COI Building Group Pty Ltd v 100 Percent Plumbing Ltd
[2017] VSC 418
•21 JULY 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY ENGINEERING AND CONSTRUCTION LIST
S CI 2015 01842
| COI BUILDING GROUP PTY LTD (ABN 56 412 463 427) | Plaintiff |
| v | |
| 100 PERCENT PLUMBING LTD (ACN 064 567 844) | First Defendant |
| and | |
| MEINHARDT (VIC) PTY LTD (ACN 052 275 625) | Second Defendant |
| and | |
| COMBINED PLUMBING PTY LTD (ACN 138 381 754) | Third Defendant |
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JUDGE: | VICKERY J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 23 JUNE 2017 |
DATE OF JUDGMENT: | 21 JULY 2017 |
CASE MAY BE CITED AS: | COI BUILDING GROUP PTY LTD v 100 PERCENT PLUMBING LTD |
MEDIUM NEUTRAL CITATION: | [2017] VSC 418 |
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PRACTICE AND PROCEDURE – Pleadings – Application to amend statement of claim to make a contingent claim – Proportionate liability Part IVAA Wrongs Act 1958 (Vic) –Wheelahan v City of Casey (Ruling No 10) [2011] VSC 546 (Osborn J) considered and applied – Proposed amended statement of claim fails to plead the Plaintiff’s case against the Second and Third Defendants – Application to amend refused.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Klotz | Norris Coates |
| For the First Defendant | Dr A Hanak | HWL Ebsworth |
| For the Second Defendant | Mr D J Christie | M&K Lawyers |
| For the Third Defendant | No appearance | No appearance |
HIS HONOUR:
In this proceeding, the Plaintiff, COI Building Group Pty Ltd (the ‘Plaintiff’) seeks damages for losses suffered as a result of water leaks at a development located at 32 Grange Road, Toorak, in the State of Victoria (the ‘Development’). 100 Percent Plumbing Ltd (the ‘First Defendant’), and Combined Plumbing Pty Ltd (the ‘Third Defendant’) were engaged to carry out plumbing services and works. Meinhardt (Vic) Pty Ltd (the ‘Second Defendant’) was engaged to carry out periodic site inspections to ensure that the works complied with the drawings and specifications.
These reasons arise from an application by the Plaintiff to amend its statement of claim.
The Second Defendant opposes the amendments.
The application was heard on 23 June 2017.
Procedural background
On 22 April 2015, the Plaintiff commenced the proceeding by writ against the First Defendant (the ‘Supreme Court Proceeding’).
At a directions hearing on 10 November 2016, the Court raised two jurisdictional questions, namely whether:
(a) the substance of the proceeding would give rise to a claim under s 16 of the Water Act 1989 (Vic); and
(b) the contract between the Plaintiff and the First Defendant could be regarded as a domestic building contract.
On 2 December 2016, the First Defendant applied to join the Second and Third Defendants to the proceeding.
On 6 December 2016, the First Defendant filed its Amended Defence.
On 24 February 2017, the Plaintiff commenced proceedings against the First Defendant in the Victorian Civil and Administrative Tribunal (the ‘VCAT Proceeding’).
On 12 April 2017, a Judge of this Court[1] was appointed by the Chief Justice of Victoria to hear and determine the VCAT Proceeding under s 29(3) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).
[1]Vickery J.
The two proceedings are to be heard together.
The proposed amendments to the statement of claim
The Plaintiff provided the proposed amended statement of claim to the Court on 21 June 2017.
The key amendments to the Plaintiff’s statement of claim which are proposed are as follows (typographical errors were corrected):
CLAIMS AGAINST SECOND AND THIRD DEFENDANTS CONDITIONAL UPON SUCCESS OF THE FIRST DEFENDANT’S DEFENCE OF PROPORTIONATE LIABILITY UNDER PART IVAA OF THE WRONGS ACT 1958
10.Further, by paragraphs 11-25 of its amended defence dated 6 December 2016 (“a copy of which is attached hereto”) the first defendant raises the defence of proportionate liability under Part IVAA of the Wrongs Act 1958 by alleging that:
(a)Further and alternatively, if the plaintiff has suffered loss and damage caused by the conduct of the first defendant (which is denied) then the plaintiff’s claim is an apportionable claim within the meaning of s 24AE of the Wrongs Act 1958;
Combined Plumbing (third defendant)
(b)In 2013, the plaintiff retained Combined Plumbing Pty Ltd ACN 138 381 754 (“the third defendant”) to carry out plumbing works at the Development;
Particulars
The retainer of the third defendant was partly oral and partly to be inferred.
