Lce Queensland Pty Ltd v J Hutchinson Pty Ltd

[2025] QSC 271

SUPREME COURT OF QUEENSLAND

CITATION:

LCE Queensland Pty Ltd v J Hutchinson Pty Ltd [2025] QSC 271

PARTIES:

LCE QUEENSLAND PTY LTD
ACN 087 540 350

(Plaintiff)

v
J HUTCHINSON PTY LTD
ACN 009 778 330

(Defendant)

FILE NO:

BS 14902 of 2024

DIVISION:

Trial Division

PROCEEDING:

Interlocutory application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

13 May 2025 (ex tempore)

DELIVERED AT:

Brisbane

HEARING DATE:

13 May 2025

JUDGE:

Hindman J

ORDER:

1. Pursuant to r 171 of the Uniform Civil Procedure Rules 1999 (Qld), Part VIII (comprising paragraphs 111 to 138) of the statement of claim filed 14 March 2025 be struck out, without leave to replead.

2.   The costs of the application be the defendant’s costs in the proceeding.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – EMBARRASSING, TENDENCY TO CAUSE PREJUDICE, SCANDALOUS, UNNECESSARY ETC OR CAUSING DELAY IN PROCEEDINGS – where the plaintiff was a subcontractor of the defendant in respect of construction works – where part 8 of the plaintiff’s statement of claim (part 8) relevantly alleges fraud, unlawful conspiracy, and misleading or deceptive conduct – where the defendant applies for part 8 to be struck out on the basis of the allegations contained therein being unnecessary – whether part 8 should be struck out for being unnecessary

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OR DEFENCE – where the defendant applies for part 8 to be struck out on the basis of it not disclosing any reasonable cause of action – whether part 8 should be struck out for not disclosing any reasonable cause of action

Uniform Civil Procedure Rules 1999 (Qld), r. 5

COUNSEL:

A J H Morris KC with V G Brennan for the plaintiff

D E F Chesterman KC with L C Brabazon for the defendant

SOLICITORS:

Simmonds Crowley Galvin for the plaintiff

Russells Lawyers for the defendant

Introduction

1. This is an application brought by the defendant to strike out part 8 of the plaintiff’s statement of claim filed on 14 March 2025. The application has been brought at a time before the filing of any notice of intention to defend and defence. There are effectively two grounds upon which the application is made. The first ground is, in summary, that the allegations made in part 8 are unnecessary, and I will return to why that is alleged to be so. The second ground concerns whether part 8 discloses any reasonable cause of action or has a tendency to prejudice or delay the fair trial in the proceeding, and that relies upon two particular matters which I will also return.

   Factual background to the proceeding

2. The nature of the claim, in a general sense, is a construction type dispute. The plaintiff respondent was a subcontractor of the defendant applicant, who has been referred to in the statement of claim by its well-known nickname, Hutchies. There are a number of different parts to the pleading, and a number of causes of action other than those contained in part 8. The important part for present purposes, which is said to result in part 8 being unnecessary, is the claim that arises under part 6 which contains a background and contains the quantum of the claims, and part 7 which deals with three variation claims.

3. The nature of the claim in part 8 of the statement of claim results in three different damages claims: under the Australian Consumer Law, for fraud, and for civil conspiracy.  The basic sense of this part of the pleading goes like this, as I understand the case theory.  The plaintiff respondent, who I will refer to as the subcontractor, had been completing works.  There had been delays allegedly caused by Hutchies and there had been variation claims, specifically variation claims 53, 91 and 99.  Although the first claimed amount in the pleading is described as an estimated amount only, in total the three claims come to a good chunk over two million dollars.  Those claims appear to have been disputed by Hutchies, and despite being claimed in a number of payment claims, have not been paid by Hutchies.

4. It appears that Hutchies, for a number of a number of reasons, including to advance the project, to avoid liquidated damages, and probably to satisfy demands that were being made by the principal where the contract was plainly running behind time, decided that the way that it would deal with these problems was to effectively change a single contract into a staged contract so that it could start to deliver parts of the project to the principal.

