Boat Harbour Beach Blue Waters Pty Ltd v Matthews Properties Pty Ltd - [2014] TASSC 59

[2014] TASSC 59

COURT: SUPREME COURT OF TASMANIA

CITATION: Boat Harbour Beach Blue Waters Pty Ltd v Matthews Properties Pty Ltd [2014] TASSC 59

PARTIES: BOAT HARBOUR BEACH BLUE WATERS PTY LTD
v
MATTHEWS PROPERTIES PTY LTD
ARTAS PTY LTD
LEE QUINTIN TYERS
LEE TYERS & ASSOCIATES PTY LTD

FILE NO:  923/2009
DELIVERED ON:  14 November 2014
DELIVERED AT:  Hobart
HEARING DATES:  16, 17 July and 6, 7 November 2014
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Damages – General principles – Other matters – Economic loss – Statutory regime of proportionate liability – Whether person concurrent wrongdoer – Determined by reference to findings pleaded and proved.

Civil Liability Act2002 (Tas), s 43A.
Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762, applied.
Aust Dig Damages [11]

Evidence – Course of evidence and addresses – Course of evidence – Reopening case and recalling witnesses – By parties – Principles involved.

Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471, applied.
Aust Dig Evidence [198]

Procedure – Supreme Court procedure – Tasmania – Practice under rules of court – Other matters arising before trial – Non-compliance with orders by defendant – Judgment for plaintiff – Application by plaintiff to set judgment aside – Principles involved.
Supreme Court Rules 2000 (Tas), r 374(b).

Macquarie Bank Ltd v Beaconsfield [1992] 2 VR 461, applied.
Aust Dig Procedure [277]

REPRESENTATION:

Counsel:

Plaintiff:D Gunson SC (16, 17 July) and
R Manly QC (6, 7 November)

First Defendant:  A Buckley
             Second Defendant:  M Whitten
             Third and Fourth Defendants:    K Read SC
Solicitors:
             Plaintiff:  Gunson Williams
             First Defendant:  Toomey Maning & Co
             Second Defendant:  M + K Dobson Mitchell Allport
             Third and Fourth Defendants:    Hunt & Hunt

Judgment Number: [2014] TASSC 59
Number of paragraphs: 51

Serial No 59/2014
File No 923/2009

BOAT HARBOUR BEACH BLUE WATERS PTY LTD v
MATTHEWS PROPERTIES PTY LTD and ARTAS PTY LTD and
LEE QUINTIN TYERS and LEE TYERS & ASSOCIATES PTY LTD

REASONS FOR JUDGMENT HOLT AsJ

14 November 2014

Introduction

The plaintiff has applied to have set aside an interlocutory judgment for damages to be assessed, which it obtained against the first defendant as a result of the first defendant failing to comply with an order. The plaintiff is concerned that the first defendant may be without funds or insurance and that the judgment may deprive it of the opportunity of pursuing the other defendants because of the proportionate liability provisions contained in the Civil Liability Act 2002.
Under the proportionate liability regime, in certain cases, joint and several liability with scope for contribution proceedings between defendants is replaced with a system whereby the court is required to apportion liability to the plaintiff based on what is just, having regard to the extent of the particular defendant's responsibility for the loss or damage.
The part of the Civil Liability Act which substitutes proportionate liability for joint and several liability relevantly contains the following provisions:
"43A   Application of Part 9A
(1)      This Part applies to the following claims ('apportionable claims'):
(a)a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury);
(b) …
(2)      In this Part –
concurrent wrongdoer, in relation to a claim, means a person who is one of two or more persons whose act or omission caused, independently of each other or jointly, the damage or loss that is the subject of the claim;
…
(4)      For the purpose of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.
…
(9)      For the purpose of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).

43B     Proportionate liability for apportionable claims
(1)      In any proceedings involving an apportionable claim –
(a)      the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just, having regard to the extent of the defendant's responsibility for the damage or loss; and
(b)      the court is not to give judgment against the defendant for more than that amount.

