Gaudry v Lifpo Constructions Pty Ltd

[2022] VCC 1527

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION
BUILDING CASES LIST

Revised
Not Restricted
Suitable for Publication

Case No. CI-22-01449

ANTON JEROME FREDERICK GAUDRY	Plaintiff
v
LIFPO CONSTRUCTIONS PTY LTD & ANOR	Defendants

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JUDGE:

His Honour Judge Anderson

WHERE HELD:

Melbourne

DATE OF HEARING:

26 August 2022

FURTHER SUBMISSIONS:

DATE OF JUDGMENT:

1 September 2022

15 September 2022

CASE MAY BE CITED AS:

Gaudry v Lifpo Constructions Pty Ltd

MEDIUM NEUTRAL CITATION:

[2022] VCC 1527

REASONS FOR DECISION
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Catchwords:              Practice and procedure – Application for summary judgment, to stay the proceeding and/or to strike out the statement of claim – Claim for restitutionary relief based on unjust enrichment – Further claim based on misleading and deceptive conduct – Joint venture building project – One party to provide finance (the plaintiff), the other to arrange the builder (“the manager”) – Subsequent building contract between the manager and a builder (the first defendant) – Most progress payments under the building contract made by the financier to the builder – Direct correspondence between the financier and the director of the builder (the second defendant) – Admitted error in the calculation of GST included in the progress payments – Whether the plaintiff had “a real prospect of success” in his claims against each defendant – Whether pleading of causes of action deficient – Plaintiff permitted to replead upon certain conditions.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J McKay	Giannakopoulos Solicitors
For the Defendants	Mr S Ryan	Bowman & Knox Lawyers

HIS HONOUR:

1The plaintiff, Anton Gaudry, issued the proceeding by writ dated 22 April 2022 with an attached statement of claim. The defendants, Lifpo Constructions Pty Ltd, and its director, George Godfrey, filed a defence on 6 June 2022. By summons filed 25 July 2022, the defendants made an application for summary judgment or, alternatively, orders that the proceeding be permanently stayed or the plaintiff’s statement of claim be struck out.

2The proceeding arises out of a project commenced in 2017 for the purchase and redevelopment of land in Richmond with two dwellings. The project was a joint venture between Mr Gaudry and Darren Rogers. Mr Gaudry was to provide the finance and Mr Rogers was to manage the project, including the engagement of a builder to construct the dwellings. For this purpose, Mr Rogers entered into a building contract with Lifpo Constructions in late 2017.

3During the course of the construction of the dwellings, Mr Gaudry made payments directly to Lifpo Constructions in response to progress claims it made under the building contract, addressed to Mr Rogers. From at least July 2018, there were email communications, between Mr Gaudry and Mr Godfrey on behalf of Lifpo Constructions, about the progress claims and payments.

4In about August 2020, it became apparent to Mr Gaudry that many of the  progress claims made by Lifpo Constructions had contained errors. Lifpo Constructions had claimed “GST on top of GST charged to Lifpo Constructions by suppliers or subcontractors of Lifpo Constructions. Those charges were therefore not owing to Lifpo Constructions”. Mr Gaudry claimed that as a result, he had personally overpaid Lifpo Constructions $197,991.41.

5In an email dated 8 September 2020, Mr Godfrey, on behalf of Lifpo Constructions, admitted to Mr Gaudry, “It seems Lifpo would likely owe you money”, and in an email dated 17 September 2020 to Mr Gaudry and Mr Rogers, that “Lifpo has overcharged $218,101.98 inc GST -  $198,274.52 ex GST”.

6In the proceeding, Mr Gaudry seeks to recover the sum of $197,991.41 from Lifpo Constructions on the basis of unjust enrichment resulting from payments made by Mr Gaudry under a mistake, or alternatively, against Lifpo Constructions and Mr Godfrey on the basis that each of them engaged in misleading or deceptive conduct by representing that the progress claims accurately stated the GST properly claimable at law for the building works completed by Lifpo Constructions under the building contract with Mr Rogers.