5. In circumstances where the subcontractor was making these substantial variation claims, which had not been paid, it seemed obvious enough that the subcontractor was not going to provide the requisite certifications of the electrical works completed in what was proposed to be a new stage 1, which was a sizeable part but not all of the building.  The issuing of those certifications would allow a building certifier to issue a certificate of occupancy, which would allow settlement to occur with purchasers of those units and allow those parts to be handed over to the principal.

6. In circumstances where it was obviously anticipated that the subcontractor would not do certifications without being paid, Hutchies obtained an independent electrical certifier to carry out the certification works, who in the period of, approximately but not definitively, a week or so, produced a certification of the electrical stage 1 works.  This was then provided back by the electrical certifier to Hutchies, who then provided it to the building certifier, who relied upon it, undoubtedly along with a number of other certifications that would have been required for other services, to issue a certificate of occupancy.

7. The subcontractor’s case goes that it must have been obvious to somebody at Hutchies, who received and then sought to deploy the electrical certification, that the certification must have been fraudulent.   It is alleged that given the work to be undertaken and the fact that the electrical certifier had not themselves carried out the underlying work, it would have been impossible for the certifier to certify the works in the time that it was certified.  Thus, it is said that the certificate is counterfeit in the sense of being false and fraudulent, that it did not comply with the approved form, that it did not comply with certain building regulations and did not validly or lawfully certify the works that it purported to certify.

8. In terms of Hutchies’ knowledge of that, it is not identified in the pleading what actual individual or individuals on behalf of Hutchies had the knowledge that is imputed to Hutchies.  It said that the guilty knowledge of Hutchies is to be inferred from a number of matters set out in paragraph 132 of the statement of claim.  It must be that those matters are to be taken in combination because some of the matters standing on their own  are not of themselves matters from which any such guilty knowledge could be inferred – for example, paragraph 132(a) pleads the fact that Hutchies is the main contractor for the project and the coordinator of the program,.  There also seems to be some difficulties in that some of the matters from which knowledge is to be inferred appear to post date when the certification was in fact handed over. 

9. Insofar as there is alleged in subparagraph (d) to be this impossible timeframe in which the certifier produced the certificate, whilst there are pleaded details of the types of things that it is suggested would have been required to be undertaken by the certifier to produce the certificate, it is certainly not plain that the allegation of impossibility is made out, because there is, on the pleading, some uncertainty about the time in which the certificate was provided, anything up to approximately a week or so.  One might envisage that one could do quite a lot of certification work in one week, so it is not evident on the face of the pleading that the timing is in fact impossible, which is the key alleged fact from which Hutchies’ guilty knowledge is to be inferred.

10. As a consequence of that guilty knowledge, it is pleaded that Hutchies was knowingly concerned in or a party to the deployment of the counterfeit electrical certificate and that the deployment of the certificate was fraudulent and Hutchies was a party to that fraud. 

    Causes of action and structure of the pleading

11. As I have said, there are then three causes of action that are pleaded arising from that.  The first is fraud.  The second is an unlawful conspiracy.  It does seem to me that the pleading of conspiracy is missing some of the essential elements, including the fact of the electrical certifier and Hutchies acting together in some way and there being an intention to harm, but that is really just a pleading issue that could potentially be fixed. 

12. The third cause of action is misleading and deceptive conduct.  It, of course, in a sense is different to the fraud and the civil conspiracy case, in that it does not rely upon Hutchies knowing that the electrical certificate was fraudulent in some way or having intention to harm.  Those more difficult elements of those causes of action are not present.

13. The causation case then proceeds such that Mr McDonald, who was the building certifier, would not have issued the Certificate of Occupancy but for the production of the counterfeit electrical certificate, and if Mr McDonald had not issued that Certificate of Occupancy, then it is said that Hutchies would have sought to obtain certification from the subcontractor, and that in order to obtain that certification, Hutchies would have promptly paid the amount “lawfully owing” to the subcontractor in respect of the stage 1 works.

