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  4. JLOC Super Pty Ltd v Nev Paterson & Sons Pty Ltd - [2023] QSC 270

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JLOC Super Pty Ltd v Nev Paterson & Sons Pty Ltd[2023] QSC 270

JLOC Super Pty Ltd v Nev Paterson & Sons Pty Ltd[2023] QSC 270

SUPREME COURT OF QUEENSLAND

CITATION:

JLOC Super Pty Ltd v Nev. Paterson & Sons Pty Ltd [2023] QSC 270

PARTIES:

JLOC SUPER PTY LTD ACN 605 330 786

(plaintiff)

v

NEV. PATERSON & SONS PTY LTD ACN 010 205 213

(first defendant)

AND

SEDGWICK AUSTRALIA PTY LTD ACN 003 437 161

(second defendant)

FILE NO/S:

12417/21

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

29 November 2023

DELIVERED AT:

Brisbane

HEARING DATE:

8 November 2023

JUDGE:

Freeburn J

ORDER:

  1. The application and the amended application (filed on 18 September 2023 and 26 October 2023 respectively) are dismissed.
  2. I will hear the parties on costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – PROCEDURAL MATTERS – where a six level building in the Brisbane CBD was owned by the individual trustees of a superannuation fund – where the building was damaged by a storm in November 2014 – where an insurance claim was made for that damage – where the insurer appointed the second defendant to provide loss adjusting services for the claim and the first defendant was engaged to carry out repairs – where the plaintiff became the corporate trustee of the superannuation fund and the legal owner of the building in June 2015 – where a storm caused further damage to the building in October 2015 – where the plaintiff alleges that the further damage was the result of defective work performed by the first defendant in repairing the 2014 damage and by breach of duty of care owed by the second defendant to the plaintiff – where the second defendant applies to strike out those paragraphs of the fourth amended statement of claim that prosecute the plaintiff’s case against the second defendant – where the second defendant contends that the plaintiff is not the proper plaintiff because the plaintiff was not the registered owner of the building at the time the alleged breaches of duty occurred – where the second defendant contends that the fourth amended statement of claim does not plead a reasonably arguably cause of action against it – whether the fourth amended statement of claim should be so struck out

Trusts Act 1973

Uniform Civil Procedure Rules 1999

Bryan v Maloney (1995) 182 CLR 609

Young v Murphy [1996] 1 VR 279

Woodcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515

COUNSEL:

Mr S Couper KC and Ms F Lubett (plaintiff/respondent)

Mr E Robinson (first defendant)

Mr D de Jersey KC (second defendant/applicant)

SOLICITORS:

