Danthanarayana v GR8 Constructions Pty Ltd
[2013] FCA 1263
FEDERAL COURT OF AUSTRALIA
Danthanarayana v GR8 Constructions Pty Ltd [2013] FCA 1263
Citation: Danthanarayana v GR8 Constructions Pty Ltd [2013] FCA 1263 Parties: WAJI DANTHANARAYANA and MARIA DANTHANARAYANA v GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646), GRANT WILSON, ROBERT PETROVIC and KENYON HOPKINS; GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646), GRANT WILSON and ROBERT PETROVIC v WAJI DANTHANARAYANA and MARIA DANTHANARAYANA File number: ACD 35 of 2011 Judge: FOSTER J Date of judgment: 27 November 2013 Catchwords: PRACTICE AND PROCEDURE – whether the Court should grant leave to the applicants to amend their Statement of Claim – whether the allegations intended to be made in the proposed amended Statement of Claim, when considered together with the allegations made in the Statement of Claim in related proceedings, constitute an abuse of the process of the Court – whether the proposed amended Statement of Claim is bad in form Legislation: Building and Construction Industry (Security of Payment) Act 2009 (ACT)
Federal Court of Australia Act 1976 (Cth), s 37M and s 37NCases cited: Danthanarayana v GR8 Constructions Pty Ltd (2012) 201 FCR 347 cited
Surfing Hardware International Holdings Pty Limited v McCausland (2008) 171 FCR 533 citedDate of hearing: Decided on the papers Date of last submissions: 6 December 2012 Place: Sydney (via video link to Canberra) Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 72 Counsel for the Applicants: Mr TA Alexis SC and Dr AJ Greinke Solicitor for the Applicants: Colquhoun Murphy Counsel for the First and Third Respondents: Mr C Erskine SC Solicitor for the First, Second and Third Respondents: Leonie Kennedy & Associates Solicitor for the Fourth Respondent: Colin Biggers & Paisley
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
ACD 35 of 2011
BETWEEN: WAJI DANTHANARAYANA
First ApplicantMARIA DANTHANARAYANA
Second ApplicantAND: GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646)
First RespondentGRANT WILSON
Second RespondentROBERT PETROVIC
Third RespondentKENYON HOPKINS
Fourth RespondentAND BETWEEN: GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646)
First Cross-ClaimantGRANT WILSON
Second Cross-ClaimantROBERT PETROVIC
Third Cross-ClaimantAND: WAJI DANTHANARAYANA
First Cross-RespondentMARIA DANTHANARAYANA
Second Cross-Respondent
JUDGE:
FOSTER J
DATE OF ORDER:
27 November 2013
WHERE MADE:
Sydney (via video link to CANBERRA)
THE COURT ORDERS THAT:
1.The applicants have leave to amend their Second Further Amended Statement of Claim dated and filed on 26 October 2012 in accordance with the draft pleading entitled Revised Second Further Amended Statement of Claim served upon the solicitors for the respondents on 6 November 2012 (the ASC).
2.The applicants pay the respondents’ costs of the applicants’ application for leave to amend and the respondents’ costs thrown away by reason of the said amendment.
3.The said costs may be taxed forthwith.
4.The proceeding be listed for further directions at 9.15 am on 6 December 2013 before the A.C.T. List Judge.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
ACD 35 of 2011
BETWEEN: WAJI DANTHANARAYANA
First ApplicantMARIA DANTHANARAYANA
Second ApplicantAND: GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646)
First RespondentGRANT WILSON
Second RespondentROBERT PETROVIC
Third RespondentKENYON HOPKINS
Fourth RespondentAND BETWEEN: GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646)
First Cross-ClaimantGRANT WILSON
Second Cross-ClaimantROBERT PETROVIC
Third Cross-ClaimantAND: WAJI DANTHANARAYANA
First Cross-RespondentMARIA DANTHANARAYANA
Second Cross-Respondent
JUDGE:
FOSTER J
DATE:
27 november 2013
PLACE:
sydney (VIA VIDEO LINK TO CANBERRA)
REASONS FOR JUDGMENT
The circumstances in which the present proceeding was commenced were summarised by me in Danthanarayana v GR8 Constructions Pty Ltd (2012) 201 FCR 347 at 348–349 [1]–[9] in the following terms:
1The applicants (the proprietors) are the registered proprietors of the whole of the land comprised in Block 5, Section 58, Kingston, A.C.T. (Vol 1830 Folio 25) known as “8 Waygoose Street, Kingston, A.C.T.” (the property).
