Boughton v Masterton Homes Pty Ltd

[2022] NSWSC 1556

Supreme Court

New South Wales

Medium Neutral Citation:

Boughton v Masterton Homes Pty Ltd [2022] NSWSC 1556

Hearing dates:

4 November 2022

Date of orders:

4 November 2022

Decision date:

04 November 2022

Jurisdiction:

Equity - Technology and Construction List

Before:

Rees J

Decision:

Refuse leave to issue cross-claim.

Catchwords:

CIVIL PROCEDURE – cross-claims – application by builder to file cross-claim against engineer – principles at [15]-[16] – engineering problem identified from outset – defendant identified engineer as concurrent wrongdoer two years’ earlier – inadequate explanation for delay – granting leave would result in substantial delay – leave refused.

Legislation Cited:

Home Building Act 1989 (NSW)

Cases Cited:

Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Rush v Nationwide News Pty Ltd (No 2) [2018] FCA 550; (2018) 359 ALR 564

Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (a firm) [2015] FCA 1098

Category:

Procedural rulings

Parties:

Bruce Boughton (First Plaintiff//Respondent)
Marianela Ferreiro (Second Plaintiff/Respondent)
Masterton Homes Pty Ltd (Defendant/Applicant)

Representation:

Counsel:
Mr S Sykes (Plaintiffs/Respondents)
Mr A Hourigan (Defendant/Applicant)

Solicitors:
William Cotsis & Associates (Plaintiffs/Respondents)
Clyde & Co Lawyers (Defendant/Respondent)

File Number(s):

2020/218709

EX TEMPORE Judgment

1. HER HONOUR: This is an application by the defendant, Masterton Homes Pty Ltd, for leave to file and serve a Technology and Construction List Cross-Claim Statement against structural engineer, Rafeletos Zanuttini Pty Ltd.

2. The application for leave is opposed by the plaintiffs, Bruce Boughton and Marianella Ferreiro, who commissioned Masterton Homes to build their home. This application comes very late in the piece.

Procedural history

3. In December 2013, the plaintiffs entered into a building contract with Masterton Homes to build their home for some $290,000. The building was completed in about November 2014.

4. In August 2019, the plaintiffs commenced proceedings in the NSW Civil and Administrative Tribunal (NCAT) in respect of alleged building defects. The main defect was said to be defects in the concrete floor slab. Mr Boughton prepared an affidavit in support of the claim in February 2020 and, from February to July 2020, the plaintiffs obtained expert reports from a surveyor, geotechnical engineer, structural engineer and expert builder. In July 2020, NCAT made an order transferring the proceedings to this Court, as the quantum of the plaintiffs' claim was then thought to exceed the jurisdictional limit of the Tribunal.

5. On 8 October 2020, the plaintiffs filed a Summons and a Technology and Construction List Statement, which identified that a key issue in dispute was a suggested defect in the concrete floor slab which was such that the plaintiffs' home required demolition and rebuilding. On 5 November 2020, the defendant filed its Technology and Construction List Response, which denied that the works were defective but also pleaded (at [11]): (emphasis added)

In answer to the whole of the Plaintiffs claim, if contrary to its Contentions in this List Response, the Defendant is found to be liable to the Plaintiffs (which is denied), then:

a. the Plaintiffs’ claim is an “apportionable claim” within the meaning of section 34 of the Civil Liability Act 2002 (NSW);

b.   the Rafeletos Zanuttini Pty Ltd, the structural engineer who designed the slab upon which the dwelling was constructed, is a “concurrent wrongdoer” within the meaning of section 34(2) of the Civil Liability Act 2002 (NSW)…

6. That is, at the inception of proceedings in this Court, the now proposed cross-defendant was identified as potentially responsible for the defects alleged by the plaintiffs.

7. In November 2020, Hammerschlag J made the first of many orders for the parties to serve their evidence. It appears that the plaintiffs were guilty of some delay such that, in July 2021, his Honour made a guillotine order in respect of the plaintiffs' expert evidence.

8. Whilst the plaintiffs were compiling and serving their evidence, Masterton Homes obtained an expert report from a structural engineer, which confirmed the problems with the concrete slab as had been identified by the plaintiffs' expert. The defendant did not serve the report at the time and, indeed, was not obliged to do so. The relevance of the report for present purposes is that the defendant now had expert evidence which suggested that it may be a prudent course to join the cross-defendant at that time.

9. By July 2021, the plaintiffs had served their expert evidence and the defendant turned its attention to preparing expert evidence in response. There were some delays in this regard given COVID lockdowns, which are explained in the affidavit of the defendant's solicitor, Hugh Irvine. The fact that the defendant was then considering whether or not to make a claim against the proposed cross-defendant is apparent from an email from Mr Irvine to one of the defendant's experts on 8 September 2021, asking the expert the excise a portion of his report "as Masterton wishes to reserve its position concerning the Rafeletos design in light of the balance of the evidence."

10. After some variation of the Court's orders to permit the defendant additional time to serve their expert evidence, the defendant's expert evidence was served on 31 January 2022. On 9 February 2022, the parties' solicitors discussed further directions to be made in the proceedings, at which time the plaintiffs' solicitor, William Cotsis, discussed with Mr Irvine whether the defendant was then going to join Rafeletos. Mr Irvine said he needed to give the matter further consideration.