…
(4)      This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
…
43C Contribution not recoverable from defendant
(1)      A defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim –
(a)      cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant); and
(b)      cannot be required to indemnify any such wrongdoer.
…

43E Subsequent actions
(1) In relation to an apportionable claim, nothing in this Part or any other law prevents a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any damage or loss from bringing another action against any other concurrent wrongdoer for that damage or loss.
(2) However, in any proceedings in respect of any such action the plaintiff cannot recover an amount of damages that, having regard to any damages previously recovered by the plaintiff in respect of the damage or loss, would result in the plaintiff receiving compensation for damage or loss that is greater than the damage or loss actually sustained by the plaintiff."

The background

The background is as follows.
The plaintiff commenced an action claiming damages for defective building work in the construction of a number of residential dwellings at Boat Harbour on the north-west coast of Tasmania. The first defendant is the builder. The second defendant is the architect, whom the plaintiff alleges failed to provide sufficient detail in the design documents and failed to adequately supervise construction. The third defendant is an employee of the fourth defendant, being the building surveyor. The building surveyor was engaged by the architect and responsible for certification that the building design and building works conformed with statutory requirements.
The statement of claim contains identical particulars of loss and damage in respect of each of the four defendants.
Each defendant filed a defence. The defences are structured on the basis that the claim is a proportionate liability claim. The first defendant, being the builder, alleged that the claim against it was an apportionable claim and that the damage was caused, at least in part, by the wrongful acts or omissions of the second, third and fourth defendants, with the result that the first defendant's liability is limited to an amount which is just, having regard to the responsibility of the other defendants. The second defendant's defence includes allegations against the first, third and fourth defendants, and against a number of contractors responsible for the performance of various components of the building work, and against three engineering companies. The second defendant asserts that the other defendants, the various contractors and the engineers bear responsibility with the result that the second defendant's liability is limited. The third and fourth defendants allege that the damage was caused by the first and second defendants, the various building contractors and the engineers, with the result that their liability is limited to such an amount as is just, having regard to the responsibility of the first and second defendants, the various building contractors and the engineers.
The plaintiff's judgment against the first defendant was entered in the following circumstances.
In accordance with the requirements contained in r 261 of the Supreme Court Rules 2000, the plaintiff delivered a schedule particularising its allegations. The defendants were required to deliver their responses, and the first defendant failed to do so. On 1 March 2013, an order was made requiring the first defendant to deliver its response within seven days. On the day that order was made, counsel for the first defendant advised the Court that the first defendant did not intend to participate further in the proceedings, that it was possible the first defendant would be placed under external administration and that, although the first defendant had the insurance then required under the Housing Indemnity Act 1992, the liability of the insurer under the policy depended upon the first defendant being insolvent. Counsel for the plaintiff advised that the plaintiff wished to be in a position to force the first defendant into liquidation to satisfy the insolvency requirement under the policy of insurance. The plaintiff wanted to be put in a position where it could apply for judgment against the first defendant for non-compliance with an order. The first defendant did not oppose the making of the order that it deliver its response to the r 261 schedule within seven days, and an order was made accordingly.
By July 2013, there was a long-standing non-compliance by the first defendant with respect to the order made on 1 March. On 2 July 2013, the plaintiff filed an interlocutory application seeking an order that the defence of the first defendant be struck out and that interlocutory judgment be given in favour of the plaintiff against the first defendant for damages to be assessed. The application was heard on 9 July. On that day, counsel for the first defendant made no submissions in opposition to the application, and in light of the lengthy period of non-compliance, the absence of any justification for it, and the absence of any reason to think that there would ever be compliance, judgment was given for the plaintiff in the terms of the application. The judgment was formally entered on 6 August 2013.