2By Building Contract dated 14 March 2008 (the building contract), entered into between the proprietors and the first respondent (the builder), the builder agreed to construct a three-storey residence on the property for the total price of $862,500 payable by way of progress payments, the quantum and timing of which were specified in the contract.
3The second and third respondents are directors of the builder. The fourth respondent was the person who certified work under the building contract from time to time.
4Building work commenced in April 2008.
5By May 2009, the parties were in dispute. The proprietors alleged at that time that the building work under the building contract had not been completed and that the work which had been carried out up to that point in time was defective in a number of material respects.
6On or about 3 June 2009, the proprietors purported to terminate the building contract on the ground that the builder had repudiated that contract by refusing to make good the allegedly defective works and by otherwise refusing to complete the work required under the building contract. For present purposes, I need not investigate the circumstances in which the building contract was terminated. The parties accept that that contract was validly terminated in early June 2009.
7As at early June 2009, when the building contract came to an end, the builder contended that it was owed approximately $250,000 in unpaid progress payments due under the building contract. The proprietors, on the other hand, argued that they owed nothing to the builder because the cost of completing the incomplete work required to be carried out under the building contract and the cost of remedying the defective work carried out by the builder under that contract exceeded $250,000 by a substantial amount. The proprietors now contend that their damages claim is well in excess of $1,000,000.
8On 8 December 2009, the proprietors commenced proceedings against the builder in the Supreme Court of the Australian Capital Territory (the Supreme Court) for damages for breach of the building contract. In those proceedings, they also alleged that the second and third respondents were liable for those damages. The fourth respondent was subsequently joined to those proceedings as an additional defendant party. Subsequently, the builder cross-claimed for the amount said to be due to it under the building contract.
9On 17 June 2011, the Supreme Court proceedings were transferred to this Court.
On 6 November 2012, the applicants notified the respondent parties that they intended to apply to the Court at the next listing of the proceeding (which was, at that time, programmed for 9 November 2012) for leave to amend their Statement of Claim in accordance with a document entitled Revised Second Further Amended Statement of Claim (the ASC), a copy of which was furnished to the respondents on the same day.
The ASC is the seventh iteration of the applicants’ Statement of Claim.
The applicants’ application for leave to file and serve the ASC was opposed by all of the respondents. These Reasons for Judgment determine the applicants’ application for leave to amend.
The present proceeding is related to another proceeding in this Court (ACD 61 of 2012) (the Solve proceeding) which was commenced by the applicants against Solve Project Management Pty Limited (Solve) on 24 August 2012. In very broad terms, Solve was the builder retained by the applicants in 2009 to identify and execute necessary remedial works at the applicants’ property at 8 Waygoose Street, Kingston, A.C.T. (the property). Those remedial works were required, so the applicants contend, in order to remedy the defective building works carried out at the property by GR8 Constructions Pty Ltd (GR8), which is the first respondent in the present proceeding and in order to complete other works which GR8 had failed to carry out at the property in breach of its building contract with the applicants.
In the present proceeding, until they filed their Second Further Amended Statement of Claim on 26 October 2012, the applicants had alleged that the scope of works determined by Solve under its contractual arrangements with the applicants constituted a reasonable plan for completing those works which GR8 had failed to complete and for remedying the defects at the property caused by GR8 and the other respondents in this proceeding. In addition, at all times up to 26 October 2012, the applicants had alleged in this proceeding that the reasonable cost of remedying those defects and completing those works was the amount which they would ultimately pay or be required to pay Solve under their arrangements with it.
