Queensland Building and Construction Commission v JP1592 Pty Ltd
[2025] QDC 28
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- Unreported Judgment
- Queensland Building and Construction Commission v JP1592 Pty Ltd[2025] QDC 28
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Queensland Building and Construction Commission v JP1592 Pty Ltd[2025] QDC 28
Queensland Building and Construction Commission v JP1592 Pty Ltd[2025] QDC 28
DISTRICT COURT OF QUEENSLAND
CITATION: | Queensland Building and Construction Commission v JP 1592 Pty Ltd & Ors [2025] QDC 28 |
PARTIES: | QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (plaintiff) v JP 1592 PTY LTD (first defendant) and AARON JOHN JOSEPH PEEL (second defendant) and JOHN PEEL (third defendant) |
FILE NO: | 2145/21 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court |
DELIVERED ON: | 12 March 2025 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 11 February 2025 |
JUDGE: | Sheridan DCJ |
ORDER: |
|
CATCHWORDS: | PRACTICE AND PROCEDURE – NO STEP IN A PROCEEDING FOR OVER 2 YEARS – where applicant seeks leave to take a step in the proceeding – when no step taken for just over two years – whether satisfactory explanations have been provided for the delay in prosecution of the claim – whether there is prejudice to the respondent as a result of the delay – whether leave should be granted to proceed |
LEGISLATION: | Corporations Act 2001 (Cth), s 9 Queensland Building and Construction Commission Act 1991, s 111C(6), s 111C(7) Uniform Civil Procedure Rules 1991, r 5, r 195, r 255, r 389 r 389(2) |
CASES: | WorkCover Queensland v Lismore City Council [2024] QSC 292 Queensland Building and Construction Commission v Crocker & Anor [2024] QDC 140 |
COUNSEL: | E Mijo, counsel for the second defendant |
SOLICITORS: | M Robinson, solicitor from Robinson Locke Litigation Lawyers Pty Ltd for the plaintiff A Eaton, solicitor from Queensland Construction Legal for the second defendant |
- Introduction
- [1]On 3 December 2024, the plaintiff filed an amended application which included an application for an order pursuant to r 389 Uniform Civil Procedure Rules 1991 (UCPR) for leave to proceed. The original application consisted solely of an application for an order that the second defendant provide disclosure pursuant to r 255 UCPR.
- [2]The making of the orders is opposed by the second defendant; the first defendant being in liquidation and the proceedings not having been served on the third defendant.
- Course of proceedings
- [3]The claim and statement of claim was filed by the Queensland Building and Construction Commission (QBCC) on 17 August 2021.
- [4]Amended statements of claim were filed on 13 October 2021 and 24 November 2021 with further and better particulars of the statements of claim being provided to the second defendant on 1 November 2021 and 24 November 2021.
- [5]The proceedings were served on the first and second defendants. At that stage, the third defendant was not located and was not served. The first defendant was placed in liquidation on 4 November 2021, shortly after the commencement of these proceedings. The proceeding continues only against the second defendant.
- [6]The second defendant filed his defence on 1 December 2021.
- [7]The reply was not filed until just over two years later on 20 December 2023.
- [8]The second defendant filed a notice that he was acting in person on 18 January 2024.
- [9]It is unclear as to when the second defendant appointed Queensland Construction Legal to act on his behalf. It does not appear that a notice was filed in the court; albeit that a copy of a notice was emailed to my associate the day before the hearing.
- [10]An application for disclosure was filed on behalf of the plaintiff on 25 November 2024. The application was to be heard on 2 December 2024.
- [11]It was only after receiving an email from the solicitors for the second defendant on 28 November 2024 that the solicitor for QBCC (Mr Robinson) realised that QBCC needed leave to proceed. Mr Robinson accordingly filed an amended application on 3 December 2024. By agreement the hearing of the amended application was first adjourned to 9 December 2024, then 28 January 2025 and then to 11 February 2025.
- Nature of claim and defence
- [12]By its claim, QBCC seeks to recover amounts paid on claims under the insurance scheme pursuant to s 111C Queensland Building and Construction Commission Act 1991 (QBCC Act) in respect of work performed by the first defendant. The second and third defendants are alleged to be liable for payment of the amounts owed by the first defendant pursuant to s 111C(6) QBCC Act.
- [13]If a company owes QBCC an amount paid under the insurance scheme, s 111C(6) attaches the liability of the company to –
- (a)each individual who was a director of the company when building work the subject of the claim was, or was to have been, carried out; and
- (b)each individual who was a director of the company when the payment was made by the commission.
- [14]The liability of the relevant individuals applies regardless of the status of the company, including that the company has been wound up.[1]
- [15]It is alleged the amounts were paid in respect of two separate residential construction works undertaken by the first defendant. In respect of the first works a complaint was received by the plaintiff on or about 30 May 2019 with directions for rectifications being issued on 4 September 2019 and 24 June 2020. The first defendant having failed to rectify the works, the plaintiff subsequently made payments over the period 30 August 2019 to 8 April 2021, totalling an amount of $93,376.00.
