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Body Corporate for the Johnson CTS 49098 v Maxcon Constructions Pty Ltd[2024] QSC 65

Body Corporate for the Johnson CTS 49098 v Maxcon Constructions Pty Ltd[2024] QSC 65

SUPREME COURT OF QUEENSLAND

CITATION:

Body Corporate for the Johnson CTS 49098 v Maxcon Constructions Pty Ltd [2024] QSC 65

PARTIES:

BODY CORPORATE FOR THE JOHNSON CTS 49098

(plaintiff)

v

MAXCON CONSTRUCTIONS PTY LTD

ACN 152 259 820

(defendant)

FILE NO:

BS 10826 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

20 May 2024

DELIVERED AT:

Brisbane

HEARING DATE:

9 February 2024

JUDGE:

Martin SJA

ORDER:

The application is dismissed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JOINDER OF CAUSES OF ACTION AND OF PARTIES – PARTIES – GENERALLY – where the plaintiff, a body corporate for a community title scheme, alleges that the then owner of the land contracted with the defendant to undertake design and construction works – where the plaintiff alleges that it is subrogated to the rights of the original owner under the contract – where the plaintiff alleges both the design and construction works were defective – where defendant’s defence pleads that the design and construction agreement was a sham – where the defendant pleads that the then owner, not the defendant, engaged design consultants – where the plaintiff applies to join a new defendant – where the plaintiff alleges, in the alternative, that the proposed defendant undertook the design work – where the proposed defendant argues there is no evidence of a sham or of the proposed defendant’s involvement – whether the proposed defendant should be joined to the proceeding

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – JOINDER OF CAUSES OF ACTION AND OF PARTIES – MATTERS RELATING TO LIMITATION PERIOD – where proposed defendant argues application to join brought outside limitation period – whether application to join falls within provisions of r 69(2) Uniform Civil Procedure Rules 1999 (Qld)

Limitation of Actions Act 1974 (Qld), s 38

Uniform Civil Procedure Rules 1999 (Qld), r 69(1), r 69(2), r 74

Allianz Australia Insurance Ltd v Haddad [2015] NSWCA 186, cited

Aqwell Pty Ltd v BJC Drilling Services Pty Ltd [2007] QSC 140, distinguished

Hutchinson v Equititour Pty Ltd [2011] 2 Qd R 99; [2010] QCA 104, cited

IMDM (Townsville) Pty Ltd v City Pacific Ltd [2009] QSC 445, cited

Interline Hydrocarbon Inc v Brenzil Pty Ltd [2006] 2 Qd R 454; [2006] QSC 184, considered

Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd [2003] QSC 187, cited

Universal Music Australia Pty Ltd v Cooper [2004] FCA 78, cited

COUNSEL:

M C Long for the plaintiff

B W J Kidston for the defendant

B A Reading for Asian Pacific Building Corporation

SOLICITORS:

Robinson Locke for the plaintiff

Diakou Faigen for the defendant

McCullough Robertson for Asian Pacific Building Corporation

  1. [1]
    The plaintiff (Johnson) applies to join Asian Pacific Building Corporation (AP Building) as the second defendant in this proceeding and seeks leave to amend the Claim and Statement of Claim. Questions concerning limitation periods arise and, so, it is necessary to give some detail of the times at which certain events occurred.

A brief history of this matter

  1. [2]
    In the middle of 2015 construction work began on the old Main Roads building in Boundary Street, Spring Hill to convert it into a building which incorporated commercial premises, residential units and hotel rooms. Johnson alleges that that occurred by the then owner of the land – Asian Pacific Group Pty Ltd (AP Group) – contracting with the defendant (Maxcon) to undertake the design and construction work (the WUC).
  2. [3]
    The work on the building was done and a certificate of classification was issued no earlier than 9 September 2016. Three days later the building was converted into separate strata titles with a number of separate bodies corporate. Johnson was the Principal Body Corporate.
  3. [4]
    Johnson is entitled to bring a claim like this because it is subrogated to the rights of the original owner under the contract to the extent that the contract applies to work affecting scheme land that is common property - s 36(3)(a) of the Body Corporate and Community Management Act 1997 (BCCM Act).
  4. [5]
    On 8 September 2022 Johnson commenced proceedings against Maxcon. It alleged that the design and construction work was subject to a series of “Design Defects” and “Construction Defects”. The existence of those defects, the extent and cost of any rectification, and Maxcon’s liability are all in issue.

