Archonstruct Pty Ltd v Moffa and Gagliardi - [2014] SADC 5

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
ARCHONSTRUCT PTY LTD v MOFFA AND GAGLIARDI
[2014] SADC 5
Ruling of His Honour Judge Slattery
21 January 2014
LIMITATION OF ACTIONS - GENERAL MATTERS - AMENDMENT OF ORIGINATING PROCESSES AND PLEADINGS OUTSIDE LIMITATION PERIOD - AMENDMENT OF DEFENCE
Action commenced on 18 September 2009 - defendants filed their first Defence in 2010 - application by the defendants to amend their defence to plead for the first time: (1) that the plaintiff’s claim is statute barred and the plaintiff is unable to obtain an extension of time to issue or maintain a claim for breach of statutory warranty under the Building Work Contractors Act 1995 (BWC Act); (2) that the plaintiff’s claim is statute barred under the operation of s73 of the Development Act 1993; (3) that the plaintiff’s claim is statute barred under the Limitations of Actions Act 1986; and (3) an estoppel arises as against the plaintiff – whether the defendant should be granted an extension of time to amend their pleadings under 6R 54 of the District Court Rules.
Action originally listed for trial on 12 August 2013 – further interlocutory issues heard and determined after the action was set for trial – in July 2013 the plaintiff filed and delivered proposed third statement of claim after defendants raised their intention to plead that any claim by the plaintiff was statute barred – defendants delivered proposed amended Defence to the plaintiff’s third statement of claim on 2 August 2013 pleading time limitation issues under the BWC Act – further proposed amended Defence delivered on 7 August 2013 pleading additional time limitation issues in respect of the Limitation of Actions Act, s73 of the Development Act and s32(6) BWC Act – defendants had not previously pleaded any time limitation points – trial of August 2013 did not proceed due to a number of judges recusing themselves from hearing the matter and it was subsequently relisted to 17 March 2014.
Plaintiff (building company) previously involved in District Court action (1870 of 1999) concerning claim by the plaintiff against owners of a home built by the plaintiff (the owner’s action) – plaintiff engaged the defendants as subcontract bricklayers for the home - firm of solicitors appointed by plaintiff to act in the dispute against the owners – retainer of the firm of solicitors terminated in April 2009 – owners counterclaimed against the plaintiff with respect to damages suffered allegedly as a result of faulty building work, including work performed by the current defendants – the plaintiff was ordered to pay damages to the owner with respect to faulty building work – current defendants not joined to the owner’s action on advice from the firm of solicitors.
Plaintiff commenced separate proceedings against firm of solicitors on 12 October 2010 in the Magistrates Court alleging negligence in respect of the action against the owners by not joining the current defendants to the action – no defence filed to date by firm of solicitors – on 17 December 2013 the Court made orders that the action be transferred from the Magistrates Court to the District Court and that the plaintiff could amend their Statement of Claim – the amendments have retrospective effect to the date of the commencement of the Magistrates Court action in 2010.
The question of whether the plaintiff’s action against the firm of solicitors would be heard together with this current action dependent upon whether the defendants’ application to amend their pleadings was successful.
Held: Permission granted to the defendants to amend their defence in the manner proposed apart from the inclusion of paragraph 15.6. Ancillary Orders to be made in relation to the filing of any further pleadings by the plaintiff.
Building Work Contractors Act 1995 s3, s32 ; Development Act s4, s73 ; Limitation of Action Act 1986 sub-s35(a) and (c); District Court Act 1991 s24 ; District Court Rules Rule 6R 54, 6R 100(3) ; Environmental Planning and Assessment Act 1979 s109ZK , referred to.
Angas Law Services Pty Ltd v Carabelas [2005] HCA 23; Channel 7 Adelaide Pty Ltd v Manock [2010] SASCFC 59; Ketteman v Hansel Properties (1987) 1 AC 188 ; Forlyle v Tiver (2007) SASC 464 ; Duke Group v Arthur Young (No 5) (1991) 159 LSJS 362; Woodhead Australia (SA) Pty Ltd v Paspalis Group of Companies (1991) 103 FLR 122, applied.
Wilson v Grimwade [1995] 2 VR 628, discussed.
Brook v Flinders University of South Australia (1988) 47 SASR 119; Aon Risk Services Australia Limited v ANU (2009) 239 CLR 175; McAskell & McAskell v Timelink Pacific Pty Ltd & Ors. [2010] VSCA 79; The Owners Strata Plan 56963 v Australand [2011] NSWSC 710, considered.

ARCHONSTRUCT PTY LTD v MOFFA AND GAGLIARDI
[2014] SADC 5
JUDGE SLATTERY

Application by the defendants to amend their defence to plead for the first time, inter alia, the following defences:-
1. That the plaintiff’s claim is statute barred and the plaintiff is unable to obtain an extension of time to issue or maintain a claim for breach of statutory warranty pursuant to s32 of the Building Work Contractors Act 1995 (BWC Act) by reason of sub-s32(6) of the BWC Act;
2. That the plaintiff’s claim is statute barred by reason of the operation of s73 of the Development Act;
3. That the plaintiff’s claim is statute barred under the Limitations of Actions Act 1936; and
4. An estoppel arises as against the plaintiff thereby preventing the plaintiff from joining the defendants in the action.
It is necessary to recount some of the history of this matter. This history is largely a repetition, of the matters set out in the affidavit of Mr Grant Mitchell sworn 10 January 2014 (FDN46) and filed herein. The affidavit was read by Dr Gray for the plaintiff without objection of the defendants and there was no cross examination on the affidavit.
The plaintiff and Mr and Mrs Karalis were the parties to an action in the District Court of South Australia (District Court action number 1870 of 1999). That action concerned a claim by the plaintiff against Mr and Mrs and Karalis (the owners) to recover the sum of $247,776.00 plus damages allegedly due to them pursuant to a written building contract between the plaintiff and the owners. The plaintiff is a builder who was associated with a firm of architects, Carn and Byrne. Mr Carn is the principal of the architecture firm. Mr Carn is also a director and effectively controls the plaintiff company.
In that action, the owners counterclaimed against the plaintiff with respect to damages suffered allegedly as a result of faulty building work. There were a series of judgments in the District Court over a long period of time and ultimately, the plaintiff was required to pay damages to the owner in respect of the faulty building work.
The firm of solicitors, DonaldsonWalsh, were appointed to act on behalf of the plaintiff in the dispute with the owners and that retainer was terminated in about April 2009. The plaintiff then appointed the firm of solicitors Minter Ellison to act in the proceedings against the owners and in respect of other matters including the performance of DonaldsonWalsh as the former solicitors for the plaintiff.
On 18 September 2009 the plaintiff commenced the current proceedings against the current defendants. On 12 October 2010 the plaintiff commenced separate proceedings in the Magistrates Court against the firm of solicitors DonaldsonWalsh alleging negligence and breaches of the contract of retainer against those solicitors: the affidavit material discloses that despite the proceedings having been filed and delivered on or about 12 October 2010, no defence has been filed to date by the solicitors DonaldsonWalsh.
In the current proceedings, the defendants in two earlier Defences, did not plead any Limitation of Actions point nor any point under the Development Act or the BWC Act.
Over a long period of time commencing on or about 6 November 2012, this action was set to commence for trial on or about 12 August 2013 under various orders made by a Master of this Court. Despite the fact that the matter was set for trial, there were subsequently a number of interlocutory hearings concerning the pleadings of the matter. On that basis, Certificates of Readiness were not signed by all of the parties.
In that same period, there was interlocutory “skirmishing” concerning Notices to Admit filed by the plaintiff and responses given by the defendants. Following negotiations, there was an agreement between the parties for an amended Response to be given by the defendants to the plaintiff’s Notices to Admit. That agreement formed Orders of the Court of 9 May 2013. Following that agreement, the defendants made an application to amend or withdraw the amended Responses and an argument was listed for 4 July 2013. Any Certificate of Readiness associated with those events was qualified.