- [16]In respect of the second works, a complaint was received by the plaintiff on 30 October 2017 with directions for rectifications being issued on 7 December 2017 and 5 April 2018. The first defendant having failed to rectify the works, the plaintiff subsequently made payments over the period 20 November 2019 to 26 February 2020, totalling an amount of $117,041.65.
- [17]The total amount of $210,417.65 paid by the plaintiff is alleged to be owed by the first defendant pursuant to s 71 QBCC Act. It is alleged, that those monies not having been paid, the second and third defendants are liable to pay pursuant to s 111C(6) of the QBCC Act.
- [18]By his defence, the second defendant denies liability as he says he was not a director of the first defendant at the material times for the purposes of s 111C(6)(a) and (b).
- [19]By its reply, the plaintiff maintains that by signing the contract notifications forms in relation to the works, the second defendant had acted in the position of director within the meaning of “director” in s 9 Corporations Act 2001 (Cth).
- Relevant Legal Principles
- [20]In making submissions, each party referred to the factors as set out by Atkinson J (with whom McMurdo P and McPherson JA agreed) in Tyler v Custom Credit Corp Limited & Ors.[2] Having set out a series of 12 factors to be considered, Atkinson J commented that the court’s discretion is not fettered by rigid rules, but should take into account all of the relevant considerations of the particular case, including the consideration that ordinary members of the community are entitled to get on with their lives and plan their affairs without having the continuing threat of litigation and its consequences hanging over them. The onus is on the applicant to satisfy the court that the order should be made.
- [21]Both in the written and oral submissions, in opposing the grant of leave, counsel for the second defendant primarily relied on the lack of reasonable explanation for the delay and prejudice.
- Delay and explanation for it
- [22]The matter has suffered unfortunate delay. In the period between the filing of the defence on 17 December 2021 and the purported filing of the reply on 20 December 2023, no formal steps were taken in the proceedings.
- [23]No explanation is given by Mr Robinson for the delay other than departures of two solicitors who had been tasked with the primary conduct of the matter, under his supervision, which Mr Robinson deposes he exercised from time to time. In his affidavit, Mr Robinson admits that he took over the conduct of the file in July 2023, following the departure of the second solicitor from the firm. There is no explanation for the delay between July and December 2023.
- [24]The conduct of Mr Robinson himself in December 2023 is unsatisfactory. At the time of forwarding the reply to the solicitor for the second defendant, Mr Robinson as the solicitor responsible for the conduct of the matter for the plaintiff said, “We hereby give on[e] months’ notice of intention to proceed. We will take no steps until the expiration of that time.” In response the solicitor for the second defendant informed Mr Robinson of the need to bring an application for leave to proceed and further informed him that the second defendant was now acting in person.
- [25]Mr Robinson responded that the substance of the solicitors’ email was “incorrect in law.” By his affidavit filed in this application, Mr Robinson accepts now that he was mistaken as to when the last step was taken and states that he was “erroneous by 3 days.” This response is also problematic because, given the absence of any step having been taken for one year, r 389 would have required a month’s notice to be given as a result of the inaction in the matter subsequent to the filing of the defence in December 2021.
- [26]There is, in addition, a further 11 month delay subsequent to the filing of the reply and this application being brought. That delay is explained by Mr Robinson in his affidavit as having been occasioned by his failure to appreciate the need for the application, having considered that the reply was filed within the two year period.
- [27]In his affidavit, Mr Robinson also deposes to the matter having progressed during the period after the filing of the reply. In the period between 26 January 2024 to 28 August 2024, Mr Robinson deposes to the parties having engaged in without prejudice negotiations. In the affidavit of the second defendant, that statement is not disputed.
- [28]On 28 August 2024, as the matter had not resolved, Mr Robinson sent an email to Queensland Construction Legal, as solicitors for the second defendant. The email referred to disclosure by both parties being overdue, referred to the delivery of his client’s disclosure being imminent and requested the second defendant make disclosure within 14 days failing which an application would be brought. On 30 September 2024, Mr Robinson forwarded to Queensland Construction Legal the plaintiff’s list of documents and a drop box link to access the documents. The letter stated that disclosure by his client was long overdue and required his client’s disclosure to be provided within 14 days, failing which it was again repeated that an application would be brought.
- [29]No application for disclosure was in fact brought until, as stated above, nearly two months later, on 25 November 2024.
- [30]It is now accepted by Mr Robinson that application was misplaced, absent an application for leave to proceed.
- Prejudice
- [31]In terms of prejudice, in his affidavit, the second defendant refers to the deterioration in his father’s health during the period of the delay. The hospital records attached to the second defendant’s affidavit show that his father has had seven strokes. It is clear from statements made in the hospital records that it would seem the last stroke was significant and has left the father with certain cognitive impairment. His father is named in the proceedings as the third defendant, and it is said by the second defendant that the father’s evidence would be relevant to his involvement in the company at the relevant time.
- [32]In his affidavit, the second defendant does not, however, depose to his father’s state of health at the time of the commencement of the proceedings in August 2021.