The result was that the plaintiff had judgment for all of the damages which it claimed and, if it was a proportionate liability case, the plaintiff could not obtain judgment against the other defendants or, in subsequent proceedings, against other wrongdoers causing the same damage.
In April 2014, the plaintiff filed an application seeking leave to amend the statement of claim. The other defendants considered that the proportionate liability provisions of the Act applied to the claim with the effect that, as the plaintiff had judgment against the first defendant for the whole of the damages claimed against all defendants, pursuit of the claim against the other defendants had become futile.
In May 2014, the second, third and fourth defendants filed their applications for dismissal of the plaintiff's claim against them. Shortly afterwards the plaintiff filed its application for an order setting aside the judgment which it had obtained. The plaintiff's application was later amended to include, as an alternative, an application for an order varying the judgment against the first defendant so as to confine the damages recoverable under it to such proportion as is just and reasonable, having regard to the responsibility of the various alleged wrongdoers.
The plaintiff's application to have the judgment set aside, or alternatively varied, proceeded to hearing on 16 and 17 July. The plaintiff chose to file no affidavits in support. The result was that, if the judgment was not erroneous, the plaintiff had no chance of having it set aside or varied.
During the course of the proceedings on 16 and 17 July, counsel for the plaintiff recognised some of the problems arising from the lack of evidence. A decision was made to call some viva voce evidence from two witnesses. The first witness was a director of the plaintiff company. He gave evidence as to the poor financial circumstances of the plaintiff caused by the defective building works. The other witness was counsel for the first defendant, who happened to be present in Court. The evidence from counsel for the first defendant elicited no useful information.
Despite the inadequacy of the evidence to support the setting aside of the judgment on discretionary grounds, counsel for the plaintiff closed the plaintiff's case.
The defendants called no evidence and concluded their arguments as to the hopelessness of the application, absent the necessary supporting evidence.
The plaintiff relied upon an argument that the judgment should be set aside for lack of jurisdiction to have given it in the first place. In particular, the argument was that for the judgment to be within jurisdiction there had to be an apportionment exercise undertaken, and no such exercise had been undertaken.
The plaintiff's argument was misconceived. It is findings ultimately made which determine whether the Court is compelled to adopt the proportionate approach. Although the proportionate liabilities provisions speak in terms of "claims", the reference to claims is a reference only to determined or decided claims that have been established as sources of liability. Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762, at 769 [18] and [19] and 771 [32], per Barrett J. The result is, that until there are findings which bring a case within the statutory proportionate liability scheme, the parties are free to resolve cases as they wish. There is nothing to prevent one of several defendants consenting to a judgment for 100 per cent of the damages and nothing to prevent a judgment for 100 per cent of the damages being entered against a defendant as a result of non-compliance with a court order.
Following the submissions on behalf of the second, third and fourth defendants, counsel for the plaintiff was invited to reply. Instead of replying, counsel stated that the decision not to file affidavits in support of the application was an error. Counsel had mistakenly placed too much faith in his contention that the judgment was beyond jurisdiction. An adjournment was sought so that affidavits could be prepared and so that an application to reopen the case could be made. The adjournment was granted.
The plaintiff filed affidavits and advised that the argument based upon jurisdiction to enter the judgment would not be pursued. The application to set the judgment aside would be pursued solely on discretionary grounds.
The application for leave to reopen was dealt with on 6 November. Leave to reopen was granted and I advised counsel that I would publish my reasons for granting leave at a later date.
The substantive hearing of the set aside judgment application resumed on 7 November, at which time the affidavit evidence filed by the plaintiff was read, with the exclusion of certain parts abandoned or ruled inadmissible. The argument on the set aside judgment application was then concluded.

