Danthanarayana v GR8 Constructions Pty Ltd

Case [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 37N
Cases cited: Danthanarayana v GR8 Constructions Pty Ltd (2012) 201 FCR 347 cited
Surfing Hardware International Holdings Pty Limited v McCausland (2008) 171 FCR 533 cited
Date 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 Applicant

MARIA DANTHANARAYANA
Second Applicant
AND:

GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646)
First Respondent

GRANT WILSON
Second Respondent

ROBERT PETROVIC
Third Respondent

KENYON HOPKINS
Fourth Respondent
AND BETWEEN:

GR8 CONSTRUCTIONS PTY LTD (ACN 105 581 646)
First Cross-Claimant

GRANT WILSON
Second Cross-Claimant

ROBERT PETROVIC
Third Cross-Claimant
AND:

WAJI DANTHANARAYANA
First Cross-Respondent

MARIA 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…

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Danthanarayana v GR8 Constructions Pty Ltd [2013] FCA 1263
Case
[2013] FCA 1263
Decision Date

CaseChat Overview and Summary

In the case of Danthanarayana v GR8 Constructions Pty Ltd, the applicants, who were involved in a construction dispute with GR8, sought leave to amend their Statement of Claim. The applicants alleged various breaches of contract and defective work carried out by GR8 and another party, Solve. The respondents opposed the grant of leave to amend, arguing that the applicants had failed to prosecute their claim with due diligence, that their claim was confused and incoherent, and that they had been less than frank with the Court. The applicants, on the other hand, submitted that their pleading adequately addressed any concerns about an abuse of process and that their allegations were not inconsistent with those made in another proceeding against Solve.

The court was required to determine whether the applicants should be granted leave to amend their Statement of Claim. In particular, the court had to consider whether the applicants' proposed amendments were consistent with their existing pleadings and whether the applicants had acted with due diligence and in good faith. The court also had to consider whether the applicants' case was confused and incoherent and whether the proposed amendments would assist in clarifying the issues.

The court found that the applicants' proposed amendments were not consistent with their existing pleadings, as they sought to recover loss from GR8 that was attributable to the work of Solve. The court held that the applicants were not entitled to plead inconsistent sets of facts in the alternative, as doing so would be an abuse of process. The court also found that the applicants had not acted with due diligence and had been less than frank with the Court by deliberately withholding information about their dispute with Solve. The court held that the applicants' case was confused and incoherent and that the proposed amendments would not assist in clarifying the issues. Accordingly, the court refused the applicants leave to amend their Statement of Claim.

In light of the above, the court held that the applicants' case was a flagrant abuse of process and that it was not appropriate for the applicants to be permitted to elect whether to pursue their case in the present proceeding or to pursue their jurisdictional defences in another proceeding. The court held that the applicants were not entitled to elect between the two inconsistent positions which they had adopted.

This case highlights the importance of consistency in pleadings and the requirement for parties to act with due diligence and in good faith in the prosecution of their claims. It also underscores the courts' power to refuse leave to amend where the proposed amendments are inconsistent with existing pleadings or where the applicants have acted improperly in the conduct of the proceeding.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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. DecisionInconsistency 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.

Ratio Decidendi

Legal Principle Established

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. ConsiderationThe 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.