In the Solve proceeding, the applicants allege that Solve has also carried out defective works at the property and has overcharged the applicants during the course of executing the works which the applicants retained it to carry out.
The circumstance that the applicants were relying upon Solve in the present proceeding to prove its case against GR8 and the other respondents while, at the same time, in the Solve proceeding, alleging that Solve too had carried out defective works at the property and had also overcharged the applicants, presented obvious difficulties for the applicants.
Once the Solve proceeding was on foot, the applicants needed to reconsider the form of their pleadings in both cases in order to ensure that they were not guilty of an abuse of process and in order to ensure that both cases could proceed in a fashion which respected the procedures of the Court but also accommodated a state of affairs which, for the applicants at least, had become very difficult.
The applicants gave due consideration to the form of their pleadings in both cases.
In the Solve proceeding, the applicants regard the form of their Statement of Claim as settled.
In the present proceeding, there remains the applicants’ application to amend the current version of their Statement of Claim in accordance with the ASC. The current iteration of the applicants’ Statement of Claim is the document styled Second Further Amended Statement of Claim dated and filed on 26 October 2012.
The History of the Proceeding in this Court
As I mentioned in the introduction to these Reasons for Judgment, this proceeding was commenced in the Supreme Court of the Australian Capital Territory on 8 December 2009 and remained in that Court until 17 June 2011 when it was cross-vested to this Court. It was first listed for directions in this Court on 2 September 2011. On that occasion, directions were made for the filing of fresh pleadings in this Court and for the provision of particulars of the applicants’ claims.
On 4 November 2011 and on 2 December 2011, the proceedings came before the Court for further directions. On the latter occasion, the applicants were granted leave to amend their Statement of Claim. On both occasions, the applicants were ordered to file a Scott Schedule.
In March 2012, the Court heard and determined an application by the applicants to vary an interlocutory undertaking previously given to the Supreme Court of the A.C.T. in order to permit the applicants to refinance their borrowings made for the purpose of developing the property (Danthanarayana v GR8 Constructions Pty Ltd (2012) 201 FCR 347). That application was dismissed with costs on 15 March 2012.
By March 2012, the applicants were in dispute with Solve. They did not reveal the full extent of that dispute to the Court at that time. They did disclose that one or more progress payments had not been made to Solve but did not make clear that they were dissatisfied with Solve’s work.
On 13 April 2012, the Court again ordered the applicants to file and serve a Scott Schedule. On the same day, the Court granted leave to the applicants to amend their Originating Application and Statement of Claim in such manner as they may be advised, such amended process to be filed and served by 9 May 2012. On 9 May 2012, an Amended Statement of Claim was filed.
On 15 August 2012, the Court made detailed orders for the core building disputes raised in this proceeding to be dealt with by a referee of the parties’ choosing.
On 24 August 2012, a little over a week later, the applicants commenced the Solve proceeding.
On 27 August 2012, in light of the commencement of the Solve proceeding, I vacated the order for reference which I had made on 15 August 2012.
It was recognised at that time that it was very likely that the present proceeding and the Solve proceeding would need to be both case managed as one and heard at the same time.
On 7 September 2012, the Court made the following orders in the present proceeding:
THE COURT:
1.GRANTS leave to the applicants to amend their current Statement of Claim in such manner as they may be advised in light of the discussions at the directions hearing held today (7 September 2012), such Amended Statement of Claim to be filed and served by 26 October 2012.
2.ORDERS that the costs of the directions hearing on 7 September 2012 be reserved.
3.ORDERS that the proceeding be listed for directions at 9.15 am on 9 November 2012 before Foster J.
On 7 September 2012, I drew the attention of the solicitor who appeared for the applicants on that day to the need for his clients to consider whether or not they wished to reformulate their claims in the present proceeding in order to ensure that the commencement and maintenance of both the present proceeding and the Solve proceeding did not constitute an abuse of process.