In or about this time, the plaintiff delivered a proposed third Statement of Claim and subsequent to that, delivered a proposed fourth Statement of Claim. The fourth Statement of Claim was delivered after the defendants had raised with the solicitors for the plaintiff their intention to amend their defence to plead sub-s32(5) and (6) of the BWC Act to the effect that any claim by the plaintiff relying on s32 of that Act was statute barred. It was in response to that notification that the plaintiff delivered a proposed fourth Statement of Claim in which it proposed to plead an extension of time. As matters turned out, the plaintiff did not press the fourth Statement of Claim.
Following the exchanges on those matters, the defendants delivered a proposed amended Defence on 2 August 2013, which sought to plead time issues concerning the BWC Act. A proposed further amended Defence of the defendants was delivered on 7 August 2013. In summary, that defence proposed to plead additional limitation points as follows: the cause of action in contract accrued on no later than 13 September 1999 and the time limit under the Limitation of Actions Act in respect of contract expired on 13 September 2005; and the cause of action in tort accrued at the latest at the commencement of the action 1870 of 1999 in this Court and therefore the time period under the Limitation of Actions Act in respect of that matter expired in late 2005. This further defence also pleaded that any claim for economic loss or rectification costs accrued no later than 13 September 1999 and that the proceedings were not issued within the time prescribed by sub-s35(a) and (c) of the Limitation of Action Act. These matters had not previously been pleaded.
The trial of 12 August 2013 did not proceed. Shortly prior to the trial, it became clear that a number of Judges of this Court were unable to hear the matter and recused themselves from the hearing. The matter was listed before acting Chief Judge Lovell. His Honour listed the matter for trial commencing 17 March 2014. I was appointed the trial Judge at that time.
The plaintiff objects to the defendants being given leave to amend their defence in the terms proposed.
I have already referred to the associated proceedings between the plaintiff and the firm of solicitors DonaldsonWalsh, which commenced in the Magistrates Court in 2010. In that proceeding, the plaintiff has sued the firm of solicitors concerning the conduct of that firm in and about the prosecution of the original District Court action on behalf of the plaintiff and the defence to the counterclaim made against the plaintiff by the owners.
The background to that counterclaim is set out in an affidavit of Nadia Karina Blake sworn 13 December 2013 (FDN43). That affidavit was read in support of an application by the plaintiff, heard by me on 17 December 2013, for the removal to this Court of the existing Magistrate Court proceedings between the plaintiff and the firm of solicitors DonaldsonWalsh and for the filing of a fresh Statement of Claim in the form of exhibit NKB-1 to the affidavit of Ms Blake. I made both of those orders by consent.
Ms Blake informed the Court in her affidavit (which was read without objection and without cross examination) that the defendants in these proceedings were retained by the plaintiff as bricklayers to perform below floor and also above floor brickwork in a home to be constructed by the plaintiff on behalf of the owners. In this work, the defendants were allegedly responsible for mixing mortar and adding a waterproofing agent in accordance with architectural specifications.
An issue before the Court in the owner’s proceedings (1870 of 1999) was whether the mortar needed to be replaced because it was weak and because no water proofing agent had been added. There was expert opinion to the effect that this was so and the Court proceeded to make a finding that the mortar was defective for those reasons. The plaintiff was then required to pay damages for the cost of rectification of the below floor brickwork in the amount of $120,237.10, diminution in the value of the premises in the amount of $20,000 and disturbance and inconvenience in the amount of $8,000.
In her affidavit, Ms Blake sets out the allegations of negligence against the firm of solicitors DonaldsonWalsh. In short, the firm of solicitors advised the plaintiff not to join the subcontractors (the defendants in these proceedings) but to enter into some form of agreement with each of the subcontractors that the plaintiff would not join them in the proceedings but rather would defend the counterclaim on their behalf and would look to those subcontractors to pay whatever damages the Court may order.
The plaintiff accepted the advice of the firm of solicitors DonaldsonWalsh, defended the counterclaim and the result is as I have already described. The defendants have refused to pay to the plaintiff any amount in respect of the damages payable to the owners by the plaintiff in the District Court proceedings (1870 of 1999); denied the existence of an agreement; and deny any liability to the plaintiff. Following that refusal and denial, the plaintiff issued the Magistrates Court proceedings against the firm of solicitors and the District Court proceedings against the defendants.
The application of the plaintiff heard by me on 17 December 2013 sought a transfer of the proceedings from the Magistrates Court to the District Court pursuant to s24 District Court Act 1991 and for leave to file amended particulars of claim in the form of exhibit NKB-1 to the affidavit of Ms Blake. Secondly, the plaintiff sought an order that both actions be heard together. The question of the actions being heard together was not dealt with in the interlocutory application before me on 17 December 2013.
In the amended proceedings transferred from the Magistrates Court to this Court on the application of the plaintiff, the pleaded loss and damage is set out in paragraphs [37]-[49] of that pleading as follows:-
“37. As a result of Donaldson Walsh’s breach of duty of care, and/or breach of contract and/or conflict of interest, Archonstruct has suffered loss and damage.
38. The issue of the defective sub-floor brickwork was a major issue in the Karalis proceedings such that had Moffa and Gagliardi been joined as third parties to the counterclaim:-
38.1 The issue of who was liable for the defective sub-floor brickwork would have been finally determined;
38.2 Archonstruct would have saved the cost of defending the sub-floor brickwork allegations in the counterclaim in the Karalis proceedings, or in the alternative a significant proportion of the cost of defending that issue in the counterclaim;
38.3 Archonstruct would have saved the cost of defending the claimed quantum of the counterclaim relating to the defective sub-floor brickwork in the Karalis proceedings, or in the alternative a significant proportion of the cost of defending the claimed quantum of that issue in the counterclaim in the Karalis proceedings;
38.4 Archonstruct would not have incurred additional costs arising out of the labour of Archonstruct’s employees, Mr Carn and Mr Darian Carn, in the Karalis proceedings which were costs of those proceedings relating to the defective sub-floor brickwork in the amount of $4,948.00 as noted in paragraph [112] of the judgment of his Honour Judge Kitchen [2007] SADC 34.
39. As a result of the matters set out in paragraphs 28 to 36 above:
39.1 Archonstruct has been required to commence the District Court proceedings against Moffa and Gagliardi claiming indemnity or contribution from them for the amounts which Archonstruct was found liable to Mr and Mrs Karalis arising out of the defective sub-floor brickwork;
39.2 Archonstruct’s loss with respect to the current District Court action, cannot be quantified at this time because the proceedings against Moffa and Gagliardi have not been finalised.
39.3 Archonstruct has incurred a liability to pay costs to Mr and Mrs Karalis in the Karalis proceedings by reason of Mr and Mrs Karalis succeeding in their claim for defective sub-floor brickwork;
39.4 Archonstruct has incurred costs in defending the counterclaim in the Karalis proceedings, which counterclaim included the sub-floor brickwork claim both as to quantum and liability.
40. By reason of the failure to advise Archonstruct that Donaldson Walsh was in a position of conflict Archonstruct suffered the loss as particularised in paragraph 39 above.
41. As a result of the matters set out in paragraph 30.9 above, Archonstruct paid costs to the defendant in respect of the drawing, filing, service and subsequent withdrawal of the Summonses to Witness in the sum of $1,500 plus GST;
42. As a result of the matters set out in paragraph 30.10 above, Archonstruct incurred additional and irrecoverable legal costs in meeting the arguments raised by Mr and Mrs Karalis raised by them in 2010 about further “non-structural defects”. Archonstruct suffered loss of $2,000 plus GST by way of those additional legal costs;
43. As a result of the matters set out in paragraph 30.11 above, Archonstruct incurred additional and irrecoverable legal costs (and the obligation to pay legal costs to Mr and Mrs Karalis) in seeking to mitigate its loss by applying to amend the Statement of Claim in 2010 in the sum of approximately $10,000.
44. As a result of the matters set out in paragraphs 30.11 and 30.12 above, Archonstruct lost the opportunity to defend the Wunda Joinery claim which resulted in Archonstruct paying $7,000 more to Wunda Joinery than its true entitlement.
45. As a result of the matters pleaded in paragraph 30.14 above, Archonstruct failed in its claim for loss of opportunity to earn a profit in the sum of $2,760 as found by his Honour Judge Kitchen in [2007] SADC 34.
