JM Kelly (Project Builders) Pty Ltd v Toga Development No 31 Pty Ltd (No 3)
[2009] QSC 321
•5 October 2009
SUPREME COURT OF QUEENSLAND
CITATION:
JM Kelly (Project Builders) Pty Ltd v Toga Development No 31 Pty Ltd & Anor (No 3) [2009] QSC 321
PARTIES:
JM KELLY (PROJECT BUILDERS) PTY LTD
(plaintiff)
v
TOGA DEVELOPMENT NO 31 PTY LTD
(first defendant)
FILE NO:
3651 of 2006
DIVISION:
Trial Division
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
5 October 2009
DELIVERED AT:
Brisbane
HEARING DATE:
18 May 2009
JUDGE:
Daubney J
ORDERS:
1. Paragraphs 37, 45, 52 and 57A of the Second Further Amended Statement of Claim be struck out, with the plaintiff to have leave to
re-plead those paragraphs within 28 days.2. The costs of and incidental to the application be reserved.
CATCHWORDS:
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PLEADING – STATEMENT OF CLAIM – where the first defendant applied to strike out certain paragraphs of the Second Further Amended Statement of Claim – the plaintiff alleged that the first defendant had made certain representations – where the first defendant claimed there was a failure on the face of the pleading to identify sufficiently those matters of conduct said to constitute the representation – whether the paragraphs of the Claim properly and specifically identified the conduct said to constitute the alleged representations
Uniform Civil Procedure Rules 1999 (Qld)
JM Kelly (Project Builders) Pty Ltd v Toga Development No 31 Pty Ltd & Anor [2008] QSC 311, applied
COUNSEL:
J Digby QC with G Harris for the plaintiff
G Inatey SC with R Schulte for the first defendantSOLICITORS:
Tucker & Cowen Solicitors for the plaintiff
Colin Biggers & Paisley for the first defendant
The first defendant has applied pursuant to rule 171 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) to strike out certain paragraphs of the Second Further Amended Statement of Claim (2FASOC). In this proceeding, the plaintiff builder (“JMK”) claims relief against, relevantly, the first defendant developer (“Toga”) in respect of the construction of a development known as “Swell” at Burleigh Heads. As against Toga, JMK seeks:
(a)declaratory and other relief with respect to the contract between the parties, including as to amounts said to be owing to JMK for progress claims and variations;
(b)declaratory and other relief as to the true terms of the contract between the parties; and
(c)relief under the Trade Practices Act 1974 (“TPA”) in the form of orders under s 87 to regulate the terms of the contract according to the case propounded by JMK and for damages pursuant to s 82.
For the purposes of this application, it is sufficient to say that the general structure of the case pleaded against Toga in the 2FASOC is as follows:
(a)On 5 November 2003, Toga invited, inter alia, JMK to tender for the construction of the “Swell” project in accordance with identified tender specifications and other documents contained in, or referred to in, the further specification (para 3);
(b)Particular terms of the tender specification are pleaded as are the design drawings which had been prepared by Toga’s consultant engineers (para 4);
(c)On 9 December 2003, JMK submitted its tender to undertake the project for $64,971,415 (exclusive of GST) in accordance with the tender specification, this figure being the sum of costs allocated by JMK to 33 trade descriptions plus a margin of six per cent and otherwise subject to certain qualifications (paras 5, 6 and 7);
(d)On 15 December 2003, Toga advised JMK that the tender was not acceptable because it was significantly in excess of Toga’s budget (para 8);
(e)Between 15 December 2003 and 14 May 2004, negotiations were conducted between JMK and Toga with a view to reducing the JMK tender price. This involved a process described in the 2FASOC as the “Toga Value Management Process”, which involved design changes, eliminating excess, reviewing JMK’s cost estimating software database and JMK obtaining further or revised subcontractors’ quotes. It also involved Toga engaging new engineering and quantity surveying consultants to redesign the project and eliminate excesses (paras 9 and 10);
(f)The 2FASOC pleads advice allegedly given by Toga to JMK as to anticipated reductions in the tender price, agreements as to matters of re-design to be considered, and other matters of cost-saving in meetings held on 11 February 2004, 25 February 2004, 10 March 2004 and 24 March 2004, as well as details of further amended drawings and other information provided by Toga to JMK and of meetings held between JMK, Toga and potential subcontractors to review and negotiate their quotations (paras 11-21);
(g)On 21 April 2004, Toga wrote JMK a letter advising of Toga’s intention to enter into an agreement with JMK (para 22). This letter referred to agreement that a lump sum contract price of up to a maximum of $50,018,219 (exclusive of GST) is “achievable”, and attached a draft Trade Cost Allocation identifying three types of trade costs as fixed sums, gross maximum prices or provisional sums. JMK indicated acceptance of the terms of the letter of intent (para 23);
(h)The 2FASOC then pleads at some length matters relating to provision to JMK of the documentation concerning the draft Trade Cost Allocation (paras 24-26), as well as a Contract Document Register to be used for the purposes of the proposed agreement between JMK and toga (para 27) and a meeting held on 14 May 2004 to review and agree on the trade packages that were to be the subject of the agreement (para 28).