The upshot of the argument which took place on 7 September 2012 was acceptance by all parties that the applicants should be given one further opportunity to get their house in order and to have an opportunity to plead their claims in the present proceeding in such manner as they may be advised paying due regard to the existence of the Solve proceeding and to the circumstances in which they then found themselves.
On 26 October 2012, the applicants filed their Second Further Amended Statement of Claim.
On 9 November 2012, a program for written submissions addressing the ASC was set by the Court. Subsequently, the working out of that program was affected by an Interlocutory Application made by the applicants in the Solve proceeding. Solve had taken steps to recover its unpaid progress claims. It had procured certificates under the Building and Construction Industry (Security of Payment) Act 2009 (A.C.T.) quantifying those claims. It had then registered those certificates in the A.C.T. Magistrates Court and subsequently sought to have Bankruptcy Notices issued against the applicants. By their Interlocutory Application, the applicants sought to restrain enforcement of the judgments which Solve had obtained. I heard the applicants’ Interlocutory Application on 7 March 2013 and made orders dealing with the subject matter of that application on 13 March 2013.
The Amendments
By their Second Further Amended Statement of Claim dated and filed on 26 October 2012 the applicants had endeavoured to accommodate the existence of the Solve proceeding and the forensic difficulties which they then confronted as a result of their falling-out with Solve.
The principal issue that arose between the parties after 26 October 2012 was whether the Second Further Amended Statement of Claim had appropriately and adequately addressed the concerns which had been expressed by me on 7 September 2012. By early November 2012, the respondents had indicated to the applicants that they considered that the Second Further Amended Statement of Claim was defective and ought to be amended.
On 9 November 2012, Senior Counsel who appeared for the applicants on that day explained the nature of the amendments propounded in the ASC. In light of Senior Counsel’s explanation and the discussion which took place on that day, a program for the exchange of written submissions in relation to the applicants’ Application for Leave to Amend their pleading in accordance with the ASC was ordered.
The amendments sought to be effected by the ASC are to be found at pars 61 to 76 of that document. There is a minor amendment to par 77.7 which is of no present relevance.
At pars 62 to 70 of the ASC, the applicants recite the existence and terms of their contractual arrangements with Solve. At par 71, the applicants recite the commencement of the Solve proceedings.
The key paragraphs in the ASC are paragraphs 72 to 76 of the ASC. I have attached the text of those paragraphs as Attachment A to these Reasons for Judgment.
Paragraph 76 is not new. It appeared in the Second Further Amended Statement of Claim dated and filed on 26 October 2012.
In the group of paragraphs which I have extracted in Attachment A, the applicants seek to remove from the 26 October 2012 iteration of their pleadings certain paragraphs to which objection was raised by the respondents. These are paragraphs 73, 75 and 61A.
At par 75 of the ASC, the applicants allege that the costs incurred by them in respect of the work carried out by Solve as claimed in progress claims 1 to 22 represents a reasonable cost to the applicants of remedying all of the defects in the work carried out by GR8 at the property and also of remedying other breaches of contract save for those costs rendered by Solve which, in the Solve proceeding, are disputed by the applicants as being due and payable to Solve. Those costs are described at subpars 75.5 to 75.8 of the ASC. They are the cost of those works carried out by Solve which were never required to be carried out under the GR8 building contract, the cost of work carried out to remedy defects caused by Solve (not GR8) and amounts which have been overcharged by Solve to the applicants.
Consideration
The Parties’ Submissions
The first, second and third respondents opposed the grant of leave to amend for several reasons.
First, they submitted that the applicants have failed to prosecute their claim with due diligence as required by s 37M and s 37N of the Federal Court of Australia Act 1976 (Cth). They argued that the applicants have been guilty of unacceptable delay in setting out their claim.
Second, they submitted that the applicants’ claim, as proposed in the ASC, is confused and incoherent. In particular, they argued that the applicants have failed to provide adequate particulars of their loss and damage. They also said that the claims sought to be made by means of the ASC impossibly complicate the present proceeding.