14. It is then said that by that conduct, Hutchies caused harm by unlawful means, did so by way of conspiracy, and that by reason of such conduct the subcontractor has suffered loss and damage.  The loss and damage is articulated as being the non-payment of the amount lawfully owing to the subcontractor in respect of the stage 1 works and the delay in recovering such payment.

    Consideration

15. The unnecessary aspect of the statement of claim, as is advanced by the applicant on the strike out application, concerns that the loss and damage that is claimed, specifically firstly in respect of the non-payment of the amount lawfully owing, is the amount of the three variation claims, which are pleaded in terms of the background part 6, and the claim in respect of same is made in part 7. And if it is found that those amounts are lawfully owing, then it must mean on the face of this pleading that – subject to one thing I will mention, an argument that Mr Morris KC raised – there would have to be success on the claim in part 7 in order for the claim in part 8 to succeed. Subject to the thing I will come to, that seems to me to be correct.

16. Insofar as the claim in paragraph 138 of the statement of claim includes an amount of loss and damage comprising the delay in recovering payment, there is no pleading of any loss and damage relating to delay separate to what would automatically occur in terms of interest that would be imposed by a court in the ordinary course. That again to me does not seem to advance the claim under part 8 in any significant way beyond that in part 7.

17. The caveat about the necessity of part 8 seems to be that there is, in circumstances where the defence has not yet been filed, at least a possibility that the defendant could plead a defence that, whilst it does not deprive those variation claims of the description of an amount lawfully owing, might prevent recovery in the proceeding of those amounts for other, what might be described as, technical reasons. An example which comes to mind is if a claim was affected by a limitation period. It might be that under part 7 of the statement of claim, it is determined that the amounts under the contract are lawfully owing, but a limitation action defence would then operate in a way such that the amount, whilst perhaps owing, is not recoverable. Whether it is then still technically owing, I am not sure, but that is a possible distinction to be made between the claims in part 7 and part 8.

18. A similar example which Mr Morris KC posited is the circumstance where, for example, an amount might be lawfully owing under the contract, but might not be able to be recovered if, for example, the contract contains a dispute resolution mechanism clause which refers to the matter to arbitration or some other form of resolution or mediation whereby a defence could be pleaded that would see potentially part 7 not be able to succeed in a way that would not affect the claim in part 8.

19. The only other issue about part 8 of the pleading that I should identify is that insofar as it is alleged the non-payment of the amount lawfully owing is in respect of stage 1 works, noting that the subcontractor’s position is that there were never officially stages, what seems implicit in that is that there is at least the possibility that the variation claims that are claimed for in part 7 comprise not just what Hutchies might describe as stage 1 works, but also might contain stage 2 works. The case that I understood to be advanced by Mr Morris KC is that the subcontractor would have only required the payment of works related to stage 1 before certifying that. That is not plain from the pleading, but something of which I was informed.

20. In that case, it is not that there is not that crossover between the claims in part 7 and part 8. It is just that there is the potential that the part 7 claim, in fact, might be broader or wider in terms of quantum than that that is actually encompassed in paragraph 138.

21. It seems to me that, in those circumstances, it would have been quite improper of the applicant to make this application and make submissions about part 8 being unnecessary if it has in mind some sort of defence to part 7 of the pleading that has the potential to affect part 7 but not part 8. It is, of course, at the moment, before the defence has been filed, somewhat hypothetical as to whether any defence of that nature might be pleaded. I can see in those circumstances some merit to the idea that one would just require the defendant to plead so that the pleadings could be looked at and then the assessment of necessity undertaken.

22. But the reality is that at the moment, if it does, in fact, prove to be unnecessary to proceed with part 8, to do that would require the defendant to now enter into a pleading in respect of part 8 and expend costs preparing that defence where that may not, in fact, be necessary. And that seems to me contrary to modern litigation principles, which in this jurisdiction are reflected in rule 5 of the Uniform Civil Procedure Rules1999 (Qld) (UCPR).

