D & C Homes Pty Ltd v Yang - [2018] SADC 36

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
D & C HOMES PTY LTD v YANG
[2018] SADC 36
Judgment of His Honour Judge Dart
19 April 2018
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - DISTRICT COURT
Appeal from decision of Master granting summary judgment - whether Master erred in holding no reasonable basis for defending the claim.
Held: Appeal dismissed.
Supreme Court Civil Rules 2006 r 232, r 286, referred to.
Ceneavenue Pty Ltd & Ors v Martin & Ors (2008) 106 SASR 1; Groom v State of SA [2017] SASCFC 35; Sandery v Kowalski & Anor [2016] SASC 175, considered.

D & C HOMES PTY LTD v YANG
[2018] SADC 36
JUDGE DART:

This is an appeal from a Master who allowed the respondent’s (plaintiff) application for summary judgment against the appellant (defendant).[1] The Master ordered that judgment be entered in favour of the respondent, with damages for breach of contract to be assessed. For the reasons that follow, in my opinion, the appeal should be dismissed.
[1] Reasons for Decision of Master Keith published 16 August 2017, Decision No 24 of 2017.
The relevant legal issue
In determining whether or not to grant summary judgment the Master was considering and applying the provisions of Rule 232, which provide as follows:
232—Summary judgment
(1)The Court may, on application by a party, give summary judgment for that party.
(2)Summary judgment may only be given if the Court is satisfied that—
(a)if the applicant is a plaintiff—there is no reasonable basis for defending the applicant's claim; or
(b)if the applicant is a defendant—there is no reasonable basis for the claim against the applicant.
There is ample authority on the Rule, which has been in operation in its current form since 2006. The Master considered a number of relevant authorities.
A starting point in respect to the operation of the Rule is the decision of the Full Court in Ceneavenue Pty Ltd & Ors v Martin & Ors.[2] In that case the principal decision was that of Debelle J, with whom Duggan and Anderson JJ agreed. His Honour said, when discussing the history of rules in respect of summary judgment:[3]
The expression “no real question to be tried” connotes such factors as whether the defendant really has a bona fide defence: Wallingford v Mutual Society (1880) 5 App Cas 685; Grimwade v Beresford at 160, and that the defendant does not have an arguable defence which ought to be fairly tried: Lawrence v Griffiths (1987) 47 SASR 455 at 487 per Von Doussa J. The defendant must show that he is not wasting the court’s time or abusing the court’s procedures to delay or defeat a just claim by the plaintiff: Lawrence v Griffiths at 463 per White J. In this context, the word “real” is intended to distinguish a bona fide defence from one that is fanciful or spurious or an abuse of process seeking to delay and defeat the plaintiff’s just claim. The onus of satisfying the court that the application should be granted lies on the applicant. When considering whether that onus has been discharged, the court will look to the cogency of the defence as raised by the defendant: Leasefin Corporation Ltd v Clarke (Full Court, judgment no S3664, unreported, 16 October 1992). All of that is conveyed by the expression “no real question to be tried”.
[2] (2008) 106 SASR 1.
[3] Ceneavenue Pty Ltd & Ors v Martin & Ors (2008) 106 SASR 1 at [78].
What the Court is attempting to achieve on an application for summary judgment, then, is to promptly bring to an end litigation in respect of which one party or another does not have a meritorious position. As numerous authorities say, great care is required in determining when it is appropriate to exercise the power to dispose of a matter on a summary basis.
In Ceneavenue Debelle J further said, when discussing the current Rule:[4]
The question whether there is no reasonable basis for the claim or defence must be determined in a summary way. It is entirely inappropriate for there to be a mini trial on that question. It must, therefore, be evident or obvious that the party defending the application for summary judgment has no reasonable basis for the claim or the defence. While adversarial argument will assist in the determination of that question, the question should be capable of ready resolution without prolonged argument. A prolonged argument might suggest that there is a reasonable basis for the claim or the defence. Comparison with the requirements in rules in other jurisdictions providing for summary judgment confirms these propositions.
[4] Ceneavenue Pty Ltd & Ors v Martin & Ors (2008) 106 SASR 1 at [82].