Third, they submitted that the applicants have been less than frank with the Court in the period after about March 2012 by deliberately holding back information about their escalating dispute with Solve.
The fourth respondent (Mr Hopkins) was the certifier who certified the work carried out by GR8. The fourth respondent also opposed the grant of leave to amend. The fourth respondent contended that the applicants have failed to provide adequate particulars of their loss and have been guilty of significant delay. He also argued that there was significant overlap and duplication between the claims made in this proceeding and the claims made in the Solve proceeding.
In their Submissions, the respondents go so far as to suggest that the Court ought now to strike out the Second Further Amended Statement of Claim and enter judgment in favour of the respondents.
The applicants responded in detail to the submissions made on behalf of the respondents.
First, they pointed out (correctly) that there is no application before the Court by any respondent to strike out the applicants’ existing pleading or for summary dismissal of the applicants’ case, or any part of the applicants’ case. This submission is correct and I accept it. I do not propose to strike out the Second Further Amended Statement of Claim nor will I entertain the respondents’ application for summary dismissal.
Second, the applicants submitted that their pleading adequately addresses any concerns which the Court might have that allowing the two proceedings to remain on foot would constitute an abuse of the process of the Court. The applicants submitted that the allegations made by them in the ASC concerning Solve are not inconsistent with the allegations made by them against Solve in the Solve proceeding.
Third, the applicants submitted that there was no duplication between the case sought to be put by means of the ASC in the present proceeding and the case pleaded in the Solve proceeding.
Fourth, the applicants submitted (correctly) that, while the developments concerning Solve create forensic difficulties for them, this circumstance was no reason to prevent the applicants from pressing the case articulated in the ASC in the present proceeding. This submission should also be accepted.
Decision
Inconsistency
I do not think that the ASC and the applicants’ pleading in the Solve proceeding are inconsistent.
Paragraphs 75 and 77 of the ASC make clear that the applicants seek to recover from each of the allegedly defaulting builders that loss which is properly attributable to each of those builders’ breaches of duty and breaches of contract.
In particular, subpars 75.5 to 75.8 except from the applicants’ claim against GR8 and the other respondents in this proceeding loss or damage flowing from defective work carried out by Solve, the cost of works carried out by Solve which were additional to the contract with GR8 and excessive charges rendered by Solve to the applicants.
In Surfing Hardware International Holdings Pty Limited v McCausland (2008) 171 FCR 533 at 545–546 [56]–[59], I said:
56In Issitch v Worrell (2000) 172 ALR 586, the Full Court of this Court considered the question of whether the appellant in that case would be permitted on appeal to conduct her case in a way which was “… factually inconsistent in a radical way …” with the case which she had conducted at trial.
57In Issitch 172 ALR 586 at [32] (pp 594–595), Drummond J (with whom Spender and Katz JJ agreed) said:
[32]But once the appellant decided to answer the claim made on her in respect of the $110,167 in the way she did, she was not entitled thereafter to set up in the alternative the inconsistent answer she now suggests she would also have relied on, if only absence of consideration had been specifically pleaded by the trustee. A party can as a general rule plead inconsistent sets of facts in the alternative (cf O 11 r 8(2); Re Morgan (1887) 35 Ch D 492 and Delfino v Trevis (No 1) [1963] NSWR 191 at 196), but not where one of those sets must be known to the party to be false. It has long been recognised that such a pleading is embarrassing and will be struck out. In Brailsford v Tobie (1888) 10 ALT 194 at 195, the defendant pleaded two factually inconsistent accounts in justification for not having paid the moneys claimed by the plaintiff. Holroyd J ordered that the defendant elect which one of these two cases she would maintain, saying:
… I think it would be most improper to allow the defendant to plead as she has done. The actual facts must be within her own knowledge, and that being so she has set up two sets of facts inconsistent with one another. If this were allowed it would be permitting a party knowing the facts to deliberately place on the record statements, one or other of which must be known to be a lie. This, in my opinion, ought not to be allowed.