Turks Legal for the plaintiff/respondent

HWL Ebsworth for the first defendant

Lander & Rogers for the second defendant/applicant

  1. [1]
    Professor John Corbett and Ms Lorraine Corbett were the trustees of their own superannuation fund called the Corbett Superannuation Fund.  They were also, in their capacity as trustees of that fund, the owners of a six level building in the Brisbane CBD at 283 Elizabeth Street.  On 27 November 2014, there was a storm in the CBD that damaged the building.
  2. [2]
    The building was covered by an industrial special risks policy of insurance with Chubb Insurance Australia Ltd.  An insurance claim was made by the Corbetts for the damage to the building.  Chubb appointed Sedgwick Australia Pty Limited to provide Chubb with loss adjusting services for the claim.
  3. [3]
    At some point NPS Commercial, a builder, was engaged to carry out the repair work on the building.  It is not clear who engaged the builder but presumably it was Sedgwick on behalf of Chubb.  NPS carried out the repair work between November 2014 and June 2015.
  4. [4]
    Then, in April 2015, the Corbetts registered their own company, JLOC Super Pty Ltd which replaced them as the trustees of the super fund.  In June 2015, the Elizabeth Street property was transferred by the Corbetts to JLOC.  And so, the effect of the restructure was that the super fund continued with the same asset, but JLOC became the corporate trustee of the super fund in place of the Corbetts and the legal title to the property was transferred to JLOC as the new trustee.
  5. [5]
    It is worth noting that this change from a personal to a corporate trustee is a relatively straight forward commercial transaction.  The trust continues – but with a different entity as trustee.
  6. [6]
    Another Brisbane storm on 22 October 2015 caused further water damage to the building.  The plaintiff alleges that the 2015 water ingress and damage was the result of defective work performed by NPS in repairing the 2014 water damage.[1] The plaintiff’s case against Sedgwick is more indirect.  JLOC alleges that Sedgwick was appointed by Chubb to:
    1. assess the damage caused by the 2014 storm;
    2. determine the nature and scope of the repair works to the building;
    3. maintain site inspections and monitor the repair works performed by NPS;
    4. ensure the repair works were carried out in accordance with “those instructions” setting out the scope of work;
    5. conduct further meetings with NPS in relation to repair costs estimates and review quotations and expenses incurred concerning asbestos removal; and
    6. provide progressive reports and advice to Chubb.
  7. [7]
    It can be seen that there is a peculiarity about the claim.
  8. [8]
    The terms of the insurance were not addressed in argument.  Presumably the insurer, Chubb, elected to reinstate the building.  In electing reinstatement, the insurer is not merely obliged to appoint a competent contractor. Having made that election, the insurer is generally responsible for the contractor’s work. The insurer’s obligation is not merely to arrange reinstatement but to reinstate it.[2]
  9. [9]
    The problem here, or at least one problem, is that the insured, JLOC, has chosen not to sue the insurer, Chubb, but to sue the repairer and the loss adjuster – both of which were likely to have been retained by Chubb.
  10. [10]
    Sedgwick applies to strike out those paragraphs of the fourth amended statement of claim that prosecute JLOC’s case against Sedgwick.[3]
  11. [11]
    Two issues are raised by the strike out application:
    1. Is JLOC the proper plaintiff to make a claim for defective work?
    2. Does the statement of claim plead facts that support the existence of a duty of care owed by Sedgwick to JLOC?

Issue 1: Is JLOC the Proper Plaintiff?

  1. [12]
    Sedgwick argues that JLOC was not the trustee of the fund at any stage before 18 April 2015 and it did not become the registered owner of the property until 29 June 2015. The Corbetts were the registered owners of the property at the time the alleged breaches of duty occurred.
  2. [13]
    Sedgwick contends that even if Sedgwick owed a duty of care to the Corbetts as trustees of the fund prior to April 2015, that duty and any breaches of that duty are not actionable by JLOC in respect of conduct prior to April 2015 as if JLOC had always been the trustee of the fund.
  3. [14]
    The argument, if sustained, would produce surprising results.  It would mean that the Corbetts could not sue for a breach of duty owed to them because the damage was suffered by JLOC.  And JLOC could not sue for the damage they suffered because the relevant duty was owed to the Corbetts.  It would mean that a new trustee, who takes over from a retired or deceased or delinquent trustee would have no remedy for any cause of action where the elements fall on either side of the appointment of the new trustee.
  4. [15]
    For three reasons, I reject the idea that a change in the trustee erects such an impenetrable wall.

Section 12(6) of the Trusts Act 1973

  1. [16]
    First, the situation is covered by legislation.  Section 12(6) of the Trusts Act 1973 provides:

“Every new trustee appointed under this section has the same powers, authorities, and discretions and may in every respect act, as if the new trustee had originally been appointed a trustee by the instrument (if any) creating the trust, both before and after all the trust property becomes by law or by assurance or otherwise vested in the trustee.”

  1. [17]
    The evident objective of that subsection is to ensure that the new trustee truly stands in the shoes of the old trustee and may exercise any powers or rights held by the old trustee.
  2. [18]
    Sedgwick argues that, when the property was conveyed to the new trustees on 29 June 2015, the Corbetts had not yet suffered any damage.  The second storm occurred in October 2015.  And so, it is argued, the cause of action was not complete and the Corbetts had no right to sue as of June 2015. Sedgwick contends that:

Section s 12(6) of the Trusts Act 1973 has neither has the effect of deeming JLOC to be trustee from the Fund’s inception nor does it deem JLOC to be the registered owner of the Property (as trustee or otherwise) at the time the alleged breaches of duty occurred.