Insofar as it was oral, the retainer was constituted by conversations between Mr Ariss and Mr Bradley McMahon, the sole director of the third defendant, in 2013, pursuant to which the third defendant agreed to carry out plumbing works at the Development.
Insofar as it was to be inferred, the retainer is inferred from the fact that plumbing works were carried out by Mr McMahon at the Development in the period to August 2013. Some of the works are recorded in Plumbing Certificate number 1176186 (Compliance Certificate). The Compliance Certificate provides that Mr McMahon, a director of the third defendant, carried out plumbing works on apartments 1 to 5 and completed plumbing works at the Development on 5 August 2013.
Further particulars will be provided following the completion of discovery (including non-party discovery) and inspection of documents.
(c)It was a term of the third defendant’s retainer with the plaintiff that the third defendant would:
(i)exercise reasonable care and diligence in carrying out plumbing works at the Development; and
(ii)carry out the plumbing works in accordance with the specifications supplied by the plaintiff.
Particulars
Term (i) was implied as a matter of law. Term 9(ii) was partly oral, partly written and partly to be implied.
Insofar as it was oral, it was constituted by conversations between Mr Ariss and Mr McMahon in 2013.
Insofar as it was in writing, it was contained in the Hydraulic Services Specification dated 16 March 2011 (Hydraulic Services Specification) and prepared by Meinhardt (Vic) Pty Ltd (Meinhardt) which was provided by the plaintiff to the third defendant.
The fact that the Hydraulic Services Specification was provided to the third defendant is to be inferred from the fact that this was the only specification which identified the plumbing works to be carried out at the Development and the fact that the third defendant carried out plumbing works referred to in the Hydraulic Services Specification.
Insofar as it was implied, it was implied as a matter of law consequent upon the provision of the Hydraulic Services Specification to the third defendant, alternatively from the need to give business efficacy to the retainer.
Further particulars will be provided following the completion of discovery (including non-party discovery) and inspection of documents.
(d)Alternatively, the third defendant owed the plaintiff a common law duty to take reasonable care when carrying out plumbing works at the Development.
(e)Pursuant to the Hydraulic Services Specification the third defendant was required to pressure test the whole of the drainage system at the Development to ensure that the system was completely water tight (cl.10.1 and 10.10, Hydraulic Services Specification);
(f)Further and alternatively, a reasonably competent plumbing contractor would have conducted pressure testing of the drainage system to ensure that the system was water tight.
(g)In the event that the PVC pipe referred to in paragraph 6(ii) of this amended statement of claim was not connected to a downpipe as alleged, this would have been revealed had the third defendant carried out basic testing of the drainage system;
(h)In breach of the terms and duty pleaded in paragraphs 10(c) and (d) above, the third defendant failed to test, or adequately test, the drainage system at the Development;
Meinhardt (second defendant)
(i)Further and alternatively, Meinhardt (“the second defendant”) was retained by COI (“the plaintiff”) to carry out periodic site inspections to confirm that the building works as constructed complied with the building drawings and the specifications;
(j)It was a term of the second defendant’s retainer with the plaintiff that the second defendant would exercise reasonable care and diligence in carrying out inspections of the Development;
(k)Alternatively, the second defendant owed a common law duty to take reasonable care when carrying out inspections of the development;
(l)In the event that the PVC pipe referred to in paragraph 6(ii) of this amended statement of claim was not connected to a downpipe as alleged, this would have been revealed had the second defendant adequately inspected:
(i)the installation of the PVC pipe and corresponding downpipe; and
(ii)the constructions of the block column in which the PVC pipe was located;
(m)In breach of the duties pleaded in 10(j) and (k) above, the second defendant:
(i)failed to inspect, alternatively adequately inspect, the works at the time the PVC pipe was installed;
(ii)failed to inspect, alternatively adequately inspect, the works at the time the block column was constructed;
(iii)failed to advise the plaintiff that PVC pipe was not connected to a downpipe and was therefore not constructed in accordance with the drawings and specifications;
(n)Each of the first defendant, the second defendant and the third defendant are concurrent wrongdoers within the meaning of s 24AH of the Wrongs Act;
(o)In the premises, the liability of the first defendant in relation to the plaintiff’s claim is limited to an amount reflecting that portion of the loss or damage the Court considers just having regard to the extent of its responsibility pursuant to s 24AI of the Wrongs Act.