46. As a result of the matters set out in paragraph 30.13 above:-
46.1 if a statement had been taken from Ms Bay, Archonstruct would have called Ms Bay as a witness and the Court is likely to have found that the contract was completed before it was signed by Mr Karalis;
46.2 the absence of the evidence of Ms Bay meant that the Full Court finding at [123] that there was an “absence of evidence clearly showing that Mr and Mrs Karalis had agreed to that high rate of default interest even though they did not have the protection of independent certification. Clause 16(b) cannot be regarded as a term of the agreement with Archonstruct. There was no evidence.” ([2008] SASC 368, [123]) was unlikely to have been found on the balance of probabilities; and
46.3 Archonstruct lost the right to recover interest from Mr and Mrs Karalis at the rate specified in the contract of 1.5% per month.
47. Donaldson Walsh failed to challenge the equitable set off either in the Karalis proceedings or on appeal as referred to by his Honour Judge Nicholson (as he then was) on the question of interest following which his Honour delivered judgment on 1 February 2012 [2012] SADC 5 (the “fifth judgment”) at [70]-[72] as a consequence, and as a result of the matters pleaded in paragraphs 30.13 to 30.15 above:
47.1 Archonstruct thereby lost 12% per annum from 1 July 2000 to 5 June 2008 on Archonstruct’s contractual entitlements of $242,828. Archonstruct’s loss in this respect is $230,686.60.
48. By reason of the matters pleaded in paragraph 30 above, Archonstruct incurred additional and irrecoverable legal costs by way of payment to Minter Ellison to “read in” to the matter and to take instructions from Archonstruct, resulting in Archonstruct suffering loss in the amount of $4,000 plus GST.
49. If Archonstruct is estopped or otherwise precluded in the current District Court proceedings, (including by reason of the matters pleaded in paragraph 31 and each subparagraph thereof above), from recovering the amount it paid to Mr and Mrs Karalis for defective sub-floor brickwork including amounts for loss of value and inconvenience, in the sum of $148,237.10 then this is a loss and damage that Archonstruct has suffered as a result of Donaldson Walsh’s breach of duty of care, and/or breach of contract and/or conflict of interest.”

The application (FDN44) brought by the plaintiff sought the following interlocutory orders:-
1.   That the proceedings issued by the plaintiff in the Magistrates Court of South Australia action 4817 of 2010 against DonaldsonWalsh (the Magistrates Court proceedings) be transferred to the District Court for the reasons set out in the affidavit of Nadia Karina Blake deposed to on 13 December 2013 and filed contemporaneously herewith.
2.   That the Magistrates Court proceedings be joined with these proceedings and both proceedings be run concurrently.
3.   That this application be made specially returnable to the directions hearing before his Honour Judge Slattery on 20 December 2013 at 10:00am.
4.   …
This application was first heard by me on 17 December 2013 and at this time the defendants made an oral application to amend their Defence (to become the proposed Defence to the plaintiff’s third Statement of Claim (despite the fact that the parties have delivered a proposed fourth Statement of Claim for the defendants’ consideration)) in the form as later came to be disclosed in exhibit DAS-27 to the affidavit of David Stokes sworn 8 January 2014 (which was described as the defendants’ Aon affidavit).
The interlocutory hearing on 17 December 2013 was attended by Mr Iles, solicitor for the firm of solicitors DonaldsonWalsh. At that time, Orders were made by consent of all parties in the following terms:-
1.   That the Magistrates Court action 4817/2010 be transferred to the District Court;
2.   That upon transfer to the District Court leave to the plaintiff to amend the Statement of Claim in that action in the terms of exhibit NKB-1 to the affidavit of Nadia Blake sworn 13/12/2013 and filed in District Court proceedings 1690/2009, FDN3;
3.   On the defendants’ oral application in District Court action 1690/2009:
a.   The defendants to file any affidavit and to deliver any proposed amended defence on or before close of business 07/01/2014;
b.   Plaintiff to file and serve any affidavit in response on or before close of business 13/01/2014;
c.   Defendants to file and serve written submissions on or before close of business 13/01/2014;
d.   Plaintiff to file and serve any written submissions on or before close of business 15/01/2014;
e.   Defendants’ oral application adjourned for argument to Friday 17/01/2014 at 8.30am – 90 mins set aside;
f.   Paragraph 2 of plaintiff’s interlocutory application adjourned For Mention Only to 17/01/2004 at 8:30am;
g.   Liberty to apply on short notice;
h.   Costs reserved.
As is apparent, Mr Iles acting for the firm of solicitors was not involved in the Orders concerning the issues arising as between plaintiff and the defendants on the amended pleadings as between them. Mr Iles’ interest was in respect of the fate of the Magistrates Court proceedings against the firm of solicitors and their amendment.
The amended Statement of Claim by the plaintiff against the firm of solicitors raises a number of allegations and causes of action which have been summarised above. At this juncture it is necessary to state that the Statement of Claim, which is now extant, makes a series of allegations against the firm of solicitors that they wholly failed to comply with the express and implied terms of their retainer with the plaintiff and that they failed to exercise reasonable care and skill in the provision of legal services pursuant to the retainer. The Statement of Claim also makes comprehensive and detailed allegations against the firm of solicitors DonaldsonWalsh concerning the performance of their retainer with the plaintiff in the first proceedings against the owners (1870 of 1999). I will deal with those matters later.
Rule 54 of the District Court Rules reads as follows:-
54—Amendment
(1)     A party may amend a document filed by the party.
(2)     An amendment is made by filing in the Court the amended document on which the amendments are to be shown as follows—
(a)Material deleted from the previous version of the document is to be shown in erased type (that is, type through which a single line is drawn);
(b)Material not previously included is to be distinguished from material previously appearing in the document by underlining or by shaded type.
(3)     A party who amends a document must serve copies of the amended document on all other parties as soon as practicable after the amendment is made.
(4)     An amendment may be made—
(a)     With the Court's permission; or
(b)     With the consent of all other parties to the action; or
(c)     As authorised by subrule (5).
(5)     A party is authorised to amend without the consent of the other parties or the Court's permission if—
(a)    The amendment is made within the period allowed for disclosure of documents or a further 14 days from the end of that period; and
(b)     The party has not exercised the right to amend under this subrule on an earlier occasion.
(6)     However, an amendment cannot be made without the Court's permission or the consent of the other parties if the effect of the amendment is—
(a)     To withdraw an admission; or
(b)     To add or substitute a cause of action that is statute barred; or
(c)To introduce a defendant against whom a fresh action would be statute barred.
(7)     The Court's power to grant permission for amendment under subrule (6) is subject to the following qualifications—
(a)the Court may only grant permission for the addition or substitution of a cause of action that is statute barred if the new cause of action arises out of substantially the same facts as the original cause of action;
(b)The Court may only grant permission for the introduction of a defendant against whom a fresh action would be statute barred if satisfied that the plaintiff's failure to join the defendant arose from a genuine mistake.
(8)     The following documents cannot be amended under this rule—
(a)     An affidavit;
(b)     A judgment or order.
My assumption is that the original Statement of Claim filed in the Magistrates Court proceedings is that pleading which is disclosed in paragraphs 1, 2 and 3 in those proceeding and deleted paragraphs 4, 5, 6, 7, 8, 9 and 10 of those proceedings. Paragraphs 8, 9 and 10 of that deleted pleading reads as follows:-
“8. The defendant:
8.1 was negligent in the provision of the legal services;
8.2 breached the contractual terms between the plaintiff and the defendant relating to the provision of the legal services; and/or
8.3 rendered excessive and unreasonable charges in relation to the legal services.