The grant of leave to reopen

Before going to the substantive application, I will set out my reasons for granting leave to the plaintiff to reopen its case.
The evidence which the plaintiff wished to present was available to it before it closed its case, and a deliberate decision had been made not to call it.
Ordinarily a court will not permit a party to reopen where the decision not to call the evidence was deliberate. If this hurdle can be overcome, the consideration of whether leave to reopen will be granted may vary depending upon whether the application to reopen is made before the hearing has concluded or is made after the hearing has concluded, or is made after reasons for judgment have been published. In Smith v NSW Bar Association (1992) 176 CLR 256, the plurality said at 266-267:
"If an application is made to reopen on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered . It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to reopen should be exercised." [Footnotes omitted.]
There are recognised categories of cases in which a court may grant leave to reopen and ultimately, whether or not leave is given will depend upon whether the justice of the case favours that course. In Spotlight Pty Ltd v NCON Australia [2012] VSCA 232, Harper and Tate JJA and Beach AJA referred to the view of Kenny J in Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 (a case where an application to reopen was made after reasons for judgment had been delivered) saying at [25]:
"Kenny J refused the application. There were, in her Honour’s opinion four recognised classes of case in which a court may grant leave to reopen; and the appellants could not bring themselves within any of them. The four classes (with which we respectfully agree) are: (i) where fresh evidence, unavailable or not reasonably discoverable before, becomes known and available; (ii) where there has been inadvertent error; (iii) where there has been a mistaken apprehension of the facts; and (iv) where there has been a mistaken apprehension of the law." [Footnote omitted.]
Their Honours then observed that the overriding consideration was the justice of the case, saying at [26]:
"These classes are not closed; but the present case shares with Bradshaw the distinction that it falls into none of them, and no applicable new category is suggested. The overriding principle is that the court consider whether, taken as a whole, the justice of the case favours the grant of leave to reopen." [Footnote omitted.]
What the justice of the case requires will depend upon the circumstances of the particular case. A deliberate decision not to call evidence made under mistake is in a very different category to a decision not to call evidence based on tactical grounds. In Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 471, Clarke JA, with whom Mahoney and Meagher JJA agreed, said at 475-476:
"Where, as here, a defendant announced the closing of its case and, there being no case in reply, a short time later sought leave to reopen because its counsel realised he had made a mistake it is difficult to discern how the interests of justice would be furthered by disallowing an application to re- open to call evidence which was clearly relevant to, and may have had a significant impact on, the issues in the case. It is true that the fact that there has been a deliberate decision not to call the witness whose evidence it is later sought to lead in a reopened case is a relevant consideration. But there may be a number of reasons why a deliberate decision is made. It may, for instance, be made for tactical reasons.
… The decision made by counsel in this case although a deliberate one stands in a very different category from one based on tactical grounds. It is more appropriately regarded as one in which counsel had made a mistake or failed to appreciate the relevance and admissibility of the evidence which he omitted to lead.
The primary purpose for the rules pursuant to which cases are contested in this State is the furtherance of the interests of justice. For this reason the exercise of the discretion to allow an application to reopen depends essentially upon the trial judge's view as to whether the interests of justice are served better by granting than refusing the application. Of course, there needs to be finality in litigation and a limit upon the number of issues which it is open to the parties to contest at a hearing. For this reason evidence contradicting a witness' testimony in cross-examination on matters going to credit is, generally, excluded. But that is because it is seen as desirable to confine the ambit of the inquiry within reasonable limits in the overall interests of justice.
For my part I can see nothing in the facts of this case which would indicate that, provided that the evidence sought to be led was relevant and admissible, the interests of justice would be better served by excluding the evidence. On the contrary on the assumption that the evidence was admissible I would have concluded that all the factors in the case favoured the grant of the application. The appellant would, if the application had been granted, have gained no tactical advantage and the respondent would not have been prejudiced in any way. All that had relevantly occurred was that the appellant had sought to call the evidence some time after it had formally closed its case rather than before it had done so."

