Coombes v Capital Certifiers Pty Ltd
[2022] ACTSC 165
•11 July 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Coombes v Capital Certifiers Pty Ltd |
Citation: | [2022] ACTSC 165 |
Hearing Date: | 8 July 2022 |
DecisionDate: | 11 July 2022 |
Before: | Elkaim J |
Decision: | (i) The application in proceeding filed for the defendant on 24 June 2022 is dismissed. (ii) The defendant is to pay the plaintiffs’ costs of the application. |
Catchwords: | CIVIL LAW – APPLICATION – where a defendant wishes to include a non-party as a defendant to the proceedings – plaintiff seeks no relief against the proposed defendant |
Legislation Cited: | Building Act 2004 (ACT) ss 140, 141 Civil Law (Wrongs) Act 2002 (ACT) Ch 7A Wrongs Act 1958 (Vic) s 24AI(3 |
Cases Cited: | Dunn v Hanson Australasia Pty Ltd [2017] ACTSC 169 Hyblewski v Bellerive Homes Pty Ltd [2019] ACTSC 44 |
Texts Cited: | Explanatory Statement, Building Bill 2003 (ACT) |
Parties: | Warren Coombes ( First Plaintiff) Emma Coombes (Second Plaintiff) Capital Certifiers Pty Ltd ( Defendant) |
Representation: | Counsel B Buckland ( Plaintiffs) M Hassall and A Schofield ( Defendant) |
| Solicitors Mills Oakley ( Plaintiffs) Wotton + Kearney ( Defendant) | |
File Number(s): | SC 97 of 2022 |
Elkaim J
The substantive proceedings were commenced with the filing of an originating claim and a statement of claim on 1 April 2022.
The plaintiffs, a couple, engaged a builder, Emmadale Projects Pty Ltd (Emmadale), to build a residence for them in Yarralumla. The defendant was appointed as the certifier for the project.
The plaintiffs allege that Emmadale did a particularly bad job to the extent that the residence is “replete with defects such that the whole of those works will need to be demolished and removed” (see [13] of the statement of claim).
The plaintiffs further allege that the defendant was in breach of its obligations as a certifier in certifying the work of Emmadale. The plaintiffs have claimed damages from the defendant arising from this breach.
The plaintiffs have not sued Emmadale because Emmadale has gone into liquidation and the limit of its statutory insurance ($85,000) has already been received by the plaintiffs. The whole of the claim is in the order of $650,000.
In its defence, filed on 17 June 2022, the defendant seeks to rely on an entitlement to proportionate liability arising from the defective work of Emmadale.
In order to give effect to this part of the defence the defendant filed an application in proceeding on 24 June 2022 in which it seeks to join Emmadale as a defendant.
The plaintiffs oppose the joinder, in particular because they say they do not wish to sue Emmadale (there being no point) and the rules of court do not permit a joinder in the circumstances that exist here.
The right to rely on an assertion of proportionate liability is to be found in s 141 of the Building Act 2004 (ACT) (Building Act). There is no dispute that the current proceedings are a “building action” as defined in s 140.
Pursuant to s 141(3), if the defendant was able to show that Emmadale was “liable for a proportionate part of damages” then it would not be liable to the plaintiffs for any more than its own assessed proportion of those damages.
I was informed that in cases of this type an assessment of proportionate liability as between a certifier and a builder might be in the order of about 20 per cent to 80 per cent in favour of the certifier. Clearly therefore it is very much in the defendant’s interest to be able to take advantage of s 141.
The defendant faces two hurdles before it can benefit from s 141:
(a)Emmadale is in liquidation so leave to proceed against it must first be obtained pursuant to s 500 of the Corporations Act 2001 (Cth) (Corporations Act).
(b)The defendant must have leave to join Emmadale as a defendant. The defendant accepts that it could not achieve its purpose by joining Emmadale as third party.
In order to surmount these hurdles, the defendant filed the application in proceeding seeking leave to commence the proceedings against Emmadale under the Corporations Act and then leave to join Emmadale as a defendant under the Court Procedures Rules 2006 (ACT) (Court Procedures Rules). The plaintiffs oppose the granting of both requests for leave.
The reason that the defendant wishes to join Emmadale as a defendant arises from the decision of Mossop J in Hyblewski v Bellerive Homes Pty Ltd [2019] ACTSC 44 (Hyblewski) who found, at [124]:
In Dunn v Hanson Australasia Pty Ltd [2017] ACTSC 169 at [37], I noted that “the section only provides for an apportionment between “defendants””. The terms of s 141 only permit apportionment between “each defendant to the action who is found to be jointly or severally liable for the damage”
In Hyblewski the plaintiff had sued a builder and a certifier. The plaintiff settled with the builder so that the builder ceased to be a defendant. His Honour then continued, in [124]:
However, by reason of the settlement and discontinuance of the proceedings against the builder there will only be one defendant in relation to whom any finding will be made for the purposes of s 141(1). As a consequence, no apportionment under the section would be possible.
For purposes of this application the defendant accepted that the Building Act ‘trumped’ the Civil Law (Wrongs) Act 2002 (ACT) which in Chapter 7A provides for proportionate liability against a wrongdoer as opposed to a defendant.