11. If, as contended for by the first defendant, the Court:
(a)determines that the plaintiff’s claim is apportionable within the meaning of Part IVAA of the Act and the first defendant and/or the second defendant and/or the third defendant are concurrent wrongdoers within the meaning of s 24AH of the Act in respect of the plaintiff’s adjudged loss and damage; and
(b)apportions that loss and damage among the first defendant and/or the second defendant and/or the third defendant according to their respective responsibility;
then the plaintiff seeks judgment against each of the defendants in accordance with the Court’s determination as to the proportion of each defendant’s responsibility for the plaintiff’s loss and damage.
Plaintiff’s submissions
The Plaintiff submitted that the proposed amendments to the statement of claim are to enable it to obtain judgment against the Second and Third Defendants in the event that the First Defendant is successful in its defence under Part IVAA of the Wrongs Act1958 (Vic).
The Plaintiff relies on the statements of Osborn J in Wheelahan v City of Casey (Ruling No 10) (‘Wheelahan’),[2] where, it submits, his Honour expressly approved the pleading of a contingent claim as an amendment to a statement of claim. That is, the Plaintiff submitted, that in Wheelahan Osborn J expressly approved the bringing of a contingent claim that ‘picks up’ pleadings from the defence in a statement of claim.
[2][2011] VSC 546.
The Plaintiff also submitted that the Second and Third Defendants would have a fully pleaded out case to which they would be able to plead any specific defence open to them.
The Second Defendant’s submissions
The Second Defendant opposes the Plaintiff’s application on three grounds, specifically that:
(a) the proposed amended statement of claim fails to disclose a cause of action as against the Second Defendant, and is also liable to prejudice, embarrass or delay the fair trial of the proceeding (the ‘Cause of Action Point’);
(b) the Plaintiff, by its proposed amended statement of claim, seeks to advance two inconsistent positions, which requires that the Plaintiff make an election (the ‘Election Point’); and
(c) the form of the proposed amended statement of claim is inconsistent with proper procedure (the ‘Proper Procedure Point’).
The Cause of Action Point
The Second Defendant submitted that, through its proposed amended statement of claim, the Plaintiff seeks, inter alia, damages against the Second Defendant, but does not disclose a cause of action because it does not state the material facts upon which the Plaintiff relies to found this claim. The amendments proposed refer to facts that are alleged by the First Defendant.
Further, the Second Defendant submitted that the proposed amended statement of claim is prejudicial and embarrassing because it introduces novel forensic issues into the proceeding by, for example, purporting to place the burden of proof upon the First Defendant in respect of the relief claimed against the Second Defendant. This, the Second Defendant submitted, relying on Cross on Evidence, is inconsistent with the:[3]
fundamental requirement of any judicial system … that the person who desires the court to take action must prove the case to its satisfaction. This means that the legal burden of proving all facts essential to their claims normally rests upon the plaintiff in a civil suit …
[3]J D Heydon, Cross on Evidence (LexisNexis Butterworths, 10th ed, 2015) [7060] (citations omitted).
The Second Defendant relies on Purkess v Crittenden[4] where Barwick CJ, Kitto and Taylor JJ quoted with approval from Phipson on Evidence where it is stated:[5]
The expression “burden” or “onus” of proof “As applied to judicial meanings (…) has two distinct and frequently confused meanings: (1) the burden of proof as a matter of law and pleading – the burden, as it has been called, of establishing a case, whether by preponderance of evidence, or beyond a reasonable doubt; and (2) the burden of proof in the sense of introducing evidence”.
[Citations omitted; emphasis in the original]
[4](1964) 114 CLR 164.
[5]Ibid 167–168.
The passage in Purkess was cited by Walsh JA in the New South Wales Court of Appeal decision of Currie v Dempsey,[6] where his Honour observed:[7]
In my opinion, the burden of proof in the first sense lies on a plaintiff, if the fact alleged (whether affirmative or negative in form) is an essential element in his cause of action, e.g. if its existence is a condition precedent to his right to maintain the action.
[6](1967) 69 SR (NSW) 116.
[7]Ibid 125.
The Election Point
The Second Defendant submits that, in the circumstances of the present case, the Plaintiff is faced with an election. It can:
(a) bring a claim against the alleged concurrent wrongdoers in the present proceeding; or
(b) await the outcome of its claim against the First Defendant in the present proceeding and subsequently bring a fresh proceeding against the concurrent wrongdoers pursuant to s 24AK of the Wrongs Act 1958 (Vic).
The fact that the First Defendant has engaged the operation of Part IVAA of the Wrongs Act 1958 (Vic), and has joined the Second Defendant and pleaded the facts upon which it relies to hold the Second Defendant liable as a concurrent wrongdoer, does not provide a basis upon which the Plaintiff is entitled to circumvent the onus of pleading and proving the facts upon which it relies to make a claim for damages as against the Second Defendant.