This is an appeal from the decision of the Master. The decision of the Master did not involve the exercise of a discretion. It was an exercise of the Master’s judgment in respect of whether or not the defendant, on the material before the Court, had established a reasonable basis for defending the proceedings. He decided that she had not.
The approach to dealing with an appeal from an order for summary judgment was considered by the Full Court in Groom v State of SA.[5]Nicholson J, with whom Kourakis CJ and Hinton J agreed, said: [6]
The appeal is one by way of rehearing.[7] Nevertheless, in this case, the only issue to be decided is whether or not the Master was correct, as a matter of law, in finding that the allegations of fact pleaded in the appellant’s second statement of claim disclosed no reasonable basis for the appellant’s claims against the respondent. The Master did not exercise any discretion or make any findings of fact that would call for a review on a rehearing.
[5] [2017] SASCFC 35.
[6] Groom v State of SA [2017] SASCFC 35 at [32].
[7] Supreme Court Civil Rules 2006 r 286.
The question on appeal, then, is having regard to the pleaded defence and the affidavit filed by the defendant, there was any reasonable basis on which the appellant was entitled to an opportunity to defend the respondent’s claim for breach of contract.
Background
The appellant is the owner of land at Magill. In July 2015 she entered into four separate but identical construction contracts with the respondent for the construction of residential dwellings on four separate allotments.
At the time the contracts were entered into and the price agreed, the respondent did not have final working engineering drawings and, accordingly, had no Council approval in respect of such engineer’s drawings. A special condition to that effect was noted in each of the contracts.
The appellant was keen for the project to proceed as quickly as possible. The respondent laid the footings for each of the four dwellings between May and August 2016. A progress payment in respect of each of the four dwellings was paid by the appellant.
On 6 October 2016 the respondent notified the appellant that he wanted to meet with her to finalise a variation in respect of the structural steel component of the building work. That led to an email exchange between the parties. The appellant refused to discuss the prospect of a variation.
On 13 October 2016 the appellant sent an email saying that, pursuant to clause 15.7, the contracts were at an end. Clause 15 of the contract deals with engineering requirements for footings. It provides for a variation in respect of footings and states that the contract will be at an end if the footings variation is not accepted within seven days.
Thereafter the appellant treated the contracts as at an end. She excluded the respondent from attendance at, or occupation of, the construction site and she retained others to carry out the construction work.
The written contracts provide a number of dispute resolution procedures, including conciliation and/or also referring the dispute off to a referee. The appellant did not seek to pursue any of these methods of resolving the dispute about the variation. The contracts anticipate variations in a variety of circumstances. Some of the variations do not require the consent of the appellant. Some variations require consent.
On 24 November 2016 the respondent served a notice of termination of the building contracts, relying on clauses 9.3 and 9.5 of the contracts. Those provisions stated that the respondent was to have exclusive occupation of the construction site until practical completion. The applicant excluded the respondent from the site, in breach of her obligations. The contracts, by clause 28.1.2, provided for termination of the contract in that circumstance. The respondent then commenced this action to pursue the appellant for damages for breach of contract.
The hearing before the Master
The appellant was legally represented in the proceedings and on the argument before the Master.
In her defence the appellant pleaded that the proposed variation in respect of the structural steel component activated clause 15 of each of the contracts and that clause 15.7 permitted her to terminate each of the contracts.
The difficulty for the appellant was that the proposed variation did not relate to any work in respect of the footings. It was a proposed variation in respect of the structural steel component of the construction. Clause 15 was not relevant.
It is clear that the appellant acted in breach of clauses 9.3 and 9.5 of the contracts and that the respondent was entitled to give the notice of termination it did.
On the hearing before the Master the appellant relied on four factual matters said to make it inappropriate to grant summary judgment. They were:
1The fact that each of the contracts was subject to finance. That is true, but the Master found there was no evidence that the appellant has failed to obtain finance. The Master found that the subject to finance condition did not provide a basis to defend the claim.
2A difference on the pleadings about when the respondent was entitled to take possession of the subject land which was a dispute about the commencement date. It was held by the Master not to provide a reasonable basis for defending the claim.
3The appellant referred to some correspondence with the City of Campbelltown about alleged damage to Council infrastructure. The Master found there was no pleaded issue between defendant and plaintiff arising from anything in the correspondence from Campbelltown City Council.