9. In particular, the defendant failed to:
9.1 provide timely and appropriate advice to the plaintiff in the conduct of the plaintiff’s claim against Mr and Mrs Karalis (and their counterclaim against the plaintiff) in District Court Action No 1870 of 1999 and in Supreme Court Action No 1474 of 2007, including but not limited to:
(i) advising the plaintiff to consent to judgment against it, pursuant to orders made by his Honour Judge Bight in the District Court of South Australia in the said action on 17 November 2004 when it was not in the plaintiff’s best interests to do so;
(ii) failing to include in the Statement of Claim for pleas for interest and loss of use of monies;
(iii) failing to advise the plaintiff to appeal the decision of his Honour Judge Kitchen in Archonstruct Pty Ltd v Karalis & Ors [2007] SADC 34 with respect to his Honour’s finding that the plaintiff was not entitled to claim the time the principal, Mr Raymond John Carn, spent consulting, assembling materials for and giving instructions to the plaintiff’s legal advisors in relation to the said action;
(iv) failing to properly and clearly record the terms of settlement of the “non-structural defects” claimed by Mr and Mrs Karalis against the plaintiff; and
(v) failing to retain an expert valuer to provide an opinion in relation to the diminution of value of the Karalis’ home.
10. As a result of the defendant’s negligence and/or breach of duty and/or breach of contract the plaintiff suffered loss and damage.”
No submission has been put to me that for 6R 54(6)(b), there has been an addition or substitution of a cause of action that is statute barred or that 6R 54(7)(b) has any application in this matter. I will assume that the status quo ante remains in respect of the causes of action pleaded in the Magistrates Court and the amended Statement of Claim in respect of that proceeding as it is transferred to this Court.[1] Under 6R 54, the amendment takes effect from the date of the original pleading and in respect of a completely new Statement of Claim[2] the same position pertains.
[1] Compare Brook v Flinders University of South Australia (1988) 47 SASR 119.
[2] Angas Law Services Pty Ltd v Carabelas [2005] HCA 23.
Paragraph 2 of the plaintiff’s application (FDN44) seeking order that the Magistrates Court proceedings be joined with these proceedings and both proceedings be run concurrently was not dealt with me on 17 December 2013 or on 17 January 2014 when a further hearing of this matter occurred.
Dr Gray who appeared for the plaintiff on 17 January 2014 informed me that in the event that I dismiss the defendants’ application to amend its defence, the plaintiff would not pursue that application and there was to be in effect, a continuing disjoinder of those actions. Dr Gray submitted that, conversely, if I was against the plaintiff and allowed the defendants’ application, the plaintiff would press the application. In those alternative circumstances, all of the parties agreed that the trial of this matter could not proceed to a hearing on 17 March 2014. That date had been specially set by acting Chief Judge Lovell on 7 August 2013 after it became clear that the first hearing date set for this matter (12 August 2013) could not proceed because so many Judges of this Court recused themselves. Thus, the loss of the first hearing date was not the fault of any part and from the plaintiff’s point of view, the fate of the timing of the hearing of the proceedings against the firm of solicitors DonaldsonWalsh depended upon the fate of this application.
Both parties filed detailed written submissions and addressed the Court based upon them: the essential feature of both parties’ submissions was the question of the exercise of the discretion under 6R 54 of the District Court Rules and a proper approach to that process bearing in mind the decision of the High Court in Aon Risk Services Australia Limited v ANU (2009) 239 CLR 175 (AON) as explained by the Full Court of the Supreme Court of South Australia in Channel 7 Adelaide Pty Ltd v Manock [2010] SASCFC 59, an appeal by leave from the decision given by Sulan J on appeal from an interlocutory decision of a District Court Judge.
In Manock, the majority judgment was given by Bleby J with whom White J agreed. Bleby J largely adopted the characterisation of the factual position as found by Sulan J. The dissentient Justice, Gray J, found that particular facts and circumstances referred to by Sulan J were to be viewed very differently and, on that and other bases came to the opposite conclusion to the majority and would have allowed the appeal from the decision of Sulan J.
One matter of significance here, amongst many, and as accepted by both parties, is that the exercise upon which I embark still remains a process of the exercise of judicial discretion and the evaluation of the factors that inform that exercise of discretion.
The argument between the parties involves two main features. The first is that the plaintiff claims the amendment would cause irremediable prejudice to its position. The second is that several of the limitation pleas as proposed are untenable and the plea of estoppels/merger is also untenable. On that basis, the plaintiff says that the amendment should not be allowed.
The contest on the question of prejudice was fought mainly in the background of the indicia discussed by Bleby J in Manock. Before discussing these matters, I refer again to the amended proceedings between the plaintiff and the firm of solicitors DonaldsonWalsh brought up from the Magistrates Court. The amendments take effect from the date of the original proceedings in 2010. The pleadings allege ([30]) that DonaldsonWalsh breached its duty of care and its contract with the plaintiff in that it:-
1.   Failed to advise the plaintiff to join the subcontractors as third parties to the owners’ proceedings;
2.    Failed to properly advise the plaintiff that by virtue of the fact that the subcontractors (the defendants in these proceedings) were not joined, there was a greater likelihood of multiple proceedings, further costs, the risk of inconsistent findings, the deprivation of opportunities to achieve a negotiated settlement, the deprivation of opportunities to ensure that all parties were bound to relevant judicial findings and other consequential matters;
3.   Advised the plaintiff to consent to judgment against it as recorded by Judge Bright in the owners’ proceedings on 17 November 2004 when that ought not have been done in the absence of the joinder of the subcontractors;
4.   Allowed the same proceedings as between the plaintiff and the owners to recommence without advising or giving consideration or acting to join the subcontractors to the proceedings including a failure to advise in relation to quantum;
5.   Failed to properly record and bind those parties to that result, despite the fact that the firm of solicitors told the plaintiff that they had bound the subcontractors into the result of the proceedings as between the owners and the plaintiff; and
6.   Failed to properly act in and about every aspect of the proceedings between the owners and the plaintiff and in particular failed to inform the plaintiff, that having previously failed to properly advise the plaintiff, the firm of solicitors was in a conflict of interest.
I have already set out the paragraphs in which the plaintiff claims against the firm of solicitors for its loss and damage as pleaded. As is usually the case, the plaintiff alleges the position that would have pertained had proper advice been given and that the plaintiff would have had the opportunity to make proper decisions in relation to the prosecution of the action against the owners and the joinder of the subcontractors including the defendants in these proceedings. A claim for damages is made in the amount $404,137.70, being the arithmetical addition of all of the heads of damages earlier pleaded.
The purpose of this summary is to disclose that, in these amended pleadings, the plaintiff has pleaded its claim against the firm of solicitors DonaldsonWalsh broadly and with effect from 2010. However, I am satisfied that this pleading is a more particular pleading of those pleadings which are set out in deleted paragraphs 4, 5, 6, 7, 8, 9 and 10 of the original Magistrates Court proceedings as I have assumed them to be and which I have earlier set out in these reasons.
Turning then to the discretionary considerations. The evidence filed on behalf of the defendants by their solicitor Mr Starke, discloses that the delay is explained by the failure of the defendants’ solicitor. The defendants contend that, as in other discretionary considerations, they should not suffer for the failure of their solicitors. Those failures may fairly be described as broad because, from as early as 2010, a Master of this Court raised a query about time limits that may affect this action. This raising of the issue of time period was followed by a query on the same topic from the plaintiff’s solicitors and some indirect advice from counsel then retained, Mr Jenner, on the same topic as given to Mr Starke.
The solicitor Mr Starke then appears to have forgotten the matter until 2012-2013 when the issue was re-agitated. It is important to note that this matter arose in the context of the plaintiff filing an amended Statement of Claim (the third amended Statement of Claim). As I have already recounted, a proposed fourth amended Statement of Claim was delivered in draft but the plaintiff proceeds on its third Statement of Claim in the action.
Dr Gray’s criticism of the defendants’ position was that this was an explanation but it was not a satisfactory one.[3] This submission of Dr Gray introduces a further level of complexity into the debate in an attempt to distinguish between an explanation and a satisfactory explanation. The question may be postulated: what considerations inform the determination of the difference? In my view, the better approach is to identify what information is proffered by the defendants on the question of “satisfactory explanation” and then to weigh those matters in the balance. 6R 100(3) of the District Court Rules makes it clear that it was always for the defendants to plead the time limitation defences. There is evidence of “time” issues being raised early in the life of the action, but there is also a history disclosed of the need to change counsel due to the ill health of prior counsel[4] and the excitement of these issues in and about the amendment of pleadings after change of counsel.[5]
[3] Viz Channel 7 v Manock.