The plaintiff's application to have the judgment set aside was advanced at the July hearing on two bases. The first basis put forward relied upon the discretionary jurisdiction to set aside a judgment which had been obtained without a hearing on the merits. The second basis put forward relied upon a proposition that the judgment was irregular. The plaintiff had delivered a written outline of submissions a few days prior to the hearing. It is apparent from that outline that the underlying premise for both bases was that the judgment was beyond jurisdiction in that it failed to address the proportionate liability requirements of the Civil Liability Act. If the judgment was not beyond jurisdiction, the plaintiff's application to have it set aside was bound to fail because of the absence of any meaningful evidence to show that the justice of the case required a favourable exercise of the discretion.
In support of the application to reopen, an affidavit from counsel who had represented the plaintiff on 16 and 17 July was read into evidence. It was said in the affidavit that counsel did not appreciate that his argument about the judgment being beyond jurisdiction was wrong until the defendants had concluded their submissions. I have no reason to doubt this evidence. If counsel for the plaintiff had realised at any time before closing his case that the judgment was not beyond jurisdiction, it is inconceivable that he would have closed his case and chosen to pursue what would have been known to him to be an exercise in futility.
As counsel for the plaintiff had closed the case under a misapprehension of law, the matter fell within a class where leave to reopen might be given. Whether or not such leave should be given depended upon whether or not the justice of the case favoured it.
Against a grant of leave was the fact that the decision not to call available evidence was deliberate. During the course of the hearing on 16 and 17 July, counsel for the second, third and fourth defendants made it clear that their position was that the application could not succeed without affidavit evidence. Counsel for the plaintiff had every opportunity to appreciate, and should have appreciated, that evidence was required.
There were a number of factors tending to favour the grant of leave to reopen. The decision not to file and read affidavits, although deliberate, was the result of a misapprehension of law and not for the purpose of securing a tactical advantage over the defendants. The second, third and fourth defendants had not presented evidence and did not contend that they would be prejudiced in responding to the application, by reason of the plaintiff having closed its case, if leave to reopen was granted. The application to reopen was made before the hearing had concluded. A grant of leave would not impinge upon principles of finality as the proceedings were interlocutory and not proceedings finalising the substantive rights of the parties.
In my view, the interests of justice were best served by granting leave rather than excluding the evidence. Accordingly, I gave leave to reopen.
There was a further factor, which although without it my decision would have been the same, reinforced my view that leave should be granted. The proceeding was an application to set aside a judgment entered in default of compliance with a court order, as distinct from a proceeding to set aside a judgment obtained following a trial on the merits. Refusing leave would not necessarily have prevented the plaintiff from making a new application. In Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246, it was held that there is no principle that refusal of an application to set aside a default judgment is a bar to the making of a fresh application. There reference was made to Hewitt v Mirror Newspapers Ltd (1977) 17 ACTR 1. In that case an interlocutory judgment for damages for defamation was entered against defendants who had filed appearances but failed to file timely defences. An application to set the judgment aside, unsupported by an affidavit of merits, was dismissed. The defendants issued a fresh application supported by an affidavit of merits based on information available at the time of the hearing of the original application. Connor J considered that there was jurisdiction to hear the second application. He rejected a contention by the plaintiff that evidence available, but not used, at the first hearing should not be allowed on the second hearing. His Honour said at 6:
"In particular, the act of admitting and considering the affidavit of merits has the effect of circumventing the refusal of Blackburn J to grant a further adjournment to enable such an affidavit to be filed. I am not aware of any authority on the point. As a matter of principle I doubt the soundness of applying to a second or later interlocutory application the rule which is applied in setting aside a final judgment on the ground of the discovery of new evidence. A new trial in such circumstances is not as of right. A subsequent interlocutory application following an order dismissing a previous one may be brought as of right. If it is brought successfully on material which was available but not put before the court in the earlier application, that circumstance may, in an appropriate case, be an occasion for penalizing the successful party by way of costs; but I think that, if a party has a right to bring more than one application, the court or judge hearing the later application must consider it on such relevant material as the applicant chooses to put before the court, whether or not it was used or available to be used in an earlier application; cf Hall v Nominal Defendant (1966) 117 CLR 423, per Taylor J at 440-1."

Should the judgment be set aside?

Upon the resumption of the hearing the new counsel for the plaintiff advised that the application to set the judgment aside was confined to an application under r 374(b) of the Supreme Court Rules. The rule is as follows:

"374     Setting aside judgment
The Court or a judge may set aside or vary –
(a)   …
(b)   any judgment or order entered, given or made on the failure of a party to –
(i)   …
(ii) comply with an order to do any act or take any step."