Thus, in summary, the defendant needs Emmadale to be a defendant if it is to take advantage of the proportionate liability provisions in the Building Act. I was referred to the Explanatory Statement to the Building Bill 2003 (ACT) where it is stated:
A person found to be liable for a proportionate part of damages under subclause (1) in a building action is not liable to contribute to the damages apportioned to anyone else in the action or to indemnify any other person in relation to the damages.
The defendant suggested that the use of the word “person” indicated that the intent behind the legislation was to enable a finding of proportionate liability to be found against ‘anyone’. But this is not what the Act says. The decision in Hyblewski makes it clear that the benefit of the proportionate liability provisions in the Building Act is restricted to defendants. This is consistent with a plain reading of the Act.
The defendant sought to draw comfort from the (roughly) equivalent legislation in Victoria. The defendant suggested that s 24AI(3) of the Wrongs Act 1958 (Vic), permitted an apportionment of responsibility between parties to a proceeding, specifically including a company that has been wound up, notwithstanding that the company is not a party. I understand the defendant’s reading of the section, but find the interpretation somewhat strained. In any event there is no equivalent section in the ACT legislation, so that little assistance can be gained from the Victorian Act, or from the authorities that considered this Act.
Ultimately the issue comes down to whether or not Emmadale can be joined as a defendant. As I have noted above, the defendant accepts that it could not achieve its purpose if Emmadale was joined as a third party.
The rule relied upon by the defendant was r 220(1)(b) of the Court Procedures Rules. The plaintiffs conceded that, under the pleadings, the question of proportionate liability had been raised as an issue in dispute. However, the plaintiffs said that Emmadale could not become a defendant because the plaintiffs did not wish to take any action against Emmadale.
The plaintiffs submitted:
As the plaintiffs do not wish to pursue a claim against Emmadale, they do not make an application for leave to proceed against that company under section 500 of the Corporations Act 2001. The defendant cannot force the plaintiffs to apply for leave to proceed against Emmadale, nor can they apply for leave on the plaintiffs’ behalf. This is because it is inherent in the joinder of Emmadale as a defendant that the plaintiffs have and seek to pursue a claim against Emmadale. (Written submissions at [4]).
In respect of s 141 of the Building Act, Mossop J in Dunn v Hanson Australasia Pty Ltd [2017] ACTSC 169 (Dunn), said at [37]:
The provision was originally enacted in the Construction Practitioners Registration Act 1998 (ACT). That provision was then re-enacted in the Building Act. It should be noted that the section only provides for an apportionment between “defendants”. Thus, the operation of the section will be determined by a plaintiff who makes the decision as to who is joined as a defendant in the proceedings. It therefore ameliorates to some extent the shifting of the risk to a plaintiff that is present in other provisions based upon the model provisions that followed the Davis Report. The wording of the provision may be contrasted with the wording of s 107A of the CLW Act and s 87CD(5) of the TPA which provide an extended definition of defendant so as to capture any party other than a claimant. (Emphasis added)
In further support of its position the plaintiffs referred to the definition of a defendant in r 20(1) of the Court Procedures Rules:
20Meaning of plaintiff and defendant
(1)For a proceeding (other than an application in the proceeding or a proceeding on a counterclaim or third-party notice)—
(a) a reference in these rules to the plaintiff is a reference to the party claiming relief; and
(b)a reference in these rules to the defendant is a reference to the party against whom relief is sought or who otherwise responds to the originating process.
The plaintiffs submitted that Emmadale was not a party against whom relief was sought nor was it a party who “otherwise responds to the originating process”. Rule 31 refers to the “Kinds of originating processes” being an originating claim or originating application. The rule goes on to say that:
(2)An application in a proceeding is not an originating process.
It seems quite clear therefore that as long as the plaintiff has no wish to take action against Emmadale, or seek any form of relief against it, Emmadale could not qualify as a defendant.
When the above rules are read in conjunction with the passage quoted above from Dunn it must follow that the application in proceeding for the defendant to join Emmadale as a defendant must fail.
In the light of this conclusion, it is not necessary for me to consider whether leave should be given to commence action against Emmadale under the Corporations Act. I do however note that the liquidator had consented to leave but only on the condition that no enforcement action be taken against it without the leave of the Court. The liquidator was, in a sense, endorsing the plaintiffs’ position to the extent that further leave would be necessary if the plaintiffs were to seek any relief from Emmadale.
Finally, I make this comment. On one reading of my decision, it imposes a possibly substantial penalty upon the defendant whose liability might otherwise have been significantly reduced if it had been able to pursue its allegation of proportionate liability against the builder. The other side to this observation is that if a proportionate split was allowed, the plaintiffs could have their damages against the defendant significantly reduced without the option of recovering the builder’s proportion of the damages.
I make the following orders:
(i)The application in proceeding filed for the defendant on 24 June 2022 is dismissed.
(ii)The defendant is to pay the plaintiffs’ costs of the application.
| I certify that the preceding thirty [30] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim. Associate: Date: |
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