Maxcon alleges that the Contract was a “sham”

  1. [6]
    On 30 January 2022, Maxcon filed its Defence. For the purposes of this application, the important part of Maxcon’s Defence is its assertion that the contract between AP Group and Maxcon was a sham. It says that it agreed with AP Group that it would build, but not design, the building. Maxcon does not identify in its pleadings who, under the True Contract, was responsible for the design of the building.
  2. [7]
    Maxcon pleads:
    1. the parties to the Contract (AP Group and Maxcon) did not intend to create a legally enforceable agreement upon entering into the Contract;
    2. it was the intention of the parties that:
      1. (i)
        the Contract would not form the terms upon which Maxcon would carry out the building work; and
      1. (ii)
        Maxcon would be engaged as builder in relation to the original land, and perform the True WUC thereunder, pursuant to the terms of the “True Contract” – the terms of the True Contract being partly oral and partly by conduct;
    3. AP Group engaged the design consultants in respect of the True Contract;
    4. Maxcon did not engage the design consultants and the Design Consultant Contracts were not novated to the defendant; and
    5. in the premises the Contract was not intended to be operated or completed in accordance with its terms, it is unenforceable, and a sham.
  3. [8]
    This assertion came as a surprise to Johnson.
  4. [9]
    On 2 February 2023, particulars of the Defence and disclosure were sought.
  5. [10]
    On 10 August 2023, Maxcon was ordered to provide further and better particulars of the Defence and further disclosure including with respect to the alleged sham contract.
  6. [11]
    Maxcon gave disclosure on 19 September 2023. It filed the further and better particulars on 16 October 2023.
  7. [12]
    This application was filed on 5 December 2023.

The basis of Johnson’s application to join AP Building

  1. [13]
    On the joinder application, Johnson relies on r 69(1) of the Uniform Civil Procedure Rules 2001. It provides:

“The court may at any stage of a proceeding order that –

…

  1. any of the following persons be included as a party –

…

  1.  a person whose presence before the court would be desirable, just and convenient to enable the court to adjudicate effectually and completely on all matters in dispute connected with the proceeding.”
  1. [14]
    If an order is made under r 69(1), then r 74 provides:
  1. “(4)
    If an order is made including or substituting a person as a defendant or respondent, the proceeding against the new defendant or respondent starts on the filing of the amended copy of the originating process.
  1. (5)
    However, for a limitation period, a proceeding by or against a new party is taken to have started when the original proceeding started, unless the court orders otherwise.”

Have the provisions in r 69(1) been met?

  1. [15]
    An applicant relying on this rule bears the onus of establishing that the presence of the proposed party:
    1. would be desirable, just and convenient,
    2. to enable the court to adjudicate effectually and completely on all matters in dispute.
  2. [16]
    Johnson proposes that the “presence” of AP Building be effected by joining it as a defendant to the proceedings. Its proposed Statement of Claim maintains the allegations against Maxcon and pleads an alternative claim against AP Building based upon the same alleged breaches.
  3. [17]
    Johnson relies only on the pleading by the current defendant of a sham contract as the basis for its application. It produces no evidence that the assertions have any basis.
  4. [18]
    An applicant under this rule must be able to identify a dispute with the party they seek to join and show a prima facie case[1] that it would be desirable, just and convenient to join the proposed defendant.
  5. [19]
    In assessing whether a case has been made the court should, as it is exercising a discretion, consider the merits of the proposed case, at least where there are significant doubts concerning its prospects of success.[2] A slightly stricter expression of the test was advanced by Tamberlin J in Universal Music Australia Pty Ltd v Cooper[3] namely, that regardless of what another party has pleaded against an applicant for such relief, it is still necessary for that applicant to demonstrate the existence of an arguable case, and one that is sufficient to resist the entry of summary judgment by the party sought to be joined.
  6. [20]
    The words in r 69(1) direct attention to whether the joinder of the proposed part would be “desirable, just and convenient”. There are decisions in which the mere pleading of a case against a proposed defendant in a draft statement of claim has been regarded as sufficient to justify joinder – see, e.g., Aqwell Pty Ltd v BJC Drilling Services Pty Ltd[4] – but that was a case in which the identity and involvement of the proposed defendants were not in doubt.

Should AP Building be joined?