The Second Defendant submitted that allowing the proposed amendments to the statement of claim to stand would ultimately raise difficult forensic issues not only on the pleadings but also during the conduct of the interlocutory process prior to trial and at the trial itself.
For example, the Second Defendant refers to the allegations of the First Defendant in its amended defence, which include, inter alia, that:
(a) the Plaintiff retained the Second Defendant to carry out periodic site inspections to confirm that the building works as constructed complied with the building drawings and the specifications;
(b) it was a term of the retainer that the Second Defendant would exercise reasonable care and diligence in carrying out inspections; and
(c) the Second Defendant breached the retainer in that it failed to, in short, carry out proper inspections.
The Second Defendant submitted that the proposed amended statement of claim, in its current form, does not clarify what the Plaintiff will say were the terms of the retainer, how the Second Defendant acted in breach of those terms, what evidence the Plaintiff will adduce, or what defences are available.
A further issue identified by the Second Defendant is on the question of damages. It submitted that it will not know until judgment whether it may be required to answer any case in damages. It follows then that the Second Defendant does not and cannot know what, if any, evidence it may be required to adduce on quantum.
The Second Defendant also submitted that the following further matters will cause prejudice to it if the proposed amendments are allowed:
(a) as the Second Defendant will not know until judgment in the Plaintiff's claim against the First Defendant whether the Plaintiff will be claiming relief against it, it will lose the opportunity to make any offers of compromise together with the costs pressures attached to such offers. In other words the Second Defendant will be unable to safely engage in discussions to settle the proceeding because the Plaintiff's position will remain equivocal until judgment;
(b) the Second Defendant will be required to run a case at trial in circumstances where the Plaintiff may ultimately make no claim in relation to it, which is a hopeless waste of resources for the parties and the Court;
(c) the Court will not be in a position to determine what evidence may be led and by which parties; and
(d) it is almost certain that amendments to pleadings will be required after the evidence, especially in the event there is a settlement between the Plaintiff and one or other of the defendants.
The Proper Procedure Point
The Second Defendant submitted that the Plaintiff should be required to properly plead out its case against it.
It also relied on the observations of Osborn J in Wheelahan. It submitted that in that case, his Honour accepted the submissions of a defendant and third party that:[8]
If [a plaintiff by counterclaim] intends to seek judgment in this proceeding against any of the respondents, in respect of the subject matter of its counterclaim against [the defendant], that it must plead a claim and seek relief against those respondents in the usual way. Each of those respondents can then respond by delivering a defence to that claim, including any statutory defences such as proportionate liability, contributory negligence and/or limitation of actions, and may also pursue claims for contribution against others. In this way the road map of claims made by [a defendant by counterclaim] in this complex proceeding will be clear for all parties, for this Honourable Court, and for any Appeal Court.
[8]Wheelahan [2011] VSC 546 [10].
Wheelahan v City of Casey (Ruling No 10)
Given that both the Plaintiff and the Second Defendant rely on the statements of Osborn J in Wheelahan, it is appropriate to consider the principles stated and applied by Osborn J in his Honour’s reasons.
The case concerned a complex group proceeding under Part 4A of the Supreme Court Act 1986 (Vic) brought by residents and former residents of a residential estate in Cranbourne, in the State of Victoria, who were affected by the migration of landfill gas from a former municipal landfill located nearby, on Stevensons Road.
In Wheelahan, Osborn J considered an application to strike out parts of a reply pleading, where the pleading sought to make contingent claims against concurrent wrongdoers in the alternative, and the contingent claims were made indirectly by reference to the defendant’s pleading. His Honour held that:
27Nevertheless, I accept that ordinarily if Peet wished to raise a contingent claim against the concurrent wrongdoers it should amend its statement of counterclaim.
28If it does not do so it runs the risk of falling short in its recovery unless the pleadings as a whole can be said to have put the concurrent wrongdoers properly on notice of such claim.
29When the plaintiffs in the present proceeding were met by defences of proportionate liability, they amended their statement of claim in order to ensure they were entitled to judgment against the alleged concurrent wrongdoers identified by Casey.
30I also accept such a course would enable the concurrent wrongdoers to plead any specific defence open to them against Peet (which theoretically might extend to matters not pleaded in answer to the TPSOC) and potentially to claim contribution and/or indemnity from others not concurrent wrongdoers.