7The parties filed extensive written submissions and supplemented these with oral argument and subsequent further written submissions. The principal matters in contention were as follows:

(a)   whether Mr Gaudry was entitled to restitutionary relief against Lifpo Constructions in circumstances where contractual claims were available, either by Mr Rogers against Lifpo Constructions under the building contract or by Mr Gaudry against Mr Rogers under the joint venture arrangement;

(b)   in fact, Mr Gaudry had brought a separate proceeding (no. CI-22-01442) in the Court against Mr Rogers and other defendants by an earlier writ. In that proceeding, Mr Gaudry had claimed, amongst other matters, the same overpayment which he claimed against Lifpo Constructions in the present proceeding. The issue arose, therefore, as to whether the present proceeding was an abuse of process or should, for example, await the determination of Mr Gaudry’s proceeding against Mr Rogers and others;

(c)   whether Mr Gaudry had suffered any loss, or the overpayment had simply resulted in loss to Mr Rogers. Lifpo Constructions alleged in the defence that Mr Rogers and Mr Godfrey had entered into an “agreement to remedy” that the overpayment would be offset against future progress claims by Lifpo Constructions under the building contract;

(d)   the misleading or deceptive conduct claim against Mr Godfrey was not pleaded as an accessorial claim and an issue arose as to whether the claim might be brought against Mr Godfrey as a principal wrongdoer.

8In the circumstances, I have determined that the proceeding as presently pleaded is fatally flawed. However, I am not persuaded, at this stage, that a claim with a real prospect of success might not be advanced by Mr Gaudry against Lifpo Constructions and against Mr Godfrey.

9I consider that Mr Gaudry should have a further opportunity to replead his claims. However, this should be subject to him:

(a)   amending his claim in the proceeding against Mr Rogers and others to either remove the duplicate claim made there for the overpayment of $197,991.41 or to make clear that, as a result of the duplication of proceedings, the claim for the overpayment will not be pursued unless and until the present proceeding is finalised;

(b)   filing and serving a proposed amended statement of claim on or before a further date.

10If Mr Gaudry fails to fulfil each one of these requirements, the proceeding will, 7 days after the filing and service of an affidavit of non-compliance by the defendants’ solicitors, be dismissed with the defendants’ costs to be assessed by the Costs Court on a standard basis in default of agreement and paid by the plaintiff.

11I propose to allow the plaintiff the opportunity to replead, rather than dismiss the proceeding without a determination of its merits. The facts of the matter are presently opaque in some important respects and I consider, on balance, that it is preferable to give the plaintiff one further opportunity to articulate his claim within the present proceeding. I have also considered the fact that the affidavit in support of the application (sworn by the defendants’ solicitor) was largely argumentative material.

12The facts which persuade me that the plaintiff may have a claim that would have a real prospect of success, rather than a fanciful one, are as follows:

(a)   the email correspondence between Mr Gaudry and Mr Godfrey between approximately October 2019 and 1 September 2020, when Mr Gaudry raised the problems with the duplication of GST in the progress claims, suggests that Mr Godfrey knew that Mr Gaudry was financing the building works under the building contract between Lifpo Constructions and Mr Rogers by making payments himself. It is presently unclear from the pleading in the statement of claim whether the payments made by Mr Gaudry were made by him on Mr Rogers’ behalf pursuant to the building contract or on some other basis which may entitle him to restitutionary relief. The pleading must make clear that it would have been apparent to Mr Godfrey and Lifpo Constructions that any errors in the progress claims would result in overpayments by, and loss to, Mr Gaudry, and not be a loss to Mr Rogers;

(b)   there is no issue that Mr Godfrey and Lifpo Constructions accepted that errors had been made in the calculation of GST in a number of progress claims, resulting in overpayments by Mr Gaudry totalling at least $197,991.41;

(c)   the “agreement to remedy” allegedly entered into subsequently by Mr Rogers and Lifpo Constructions is vague and does not appear to have resulted in any of the overpaid monies being repaid or set off against other progress claims. In any event, Mr Gaudry was not a party to that arrangement.

13It is possible, therefore, that Mr Gaudry may be able to formulate a claim against both Lifpo Constructions in mistake or misleading or deceptive conduct, or against Mr Godfrey on the latter basis. However, the present pleading does not contain claims with a real prospect of success or which contain sufficient particulars, or indeed any particulars in some respects.