  1. [19]
    In fact, that is exactly the effect of s 12(6). It places the new trustee in the position as if the new trustee had originally been appointed the trustee.
  2. [20]
    Sedgwick’s submissions continue:

Even if Sedgwick owed a duty of care to the Corbetts as trustees of the Fund prior to 17 April 2015, that duty and any breaches of that duty are not actionable by JLOC in respect of conduct prior to 17 April as if JLOC had always been trustee of the Fund. That is not the effect of s 12(6) the Trusts Act 1973. The alleged duty of care could only have arisen, and any breaches thereof by Sedgwick, could only have taken place on or after 17 April 2015.

  1. [21]
    In my view, s 12(6) is not so ineffectual.  The words of s 12(6) are broad.  The concepts of the trustee’s “powers, authorities, and discretions” ought not be read as confined to complete causes of action.  The subsection gives the new trustee “in every respect” the rights of the old trustee “as if the new trustee had originally been appointed.”  And so, here, one must regard JLOC as the trustee from the beginning – that is before the first storm.

In principle: the common law

  1. [22]
    Second, even in the absence of s 12(6) of the Trusts Act 1973, JLOC, as the new trustee, is the appropriate plaintiff.  Brooking J explained the principle in Young v Murphy:

“The rule that in general it is the trustee, and (except as regards breaches of trust) the trustee alone, who can sue for torts with respect to the trust estate and enforce contracts made in the administration of the trust and indeed take any appropriate proceedings to protect the estate and enforce rights belonging to it, is reflected by the long line of cases of which Lee v Sankey (1873) L.R. 15 Eq. 204 is an example: in general the trustee alone may sue for breach of duty an agent employed by him unless the agent as made himself liable as trustee, in which case the trustee and the beneficiary each have standing.”[4]

  1. [23]
    His Honour went on to explain that, once a new trustee is appointed, and a vesting order is made,[5] the person with standing to enforce a pre-existing right of action for a tort committed in respect of the trust property is, in general, the new trustee.  Similarly, the person with standing to enforce a contract that was held on trust by the former trustee, or to enforce a pre-existing right of action, is the new trustee.

Principles of Bryan v Maloney

  1. [24]
    Third, in any event, a person responsible for the building work may be liable to a subsequent owner in accordance with the principles in Bryan v Maloney[6] and Woodcock Street Investments Pty Ltd v CDG Pty Ltd.[7]  Certainly, the existence of those principles means that this is not a clear case where the court could exercise its discretion to strike out under rule 171 of the Uniform Civil Procedure Rules 1999 (UCPR).
  2. [25]
    For those reason, there is no basis for striking out the pleading on the first ground.

Issue 2: Does the statement of claim plead facts that support the existence of a duty of care owed by Sedgwick to JLOC?

  1. [26]
    Sedgwick argues that JLOC’s case, as summarised in paragraphs [1] to [6] above, does not plead a reasonably arguable cause of action against Sedgwick.
  2. [27]
    JLOC has served its proposed fourth amended statement of claim after Sedgwick had raised its complaints about the third amended statement of claim.  The parties were content to argue the case based on the proposed fourth amended statement of claim. The complaints about that pleading are as follows.
  3. [28]
    First, Sedgwick says that JLOC does not plead any material facts in support of the alleged retainer as required by rule 149(2) of the UCPR.  Sedgwick complains that the particulars pleaded in support of paragraph 5A of the statement of claim suggest that the retainer is wholly in writing, but the documents relied on by JLOC to support the allegation (Sedgwick’s first and fourth reports to Chubb) plainly do not support it.
  4. [29]
    To make sense of this complaint it is necessary to set out paragraph 5A in its entirety:

“5A. Sedgwick was appointed by Chubb Insurance Australia Limited (Chubb) to:

  1. assess the damage caused to the Property by the 2014 Storm event;
  1. consider, report and, if in agreement, attend to payments as recommended in relation to the repair works to be performed by NPS Commercial;
  1. determine the nature and scope of the repair works to the Building (including the Rectification Work) in consultation with NPS Commercial, and maintain site inspections and monitoring of repair works performed by NPS Commercial to ensure they were carried out in accordance with those instructions setting out the scope of work;
  1. conduct further meetings with NPS Commercial in relation to repairs costs estimates, and review actual quotations and expenses incurred concerning asbestos material removal;
  1. provide progressive reports and advice to Chubb on developments.