11. From 25 February 2022 until 13 October 2022, directions were made on five occasions for the plaintiffs’ reply evidence to be completed. None of these orders, however, anticipated that the defendant might then seek to join Rafeletos Zanuttini. Again, it appears that there were some delays in the plaintiff attending to this task and, on 11 August 2022, Ball J made a guillotine order in respect of the plaintiffs' reply evidence. The evidence was finally served by 30 September 2022 which, as I understand it, essentially confirmed the plaintiffs' evidence-in-chief with respect to the problems with the concrete slab, including its design.

12. It was not until 12 October 2022 that the defendant again suggested to the plaintiffs' solicitor that it wished to join Rafeletos Zanuttini. Perhaps unsurprisingly, the plaintiffs were less than willing to then accede to that application. On 21 October 2022, I made orders directing the defendant to file any application to issue a proposed cross-claim, which now brings the matter before the Court.

13. As to the explanation for the late joinder of the proposed cross-defendant, Mr Irvine explained that he was awaiting the plaintiffs' reply expert evidence in order to firm a view as to whether the cross-defendant should be joined to the proceedings. Mr Irvine said he was unable to confirm his view until such time as that evidence was to hand. Mr Irvine also sets out in some detail the delays in the service of that evidence by the plaintiffs, both in chief and in reply.

14. Mr Cotsis understands that his clients, in particular, Mr Boughton have found these proceedings to be particularly stressful. It is unsurprising that the plaintiffs are concerned at the extenuation of these proceedings commenced three years ago and which concern their family home. Obviously enough, if the plaintiffs' complaints are established at trial then their home may need demolition and rebuilding. It is unsurprising that their enjoyment of their home may be affected by the continuation of these proceedings any longer than need be the case.

Principles

15. The plaintiffs rely on the principles in Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. In Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (a firm) [2015] FCA 1098, Gleeson J provided a summary of the principles relevant to late amendments at [127]:

… Relevant matters the Court is to consider include:

(1)   The nature and importance of the amendment to the party applying for it: Aon at [102];

(2)   The extent of the delay and the costs associated with the amendment: Aon at [102];

(3)   The prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5], [100] and [102];

(4)   The explanation for any delay in applying for that leave: Aon at [108]; and

(5)   The parties’ choices to date in the litigation and the consequences of those choices: Aon at [112] and Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 (“Luck”) at [44];

(6)   The detriment to other litigants in the Court: Aon at [93], [95] and [114] and Luck at [44]; and

(7)   Potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification: Aon at [5], [24] and [30].

16. The principles that are applicable to the grant of leave to file a cross-claim out of time are relevantly the same as those that apply in the case of applications for leave to amend: Rush v Nationwide News Pty Ltd (No 2) [2018] FCA 550; (2018) 359 ALR 564 at [87] (per Wigney J).

Consideration

17. The defendant's counsel readily acknowledged that joinder of the cross-defendant would delay this matter taking a hearing date by at least six months. I agree. The defendant also acknowledged that joinder of the cross-defendant would lengthen the hearing of this matter, presently estimated to be seven days. However, the defendant submitted that joining the cross-defendant presented benefits by resolving all issues between the parties in a manner that was cost effective rather than having these proceedings continue to a hearing followed by a second set of proceedings against the engineer. It was submitted that the defendant had taken a conservative approach to joining the cross-defendant and to some extent the defendant's delay in making this decision was referrable to the plaintiffs' delay in serving their reply expert evidence.

18. The plaintiffs opposed the application on the basis that there was no satisfactory explanation for the delay and where the prejudice caused to the plaintiffs was said to outweigh the discretionary factors in favour of allowing an amendment. The plaintiffs’ pleaded case has not changed since commencement of these proceedings. The defendant has identified the proposed cross-defendant as a concurrent wrongdoer since then. The plaintiffs submitted that they are not sophisticated commercial entities but homeowners bringing a claim under the Home Building Act 1989 (NSW). That legislation is designed to simplify a homeowner’s remedy by excluding the proportionate liability legislation and putting the onus on the builder to proceed against parties other than those with whom the home builder has contracted. The defendant can commence separate proceedings against its sub-contractor if it wishes to do so.

19. I am not prepared to grant leave to file a cross-claim at this stage in the proceedings. Where the issue of the responsibility of the cross-defendant for any defect in the concrete floor slab was identified at the inception of these proceedings – now two years ago – I consider that the defendant has unduly delayed in making that final decision.

20. There is no evidence that the defendant has made contact with the proposed cross-defendant and ascertained their attitude to be joined, nor how long it might take the proposed cross-defendant to be in a position to file a response or put on any evidence in this matter. Given how long ago the concrete slab was presumably designed, being almost a decade ago, it is reasonable to think that the proposed cross-defendant may take some time to locate its records, if they still exist, locate the relevant employees who worked on this design, if they still work for the company, and to form a view as to its position.

21. I accept that the plaintiffs may not have prosecuted their claim as efficiently as this List would ordinarily expect to see. I understand that the plaintiffs are homeowners rather than a commercial litigant. Whilst not an excuse, it is something of an explanation. I am not satisfied that they should be further delayed by six months before they can even be allocated a hearing date. This may have the consequence that these proceedings may drag on for another year than is presently the case. I am not satisfied that a sufficient explanation has been given as to why the defendant has delayed until now to finally decide to join the structural engineer and for these reasons, I refuse the relief sought.

**********

Decision last updated: 14 November 2022