- [33]The second defendant also refers to having lost contact with potential witnesses who may have been able to give evidence as to his role in the company at the relevant time. The second defendant does not, however, in his affidavit identify what steps, if any, were taken when the proceedings were commenced in 2021 to identify potential witnesses.
- [34]Finally, the second defendant refers to the lost opportunity to commence third party proceedings against the subcontractors who performed the work. It is difficult to accept this submission given that in the defence filed on 17 December 2021 it is alleged that the work was performed by two named subcontractors and two cladding and waterproofing contractors, the details of whom are to be confirmed. The second defendant does not say anything about why those entities might be liable nor does he depose to what steps were taken at that time to obtain the details of the unnamed third parties.
- [35]If the second defendant intended to commence third party proceedings, r 195 UCPR requires that any third party proceedings be commenced within 28 days of the filing of the defence. The second defendant was represented by solicitors at the time of preparation of the defence and there are no details as to the steps taken, if any, in this regard.
- Quality of defence
- [36]As regards the defence, it is submitted on behalf of the plaintiff, that the second defendant continued to play a role in the company after resigning as a director.
- [37]The original documentation filed with ASIC stated that the second defendant resigned as director and secretary of the plaintiff on 3 April 2018. It was only after the commencement of these proceedings that a request for correction was lodged with ASIC on 1 October 2021 to change the date of resignation of the second defendant to 3 April 2015.
- [38]The plaintiff also relies upon company records held by the plaintiff to show that the second defendant continued to sign documentation as Managing Director of the company up until at least July 2019. Attached to the affidavit of Mr Robinson are a number of company records and emails where the second defendant has signed as managing director, including Minimum Financial Requirements Reports for period ended 30 June 2017 and 31 August 2017 and dated 23 October 2017 and 31 October 2017 respectively and emails sent to QBCC on 14 November 2017 and 12 July 2019.
- [39]Those documents must at least raise questions as to the statements made by the second defendant in his affidavit affirmed on 10 February 2025 that he had sold the company to his father in April 2015 and that in the period between April 2015 and 2017 he was an employee and worked on site in accordance with his father’s direction and that he was not involved in the management decisions of the company and had had no involvement with the first defendant’s business since 2017.
- [40]That evidence also casts a shadow over the statements affirmed by the second defendant in his affidavit that he has not been able to access the company records since resigning as a director in April 2015. Even without that evidence, the veracity of that statement seems questionable in circumstances where it is said that the second defendant’s father became the sole director of the company upon the resignation of the second defendant and there is no suggestion that there has been a falling out between the second defendant and his father. In the normal course of events, the company records would now be in the hands of the liquidators and able to be accessed. No evidence has been given on that matter, and in particular no evidence as to whether requests for access have been made and refused.
- [41]Another factor to be considered is that even if no orders were made, the plaintiff could commence new proceedings as the six year limitation period since the payments were made by QBCC has not as yet expired.
- Final Considerations
- [42]There is no doubt that the proceedings have suffered unfortunate and not satisfactorily explained delay. Unlike the two cases relied on by counsel for the second defendant, however, that delay was not the result of any deliberate decision by either the solicitors for QBCC or QBCC.[3]These proceedings can be further distinguished from the facts in WorkCover, as these proceedings have been properly served and a defence filed.
- [43]Rule 5 UCPR imposes an obligation on all parties to a proceeding. All parties, not just the plaintiff, have an implied undertaking to proceed in an expeditious way. That of course does not excuse the inaction by the solicitors for QBCC and the solicitor director in his role as the senior practitioner in that firm responsible for the supervision of junior lawyers. It is no excuse to say that the services of the junior solicitors were terminated.
- [44]Delay is but one of the factors to be considered. Other relevant factors referred to above are prejudice and prospects of success. As I have commented, I am not satisfied that the second defendant has suffered prejudice to the extent deposed to in his affidavit. I am not satisfied that the second defendant has taken any steps subsequent to receipt of the claim and statement of claim and the filing of his defence to make the necessary or any enquiries as to the whereabouts of any sub-contractors and to put them on notice nor any potential witnesses.
- [45]I accept that during the period of the delay the health of the second defendant’s father has deteriorated, though it is unclear as to the state of his health when these proceedings were commenced. I am also not satisfied that the father’s evidence is critical.
- [46]Further, the matters deposed to by the second defendant are in direct conflict with the documentary evidence held by QBCC and attached to the affidavit of Mr Robinson and are suggestive of a continuing role as a managing director of the first defendant. It is not possible to conclude that QBCC does not have good prospects of success against that defence; as counsel for the second defendant urged upon me.
- [47]Balancing all these matters, I am satisfied that an order should be made granting leave to proceed.
- Orders
- [48]Accordingly, it is ordered that pursuant to r 389(2) Uniform Civil Procedure Rules 1999 (Qld) the plaintiff have leave to proceed.
- [49]The proceedings clearly need to be the subject of further orders and directions for the future conduct of them.
- [50]I will accordingly order that the application otherwise be adjourned to a date to be fixed.
- [51]My initial view is that the plaintiff should pay the second defendant’s costs of the amended application on a standard basis. If the parties wish to submit otherwise, then I will hear them on that subject when the application next comes before me for directions.