(i)It is asserted (para 29) that on 14 May 2004, JMK and Toga agreed:
(i)that JMK would undertake the agreed trade packages for the price determined under the Toga Value management Process for each of those packages plus six percent, being a total contract price of $50,018,219.
(ii)the agreed scope of these packages were to be recorded in a document to be produced by Toga described as the Trade Costs Allocation.
(j)Other terms of this asserted contract are then pleaded, including as to possession of the site and precedence of contract documents (para 30), as well as certain adjustments (para 31);
(k)On 17 May 2004, Toga provided JMK with copies of the Trade Cost Allocation (as varied) to reflect the agreement reached by the parties (para 32). The 2FASOC then pleads the reduction for the scope of works that had been achieved by the Toga Value Management Process (para 34);
(l)The 2FASOC also pleads an email sent to JMK by Toga on 21 May 2004 amending the Preliminaries Specification in the form of contract to be executed (para 35);
(m)The parties subsequently executed a formal contract for construction of the project but critically, on JMK’s case, the scope of the works under the formal contract was not that which JMK contends had actually been agreed to by the parties in that it was not the scope constituted by the Trade Cost Allocation Works.
The first of the paragraphs in the 2FASOC complained of by Toga is para 37 which reads:
“Further, or alternatively, by reason of the conduct of Toga (including that of its consultants) set out in paragraphs 28 to 36E hereof and in the circumstances referred to in paragraphs 1 to 36E hereof, and in the premises, Toga also represented to JMK that the scope of work to be undertaken by JMK for the Contract Price was limited to the Trade Cost Allocation works, as detailed in paragraphs 29 to 36 hereof (the “Scope of Works Representation”).”
JMK then pleads, in brief, that, induced by and in reliance on this Scope of Works Representation it agreed to undertake the works for the Contract Price, took possession of the site and commenced work. It is then alleged in paragraph 39 that:
“The Scope of Works Representation was false and untrue, was misleading or deceptive or was likely to mislead or deceive and, therefore, was in contravention of s 52 of the TPA if, as asserted by Toga and Suters, the scope of works required by Toga and Suters to be undertaken by JMK for the Contract Price was not limited to the Trade Cost Allocation Works as detailed in paragraphs 29 to 36 hereof but was the scope of works now asserted by Toga and Suters as detailed in paragraphs 65 to 67 hereof.”
Toga contends that the plea in para 37 is embarrassing because it simply “bundles up” diverse allegations previously made in the pleading and does not state precisely, or at least with sufficient particularity, what conduct is relied on as giving rise to the Scope of Works Representation. For its part, JMK argues that the misleading character of Toga’s conduct is adequately pleaded, saying that, “Toga understands that its conduct induced JMK’s belief that the scope of works for the project was that constituted by the Trade Cost Allocation Works and that, for example, JMK executed documents proffered by Toga in that belief.”
Toga’s complaint about the 2FASOC is not, however, about the pleadings of what JMK did or did not do in reliance on the Scope of Works Representation. The complaint goes to a failure on the face of the pleading to identify sufficiently from a wide-ranging narrative in the paragraphs preceding para 37 those matters of conduct which are said to constitute the representation.
In JM Kelly (Project Builders) Pty Ltd v Toga Development No 31 Pty Ltd & Anor[1] (being the judgment on an application by the second defendant in this proceeding to strike out certain parts of the statement of claim, including allegations of contravention of s 52 of the TPA) I said:
[68]“JMK’s submissions in this regard do not, however, stand up to close scrutiny. As was said by French J (as his Honour then was), with whom Beaumont and Finkelstein JJ agreed, in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd,[2] the touchstone of liability under s 52 of the TPA is the conduct by act or omission of the particular defendant ‘and its characterisation as misleading or deceptive’. His Honour said:
‘The analysis of the statement of claim must begin by identifying the conduct and the facts relied upon to give it that character. The principles governing characterisation are well established. Conduct is misleading or deceptive if it induces or is capable of inducing error... The so-called “doctrine” of “erroneous assumption” referred to by the High Court in Campomar Sociedad Limitada v Nike International Ltd (2000) 169 ALR 677 at 704 is merely another way of expressing that general proposition albeit it seems to have arisen in the context of cases involving similar product names. The statement in the joint judgment of Deane and Fitzgerald JJ in Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 2 TPR 48 at 70 ... that “no conduct can mislead or deceive unless the representee labours under some erroneous assumption”, cited in Campomar, is another way of saying that the representee must be led into error.’