31 It will also facilitate the service of offers of compromise.
32 It would fully plead out the case the Court must decide.
33I do not accept that the proper basis certification requirements imposed by s 42 of the Civil Procedure Act 2010 present a barrier to making the claims in proper form on a contingent basis.
34It seems to me that I should not depart from the ordinary course unless it is plain there is no utility in it. I am not so persuaded, although I doubt that the further pleadings sought will add to the substance of the contingent allegations Peet makes against the concurrent wrongdoers. The content of those allegations will remain defined by what Peet picks up from Casey’s pleadings and the answer to those allegations will, in all probability, be that already pleaded in answer to the TPSOC.
35Nevertheless, I will direct that if Peet persists in the contingent claims in para [8] of Peet’s reply pleading, Peet file and serve an amended statement of counterclaim raising such contingent claims directly against the alleged concurrent wrongdoers.
Whether the proposed amended statement of claim adequate
The real issue to determine here is whether the proposed amended statement of claim adequately pleads the Plaintiff’s case against the Second and Third Defendants. In my opinion it fails to do so.
The principles stated and applied by Osborn J in Wheelahan and cited above, are directly applicable.
I accept the force of the principal contentions of the Second Defendant under the ‘Cause of Action Point’ and the ‘Proper Procedure Point’. The two points are closely aligned and will be dealt with together.
It is apparent that by its proposed amended statement of claim, the Plaintiff seeks, inter alia, damages against the Second Defendant. However, in purporting to do so, it does not disclose a cause of action against the Second Defendant. The proposed pleading does not state the material facts upon which the Plaintiff relies to seek damages against the Second Defendant, or indeed against the Third Defendant. The amendments proposed refer to facts which are alleged by the First Defendant in its claim for a finding of proportionate liability under Part 1VAA of the Wrongs Act1958 (Vic).
The proposed amended statement of claim, in its current form, does not clarify what the Plaintiff will say were the terms of the retainer, how the Second Defendant acted in breach of those terms, what evidence the Plaintiff will adduce, or what defences are available.
As to damages, no claim is made or quantified against the Second Defendant or the Third Defendant. Those parties are not placed in any position to know what, if any, evidence it may be required to adduce on causation or quantum.
As to the ‘Proper Procedure Point’, the overarching purpose of the Civil Procedure Act 2010 (Vic) (the ‘CPA’)[9] will be compromised if the proposed pleading of the Plaintiff is permitted to proceed.
[9]Namely, ‘to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute’: s 7(1).
The Second Defendant will not know until judgment in the Plaintiff's claim against the First Defendant whether the Plaintiff will be claiming relief against it. Accordingly, it will lose the opportunity to make any offers of compromise with a view to settling the proceeding.
As a consequence, the Second Defendant will be compelled to proceed to trial in an attempt to defend its position in circumstances where the Plaintiff may ultimately make no claim in relation to it.
Further, the Court will not be in a position to determine what evidence may be led and by which parties. Consequently, the obligation of the Court to properly manage the case in accordance with the CPA will be inhibited.
For these reasons, and in accordance with the observations of Osborn J in Wheelahan[10] the Plaintiff should be required to properly plead out its case against both the Second Defendant and the Third Defendant.
[10] Wheelahan [2011] VSC 546 [10].
As to the ‘Election Point’, this requires clarification.
In the circumstances of the present case, the Plaintiff may, amongst other courses which may be open to it, either:
(a) bring a claim against the alleged concurrent wrongdoers in the present proceeding; or
(b) await the outcome of its claim against the First Defendant in the present proceeding and subsequently bring a fresh proceeding against the concurrent wrongdoers pursuant to s 24AK of the Wrongs Act 1958 (Vic).
However, it is not presently compelled to make an ‘election’ in the traditional sense, which once made before judgment, for practical purposes, would usually preclude it from pursuing the course which has been abandoned.
Rather, in this case, it is apparent that the Plaintiff proposes to make claims against the alleged concurrent wrongdoers, namely the Second and Third Defendants.
The Plaintiff may well make contingent claims against the Second and Third Defendants if pleaded appropriately. However, adopting this course does not detract from its obligation to plead a case against both of those parties in the usual way.
Conclusion and orders
It follows that the Plaintiff’s application to file and serve an amended statement of claim in the form provided to the Court on 21 June 2017 should be refused.
I will make the following orders:
1.The requirements of r 46.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) be dispensed with.
2. The Plaintiff’s application to file and serve an amended statement of claim in the form provided to the Court on 21 June 2017 is dismissed.
I will hear the parties on the question of costs and on any further orders by way of directions which should be made.
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