  1. [21]
    This is not a case where the argument is about the existence of negligence or damages but about the identity of the contracting party. This application is founded upon Maxcon’s denial that it was a party to the true contract relied on for the design and construction of the building. Given the requirements for the careful pleading of such a defence then those allegations are sufficient to raise a doubt about whether the proceeding was started in or against the name of the right person as a party. But that is not enough. The merits of the proposed case must be considered and that necessarily involves the identity of the proposed defendant.
  2. [22]
    In answer to the question: “Why have you chosen this particular respondent, Asian Pacific Building Corporation?”. Mr Long responded: “The answer to that is in the further and better particulars of the defence that were provided …”. He directed me to paragraphs 2 and 3 of those particulars. They were particulars of paragraph 40 of the Defence. That paragraph concerns the allegation that the True Contract was constituted in part by conduct and that the conduct was made up of the following:
    1. AP Group entering into the Design Consultant Contracts;
    2. Maxcon carrying out the True WUC;
    3. neither AP Group nor Maxcon requiring the Design Consultant Contracts to be novated to Maxcon;
    4. AP Group giving directions to Maxcon in relation to the design of the building;
    5. Maxcon issuing payment claims to AP Group in accordance with the True Contract Construction Price; and
    6. AP Group paying Maxcon in accordance with the True Contract Construction Price.
  3. [23]
    The particulars given were:
    1. the variations and directions carried out by Maxcon comprising the True WUC (in addition to the Design) are those set out in the documents contained in the architect’s advice folders named “AA-001” to “AA-213”; and
    2. the date and substance of each alleged direction are those set out in the documents contained in the architect’s advice folders named “AA-001” to “AA-213”.
  4. [24]
    The material which was said to identify AP Building as the architect of the project was not exhibited. In Johnson’s written submissions it is contended that it is Maxcon’s case that AP Building performed the design work. That cannot be drawn from Maxcon’s pleading.
  5. [25]
    In his submissions, Mr Long accepted that there was no evidence to suggest any involvement by AP Building, but he contended that while the evidence was not before the court, the proposed new defendant had not responded to any of the allegations in the proposed Statement of Claim. That, he said, was the basis upon which the case was brought.
  6. [26]
    When the identity of a proposed defendant is in dispute, as it is in this case, an applicant must show, at least, why it is just that the respondent be joined as a defendant. That has not been done in this case. It is not sufficient to say that the proposed Statement of Claim is based upon material (not seen by the court) and that identifies the proper defendant.
  7. [27]
    According to Mr Reading there is evidence which shows that the contract sued upon was not a sham. He took me to documents which, on their face, show that Maxcon had claimed payment during the project for numerous types of “design work” performed by “design consultants” novated to it. So far as the proposed amended pleading is concerned, there are five “design defects” pleaded against AP Building. AP Building submits that the pleading does not identify any drawings said to be created by it. 
  8. [28]
    The applicant has not established a prima facie case that AP Building was a party to any contract let alone the “True Contract” alleged by Maxcon. With Johnson having failed to establish that AP Building’s presence before the court would be desirable, just, and convenient the application should be dismissed,

Have the conditions in r 69(2) been met?

  1. [29]
    I will consider this point in case I have erred in my conclusion above and r 69(1) has been satisfied.
  2. [30]
    Johnson seeks damages for breach of contract and pleads that the building design had the design defects “as at on or about 9 September 2016”. For the purposes of the limitation period for a breach of contract, time begins to run from the date of breach.[5] Proof of damage is not an element of a claim for breach of contract. This distinguishes a claim for breach of contract from a claim for negligence in, say, the construction of a building. In that case, negligence is only actionable on proof of damage and it is only on such a claim that issues of when the design defects became manifest are relevant.
  3. [31]
    Johnson argues that there is currently no pleading or evidence as to the extent to which the design defects were latent, or manifest, and when.
  4. [32]
    On the state of the proposed amended pleading, Johnson demonstrates that the limitation period has passed.
  5. [33]
    AP Building argues that, as the relevant limitation period has expired, it should not be joined unless one of the criteria identified in r 69(2) is satisfied.
  6. [34]
    Where a limitation period has expired, then r 69(2) confines the circumstances in which the power to add a party can be exercised. Rule 69(2) provides grounds upon which a party can be added after the end of the limitation period. In this case, Johnson relies upon the following parts of that rule:
  1. “(2)
    However, the court must not include or substitute a party after the end of a limitation period unless 1 of the following applies—
  1. (a)
    the new party is a necessary party to the proceeding because—