[4] Mr Greg Holland the counsel appointed after Mr Jenner suffered a stroke in the middle of 2013.
[5] Mr Robertson SC was briefed in July 2013 and it was after that time that the question of issues of time limits were raised.
The question of public resources is difficult to weigh in the balance. It is no party’s fault that the first trial date was abandoned. The most efficient use of public resources is to hear and determine all matters (involving the plaintiff, the defendants and the firm of solicitors DonaldsonWalsh) in one proceeding in a way that all parties are bound into one result and the evidence in one matter is to become evidence in all other matters. That will not occur if the plaintiff’s action against the firm of solicitors is not heard concurrently with this action. Similarly, it is something of a strange result that a refusal of the defendants’ application may well excite a further action (and therefore use of public resources) against their current solicitors.
I am cognisant of what fell from Lord Griffiths in Ketteman v Hansel Properties[6] as follows:-
“Equally, in my view, if a defence of limitation is not pleaded because the defendant’s lawyers have overlooked the defence, the defendant should ordinarily expect to bear the consequences of that carelessness and look to his lawyers for compensation if he is so minded.”
[6] (1987) 1 AC 188 at 219.
At the same page of the report of the speech of Lord Griffiths, his Lordship identified that a defendant would not invariably wish to rely on the defence of limitation and that a defendant may well prefer to contest an issue on the merits. His Lordship said[7] as follows:-
“If therefore, no plea of limitation is raised in the defence the plaintiff is entitled to assume that the defendant does not wish to rely upon a time bar but prefers the Court to adjudicate on the issues raised in the dispute between the parties. If both parties on this assumption prepare their cases to contest the factual and legal issues arising in the dispute and they are litigated to the point of judgment, the issue will by this time have been fully investigated and a plea of limitation no longer serves its purpose as a procedural bar.” (My emphasis).
[7] Ibid.
I have already indicated that the fourth Statement of Claim proffered by the plaintiff included claims for extension of time (in response to the time issue that were recently raised by the defendants). There must be some prospect that this approach will be reiterated by the plaintiff if it is unsuccessful in this application. So much was conceded by Dr Gray in her submissions made to me in this Court. This will require further pleadings and interlocutory processes. Again, this assumption appears common between the parties.
Both parties agree that if the plaintiff’s objections fail and it consequently proceeds with paragraph 2 of FDN33 (seeking a concurrent hearing of this action and the solicitors’ action), then this action must be adjourned. If the plaintiff’s objection succeeds the defendants will look to their current solicitors to recover any loss or damage sustained as a result. If that be the case there will need to be a change of solicitors for the defendants in this action. The defendants may also contemplate attempting to join their current solicitors to this action in that eventuality. In my opinion, there is no certainty that the defendants will be in a position to proceed if they seek to join their current solicitors to these proceedings or at least take steps to bind them into the result of these proceedings. The greater likelihood is that the defendants will terminate that retainer with their current solicitors in order to preserve any legal rights that they may claim against them.

If the application succeeds, the plaintiff must react to the “time” pleadings of the defendants. However, it was the plaintiff who did not join the defendants in the first proceedings (number 1870 of 1999) (the owners’ proceedings).
It is also curious that, at no time after the commencement of the owners’ proceedings, or after the delivery of the experts reports in those proceedings such as those of Mr Goldfinch, or after the filing of the defence and counterclaim of the owners’, did the plaintiff take any action against the defendants until the within action. The defendants, whose command of English is poor, were not called as witnesses in the owners’ proceedings and knew little of it. That disadvantage is only exacerbated by the effluxion of time since 1999.
In order to understand Dr Gray’s primary argument, it is necessary to understand what she describes as the irremediable prejudice the plaintiff contends will be suffered in the event that the defendants’ application is granted.
On the assumption that the causes of action against the plaintiff by the owners accrued in 1999 and that a number of different time limits commenced from that time[8] then the plaintiff submits once the time pleas are made, there is a real risk to the plaintiff that it would be said to be out of time now more than 12 years after the relevant act of negligence than, compared to the position that would have pertained in 2011. Under this argument, a distinction is said to be made between the failure to institute the separate proceedings earlier when compared to the failure to join in the initial proceedings.
[8] Five years under s32 of the BWC Act; six years under s35 of the Limitation of Actions Act; ten years under s73 of the Development Act.
The initial proceedings were action number 1870 of 1999 in this Court. Those proceedings were not resolved finally until the judgment of Judge Nicholson in this Court in 2012. On 17 November 2004, a consent judgment on one aspect of the matter[9] was entered by Judge Bright in favour of the owners against the plaintiff. Following the retirement of Judge Bright from this Court, the balance of the parties claims were tried before Judge Kitchen of this Court firstly between 7 August 2006 and 3 October 2006 and a first judgment was entered on 30 March 2007 on that claim.
[9] On that day, Judge Bright made orders that the owners were to have judgment against the plaintiff for the reasonable costs of inserting a viscourse damp proof membrane at the appropriate level into all walls and dwarf walls supporting the floor slab.
Further, a trial was conducted between 7 June and 9 July 2007 and Judge Kitchen delivered a further judgment (the second judgment) on 24 October 2007. A third judgment of Judge Barrett on an ancillary topic of an injunction and a stay of execution of Judge Kitchen’s order of 24 October 2007 was given on 17 November 2007.
The trial continued before Judge Kitchen between 24 October 2007 and 5 March 2008 and the fourth judgment was delivered by his Honour Judge Kitchen on 6 June 2008. There was an appeal to the Full Court of the Supreme Court against that judgment and that appeal was successful only in part and there was then a settlement of liability issues as between the owners and the plaintiffs.
A further judgment was delivered on 5 March 2012 by Judge Nicholson (the sixth judgment) on the question of interest. This was followed by his Honour’s judgment on the question of costs on 3 April 2012. The arithmetic calculation of the detriment allegedly suffered by the plaintiff and sounding in damages on the causes of action pleaded totalled $404,137.70 and that is the claim of the plaintiff against the firm of solicitors DonaldsonWalsh.
The first hearing of the matter and the first agreement between the plaintiff and the owners leading to the judgment by consent before Judge Bright took place in the period between 8 and 17 November 2004. At that date, the plaintiff accepted at the very least that there was a need to insert a viscourse damp proof membrane at the appropriate level in the walls supporting the slab of the owners’ home, those walls having been constructed by the defendants in this action. That agreed position related to the work done by the defendants and its remediation. That date of 19 November 2004 is not to be seen as determining a cut-off date for the commencement of an action. Rather, it informs the argument of Dr Gray concerning the question of the risk facing the plaintiffs.
However, that position is also to be understood in light of the fact that the plaintiff’s proceedings against the firm of solicitors DonaldsonWalsh were commenced in 2010 and no application was then made for an extension of time for the bringing of those proceedings. And, more importantly, the retainer of DonaldsonWalsh was terminated in 2009 at which time Minter Ellison replaced DonaldsonWalsh as solicitors for the plaintiff and in the following year the plaintiff issued proceedings against DonaldsonWalsh for breach of duty and breach of contract of retainer.
Thus it may be seen that in the absence of a plea for an extension of time by the plaintiff to issue these proceedings, the plaintiff may have been content to rely upon a breach(es) that occurred in the period 6 years prior to that time.[10] The risk referred to by Dr Gray is one that must have not existed as at 2009 at the time of the termination of the solicitor’s retainer and at 2010, the time at which the proceedings by the plaintiff against the solicitors were commenced. This must have been so for several reasons.
[10] Section 35 Limitation of Actions Act.
The first is that as a matter of ordinary inference, the act in breach of duty or the relevant breach of contract by the firm of solicitors DonaldsonWalsh relied upon by the plaintiff, occurred in the 6 year period prior to the commencement of the plaintiff’s action against that firm of solicitors in 2010. No Defence to that claim has been filed and no doubt, if there is a time point to be taken, it will be taken by those representing that firm of solicitors. The decision of the firm of solicitors DonaldsonWalsh to take a time point is a question for them and it does not determine the issue as between the plaintiff and these defendants.