     Particulars

  1. The best particulars that the plaintiff can presently provide are:
  1. Sedgwick was appointed on about 28 November 2014;
  1. the terms of the appointment are evidenced by the content of a report entitled ‘BRISBANE HAIL STORM – REPORT 1’ (the First Report) prepared by Sedgwick for Chubb, including, in particular, section 10.
  1. Sedgwick’s involvement in determining the scope of repair works is also evidence by section 2.1.3 of the report entitled ‘BRISBANE HAIL STORM – REPORT 4’ (the Fourth Report) prepared by Sedgwick for Chubb.
  1. The plaintiff will provide further particulars after disclosure and inspection.”[8]
  1. [30]
    The content of these particulars suggests that they are particulars of the appointment of Sedgwick by Chubb.
  2. [31]
    In any event, the thrust of paragraph 5A is to allege that Chubb appointed Sedgwick to assess, determine and monitor the repair work.  As I have already remarked, it is surprising that it is contended that the insurer’s loss adjuster, owed a duty of care to JLOC as the insured.  But that is not Sedgwick’s point.  Sedgwick’s point is that no pleaded facts, least of all the content of the two reports, support “the alleged retainer”.
  3. [32]
    However, a fair reading of paragraph 5A suggests that what is contended is that Chubb retained Sedgwick informally.  There was no letter of appointment or written appointment of Sedgwick.  However, the alleged terms of the appointment are identified in paragraph 5A, and it is pleaded that the appointment was “evidenced by” the two reports. 
  4. [33]
    That is, in my view, a sufficient plea of Chubb’s appointment of Sedgwick.  The appointment may be proved or disproved at trial.  The fact that the words of the reports do not support the terms of the appointment is beside the point.  JLOC merely puts the reports forward as ‘evidence’ of the existence of the appointment.  I do not read paragraph 5A as saying that the terms of Chubb’s appointment of Sedgwick are evidenced by or recorded in the two reports.
  5. [34]
    In any event, the trial judge will assess the allegations of the appointment, and its terms, against all of the evidence of the witnesses and the relevant documents.
  6. [35]
    Second, Sedgwick complains that:

“paragraph 5A(c) of the draft 4ASOC also appears to be directly contrary to what JLOC pleads in:

  1. paragraphs 7(d) and 7(f) of the reply that Chubb Insurance did not engage NPS Commercial and did not exercise any control or provide direction over NPS Commercial in relation to their repair works;
  1. paragraph 12(b) of the reply that Chubb Insurance was not under an obligation under the Chubb Policy to ensure that damaged portions of the Building were restored to the condition required under the policy and did not assume responsibility for the repair of the Building after the 2014 Storm Event; and
  1. paragraph 28(c) of the reply that Chubb Insurance did not deal with and did not have authority to direct NPS Commercial in respect of the repair works.”
  1. [36]
    I do not accept that paragraph 5A(c) is “directly contrary” to what JLOC pleads in paragraphs 7(d) and 7(f) of the reply.  Paragraph 5A(c) pleads that Sedgwick was appointed by Chubb to determine the nature and scope of the repair work with NPS and to monitor that report work.  Paragraph 7(d) denies that:
    1. Chubb engaged NPS;
    2. the Corbetts engaged NPS;
    3. Chubb engaged Mr Ryan (a Sedgwick representative); and
    4. the Corbetts engaged Mr Ryan.
  2. [37]
    None of that is inconsistent with Chubb’s appointment of Sedgwick.  And it is not inconsistent with the allegation in paragraph 7(f) that Chubb did not exercise control or provide direction to NPS. Presumably, JLOC contends that it was Sedgwick that, in monitoring NPS’s work, exercised control and direction of NPS.
  3. [38]
    Similarly, paragraph 5A(c) is not directly inconsistent with the allegation in paragraph 12(b) of the reply to the effect that Chubb did not owe an obligation to ensure that the damaged parts of the building were restored and did not assume responsibility for the repairs.  Presumably, again, JLOC says Sedgwick assumed control of the repair work.
  4. [39]
    And paragraph 5A(c) is not directly inconsistent with paragraph 28 of the reply.  There, JLOC says Chubb did not deal with and did not have authority to direct NPS’ repair work because, on JLOC’s case, it was Sedgwick which had that control.
  5. [40]
    Of course, some caution must be exercised.  This is an application to strike out the statement of claim.  That should only be done in a clear case. Care should be taken concerning allegations that are pleaded as material facts and without a proper examination of the disclosed documents or the evidence of the witnesses.
  6. [41]
    For those reasons the application should be dismissed.  I will hear the parties on costs.

