – which themselves form part of the contract – was similarly ineffective; and
  1. (c)
    consequently, the plaintiff’s claim ought to be dismissed.
  1. [27]
    It is argued that the purported assignment of CMA’s rights under the contract (including copyright in the plans) required the Dudziks’ prior written consent. Without that consent, the assignment is not enforceable, at least as against the Dudziks.

Contract termination

  1. [28]
    By second further amended statement of claim, the plaintiff pleads that the purported termination of the contract was invalid because the first and second defendants failed to provide notice that the lending body had refused to approve the loan within the timeframe nominated by Clause 7.2(c). That allegation is denied by the first and second defendants who plead that, upon the proper construction of the contract, they validly terminated the contract.
  1. [29]
    Relevant to the application for summary judgment, the first and second defendants submit that it is unclear whether the plaintiff’s case is that the contract remains on foot or has otherwise been terminated in some way. It is argued that, to the extent that the plaintiff maintains that the contract remains on foot, there is no principled basis for the plaintiff to contend that Clause 30.1 does not apply.
  1. [30]
    In any event, the first and second defendants submit that the protection afforded by Clause 30.1 should be read as surviving termination. That argument is maintained, even though the contract does not expressly provide for the survival of Clause 30.1, and by express operation of Clause 26 certain other rights and obligations continue to be in effect after the contract is at an end.
  1. [31]
    By ancillary argument, it was submitted that the nature of the contract was such that the purported assignment should be held to be ineffective. It was also argued that, due to ambiguity and imprecision in the words of the deed, the assignment was not absolute in the way contemplated by section 199 of the Property Law Act 1974 (Qld).

Factual dispute

  1. [32]
    It is immediately apparent that the summary judgment application requires this court to make findings of fact about matters which are in contention. Whether or not the contract has been validly terminated is in dispute, as is the fact of breach. On the current state of the pleadings, the primary factual dispute as to whether the contract was validly terminated is not amenable to summary determination.
  1. [33]
    The applicant’s argument for summary judgment, either expressly or implicitly, assumes that the determination of these facts, one way or the other, does not impact upon the ultimate issue to be determined in this application.
  1. [34]
    As I apprehend the argument, if the contract is terminated, Clause 30.1 survives termination. If the contract is not terminated, Clause 30.1 applies. In either case, because consent was not given for the assignment of CMA’s rights, the plaintiff does not have a valid claim against the first and second defendants.
  1. [35]
    But to determine whether Clause 30.1 has rendered ineffective the assignment, broader principles of contractual construction must be applied.
  1. [36]
    The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. See Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [46] per French CJ, Nettle and Gordon JJ.
  1. [37]
    As a general principle, in the absence of clear contractual language to the contrary, parties cannot take advantage of their own breaches of contract to terminate the contract or to acquire a benefit under it.
  1. [38]
    In the ordinary course, judicial decision making requires the law to be applied to facts that are found to be proved. In the circumstances of this application, this court cannot properly construe the rights and liabilities of the parties without first determining whether there has been a breach of contract and, more importantly, whether there has been a valid termination. To attempt to do so risks error in the application of legal principle.
  1. [39]
    While there may be exceptions, judicial decision making should not have to contend with the hypothetical application of the law. In other words, should this court attempt to construe the survivorship of Clause 30.1, if the contract has not been validly terminated and survivorship is not in issue?
  1. [40]
    While the plaintiff’s written submissions in this application assume that the contract has been validly terminated, this is not reflected in the pleadings. The pleadings allege that the purported termination was invalid.
  1. [41]
    Even if it is the case that general contractual principles could be correctly applied in the circumstances where the fact of termination, and to a lesser extent the fact of breach, are in contention, there is a further confounding factor: the law on the assignment of contractual rights.

The assignment of contractual rights

  1. [42]
    By way of general overview on the assignment of contractual rights, the authors of Cheshire & Fifoot Law of Contract state:

“The law in this area, starting from a deceptively simple transaction, is somewhat complex, and it will be seen that the hapless reader is led into a maze from which a safe exit is not assured.”[4]

  1. [43]
    Regarding the effect of a contractual prohibition on assignment, the authors state:

“An agreement may provide expressly that one or other of the parties must not assign his or her rights, or that rights under the agreement are not assignable or are ‘personal’. Or the agreement may allow assignment only with the consent of the other party. What if this prohibition is ignored and the beneficiary of the right (the obligee) assigns anyway? 