58The requirement to elect imposed by Holroyd J on the defendant in Brailsford v Tobie (1888) 10 ALT 194 occurred in circumstances where the two inconsistent sets of facts appeared in a single pleading, not in different pleadings in different courts as is the case here. The applicants do not plead inconsistent sets of facts in the Statement of Claim in this Court if the pleading is viewed in isolation. However, the principle which underlies the observations made by the Full Court in Issitch 172 ALR 586 is that a litigant ought not to be permitted to advance a pleaded case which is inconsistent with another pleaded case in circumstances where one of those cases is known to the litigant to be a false case. Whilst it must be accepted that inconsistent sets of facts may be pleaded in the alternative in the same pleading, pleadings of that kind need to make very clear that the cases are to be put in the alternative and need also to make very clear what the alternatives are. The principle which permits the pleading of inconsistent sets of facts in the alternative does not authorise the pleading of inconsistent cases where one of the cases is known to the party who pleads it to be false. This is so whether the cases are pleaded in one pleading or in different pleadings. Propounding a case which is known to be a false case is an abuse of process. Doing so solely in order to obtain a strategic advantage by invoking the cross-vesting legislation is a flagrant abuse of process.
59In the present case, in my judgment, the pleading in this Court is wholly inconsistent with the cases pleaded by the respondents in the IRC proceedings and the contentions which they have made in support of their applications to have the IRC proceedings dismissed. The applicants’ position in the IRC is supported by the affidavit of Mr Hawkins. Their position in this Court is not supported by any evidence. In my view, I should find that the case propounded by the applicants in this Court is a case which is known by the applicants to be a false case. In those circumstances, it is not appropriate for the Court to permit the applicants in this Court (who are three of the five respondents in the IRC) to elect whether to pursue the case in this Court or to pursue their jurisdictional defences in the IRC. For the Court to permit such a course would be to ignore the finding which I have made to the effect that the case being advanced in this Court is a case which is known by the applicants to be a false case. I am not prepared to permit the applicants now to elect between the two inconsistent positions which they have adopted.
The observations which I made in Surfing Hardware International Holdings Pty Limited v McCausland addressed circumstances where inconsistent sets of facts were pleaded. That is not the case here. Rather, the applicants have been at pains to make clear in the ASC that they are not seeking to attribute all of their loss to one or other of the two relevant builders but are seeking to differentiate the loss caused by GR8 from the loss caused by Solve and to claim from each builder only that loss which is properly attributable to that particular builder’s conduct. The applicants’ essential contention is that they have suffered distinct and separate losses caused by each of the builders.
In my judgment, they have made this clear in the ASC and the pleading is not defective on the ground that it is inconsistent with the applicants’ pleading in the Solve proceeding.
Duplication
The applicants submitted that, when close regard is paid to the current Scott Schedule filed in the present proceeding and the Scott Schedule filed in the Solve proceeding, it is clear that there is no duplication as between the two proceedings in respect of the asserted defects. In their Written Submissions, they illustrated the point by reference to a number of particular matters. Those Submissions made good the proposition that, although, according to the applicants, GR8 carried out defective building works in a number of respects (eg various sliding doors), Solve also carried out defective building works in the same general area and in respect of the same items, the defective works carried out by Solve nonetheless being separate and distinct from the defective works carried out by GR8.
I am satisfied that there is no duplication in the claims made against GR8 and the claims made against Solve.
Delay and the Applicants’ Conduct
There is no doubt that the applicants have failed to articulate their claims against GR8, its directors and Mr Hopkins in a prompt and efficient manner. They have had many opportunities to bring forward their claims and only finally managed to do so in an acceptable way in the middle of 2012.
It is fair to say that, if I were to put to one side for the moment the applicants’ dispute with Solve, the applicants’ case was in order by 15 August 2012 when I made the order for reference.
Whatever the delays prior to that time, the parties were, by then, ready, willing and able to proceed to have the core building disputes and other matters the subject of the orders for reference which I made on 15 August 2012 dealt with by the agreed referee.