[1][2008] QSC 311
[2](2000) 104 FCR 564.
Paragraph 37, by simply invoking a large number of preceding paragraphs of the pleading, does not properly and specifically identify the conduct said to constitute the alleged representation nor does it in any meaningful way identify the facts said to give that conduct the character asserted. It is not for Toga to “hunt and peck” through the preceding paragraphs to try to divine the conduct and underlying facts on which JMK will advance its case; rather, it is for JMK to give Toga proper and fair notice of the case it has to meet. Nor is it appropriate, as was canvassed in my previous judgment, to cast such a plea in a way which simply puts a raft of conduct before the judge for evaluation as misleading or deceptive.
Paragraph 37 needs to be recast to cure these defects.
Toga makes similar complaints about paragraphs 45 and 52 of the 2FASOC. Each of those is a plea of a representation said to be inferred from conduct of Toga and which is relied on as founding a claim for contravention of s 52 of the TPA. Those paragraphs read:
“45.By providing the Draft Formal Contract Documents as set out in paragraphs 44 and 44A hereof, and in the circumstances of the matters referred to in paragraphs 1 to 39 and 42 to 43 hereof, Toga also represented to JMK that Toga did not intend that the execution of any of the Draft Formal Contract Documents would require JMK to perform a scope of works for the Contract Price that was different from that constituted by the Trade Cost Allocation Works as detailed in paragraphs 29 to 36 hereof (the “Execution of the Draft Formal Contract Documents Representation”).
…
52.In the circumstances referred to in paragraphs 1 to 47 hereof, and in the premises and by reason of the Toga Scope of Works Confirmation and by providing the 15 June, 2004 Toga Fax in the premises as set out in paragraphs 48 to 51 hereof, Toga represented to JMK that Toga did not intend that the execution of the Tender Form and the Formal Instrument of Agreement would require JMK to perform a scope of works for the Contract price that was different from that constituted by the Trade Cost Allocation works as detailed in paragraphs 29 to 36 hereof (the “Tender Form and Formal Instrument Representation”).”
It is, in my view, clear that each of these suffers from the same defect of pleading as para 37, and ought be re-pleaded.
Toga also complains about para 57A, which is as follows:
“Further or alternatively, in the premises of the matters set out in paragraphs 1 to 56 hereof, Toga (its agents and consultants, including Suters) is estopped from:
57A.1contending that, for the Contract Price, JMK is obliged to perform a scope of work that is different from that constituted by the Trade Cost Allocation Works for the contract Price as detailed in paragraphs 29 to 36 hereof; and
57A.2administering the Contract, the Formal Contract Documents and/or the Toga Terms, and determining JMK’s entitlements in respect of the Project, by reference to a scope of works that is different from the Trade Cost Allocation works as detailed in paragraphs 29 to 36 hereof;
57A.3contending that JMK is not entitled to the payments claimed when the design as developed and/or the Sub-contracts actually let resulted in the Trade Cost Allocations and the Scope Clarifications being incorrect, in circumstances where the resultant extra cost to JMK was not set-off by other cost savings on the Project.”
This paragraph does not even attempt to identify the species of estoppel on which JMK relies, let alone the material facts which will be relied on to invoke the operation of the doctrine. In argument, I was informed by counsel for JMK that it was proposed to advance a case of estoppel by representation. In that event, one would expect to see the facts relied on stated (at least by cross-referencing or incorporation of matters previously pleaded) to support the asserted representation, reliance, detriment and unconscionability. Paragraph 57A needs to be re-pleaded.
JMK sought to resist the application on the ground that, in the scheme of the progress of this proceeding, this striking-out application is lamentably late. I am not unsympathetic to that submission. It would appear that Toga has, for a very considerable period, sat by without raising these issues, even when cognate pleading points were being agitated by Suters. I am, however, not inclined to refuse Toga’s application, but state immediately that I am not thereby condoning its delay. Rather, the reason I am inclined to allow the application, even at this stage, is because the parties, under case management, have devised an appropriate regime for the early determination of issues of liability in the matter. That process will, however, require clear delineation and definition of issues on the pleadings. The paragraphs challenged by Toga need to be re-cast in order to be of utility in that process.
Toga’s dilatoriness in bringing this application leads me to conclude, however, that the costs of the application ought be reserved.
There will be the following orders:
1.Paragraphs 37, 45, 52 and 57A of the Second Further Amended Statement of Claim be struck out, with the plaintiff to have leave to
re-plead those paragraphs within 28 days.
2.The costs of and incidental to the application be reserved.
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