Cornonero Pty Ltd v Bright Moon Buddhist Society Inc

[2020] VCC 453

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

BUILDING CASES LIST

Case No. CI-19-04272

CORNONERO PTY LTD	Plaintiff
v
BRIGHT MOON BUDDHIST SOCIETY INCORPORATED	Defendant

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JUDGE:	His Honour Judge Woodward
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers – final submission dated 21 April 2020
DATE OF RULING:	23 April 2020
CASE MAY BE CITED AS:	Cornonero Pty Ltd v Bright Moon Buddhist Society Inc
MEDIUM NEUTRAL CITATION:	[2020] VCC 453

REASONS FOR RULING
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ON THE PAPERS:	Counsel	Solicitors
For the Plaintiff	JR Gurr	Mills Oakley
For the Defendant	B Reid	Noble Lawyers Pty Ltd

HIS HONOUR:

1       The parties have been unable to agree on a timetable for the interlocutory steps in the proceeding.  After each filing and exchanging submissions dated 27 March 2020 on their respective proposed orders, the parties sought some further time to consider each other’s position and file reply submissions and revised proposed orders.  The plaintiff’s reply submissions are dated 17 April 2020 and the defendant’s are dated 21 April 2020.

2       In short compass, the plaintiff is seeking an early mediation (by 26 June 2020) – after discovery (proposed for 29 May 2020), but before expert reports are filed and served (proposed for dates between 17 July 2020 and 11 September 2020).  Its draft orders provide for the matter be listed for further directions on 29 May 2020.  However, this date falls before the date the plaintiff proposes for the mediation, so I assume this is a hangover from an earlier draft, and the plaintiff in fact intends that the further directions (if required) fall after the last date for mediation.

3       For its part, the defendant argues that the mediation should be scheduled to take place by 9 October 2020, being after each party has filed its expert reports (initial reports by both parties proposed for 17 July 2020, reply reports due on 4 September 2020), but before the conclave (30 October 2020).  But it also seeks to defer the filing and service of its foreshadowed amended defence and counterclaim until some four weeks after its initial expert report is due (that is, until 14 August 2020).

4       Both parties’ submissions include a summary of the background to the proceeding.  It arises out of a building contract entered into between the parties in January 2017 for the construction by the plaintiff for the defendant of a nine story ceremonial temple on a site in Springvale owned by the defendant.  The agreed lump sum price for the works, subject to adjustment, was $2,297,776.80. The plaintiff’s claims in the proceeding concern the late payment, non-payment and underpayment of various payment claims issued by it between November 2017 and April 2018. The plaintiff argues that the defendant’s repeated failures to make payment in accordance with its contractual obligations led to the plaintiff validly terminating the building contract in June 2018.

5       The defendant denies that the plaintiff was entitled to terminate the building contract and contends, instead, that the plaintiff repudiated the contract, which repudiation it accepted and itself terminated the contract by letter dated 29 June 2018.  In relation to the plaintiff’s alleged variation works, the defendant contends that the works were within the scope and did not constitute variations.  The defendant also alleges that the plaintiff over claimed for work, or claimed for work not actually undertaken or completed, and had not completed the works by the date for practical completion on 15 April 2017.

6       The proceeding was commenced by writ and statement of claim dated 10 September 2019. The plaintiff filed and served an amended statement of claim on 9 January 2020 and provided further particulars of that statement of claim, going primarily to questions of quantum, on 27 February 2020.  By consent orders made on 25 February 2020, the time for filing a defence and any counterclaim by the defendant was extended to 3 March 2020.  The defendant filed its defence on that date, but has not so far filed a counterclaim.  The plaintiff’s submissions also note that during 2018, the parties engaged in an adjudication of claims under the building contract under the Building and Construction Industry (Security of Payment) Act 2002 (Vic) and a failed application by the defendant to review that adjudication.

7       The plaintiff submits that an early mediation is consistent with the overarching purpose under the Civil Procedure Act 2010 (Vic), because the issues in dispute are well known to the parties and the costs likely to be incurred in the preparation of expert evidence will be significant. It argues that given the sum in dispute, the costs likely to be incurred in relation to the expert reports are likely to pose an impediment to a commercial resolution of the dispute. On the subject of the counterclaim, the plaintiff submits in substance that the defendant has had long enough to finalise any counterclaim - it has twice consented to orders for the delivery of a counterclaim by a particular date, both of which dates have now passed. The plaintiff also submits it would be contrary to the overarching purpose and efficient conduct of the proceeding to allow the defendant to delay the defining of the issues in dispute between the parties until after its initial expert reports are finalised.

8       The defendant opposes an early mediation, arguing that completing mediation before expert reports is not the usual course, particularly for building and construction matters.  It asserts, in effect, that the parties can only engage in effective settlement negotiations when each is fully cognisant of the claims against them and the strength of the expert evidence.  On the timing of the foreshadowed counterclaim, the defendant relies on an affidavit by its solicitor Mr Noble, sworn on 27 March 2020, to argue that it is reasonable for the defendant to await further expert advice about defects in the works and the cost of rectifying defects before finalising any counterclaim.  Mr Noble refers to having obtained a preliminary engineering report in December 2019, which recommended a number of further investigations.  He deposes that the further investigation work is progressing, but is unlikely to be completed until mid-July 2020.

9       I would generally encourage parties in any dispute to undertake an early mediation, in the hope that a resolution can be found before the legal and other costs begin to overwhelm the sums claimed.  Contrary to the defendant’s submissions, building disputes can be particularly suitable for early mediation, because the parties and their practitioners are often experienced and pragmatic operators, who can make informed early assessments of where a claim is likely to end up.  However, in my experience, early mediations are worthwhile only if all parties embrace the process and are prepared to invest in an early pragmatic solution.  Further, sometimes the reluctance of a party to participate is based on a genuine lack of the information and expertise necessary to make an informed assessment of their exposure.  In the circumstances of this case, I accept that an early mediation is unlikely to be productive, and therefore propose to order consistently with the defendant’s submissions that the mediation be scheduled to be concluded on a date after the initial experts reports are filed and exchanged.

10      On the other hand, I do not accept that the defendant should be permitted to delay the filing and service of its amended defence (including a set-off) and any counterclaim until after that time.  I am satisfied that the defendant has had more than sufficient time and preliminary expert assistance to determine whether it has proper grounds for a defence of set-off and a counterclaim and to formulate the material facts on which those claims rely.  I agree with the plaintiff that it is incumbent on the parties to define the issues in the proceeding by pleadings at the earliest opportunity, particularly as this will set the parameters for both the discovery and the expert evidence, which the defendant is insisting should be completed before mediation.  The finalisation of expert reports may lead to some refinement of those claims and further particularisation (particularly on quantum).  But I see no justification in this case for affording the defendant the luxury of putting off entirely the pleading of a set-off and any counterclaim until after its initial expert reports are completed.

11      I will therefore make orders in the form attached, including that the costs of the application be costs in the proceeding.  I note in passing that I have provided in the orders for initial experts reports by both parties, followed by reply reports, rather than the plaintiff’s report followed by the defendant’s reply.  This is essentially because it is presently unclear what reports the defendant will ultimately seek to rely on, and it is not appropriate for the plaintiff to have to speculate about this when instructing its expert or experts.  Although it is likely that I will in due course make orders for one or more expert conclaves, this too should await finalisation of the initial expert reports and the mediation.

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Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge Woodward delivered on 23 April 2020.

Dated: 23 April 2020

Claire Findlay

Associate to His Honour Judge Woodward