The second is that, as the plaintiff accepts, the firm of solicitors DonaldsonWalsh acted for the plaintiff until 2009. The retainer of the firm of solicitors was from prior to 1999 until 2009. It is alleged by the defendants here that causes of action against the defendants in favour of the plaintiff allegedly accrued in 1999. The plaintiff now argues that the time period of 12 years (6 years for the plaintiff to sue the defendants and 6 years for the plaintiff to sue the firm of solicitors DonaldsonWalsh) for the failure to sue the defendants (is to be measured from 1999 and ending 12 years later in 2011) has lapsed. On the plaintiff’s argument, if the time point was raised in 2011, then this issue, in turn could have been pleaded against the solicitors because the 12 year time limit would not have expired and all matters could have been ventilated in those proceedings.
Dr Gray submitted that if the defendants are now permitted to plead the time limits, then despite the fact that the firm of solicitors DonaldsonWalsh acted for the plaintiff until 2009 and took no action against the defendants, the plaintiffs will suffer the risk of the firm of solicitors now raising a time defence against it in the separate proceedings. However, for the firm of solicitors DonaldsonWalsh now to rely upon a time point as between it and the plaintiff, would be akin to those solicitors calling in aid their own breach. In my view, the essential feature here is the fact that the amendments to the Magistrates Court proceedings have retrospective effect back to 2010 under the operation of 6R 54 of the District Court Rules as I have already described.
If Dr Gray is correct in her primary submission then there is no “risk” as suggested by her because the pleading of the alleged breaches by DonaldsonWalsh have effect as from the date of the commencement of these proceedings in 2010. Part of those pleas concern the failure of DonaldsonWalsh to advise upon and attend to the joinder of the defendants herein to the 1999 action by the plaintiff against the owners. In order to succeed in that claim it is necessary for the plaintiff to prove loss measured by a comparison of its position now and the position it would have been in if the joinder had occurred. This in turn will require the plaintiff to prove the liability of the defendants and what contribution the defendants herein would have been required to pay and would have paid if they had been joined to the proceedings and orders made.
However, this case could never rise any higher than one commenced in 2010. If the action should have been commenced earlier, then it should have been commenced by the plaintiff’s current solicitors and no submissions have been made on that issue. Alternatively, it may be postulated that the action should have been commenced earlier but at that time DonaldsonWalsh were acting and those solicitors continued to act despite knowing of the defendants’ refusal to contribute to the arrangement that they had organised on behalf of the plaintiff, but which failed. At that time, DonaldsonWalsh would in all probability have been aware of two very important matters. First: that the defendants were not bound to an Order of the Court; second: that whatever arrangement was made with the defendants on behalf of the plaintiff, the position of DonaldsonWalsh was that the defendants reneged on that agreement. That was the position right up to and after the time that DonaldsonWalsh terminated their retainer with the plaintiff.
DonaldsonWalsh continued to act on behalf of the plaintiff until 2009 in the background of those matters. Both counsel argue that the plaintiff’s damages claim against the defendants is subsumed within and is not separate from the plaintiff’s claim against DonaldsonWalsh. I have also already set out the activity before the Court as between the plaintiff and the owners up to and including the two judgments of the Court in 2012: the history of the matter is spread over a long period of time.
I agree with the summary of the position given by Dr Gray that this argument is only a secondary one because the position can only be put by the plaintiff no higher than that there may be a risk because the plaintiff’s proceedings were commenced against the firm of solicitors in 2010. The Statement of Claim in that action has now been amended with retrospective effect to 2010 to plead every aspect of breach of duty and breach of contract of retainer that may be pleaded against the firm of solicitors DonaldsonWalsh.
I am therefore unable to accept the plaintiff’s primary submission that based upon the decision of the Full Court of the Supreme Court in Victoria in Wilson v Grimwade [1995] 2 VR 628, the plaintiff in this matter will face irremediable prejudice in the event that, as in that case, leave was given to a party to plead a time defence well into the life of the action. In that case the defendants were a firm of solicitors. They were sued by the plaintiff by a writ dated 3 September 1990 in respect of breaches allegedly occurring in and after February 1981. After those alleged breaches occurred, the plaintiff retained a second firm of solicitors in April 1985 but this retainer was terminated in 1988. The writ was filed on 3 September 1990 in respect of breaches alleged to have occurred in 1981. The question of the effluxion of time was therefore an issue and the plaintiff put the second solicitors on notice soon after the issue of the first writ that if a defence of limitation of actions was taken by the defendants in respect of the 1981 breaches, it may be necessary to join the second solicitors as parties to that proceeding.
As things turned out, the defendants’ Defence when filed did not plead the Limitation of Actions Act and therefore no proceedings were issued against the second solicitors.
An application was brought by the defendants to amend their defence in March 1994. The defendants wanted to plead limitation defences and a Master granted leave. A Judge then allowed the appeal from the Master’s order because the amendment would irremediably prejudice the plaintiff because he had lost the chance to sue the second set of solicitors (whose retainer was terminated in 1988) because the plaintiff had lost the chance to sue those solicitors within the period applicable to any claim against them.
In my view, there are some peculiarities here. The first defendant knew nothing of the communications between the plaintiff and the second solicitors. The cause of action against the second solicitors arose in respect of a separate spes arising out of the same or similar circumstances. Nothing was either said or done by the first defendant that would lead the plaintiff to believe that the first defendant would not plead a time point. The plaintiff made no communication with the first defendant about that topic. These issues were not canvassed before the Court and emphasis was placed upon the communication between the plaintiff and the second solicitors.
This was an appeal by leave from the decision of the appeal Judge at first instance and the appeal Court refused the appeal. The Court accepted that if the appellants were entitled to amend the defence to plead the statute of limitations, there would be irremediable prejudice (I will refer to this as catastrophic prejudice) to the respondent. If the respondent had known that the time issues were to be pleaded, then the respondent would have sued the second solicitors. However, that right to sue those solicitors had become statute barred. The Appeal Judge (Fullagar J) concluded that “…amendment of the defence to allow the appellants to plead the statute as they wish would probably irremediably prejudice the respondent and ought therefore to be refused…”[11]
[11] At 632.
The Court of Appeal then discussed the relevant principles and summarised the position as follows:-[12]
“His Honour was required to consider whether it was a fair thing that the appellants should be permitted to change their front by pleading the statute 3 and a quarter years later upon an application made on 9 March 1994. There was no evidence at all to indicate a reason or to allow a reason to be properly inferred why the appellants waited until 9 March 1994 to apply for leave to amend their defence.”
[12] Page 633 at line 18.
After discussing the speech of Lord Griffith in Ketteman v Hansel Properties Limited[13] Tadgell J identified that there was no evidence suggesting why the appellants did not originally plead the statute whereas, there was clear evidence before the Court that the respondent’s legal advisors were unwilling to recommend the engagement and litigation against the second solicitors unless it was necessary to do so. That became unnecessary in the absence of a plea of the statute of limitations. The problem was only excited by the fact that the respondents may have sought to plead the question of the Limitation of Actions Act. In the exercise of the discretion, the Judge at first instance, Fullagar J had refused the application. The Appeal Court could point to no error on the part of Fullagar J in coming to that decision. Tadgell JA held at page 634 as follows:-
“Had the application to amend been made a year or even two years after the service of the defence, one can very well understand that the Judge might have taken a different view of the likely consequences to the respondent of amendment and he might have exercised his discretion differently from the way in which he did. As it was, his Honour took the view that to grant an amendment so late would as a matter of probability, unwarrantably prejudiced the respondent.”
[13] [1987] AC 189 at 219.
In this case, the ability of the appellants to plead the time defence and to have succeeded as against the respondent successfully would have had a catastrophic effect upon the appellants not being in a position to issue against the second set of solicitors because of a time bar. That is not this case on the material before me. It is not the case put by Dr Gray. Dr Gray could put the position no higher than that there was a risk. However, as I have already demonstrated there are a number of circumstances and events within the timeline between now and the commencement of the action against the owners in 1999 that may ground causes of action against a number of parties that have not been ventilated in submissions but which are raised in the new comprehensive pleading between the plaintiff and the firm of solicitors. In my judgment, the risk so adumbrated by Dr Gray is, on the information before me, not sufficiently strong to shift the balance one way or the other.