23. I am mindful that, as Mr Morris QC pointed out and it seemed was accepted by Mr Chesterman KC, whilst there are cases dealing with the striking out of pleadings as being unnecessary, they are different to this case, in that they are cases where there are specific allegations made in a pleading that are unnecessary to relevant causes of action, whereas here what is contemplated is that an otherwise on its face reasonable and available cause of action is sought to be prevented from running by this application.

24. Obviously, the Court often is faced with proceedings where there are claims for alternate relief and it is commonly the case that success on one cause of action pleaded means that it will not be necessary for the court to determine other causes of action pleaded. But this does appear to me to be an exceptional type of case, where it is not merely that these claims are alternate claims based on broadly the same set of facts, even if a slightly different sets of facts. It seems to me to be a case where in truth the part 8 claim, if those type of defences that I have discussed are not pleaded, cannot win unless the claim in part 7 succeeds. In terms of the issues to be considered in evidence and time that would be spent at trial, the part 8 claim really introduces a much more complex set of allegations.

25. I also accept as true, as was posited by Mr Morris KC, that parties should and generally are permitted to bring any cause of action that is reasonably available to them as long as they plead it in a proper way, and that in this case, if the claim under part 7 was not, in fact, advanced in the proceeding, there would be no basis upon which I could possibly consider the striking out of part 8. It is not for me to dictate what available causes of action a party brings.

26. But I think this is a case where, because of that cross-over between the two parts in terms of the damages claims, because it seems to me that part 8 cannot succeed unless part 7 also succeeds, and because there does seem to me to be a lot of additional time and cost involved in the resolution of the part 8 matters, I should conclude under rule 171 of the UCPR that the part 8 claim is unnecessary or has a tendency to delay the fair trial of the proceeding. It seems to me that the real issues in dispute in this case in terms of where that claim for money arises from concern the entitlement to the variations, and that is what needs to be determined in the proceeding in order to give the parties a fair trial.

27. Accordingly, I am satisfied that the appropriate way for me to proceed in this case, on the basis that the type of defence that would make part 8 necessary seems unlikely to me to be one pleaded, given it has not been foreshadowed, and ought to have been if it was to be advanced, is to strike out part 8 of the pleading under rule 171 of the UCPR, to not give leave to replead, but noting – without making any orders about it – that if a defence is received in due course which makes it plain that it is that type of defence that I have discussed that makes part 8 is necessary, there would be some application made to, effectively, reverse the orders that I am going to make. I think that is the most efficient use of both the court’s resources and the parties’ resources, consistent with rule 5 of the UCPR.

    Ground 2: no reasonable cause of action disclosed

28. That then makes the alternate basis of the application unnecessary for me to determine.  It was, in a sense, just a pleading fight.  I have remarked along the way in discussions with counsel that it seemed to me that the conspiracy case was missing some elements and so it was probably liable to be struck out, but leave to replead that would have been given if that was the only issue.

29. The issue about the timing issue and the impossibility issue, and the fact of the subcontractor presently not being able to identify with precision person or persons within Hutchies who had the relevant knowledge, I think is a more difficult issue to determine.

30. On balance, as the pleading presently stands, I think it is sufficiently deficient that I would have struck it out, but with leave to replead.  It is not, as I remarked during the submissions, that I have no sympathy for the plaintiff having difficulty identifying the persons of Hutchies that were knowingly concerned, but that any deficiency in that respect might be able to be alleviated with some better particularisation of the timing issue, which more persuasively and comprehensively shows the issue of impossibility that is sought to be advanced.  But as I said, it is presently not necessary for me to make any findings on that ground, given the first finding that I have made.

    Orders

31. The Court orders that:

    (a)Pursuant to r 171 of the UCPR, Part VIII (comprising paragraphs 111 to 138) of the statement of claim filed 14 March 2025 be struck out, without leave to replead.

    (b)The costs of the application be the defendant’s costs in the proceeding.