The principles applicable to the exercise of the discretion to set aside a judgment at the instance of the plaintiff who obtained it were considered in Macquarie Bank Ltd v Beaconsfield [1992] 2 VR 461. There the plaintiff bank claimed recovery of a debt of about $15 million, or alternatively damages. Upon the non-delivery of defences, default judgment for damages to be assessed was entered. The plaintiff later became concerned that the principal debt might not be recoverable as damages. The plaintiff applied to have the judgment set aside. The defendants opposed the application, contending that the plaintiff had elected to recover only damages and should not be permitted to resile from that election. There were other grounds of opposition. Ormiston J concluded that the judgment should be set aside. The following propositions can be extracted from the judgment:
1Where a judgment has been taken by mistake so as to preclude the plaintiff from pursuing an alternative claim, the defendants may not rely on an election and the court may vacate the judgment if no injustice appears to be produced by such a course. A failure to properly account for risk may constitute mistake.
2The discretion should not be fettered by rigid rules. Relevant matters, however, usually include:
(i)the reason for the entry of the judgment,
(ii)delay in applying to have the judgment set aside,
(iii)the reasons for the delay,
(iv)the prejudice to the defendant by reason of the delay and any other prejudice, and
(v)whether any purpose would be served by setting the judgment aside other than giving the plaintiff the satisfaction of proving the case in open court.
3The plaintiff need not file an affidavit as to merits. It is sufficient that the statement of claim discloses a cause of action for relief at trial different to that already obtained.
4The plaintiff does not have to demonstrate special or unusual circumstances.
If it is determined that the whole of the plaintiff's claim is subject to the proportionate liability provisions of the Act, the plaintiff will be unable to recover a judgment against the other defendants whilst the judgment against the first defendant stands.
The evidence of counsel for the plaintiff who appeared on 16 and 17 July, and who was the plaintiff's solicitor overseeing the conduct of the litigation, was that judgment was entered in the belief that the proportionate liability provisions did not preclude judgment being obtained against the other defendants. This was a mistake. It resulted in a failure to fully appreciate the potential implications arising from the entry of the judgment. Although it has been said that where a plaintiff chooses to proceed to judgment against one defendant to the exclusion of another who was also liable, the plaintiff will likely be held to the election, the observation does not apply in cases of mistake. In Sunray Irrigation Services v Hortulan Pty Ltd [1993] 2 VR 40, Tadgell J said at 44-45:
"In the 1993 edition of the Supreme Court Practice, para15/4/8, it is said that: 'In actions where alternative defendants are joined, the plaintiff must be careful not to sign judgment by default, or under O 14 [cf O 22 of our Rules] against one of such defendants, unless he is prepared by so doing to abandon his claim against the other'. Cases such as Morel Brothers and Co Ltd v Westmoreland [1903] 1 KB 64; [1904] AC 11 are cited for and support the warning; and see Moore v Flanagan [1920] 1 KB 919 and Parr v Snell [1923] 1 KB 1. (It is otherwise where two are sued jointly: R21.05 and R22.12.) So, if the plaintiff sues two defendants claiming that they are alternatively liable, a default judgment obtained against one will usually not, it would seem, be set aside in order that the claim against the other may be pursued. Moreover, if a plaintiff sues one defendant only, and obtains judgment, knowing that another is liable alternatively to the defendant sued, the plaintiff ought not ordinarily to be capable of having the judgment set aside in order to pursue a claim against the other. In either of these cases the plaintiff is likely to be held to his election.
The present case appears to me to be governed by none of these principles or guides. The plaintiff sued the defendant and obtained judgment without knowledge (or, it seems, means of knowledge) of a possible alternative claim: the circumstances in which the contract was made with the defendant indicated to the plaintiff, so far as the facts before me disclose, that the defendant contracted as principal and on no other basis. That circumstance, of course, provides no reason why the general rule should not apply whereby, having sued the defendant to judgment, the plaintiff is precluded while the judgment stands from recovering from any principal for whom the defendant may have been acting. That is not to say, however, that the circumstance does not afford a basis for setting aside the judgment and thereby displacing the general rule."
The reason for the entry of the judgment, as disclosed in the affidavit evidence, was that the solicitor for the plaintiff did not believe that the first defendant had the financial means to conduct a defence at trial, nor the means to pay any damages which might be awarded against it. It was considered that the efficient conduct of the trial would be enhanced, absent participation from the first defendant on the question of liability. There was also the desire to force the first defendant into liquidation so as to prove insolvency and trigger the insurer's obligation to indemnify it.
The judgment was given in July 2013 and the application to have it set aside was not made until May 2014. Up until May 2014, the plaintiff's solicitor continued to believe that the claim against the other defendants was unaffected by the judgment. It was not until the other defendants brought their applications for summary judgment in May 2014 that the plaintiff's solicitor began to doubt the correctness of the view which he had taken. Promptly, following the defendants' applications for summary judgment, the plaintiff filed its application to have the judgment against the first defendant set aside.