Finally, in this respect, Mr Robertson SC submitted that, in the exercise of my discretion, I may take into account the fact that, as appears the case from the pleadings, the damages in the Magistrates Court action between the plaintiff and the firm of solicitors DonaldsonWalsh will subsume the damages from the within action. There are some differences but the likelihood is that the DonaldsonWalsh claim by the plaintiff is of a greater breadth than the current action and this is self evidently the case. Dr Gray did not seek to gainsay this submission or this proposition. As a matter of commonsense, I think it is correct.
Paragraph 7.4.2A of the third Defence reads as follows:-
“7.4 In relation to paragraph 7.4 of the Statement of Claim, the defendants:
7.4.2A says that the claim relying on s32 of the Building Work Contractors Act 1995 is statute barred pursuant to s32(5) (of that Act).”
Paragraph 15 of the proposed Defence to the third amended Statement of Claim reads as follows:-
“15. Further the defendants:
15.1 Say that the plaintiff’s claim is statute barred and that the plaintiff cannot obtain an extension of time to issue or maintain a claim for a breach of warranty pursuant to s32 of the Building Work Contractors Act 1995 by reason of sub-s32(6) of the Building Work Contractors Act 1995;
15.2 Say that the plaintiff’s claim is statute barred and that the cause of action in simple contract accrued no later than 13 September 1999 and the time within the claim could be issue expired on 13 September 2005;
15.3 Say that the plaintiff’s claim is statute barred and that the cause of action in tort accrued at the latest when the plaintiff issued Action No. 1870 of 1999 to recover, inter alia, the sum of $274,776 from the owner, Mr and Mrs Karalis in late 1999 and the time within the claim could be issue expired in late 2005;
15.4 Say that the below floor brickwork as referred to in paragraph 14.1 of the Statement of Claim was completed by the Defendants on or before 13 September 1999, was noted by the Plaintiff’s consulting engineer Dean Juliano as having been completed as at 13 September 1999, and as a consequence the plaintiff’s action for damages for economic loss or rectification costs in relation to the below floor brickwork accrued on no later than 13 September 1999;
15.5 Say that these proceedings were not issued within the time prescribed by s32(5) of the Building Work Contractors Act 1995, or s35(a) and (c) of the Limitation of Actions Act 1936 or s73 of the Development Act 1993;
15.6 Sat that the plaintiff elected not to join the defendants to Action No. 1870 of 1999 and are now estopped from making this claim as the issue has merged in the judgment of this Honourable Court in [2007] SADC 34.”
For present purposes, the relevant issues are the content of s32 of the BWC Act, s73 of the Development Act and s35(a) and (c) of the Limitation of Actions Act 1936. Those provisions read as follows:-
“32—Statutory warranties
(1)     This section applies to a contract entered into on or after 22 January 19871.
…
(5)     Proceedings for breach of a statutory warranty must be commenced within five years after completion of the building work to which the proceedings relate.”
“73—Limitation on time when action may be taken
(1)     Despite the Limitation of Actions Act 1936, or any other Act or law, no action for damages for economic loss or rectification costs resulting from defective building work (including an action for damages for breach of statutory duty) can be commenced more than 10 years after completion of the building work.
(2)     This section does not affect an action to recover damages for death or personal injury resulting from defective building work.
(3)     The period prescribed by subsection (1) cannot be extended.”
“35—Actions on simple contract and in tort
The following actions namely:
(a)     actions founded upon any simple contract express or implied, or upon any award where the submission is not by specialty;
(b)     …
(c)     actions founded on tort;
shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after.”

It will immediately be seen that the statutory provision s32 BWC Act constitute the warranties that are implied into every domestic building work contract and are the statutory formulation of the ordinary implied terms that would otherwise would have been implied into the building contract.[14] In the BWC Act,[15] “building” is defined to include a structure and part of a building or structure. “Building work” is defined as follows:-
“Building work means:
(a)    The whole or part of the work of constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing a building; or
(b)   The whole or part of the work of excavating or filling a site for work referred to in paragraph (a); or
(c)    Work of a class prescribed by regulation.”
[14] Forlyle v Tiver (2007) SASC 464 at [15] and [16].
[15] The dictionary section is s3.
The submission of the defendants was that the wording of sub-s32(5) and the content of the dictionary provisions indicates that the expression “completion of the building works” (to which the proceedings relate) can be a reference to the whole of the work or part of the work of constructing or erecting the building. It follows that if a contractor who is a building work contractor completes part only of the building, the contractor completes part only of the building work. On this argument, the statutory warranty commences to run from the time that the building work carried out by that contractor is completed. The natural extension of this argument is that the statutory warranty applied for a period for 5 years after the completion of that work by that building contractor and that, in respect of any building contractor who is involved in the site, there are variable dates for the operation of the five year statutory warranty depending upon the date that such contractor is alleged to be in breach for the purposes of the Act.
The defendants make the same arguments in relation to s73 of the Development Act. Under that provision no action can be taken in respect of defective building work more than 10 years after the completion of the building work. In the Development Act[16] “building work” to mean the following:-
“Building work means work or activity in the nature of:-
(a) Any construction, demolition or removal of a building (including any incidental excavation or filling of land); or
(c) Any other prescribed work or activity
But does not include any work or activity that is excluded by regulation from the ambit of this definition.”
[16] The dictionary provision is s4.
In the same dictionary provision, “building” is defined as follows:-
“Building means a building or structure or a portion of a building or structure (including any fixtures or fittings which are subject to the provisions of the Building Code of Australia), whether temporary or permanent, moveable or immovable, and includes a boat or pontoon permanently moored or fixed to land, or a caravan permanently fixed to land.”
The defendants also make the same arguments concerning the concept of “building work” and “building” for the purposes of s73 of the Development Act.
The plaintiff rejects the arguments of the defendants. The plaintiff points to the decision of the Full Court of the Supreme Court of South Australia in Forlyle v Tiver[17] and in particular paragraphs [15] and [16] of the decision of Debelle J who wrote the decision of the Court confirming the nature of the statutory warranty as now encapsulated within the BWC Act. The plaintiff’s argument was that it would defy commonsense for the defendants’ argument to be correct. The plaintiff submitted that it would be unarguable that in respect of one building there would be a disparate number of commencement dates in respect of the statutory warranty depending upon which contractor was involved in the defective building work. Dr Gray submitted that the correct way of viewing the matter was that in respect of any part of a building work, the defective building work can actually be part of the building, but all that is to be looked at is the cut-off point for the commencement of the statutory warranties at the completion of the whole of building work i.e. the whole of the building work in total. Dr Gray also submitted that the plaintiff’s argument in relation to the Development Act was stronger because if the argument of the defendants succeeded then there would be a variable number of 10 year limitation periods and this would lead to unacceptable uncertainty. This is borne out by the defendants’ current pleadings. These suggest that work was done by the defendants in September 1999 and then further work done by them in October 1999. This work was done at different times and on different parts of the building. If the defendants’ arguments were correct, in respect of two different occasions of building work undertaken by the same defendants on the same site, there would be possibly two different 5 year and 10 year periods for the purposes of s32 BWC Act and s73 Development Act.
[17] (2007) SASC 464.
Dr Gray also submitted that if the time limitation point was correct, that would be a limitation that would not run against the firm of solicitors DonaldsonWalsh who were not solicitors on file when the time limit ran out but against the plaintiff’s current solicitors, messrs Minter Ellison. The plaintiff would need to terminate its retainer with the firm Minter Ellison and retain new solicitors to take any action that may be available against Minter Ellison in the event that Minter Ellison failed to advise the plaintiff on the question of time limits. There was no challenge to that submission however it also emphasises the same issues that potentially arise as between the defendants and their current solicitors. A finding in favour of the plaintiff in this application will inevitably mean that the defendants’ present solicitors must advise the defendants to seek alternative representation and advice about their performance as the defendants’ solicitors.