4The fourth issue related to a factual dispute about footing design details. The document was created in February 2017 and related to proposed carports. That post-dates the appellant’s purported termination of the contracts. The Master found that there was no pleaded issue in respect of that footing issue.
The Master held that none of the four factual issues raised by the appellant established a reasonable basis for a defence. With respect, the Master was correct to decide the matter in that way. The pleadings contained no defence that arose on the facts of the matter and it was appropriate, in the circumstances, to enter summary judgment.
The grounds of appeal proceed on the basis that the dispute between the parties, as defined by the pleadings, did not provide a suitable vehicle for summary judgment. Eleven factual assertions were set out in the Notice of Appeal, said to establish that a dispute exists and should be permitted to go forward. In my view, none of the factual matters contained in paragraph 3.1 of the Notice of Appeal goes to the heart of the dispute. They are peripheral to the critical dispute.
Simply put, the respondent advised the appellant that it was necessary to have a contractual variation in respect of the structural steel component of the dwelling arising from an engineer’s report obtained after the signing of the contracts. There is no factual dispute about that being a correct statement of the position.
Whether or not the respondent was entitled to unilaterally impose a variation or whether the structural steel issue gave rise to a need for the parties agree the terms of the variation does not properly arise for consideration. The respondent simply sought a meeting to discuss the issue of a variation.
In the circumstances where the construction contracts expressly envisage that there will be variations from time to time, there is no basis for holding that the appellant was entitled to unilaterally terminate the contracts simply upon a request from the respondent to discuss a variation. The appellant has no reasonable basis on which to defend the claim that she acted in breach of her obligations pursuant to the contracts.
The appellant has retained new solicitors and counsel. They have a different view of the matter and wish to explore defences and factual disputes not put before the Master. One question is whether a change of representation justifies permitting the appellant another opportunity to establish a reasonable basis for defence.
In Sandery v Kowalski & Anor Doyle J was considering the modern approach to commercial disputes and said as follows:[8]
Cubelic v T & D Lock Pty Ltd[9] represents a relatively rigorous approach to the setting aside of judgments. However, that approach is required by r 87(2), particularly when interpreted in light of the overarching requirements of r 3(1)(a). In the case of commercial litigation, there is an imperative to ensure that the rules are interpreted and enforced in a manner conducive to the expeditious determination of proceedings. While this should not occur at the expense of doing justice to the parties and more generally, which remains the paramount concern of the courts, this does not mean that parties will be given unlimited opportunity to pursue or contest a claim. If they have not taken an earlier opportunity reasonably available to them to identify and pursue a proper basis for contesting a claim, then even achieving justice between the parties may not require that they be afforded a further opportunity. But certainly once regard is had to the interest in the just and expeditious administration of civil justice more generally, and in particular the need to ensure that the public’s confidence in the courts’ ability to efficiently determine matters is not undermined, it can readily be seen that there must be limits to the parties’ entitlement to contest claims where they have fallen into default in their conduct of the litigation.
Some rigor in the courts’ approach, as demonstrated by the reasons of Duggan J in Cubelic v T & D Lock Pty Ltd,[10] is consonant with, if not required by, the approach of the High Court to applications to amend in Aon Risk Services Australia Ltd v Australian National University.[11] As the reasons of the various members of the Court in that case make plain,[12] commercial litigation has a particular claim to expedition. Delay and disruption in the ordinary course of litigation not only exacerbate the time, cost and inconvenience to the parties, and the uncertainty and strain of litigation to which they are subjected, they also have an undesirable impact on the availability of judicial and court resources to other parties, and upon the public’s confidence in the courts’ ability to administer justice in a commercial setting.
[8] [2016] SASC 175 at [29]-[30].
[9] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
[10] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
[11] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
[12] In particular, per Heydon J at [137].
In my opinion, the same approach is appropriate here. This is a commercial dispute. At the time of the summary judgment both parties were represented. The decision of the Master was correct. The fact that the new solicitors would adopt a different approach is not a basis to allow the appeal and return to the pleadings stage of the proceedings.
I dismiss the appeal and will hear the parties on any consequential matters.