In those circumstances, it seems to me that I should not pay any regard now to delays in the proceedings which do not relate to the applicants’ dispute with Solve.
It is apparent that the applicants have been in dispute with Solve since late 2011.
The fact that progress payments rendered by Solve to the applicants were unpaid as at March 2012 was disclosed by the applicants to the Court and to the legal representatives of the respondents in the present proceeding when the applicants brought their Interlocutory Application in this Court to be released from the undertaking which they had given to the Supreme Court of the A.C.T. This was the Application determined by me in Danthanarayana v GR8 Constructions Pty Ltd (2012) 201 FCR 347. It is also clear that the applicants did not, at that time, disclose to the Court or to the other parties to the present proceeding the additional circumstances that, at least from about March 2012, in answer to Solve’s claim for further payments under its contract with the applicants, the applicants were arguing that Solve had breached its contract with them by carrying out defective works and by overcharging.
The conduct of the applicants in the period from at least about March 2012 up to 24 August 2012 has been most unsatisfactory. They should have promptly disclosed to the Court and to the respondents in this proceeding the true nature of the dispute with Solve that was festering constantly throughout that period. Had they done so, a great deal of time and expense would have been avoided.
The question for me, however, is whether this conduct, unsatisfactory though it was, should be viewed as a reason for disallowing the amendments embodied in the ASC. To disallow those amendments would, I think, visit a substantial injustice upon the applicants by depriving them of a fair opportunity to litigate all of their substantive claims.
The applicants found themselves in a very difficult position. On the one hand, as matters stood in the present proceeding, at all times until August 2012, Solve was an essential player in the applicants’ case. Not only was it the linchpin of their case on damages but it was also a critical participant in their case on liability. It will probably still have a role to play in the applicants’ case in the present proceeding.
The applicants took some time to grasp the fact that they could not wholeheartedly embrace Solve’s work in the present proceeding and, at the very same time, accuse it of significant breaches of duty and of contract in the Solve proceeding.
Nonetheless, as I have held above, they have now addressed the problems created by their reluctance to confront the difficulties presented by the circumstance that, according to their pleadings in both cases, they have been the unfortunate victims of two unsatisfactory builders.
I think that the matters raised by the respondents concerning delay and the conduct of the applicants can be adequately addressed by an appropriate order for costs. I do not think that these matters provide any proper basis for denying to the applicants their day in Court in respect of the cases which they seek to run against the respondents in the present proceeding and against Solve in the Solve proceeding.
Other Matters
I do not think that the ASC suffers from other pleading deficiencies. I consider that it is sufficiently detailed and in a form which enables the respondents to plead to it. Any ongoing difficulties concerning particulars of defects and particulars of loss and damage can be addressed through case management directions (especially through the use of a Scott Schedule).
I intend to list the matter for directions on 6 December 2013 with a view to making directions about the filing of the respondents’ Defences, an amended Scott Schedule (if required) and a reference out of the core building disputes. I will also list the Solve proceeding on the same day. I expect the parties in both proceedings to confer before then in order to secure as much agreement as is possible as to the future conduct of both proceedings.
Conclusions
For all of the above reasons, I propose to grant leave to the applicants to amend their Second Further Amended Statement of Claim in accordance with the ASC.
The applicants have sought and obtained a very significant indulgence from the Court. The grant of that indulgence has imposed and will impose a significant costs burden on the respondents. In those circumstances, I intend to order the applicants to pay the respondents’ costs of the amendment application and to pay the costs thrown away by the grant of leave to amend. I will also order that those costs may be taxed forthwith.
Although I have decided to leave the question of the quantification of those costs to the taxing officer, I record for the benefit of that officer that, as presently advised, I think that all of the costs incurred by the respondents since 31 March 2012 ought properly to be regarded as costs thrown away by reason of the amendment. I make this observation, not to bind the taxing officer, but to give to that officer an indication of my present view and to assist in the taxation process.
There will be orders accordingly.
I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate:
Dated: 27 November 2013
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