…

  1. (iii)
    the proceeding was started in or against the name of the wrong person as a party, and, if a person is to be included or substituted as defendant or respondent, the person is given notice of the court’s intention to make the order; or
  1. (iv)
    the court considers it doubtful the proceeding was started in or against the name of the right person as a party, and, if a person is to be included or substituted as defendant or respondent, the person is given notice of the court’s intention to make the order;”
  1. [35]
    The requirements of r 69(2) were considered by Muir J in Interline Hydrocarbon Inc v Brenzil Pty Ltd.[6] For these purposes, the following reflects Muir J’s conclusions:
  1. (1)
    Rules 69(2)(a)(iii) and 69(2)(a)(iv) are not limited in their application to cases of misnomer.
  1. (2)
    Rule 69(2)(a)(iv) might operate in circumstances in which there was (and remained) a good cause of action against an initial defendant, who was to remain a defendant in the proceeding.
  1. (3)
    An explanation for a failure to join a party within time would always be relevant, but was not a precondition of the power to order a joinder.
  1. (4)
    That accordingly in circumstances in which it was arguable that only one of two corporations potentially liable was sued and the corporation sued was the other's agent or alter ego, an order for joinder of the other corporation would be made under r 69(2)(a)(iv).
  1. [36]
    If, contrary to my finding above, Johnson has shown that there was a reasonable argument that AP Building was the entity which contracted with AP Group to provide the design work, then that would satisfy r 69(2)(iv).

Was the commencement of the limitation period postponed?

  1. [37]
    Johnson also sought to rely on s 38(1) of the Limitation of Actions Act 1974 (LAA). It provides:

“(1) Where in an action for which a period of limitation is prescribed by this Act—

  1.  the action is based upon the fraud of the defendant or the defendant’s agent or of a person through whom he or she claims or his or her agent; or
  1.  the right of action is concealed by the fraud of a person referred to in paragraph (a); or
  1.  the action is for relief from the consequences of mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or, as the case may be, mistake or could with reasonable diligence have discovered it.”

  1. [38]
    That provision does not assist Johnson at this point. The onus of establishing the facts necessary to come within s 38 LAA lies on Johnson – see Hutchinson v Equititour.[7] The basis for Johnson’s assertion on this point is the pleading by Maxcon – nothing else was relied upon.
  2. [39]
    Section 38(1)(b) requires that the right of action is concealed by the fraud of “the defendant or the defendant’s agent or of a person through whom he or she claims or his or her agent”. In this case, the contract was not executed by an agent of AP Building. The evidence shows that there is a person who is a director of both one of the parties who executed the contract and AP Building, but that does not establish agency.
  3. [40]
    Further, it is not suggested that AP Building or its agents represented to Johnson that the “sham” contract was the actual document upon which the construction and design work were based.

Are there discretionary grounds upon which relief should be refused?

  1. [41]
    AP Building proposes a number of discretionary matters which would tell against granting an order that it be joined.

There is no evidence to explain why Johnson could not have discovered the alleged “sham” sooner.

  1. [42]
    Mr Long submits that, before the Defence was filed, Johnson had no knowledge of and no way of knowing about the “sham contract”. That, though, does not explain the delay in commencing the action – one day before the limitation period expired.
  2. [43]
    While delay is a matter to be taken into account, the more relevant factor is the consequences of delay.

Passage of time and prejudice

  1. [44]
    Mr Faigen is a solicitor and the Group Counsel and Development Director of the Deague Group of Companies of which AP Building is a part. In his affidavit he gives evidence of attempts to “obtain access to the books and records (both electronic and hard copy) maintained by Asian Pacific Corporation from the period at or about the time of the Project the subject of the D&C Contract.” He gives evidence of contacting 5G Networks, a company contracted by Asian Pacific Building as “an external information technology service provider.” While he could not recall the name of the person he spoke to, he was informed that, “given the passage of time since the Project was complete” “limited documentary records in electronic form relating to the Project exist”, some documents may “not have been retained in electronic form” and 5G Networks’ attempts to retrace the records were still taking place at the time of making his affidavit.
  2. [45]
    The evidence is equivocal. It does not go so far as to say that documents cannot be obtained, only that it may be difficult to do so.
  3. [46]
    It cannot go unnoticed that one of AP Building’s directors was involved with the creation of the “sham” contract. There is nothing to suggest that he is unavailable or unable to give instructions on these matters.

The pleading is deficient

  1. [47]
    Mr Reading pointed to two aspects of the pleading as being deficient:
    1. first, schedule 1 of the Statement of Claim outlines the alleged defects and labels a series of defects as both design and construction defects. He argued that A P Building “can’t identify on the face of this what design of [AP Building] is said to be defective or why” and further, that “there’s no allegation here that references a drawing apparently authored by [AP Building]”.
    2. secondly, schedules 3 to 5 provide tables of alleged rectification costs, consultants’ costs, and scheme land damage and rectification costs, respectively. Mr Reading submitted, with respect to sch 5, that “it’s impossible, on the face of this schedule, to tell whether or not it’s alleged that [AP Building’s] design caused this defect and how, if that’s what’s alleged, or whether it’s a construction defect.”
  2. [48]
    Both of those are reasonable criticisms but do not make the pleading irreparable and, if AP Building is joined, can be cured by appropriate particulars.
  3. [49]
    None of the matters advanced under this heading are of such a magnitude as to require a refusal of the application.

