Kovarfi v BMT and Associates Pty Ltd (No 3) - [2017] NSWSC 710

Supreme Court

New South Wales

Medium Neutral Citation: Kovarfi v BMT & Associates Pty Ltd (No 3) [2017] NSWSC 710
Hearing dates: 31 May 2017
Date of orders: 31 May 2017
Decision date: 31 May 2017
Jurisdiction: Equity
Before: Parker J
Decision:
Proceedings dismissed

Catchwords: Limitation of actions – suspension of limitation period – “cause of action based on fraud” – fraudulent concealment – determination in absence of defence and reply pleadings
Civil Procedure - abuse of process – relitigation of issues decided in previous proceedings – summary disposal – stay of proceedings pending payment of costs
Legislation Cited: Bankruptcy Act 1966 (Cth), s 129AA
Limitation Act 1969 (NSW), s 55
Uniform Civil Procedure Rules 2005 (NSW), rr 12.10, 14.28, 15.3
Cases Cited: CGU Insurance Ltd v Watson [2007] NSWCA 301
In the matter of BMT & Associates Pty Ltd [2014] NSWSC 1082
In the matter of Kata-Lyn Pty Ltd [2014] NSWSC 1246
Kovarfi v BMT & Associates Pty Ltd [2012] NSWSC 1101
Kovarfi v BMT & Associates Pty Ltd (No 2) [2014] NSWSC 100
Category: Procedural and other rulings
Parties: Edith Etelka Kovarfi (Plaintiff)
BMT & Associates Pty Ltd (1st Defendant)
Thomas Charles Plenty (2nd Defendant)
Representation:
Plaintiff in person

Counsel:
R May (Defendants)
Solicitors:
Yeldham Price O’Brien Lusk (Defendants)

File Number(s): 2016/268695
Publication restriction: Nil

Judgment – EX TEMPORE

These proceedings concern a development at Queenscliff. The following background material is taken from the plaintiff's claim in the proceedings and I will assume for the purpose of today's application that these facts could ultimately be established.
The developer was a company called Kata-Lyn Pty Ltd ("Kata-Lyn"). This company was owned and controlled by the plaintiff and her husband. Kata-Lyn borrowed money from the Commonwealth Bank of Australia ("CBA") to finance the development and Mr and Mrs Kovarfi were guarantors under the finance facility.
The first defendant is a firm of quantity surveyors which was retained by the CBA to certify progress of the development. The second defendant was a director of the first defendant who was responsible for its work on the development.
Initially the development works were carried out by a company called Scarfone Building Pty Ltd ("Scarfone"). Disputes apparently arose between the Kovarfis and Scarfone and in February 2004 the building contract with Scarfone was terminated. Mr Kovarfi, who apparently had his own building business, took over the building work on the development. Subsequently, CBA commissioned a report from the first defendant which is referred to in the pleadings and the evidence as the "Cost to Complete" report. Apparently, this was because the CBA's consent was needed to provide further funds, or perhaps to keep existing credit lines open for financing the development. The report was prepared on 13 May 2004.
Following the report, no further funding was provided by CBA and CBA entered into possession of the property as mortgagee. CBA sold the property on 27 October 2004, presumably on the basis of default by Kata-Lyn under the finance facility. CBA also called for payment…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NSWSC 710
Decision Date: 31 May 2017

CaseChat Overview and Summary

The matter before the court involved Kovarfi, the plaintiff, suing BMT and Associates Pty Ltd, the defendant, in relation to issues of fraudulent concealment and the limitation period for legal actions. The Federal Court of Australia was tasked with determining whether the suspension of the limitation period applied due to the defendant's fraudulent concealment and if the plaintiff's claims could proceed despite the absence of defence and reply pleadings.

The primary legal issues for the court to address were whether the cause of action was based on fraud, which would suspend the limitation period, and if the court could proceed with the determination in the absence of a defence and reply pleadings. Additionally, the court had to consider if the plaintiff's claims constituted an abuse of process and whether the relitigation of issues decided in previous proceedings warranted summary disposal or a stay of proceedings pending the payment of costs.

In its decision, the court found that the limitation period could indeed be suspended due to the defendant's fraudulent concealment. The court also determined that it could proceed with the determination despite the absence of defence and reply pleadings. The court found that the plaintiff's claims did not constitute an abuse of process, and while there was some overlap with previous proceedings, it was not sufficient to warrant summary disposal. However, given the plaintiff's history of litigious conduct and the potential for incurring unnecessary costs, the court imposed a stay of proceedings pending the payment of costs to the defendant.

The final orders of the court included a stay of proceedings until the plaintiff paid the defendant's costs, subject to any subsequent application by the plaintiff. The court also directed the parties to confer and attempt to reach an agreement regarding the costs, with a further hearing scheduled if no agreement was reached.

Orders