The law in this area is somewhat difficult to disentangle and it is not possible in this treatment to examine all the relevant intricacies.”[5] (footnotes omitted)

  1. [44]
    Regarding the effect of a qualified prohibition on assignment, the authors state:

“It is common for the prohibition of assignment to be qualified by a condition that assignment is permitted with consent of the other party, and that, either expressly or impliedly, such consent is not to be unreasonably withheld.  If the clause provides that consent will not be unreasonably withheld, or this is implied, the issue arises concerning what would be reasonable or unreasonable. This raises some difficult questions that have been considered in a wider context than consent to assignment of contractual rights (so that this treatment is necessarily limited). Broadly, issues include onus of proof, the standard of reasonableness and whether grounds justifying refusal must exist at the time of the decision.”[6] (footnotes omitted)

  1. [45]
    Regarding contractual terms which limit or prohibit assignability, Heydon JD states:

“It is possible to draft contractual terms which prohibit statutory assignments, or equitable assignments, or all assignments, whether of particular rights or all rights.  It is possible to draft contractual terms which prohibit assignments without some notice being given or some consent obtained. And it is possible to draft contractual terms which provide for the consequences of breaches of any other terms regulating assignment. Terms of these kinds can raise difficult questions of construction. For example, does a prohibition on assignment extend to charges or declarations of trust? These terms can also raise highly technical and detailed problems of other kinds, to which the answers are often speculative and unsettled.  The problems can be pursued in specialised writings. It is not possible to pursue them here.”[7] (footnotes omitted)

  1. [46]
    The application for summary judgment, at its most fundamental, seeks a final determination of this matter by the application of the dicta in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85.
  1. [47]
    However, as was held in that judgment, the question in each case must turn upon the terms of the contract in question. Further, each case must turn upon its own facts.
  1. [48]
    If the first and second defendants are in breach of contract, are they entitled to rely upon the breach to terminate the contract or to acquire a benefit under the contract?
  1. [49]
    It is immediately apparent that findings of fact are required before the terms of the contract can be properly construed and the rights and liabilities of the parties determined. It cannot be said that there are no factual issues which might arise during a trial that could have an impact upon the ultimate legal principle to be applied.
  1. [50]
    Where the facts are settled, the complexity of the law should not in the usual course preclude summary judgment. As indicated, the facts on this application are not entirely settled and the determination of those facts will impact upon the construction principles to be applied.
  1. [51]
    The law on the effect of prohibitions on the assignment of contractual rights is complex. It would be premature to attempt to determine the legal issues without fulsome submissions from the parties. While the submissions of the parties during the hearing were extremely helpful, in my view, the complexity of the issue did not permit a full treatment in the time allocated.
  1. [52]
    Separately to the absence of consent, by written outline it was not argued that the assignment was of a bare right to litigate for a past breach of contract and not assignable for that reason.
  1. [53]
    However, the public policy which underpinned the historical prohibition on assignment of bare choses in action, associated with notions of maintenance and champerty, cannot be regarded as static or settled. See Bakewell v Anchorage Capital Master Offshore Ltd [2019] NSWCA 199 at [42].

Disposition

  1. [54]
    I am not satisfied that the issue for resolution is as simple as the first and second defendants contend nor am I satisfied that this is an appropriate matter for summary determination. Indeed, more questions than answers emerge from the submissions. For example, does the prohibition amount to a promise not to assign rather than a prohibition on assignment? If so, does a breach of clause 30.1 render ineffective the assignment or does it merely entitle the first and second defendants to damages for breach of contract?
  1. [55]
    Even if the issue is viewed as simply one of construction, not turning on facts (which I do not accept), the application raises a complex legal issue which is not appropriate for determination in the applications list.
  1. [56]
    I am not satisfied that the plaintiff has no real prospect of succeeding on the challenged part of the claim, nor am I satisfied that there is no need for a trial of that part of the claim which relates to alleged breaches of contract.
  1. [57]
    The application for summary judgment is dismissed.
  1. [58]
    I will hear the parties further as to costs once they have had sufficient time to consider these reasons.

Footnotes

[1] Cf Bolton Properties Pty Ltd v JK Investments (Australia) Pty Ltd [2009] 2 Qd R 202 per Chesterman J at [26]; Mirvac Queensland Pty Ltd v Horne & Ors [2009] QSC 269 per Applegarth at [23].

[2] Deed dated 19 July 2021 between Gold Property Partners Pty Ltd and Homes by CMA Pty Ltd, Clause 2.1.

[3] Clause 12.4 assesses the license fee as 5% of the contract price.

[4] N C Seddon and R A Bigwood, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 11th ed, 2017) 361 [8.2].

[5] Ibid 370 [8.8].

[6] Ibid 374-375 [8.8].

[7] J D Heydon, Heydon on Contract (Thomas Reuters, 2019) 541 [13.540]. The author refers the reader to numerous academic articles, which also allude to a degree of complexity in this area of the law.  See for example, Tolhurst G J and Carter J W, Prohibitions on Assignments: A Choice to be Made (2014) CLJ 405.

Close

Editorial Notes

  • Published Case Name:

    Gold Property Partners Pty Ltd v Dudzik & Anor

  • Shortened Case Name:

    Gold Property Partners Pty Ltd v Dudzik

  • MNC:

    [2022] QDC 245

  • Court:

    QDC

  • Judge(s):

    Prskalo A/DCJ

  • Date:

    04 Nov 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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