Can Johnson be subrogated to the extent that it can sue on the design work?

  1. [50]
    Johnson’s claim is contingent on its subrogation to the rights of Asian Pacific Group held under the alleged “Design Contract”. That subrogation is pleaded to arise by operation of s 36(3)(a) of the BCCM Act, which (broadly) provides that where “a contract is entered into to have work carried out on land that becomes scheme land… the body corporate is, on the establishment of the scheme, subrogated to the right (if any) of the original owner” as relevant to scheme land that is common property.
  2. [51]
    AP Building argued that, even assuming the design contract existed as pleaded, it was not performance of “work carried out on the land” but instead performance of architectural services. Thus, it was argued, there could be no subrogation.
  3. [52]
    Mr Long resisted the resolution of that question of construction on the interlocutory application, given the factual analysis of the agreement which he submitted would be required.
  4. [53]
    This is not a matter which can be decided at this point. Whether design work or architectural services can be “work carried out on the land” will be mixed question of fact and law and not suitable for decision at an interlocutory stage.

Orders

  1. [54]
    The application is dismissed.
  2. [55]
    I will hear the parties on costs.

Footnotes

[1] IMDM (Townsville) Pty Ltd v City Pacific Limited [2009] QSC 445; see also Tiu-Hsiao v Australian Sharemarket Fund Pty Ltd (unreported, Beach J, Supreme Court of Victoria, 24 June 1994).

[2] Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd [2003] QSC 187.

[3]  [2004] FCA 78 at [6]-[7].

[4]  [2007] QSC 140 where Helman J adopted the approach of McGill DCJ in Cooper v Dexter [2003] QDC 31.

[5] Allianz Australia Insurance Ltd v Haddad [2015] NSWCA 186 at [21].

[6]  [2006] 2 Qd R 454. His Honour considered and applied the High Court’s decision in Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231.

[7]  [2011] 2 Qd R 99 at [27].

Close

Editorial Notes

  • Published Case Name:

    Body Corporate for the Johnson CTS 49098 v Maxcon Constructions Pty Ltd

  • Shortened Case Name:

    Body Corporate for the Johnson CTS 49098 v Maxcon Constructions Pty Ltd

  • MNC:

    [2024] QSC 65

  • Court:

    QSC

  • Judge(s):

    Martin SJA

  • Date:

    20 May 2024

  • White Star Case:

    Yes

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Allianz Australia Insurance Ltd v Haddad [2015] NSWCA 186
2 citations
Jump To
Cite 1 - [2015] NSWCA 186
Cite 2 - [2015] NSWCA 186
Aqwell Pty Ltd v BJC Drilling Services Pty Ltd [2007] QSC 140
2 citations
Jump To
Cite 1 - [2007] QSC 140
Cite 2 - [2007] QSC 140
Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231
1 citation
Jump To
Cite 1 - (1991) 173 CLR 231
Cooper v Dexter [2003] QDC 31
1 citation
Jump To
Cite 1 - [2003] QDC 31
Hutchinson v Equititour Pty Ltd[2011] 2 Qd R 99; [2010] QCA 104
3 citations
Jump To
Cite 1 - [2010] QCA 104
Cite 2 - [2011] 2 Qd R 99
Cite 3 - [2011] 2 Qd R 99
IMDM (Townsville) Pty Ltd v City Pacific Limited [2009] QSC 445
2 citations
Jump To
Cite 1 - [2009] QSC 445
Cite 2 - [2009] QSC 445
Interline Hydrocarbon Inc v Brenzil Pty Ltd[2006] 2 Qd R 454; [2006] QSC 184
3 citations
Jump To
Cite 1 - [2006] QSC 184
Cite 2 - [2006] 2 Qd R 454
Cite 3 - [2006] 2 Qd R 454
Kestrel Coal Pty Ltd v Longwall Roof Supports Ltd [2003] QSC 187
2 citations
Jump To
Cite 1 - [2003] QSC 187
Cite 2 - [2003] QSC 187
Universal Music Australia Pty Ltd v Cooper [2004] FCA 78
2 citations
Jump To
Cite 1 - [2004] FCA 78
Cite 2 - [2004] FCA 78

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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