14The plaintiff has further problems which he must address, and to which I have referred in the proposed orders:

(a)   the plaintiff’s counsel, Mr McKay, conceded that the present proceeding could not go ahead unless the duplicated claim in the proceeding against Mr Rogers were removed, or at least made clearer by amendment;

(b)   Mr McKay submitted that Mr Rogers would, on the facts, have no basis to claim the repayment of the overpayments made by Mr Gaudry to Lifpo Constructions. However, as presently pleaded, Mr Gaudry’s obligation under the joint venture arrangement with Mr Rogers was to “advance the funds necessary to complete the construction”. This suggests that Mr Rogers retained the obligation he had under the building contract with Lifpo Constructions to make the progress payments (although using funds advanced by Mr Gaudry). If that were the case, it is likely in my view that Mr Rogers would be able to himself claim repayment;

(c)   Defendants’ counsel, Mr Ryan, referred at the hearing to the decision of Delany J in Uniting Church in Australia Property Trust (Victoria) v Ian Hartley Architects Pty Ltd & Ors [2022] VSC 233. Justice Delany’s analysis of the decision of the High Court in Houghton v Arms (2006) 225 CLR 553; [2006] HCA 59 makes it clear that a claim of misleading and deceptive conduct against Mr Godfrey would only be available if the requirements of an accessorial claim were pleaded;

(d)    However, the present pleading that “submitting invoices containing the Disputed GST Changes” was an actionable representation by Mr Godfrey was wholly inadequate, if the actions of Mr Godfrey were to be relied upon to found a claim against him, whether as a principal or accessory;

(e)   Nevertheless, I consider that there may possibly be matters arising from the email correspondence between My Gaudry and Mr Godfrey which would allow Mr Gaudry to plead a claim that had a real prospect of success. These matters must await the filing of an amended pleading and consideration of its contents. If the plaintiff does not file a proposed amended statement of claim, or any proposed draft remains inadequate, the proceeding will stand, or likely be, dismissed;

(f)    I consider that, in circumstances where the defendants, in apparent breach of orders of the Court made by His Honour Judge Woodward on 31 May 2022, failed to respond to the plaintiff’s request for further and better particulars of their defence and for discovery, should make discovery of the “building contract” and the “agreement to remedy” referred to in their defence, before the plaintiff is required to file and serve a proposed amended statement of claim. I have also taken this matter, and the argumentative nature of much of the defendants’ affidavit in support of the application, into account in the costs orders I have made or proposed if certain events were to happen.

15Accordingly, I make the following orders:

1.    The plaintiff’s statement of claim attached to the writ is struck out.

2.     By 2:00pm on 16 September 2022, the defendants must make discovery of all documents comprising or evidencing:

a.     the “building contract” admitted in paragraph 5 of their defence;

b.     the “agreement to remedy” alleged in paragraph 8(c) of their defence.

3.     The plaintiff has leave to file and serve a proposed statement of claim on the defendants by 11 October 2022 at 4.00pm, provided that the plaintiff has also by that date filed and served an affidavit deposing that in proceeding no. CI-22-01442 in the Court, he has amended his claim against the defendants in that proceeding to remove the claim for the overpayments of $197,991.41, and has informed the solicitors for each of the defendants in the proceeding that a claim for the overpayment will not be pursued in that action unless and until the present proceeding is finalised;

3.    If the plaintiff fails to file a proposed amended statement of claim, or to fully comply with the matters contained in paragraph 2 hereof, the proceeding will, 7 days after the filing and service of an affidavit of non-compliance by the defendants’ solicitors, and without further adjudication, be dismissed with the defendants’ costs, including any reserved costs, to be assessed by the Costs Court on a standard basis in default of agreement and paid by the plaintiff.

4.    If the plaintiff fully complies with paragraph 2 hereof, the defendants’ solicitors must, within 14 days of service of the proposed amended statement of claim, notify the plaintiff’s solicitors whether they oppose the filing and service of the amended pleading. In that event, if the plaintiff wishes to seek to file the amended pleading he must, within 7 days of the receipt of notice of the defendants’ opposition, make application to the Court pursuant to the liberty to apply reserved in paragraph 5.

5.    Reserve liberty to the parties to apply.

6.    The defendants’ costs of its summons filed 25 July 2022 are reserved.

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Certificate

I certify that these 7 pages are a true copy of the ruling of his Honour Judge Anderson delivered on 15 September 2022.

Dated: 15 September 2022

Andrea Ko
Associate to His Honour Judge Anderson