Dr Gray also referred me to two decisions that were relevant to interstate legislation. The first was McAskell & McAskell v Timelink Pacific Pty Ltd & Ors.[18] and the second The Owners Strata Plan 56963 v Australand.[19] The Victorian proceedings concerned s134 of the Building Act which is relevantly identical in terms to s52 of the BWC Act except that the reference to the 10 year period for the bringing of a building action is in the period 10 years after the issue of the relevant occupancy permit. Although not on identical terms, the New South Wales decision revolved largely around the same matter under the operation of s109ZK of the Environmental Planning and Assessment Act 1979. Under that Act, the 10 year period runs from the date of occupation, which may only occur at completion and a Certificate of Completion having been given under the relevant legislation. Therefore, it is apparent that, different from the South Australian legislation, there is a cut-off point in respect of which the 10 year period may be measured. Taking as an example, the operation of a Certificate of Occupancy, building contracts that identify the requirement to deliver a Certificate of Occupancy operate in quite specific ways and in a fashion that is well understood. For example, questions of the risk of the site change upon the delivery of the Certificate of Occupancy. Interstate legislatures have, for the purposes of the establishment of the 10 year time period, specified a specific cut-off point from which that time period should run. Dr Gray argued that implicitly, that must be so in South Australia and that the time limitation period would not start until such time as an owner has occupancy so that the question of occupancy or completion becomes a question of fact.
[18] [2010] VSCA 79.
[19] [2011] NSWSC 710.
However, having regard to the nature of the task before me, it is not a situation where I am required to make a final decision on this matter. Rather, I am required to determine whether or not a pleading should be allowed which contain the allegations as set out in paragraph 15 of the defendants’ Defence as I have set out above. It is always necessary for a proposed amendment to disclose a reasonably arguable cause of action or ground of defence.[20] All that I am required to decide is whether the proposed amendment is arguable and it is not necessary for me to determine the matter.[21]
[20] Duke Group v Arthur Young (No 5) (1991) 159 LSJS 362.
[21] Woodhead Australia (SA) Pty Ltd v Paspalis Group of Companies (1991) 103 FLR 122.
In this matter, I am of the view that albeit that I agree that the approach as postulated by Dr Gray makes complete commonsense on one view, her argument is not assisted by the wording of a statute. There are matters that need to be fully ventilated at trial. This is the position adopting, as I have, the purposive approach to statutory interpretation. An exception to that view is the proposed amendment to paragraph 15 of the Defence namely 15.6. In my view, that pleading is untenable and would not be allowed on any basis.
On the question of the Limitation of Actions Act pleas, no substantive submission was made in relation thereto by Dr Gray apart from those matters that I have already referred to and I do not need to consider those matters further.
In the decision of the Court in Channel 7 Adelaide Pty Ltd v Manock[22] ten matters were identified by Bleby J as follows:-
[22] Supra.
(1)Whether there has been undue delay in making the application;
(2)The extent to which there will be wasted public resources in granting the amendment;
(3)Whether there will be inefficiency occasioned by the need to revisit interlocutory processes;
(4)Whether a trial date would need to be vacated or a trial adjourned;
(5)Whether there is any satisfactory reason for the delay in applying;
(6)Whether the point to be raised by the amendment would be raised in any event at the trial;
(7)The likelihood of strain and uncertainty being imposed on the litigants;
(8)Whether any further delay would undermine a confidence in the administration of civil justice;
(9)Any other prejudice likely to be suffered by the other party;
(10)The additional costs likely to be incurred (footnotes omitted).
I will consider each matter in turn.
(1). The plaintiff submits that there has been undue delay in making the application. However there is a distinct history surrounding the making of the application. It is associated with the failures of the solicitor acting on behalf of the defendants in seeking to make an amendment to the Defence as raised by the Master of the Court and as discussed by Mr Jenner. However it appears that the second counsel, Mr Holland did not make any such recommendations. It was only when Mr Robertson SC was briefed in the matter that advice was given, the plaintiff was put on notice and the application was made. In my opinion, it could not be said that there has therefore been undue delay in making the application.
(2). In my opinion, there will always be wasted public resources in granting an amendment. However, the question is the extent to which there will be wasted public resources is balanced against the requirement for a more efficient use of the same public resources. In my opinion, the most efficient use of public resources is for all matters to be resolved by the Court at one time. To an extent, there is an inevitability about the adjournment of the trial set for 17 March 2014 in the event that the defendants are unsuccessful and the current solicitors give the appropriate advice about their failures and the need to retain other solicitors. That said, this is not a matter to be weighed in the balance nor does it inform the question of risk.
(3). There will be inefficiency occasioned by the need to hear and determine further interlocutory processes. It is not clear whether there would be a need to revisit interlocutory processes but it is clear that further interlocutory processes will be required.
(4). The trial date would need to be vacated and the trial adjourned. However, in my opinion, it was inevitable that the trial would be adjourned because, if the application fails, the defendants may have a right of action against their current solicitors. If that be the case, the current solicitors could not continue to act on behalf of the defendants, new solicitors would need to be retained and time would need to be given to those new solicitors to become familiar with this action. In that respect, it is important to recall that there are real language difficulties in dealing with the defendants in respect of events that occurred some 15 years ago.
(5). The reason for the delay in applying is associated with the conduct of the solicitors, the failure of those solicitors to pursue the initial advice from counsel, the failure of replacement counsel to identify the need to plead the time limitation issues and the realisation upon the briefing of counsel recently that there is a need to plead the amendments. It would follow that the delay is associated with the activity of professional advisors. It has no connection with the defendants themselves.
(6). In the absence of an ability to amend the defendants’ Defence, it is unlikely that, in these proceedings, the point to be raised by the amendment would be raised in any event at the trial as between the plaintiff and the defendants.
(7). In every aspect of litigation there is strain and uncertainty imposed upon the litigants. In my opinion, in light of the indication given by the plaintiff that if the application failed, the plaintiff would seek orders for the concurrent hearing of the action between the plaintiff and the firm of solicitors, it is unlikely that strain and uncertainty would be imposed upon litigants any greater than would otherwise be the case. On one view, there would be less uncertainty imposed on litigants in the event that the action between the plaintiff and the firm of solicitors was resolved at the same time as the action between the plaintiff and the defendants. This was because the position reached, on the plaintiff’s case, involves the failure of the solicitors to give proper advice in relation to the position of the defendants.
(8). In my opinion further delay would not undermine the confidence in the administration of civil justice because it may equally be argued that for the matter to be pushed onto trial in the light of all of the circumstances of this matter would be most unsatisfactory. In the event that the application was refused, it would be nigh on impossible for a new set of solicitors for the defendants to become fully conversant with the matter and to enable that firm of solicitors to properly advise the defendants in the matter. Both of the defendants have difficulty with the English language and the first defendant would most likely require an interpreter. Great difficulties would be encountered.
(9). The other prejudice likely to be suffered by the plaintiff in this instance is a neutral factor because the failures of the legal advisers to the defendants, as admitted in the affidavit material, would lead inexorably to the situation that those solicitors could no longer continue to act for the defendants, that the defendants would need to appoint new solicitors and that those new solicitors would require time to become familiar with the whole of the issues in this matter. The question of the adjournment of the trial date immediately arises.
(10). It is impossible to predict what additional cost would likely be incurred in the event that, in the most efficient way possible, the matter proceeded on a hearing of both the claim by the plaintiff against the defendants and the claim by the plaintiff against the firm of solicitors. In the event that the defendants’ current solicitors were no longer able to act, then all parties would likely incur costs. In my opinion, that issue is evenly balanced.
In those circumstances, in the exercise of my discretion and having regard to all of the affidavit material, the relevant authorities and the arguments of the parties as I have set them out, the appropriate decision is to allow the defendants to make the amendments to their current proceedings save and except that the defendants would not be permitted to plead paragraph 15.6 of the amended Defence as set out in exhibit DAS-27 to the affidavit of Mr Starke sworn 9 January 2014.
It will be necessary to hear the parties in relation to ancillary orders and in relation to issues of costs.
I give permission to the defendants to amend their defence in the manner proposed apart from the inclusion of paragraph 15.6. It will be necessary for ancillary Orders to be made in relation to the filing of any further pleadings by the plaintiff. In light of my decision, it will be necessary to give further directions in relation to the hearing of this matter, the pleadings in the Magistrates Court action and generally. I will hear the parties as to consequential Orders and costs.