Footnotes

[1]  All of the facts set out in these first six paragraphs are facts pleaded in the fourth amended statement of claim.  For present purposes those facts are presumed to be accurate. The fourth amended statement of claim has not been filed but both parties were content to argue the case on the basis of that proposed pleading.

[2]  See Clarke, The Law of Insurance Contracts (4th ed) at [29-2D].

[3]  The paragraphs sought to be struck out are paragraphs 1CA, 5A, 7A, 19(d), 20, 20A, 20B, 20C, 21, 22 and 22A.

[4]  [1996] 1 VR 279 at 291.  JD Phillips J delivered reasons which were consistent with those of Brooking J.  Batt J agreed with both Brooking J and JD Phillips J.

[5]  The court has power to make a vesting order under ss 82 and 83 of the Trusts Act 1973, but the absence of a vesting order does not affect the efficacy of the trust. For example, vesting orders are generally not made as a substitute for ordinary conveyancing practice: Re Nairn’s Application [1961] VR 26.

[6]  (1995) 182 CLR 609.

[7]  (2004) 216 CLR 515.

[8]  The additions and deletions illustrate what is proposed to change from the third to the fourth amended statement of claim.

Close

Editorial Notes

  • Published Case Name:

    JLOC Super Pty Ltd v Nev. Paterson & Sons Pty Ltd

  • Shortened Case Name:

    JLOC Super Pty Ltd v Nev Paterson & Sons Pty Ltd

  • MNC:

    [2023] QSC 270

  • Court:

    QSC

  • Judge(s):

    Freeburn J

  • Date:

    29 Nov 2023

  • White Star Case:

    Yes

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2023] QSC 27029 Nov 2023Proceeding against builder and loss adjuster for loss and damage sustained in consequence of breach of duty of care relating to building rectification work; application to strike out various paragraphs of statement of claim dismissed: Freeburn J.
Notice of Appeal FiledFile Number: CA 16103/2320 Dec 2023Notice of appeal filed.
Appeal Determined (QCA)[2024] QCA 21812 Nov 2024Appeal allowed; orders below set aside; order that certain paragraphs of statement of claim be struck out with leave to re-plead: Bond JA (Callaghan and Crowley JJ agreeing).
Appeal Determined (QCA)[2024] QCA 26017 Dec 2024Costs judgment: Bond JA (Callaghan and Crowley JJ agreeing).

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Bryan v Maloney (1995) 182 CLR 609
2 citations
Jump To
Cite 1 - (1995) 182 CLR 609
Cite 2 - (1995) 182 CLR 609
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515
2 citations
Jump To
Cite 1 - (2004) 216 CLR 515
Cite 2 - (2004) 216 CLR 515
Young v Murphy [1996] 1 VR 279
2 citations
Jump To
Cite 1 - [1996] 1 VR 279
Cite 2 - [1996] 1 VR 279

Cases Citing

Case NameFull CitationFrequency
Sedgwick Australia Pty Ltd v JLOC Super Pty Ltd [2024] QCA 218 1 citation
Sedgwick Australia Pty Ltd v JLOC Super Pty Ltd [No 2] [2024] QCA 2601 citation
1

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