The second, third and fourth defendants do not assert that they will be prejudiced in the conduct of their defences to the substantial claim by reason of the plaintiff's delay in bringing the application. They do not assert that the setting aside of the judgment would otherwise cause prejudice to them other than the loss of the opportunity to pursue the summary judgment applications or contend at trial that the judgment against the first defendant protects them from liability. I do not regard the loss of the opportunity to escape a determination on the merits as being relevant prejudice in the context of an application to have a judgment set aside. Such a feature will be present in every case where a judgment is entered by default or for non-compliance with a court order.
Earlier in these reasons I referred to the proposition contained in Macquarie Bank Ltd v Beaconsfield that the plaintiff need not file an affidavit of merits, and that it is sufficient that the statement of claim discloses a cause of action for relief at trial different to that already obtained. Counsel for the third and fourth defendants (the building surveyor) submitted that the statement of claim does not disclose a cause of action against the third and fourth defendants. Because there is no evidence demonstrating the existence of a viable claim, the application to set aside the judgment should be dismissed as the Court cannot be satisfied that any purpose would be served as a result of it being set aside. In support of this contention, counsel submitted that as the claim against the third and fourth defendants was for pure economic loss, the salient features, including reliance and vulnerability need to be pleaded to show the existence of a duty of care and they have not. The need for the existence of such features to create a duty of care is explained in Bryan v Maloney (1995) 182 CLR 609, Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515, and Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36.
The plaintiff has pleaded that the building surveyor was engaged by the plaintiff's architect and was responsible for ensuring compliance with statutory building standards, and that accordingly the building surveyor owed to the plaintiff a duty of care. In my opinion, the facts pleaded are sufficient to disclose a basis for a case that there was reliance on the building surveyor, and so are sufficient, if proved, to result in a conclusion that a duty of care was owed to the plaintiff by the building surveyor. Because, in my view, the statement of claim does disclose a reasonable cause of action, the plaintiff was not obliged to provide evidence as to the merits of its case against the third and fourth defendants.
Although I do not regard the evidence as sufficient to show that the first defendant will be without the necessary resources to satisfy a judgment, and I do not regard the evidence as sufficient to show that a claim against the first defendant's insurer would be unsuccessful, there is enough in it to show a risk that these things will eventuate. Counsel for the first defendant has previously advised the Court that the first defendant has no intention of participating at a trial of the action, even though in its defence it asserts that others are responsible for the plaintiff's loss and damage. The trigger for the insurance company to become liable is the insolvency of the first defendant, but the first defendant has not been placed under administration or put into liquidation, and the period for making a claim under the insurance policy has expired. Even if insurance is available, the quantum of the plaintiff's claim, as asserted by counsel, significantly exceeds the amount of the insurance cover.
Counsel for the third and fourth defendants also placed reliance upon case management principles. It was said that if the judgment is set aside and the action proceeds to trial, the likely length of the trial will be about three months. Setting the judgment aside and allowing the matter to proceed to trial on the merits would keep other litigants out of the Court list for a lengthy period. If this were a case where the action had already been set down for trial and trial time reserved there would be substance in the submission. However, the application to set aside the judgment is not an application of a kind which if granted would waste already allocated Court time.

Conclusion

The reasons for the entry of the judgment by the plaintiff and the delay in applying to have it set aside have been explained. The existence of the judgment puts the plaintiff at risk of being unable to recover damages as claimed against the second, third and fourth defendants. The plaintiff is at risk that the first defendant will not be able to satisfy the judgment against it, either directly or through an insurer. The first defendant does not oppose the making of an order setting aside the judgment against it. The other defendants have not been compromised in their ability to defend the claims against them by reason of the entry of the judgment or by reason of the delay in applying to have it set aside. The pleadings disclose causes of action against the other defendants and so setting aside the judgment and leaving the plaintiff free to pursue recovery against the other defendants would not be without purpose. For these reasons I am positively persuaded that the justice of the case lies with granting the application.

Order

All that remains for consideration is the question of whether the judgment should be set aside or varied, as proposed by the plaintiff, to limit the damages recoverable against the first defendant to such damages as may be found to be proportionate to the responsibility of the first defendant.
I do not consider it appropriate for there to be a judgment for damages to be assessed on an unascertained liability. In any event, varying the judgment would not achieve any purpose different to that which would be achieved by setting it aside.
It is ordered that the interlocutory judgment for damages to be assessed entered in favour of the plaintiff against the first defendant is set aside.