MDC Developments Pty Ltd v G & M Van Der Vegt Nominees Pty Ltd
[2010] QCAT 489
•5 July 2010
| CITATION: | MDC Developments Pty Ltd v G & M Van Der Vegt Nominees Pty Ltd [2010] QCAT 489 |
| PARTIES: | MDC Developments Pty Ltd |
| v | |
| G & M Van Der Vegt Nominees Pty Ltd ATF G & M Van Der Vegt Family Trust Ray Wells Pty Ltd |
| APPLICATION NUMBER: | BD484-08 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 23 June 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Richard Oliver, Senior Member |
| DELIVERED ON: | 5 July 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The application to join Samuel James Ray as a party is refused. 2.The application to amend the first respondent’s defence and counter-claim by adding paragraphs 42-46 inclusive as set out in the document titled “Appendix ‘A’” and filed in the Tribunal on 25 May 2010 is refused. 3.The first respondent is granted leave to amend the defence and counter-claim by inserting paragraphs 47-52 inclusive as set out in the document titled “Appendix ‘A’” and filed in the Tribunal on 25 May 2010. 4. The fist respondent must file and serve any statements of evidence including expert evidence by 31 July 2010 5. The application is listed for a Directions Hearing on 12 August 2010 6. The parties file and serve any written submissions on costs of the application by 16 July 2010 7. The decision on costs will be decided on the papers. |
| CATCHWORDS : | Application by first respondent to amend defence and counter-claim to add a cause of action; case management principles; prejudice to applicant and second respondent; no explanation of delay; forensic advantage to first respondent; Aon Risk Services Australia Limited v Australian National University (2009) HCA 27 followed; Objects of QCAT Act considered. |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | MDC Developments Pty Ltd represented by Mr Whitten of Counsel instructed by Mills Oakley Lawyers |
| RESPONDENTS: | G & M Van Der Vegt Nominees Pty Ltd ATF G & M Van Der Vegt Family Trust represented by Mr Matthews of Counsel instructed by Lawyers Qld Ray Wells Pty Ltd represented by Mr Whitten of Counsel insructed by Maunsell Pennington Solicitors |
REASONS FOR DECISION
This proceeding commenced in the former Commercial and Consumer Tribunal (“CCT”) on 23 December 2008. Save for the application under consideration here, all that is needed before the proceeding can be listed for a compulsory conference, and onto hearing, is the filing of statements of evidence by the first respondent, G & M Van der Vegt Nominees Pty Ltd as Trustee, (“Van der Vegt”).
On 3 June 2010 Van der Vegt filed an application seeking the following directions:
(1)Leave to amend the defence and counter claim
(2)Leave to join Sam Ray as a party (Third Respondent) to these proceedings so that a Cross-Claim may be made by the Van der Vegt against Mr Ray
(3)An order that the Tribunal lacks the jurisdiction to hear the proceeding
The proposed amendment seeks to plead a claim of misleading and deceptive conduct on the part of Mr Ray pursuant to section 52 of the Trade Practices Act and damages against Mr Ray pursuant to section 82.
The application for amendment to plead the Trade Practices Act claim is opposed, as is the application to join Mr Ray, by the applicant and second respondent.
Background
The relevant facts underpinning the proceeding are that the applicant, MDC Developments Pty Ltd (“MDC”) entered into a master builders contract with Van der Vegts on 9 July 2007 to carry out renovation and extension building work to Van der Vegt’s house at 40 Cotlew Street, East Southport.
MDC’s claim against Van der Vegt is for the payment of $141,807.56 being the balance of monies owing under the building contract together with $232,566.57 for additional building work carried out as a result of variations. MDC also claims interest.
Van der Vegt, at the time the only respondent to the proceeding, filed a defence to the application on 28 January 2009.
The second respondent, Ray Wells Pty Ltd (“Ray Wells”) was joined to the proceeding pursuant to an order of the CCT of 18 February 2009. Ray Wells filed a defence to the claim made against it by Van der Vegt on 24 March 2009.
Van der Vegt’s claim against Ray Wells is in breach of contract and negligence whereby Van der Vegt claims $493,498.00 from the Ray Wells. The basis of the cause of action is that Van der Vegt entered into a contract with Ray Wells as Project Manager for the contract works to be carried out by the MDC, when Mr Ray was a director of, and had an interest in, both companies.
10. In the defence that is filed, Van der Vegt pleads:
“27Mr Sam Ray is a Director of Ray Wells as well as a Director of the MDC…
31.At no material time did Mr Ray, or any other person, disclose that Mr Ray is also a Director of the MDC…
37.Ray Wells and Mr Ray owed the Respondent a duty of care –
a. Not to be conflicted in his duties
b. To independently advise and act for the Respondent;
c. To prefer the Respondents interest
d. To comply with the contractual terms at paragraph 34 and 35 herein
38.Ray Wells breached each of the duties in paragraph 37 herein…
40.Specifically
a. ….
b. ….
c. ….
d. Mr Ray preferred his interest to the MDC over his obligations under the Ray Wells agreement and was conflicted in his duties
e. Mr Ray failed to disclose at anytime that he was a Director of the MDC”
11. Therefore, at the close of pleadings between MDC and Van der Vegt, Van der Vegt had clearly articulated it’s complaint about the conflict of interest between Mr Ray, acting both as Director of MDC, and also acting as Director of the Ray Wells.
12. Subsequent to the filing of the defence an application was made by Van der Vegt to join Ray Wells Pty Ltd as a respondent. In support of that application Ms Schwede, the Solicitor for Van der Vegt, filed an affidavit, sworn 28 January 2009, which annexed to it company searches and information leading to the contention that:-
“The Respondent intends to plead that Ray Wells Pty Ltd was negligent in its capacity as the “project manager” as stated in the defence and counter claim filed by the Respondent in this proceeding”.
13. Directions were then made about the filing of material and, in particular, on 28 May 2009 the CCT directed Van der Vegt to file statements of evidence. This did not occur. MDC was also delinquent with respect to compliance with the CCT’s orders and a further order was made on 17 July 2010 ordering MDC to file its statements of evidence otherwise the application would be struck out.
14. Pursuant to that order, MDC did file its statements of evidence and by 23 September 2010 the Tribunal again ordered Van der Vegt to file its statements of evidence. That order has still not been complied with.
15. As far back as 29 July 2009 Mr Ray, on behalf of MDC, filed an affidavit in the Tribunal which contains the following statement:-
“In or about early June 2009, I was advised by both Ms Jody Stroud of the Solicitors for the MDC and Mr Tom Adames of the Solicitors for the second respondent that the first respondent would likely bring an application in the proceeding for it to be started by the applicant again in the Supreme Court of Queensland pursuant to section 40(2) of the Commercial and Consumer Act 2003 because the first respondent had raised issues relating to a breach of the Trade Practices Act by the second respondent and these issues are outside the jurisdictional power of the Tribunal to decide”.
16. The reference to that suggestion by the Solicitors for Van der Vegt was strenuously objected to by Mr Matthews, counsel for Van der Vegt at this hearing, on the basis that it discloses confidential information about what occurred in mediation. He was critical of the breach of that well known convention that what occurs in mediation is confidential and cannot be relied on at any subsequent proceeding. In fact that principle is enshrined in the QCAT Act[1].
[1] Section 83
17. However, the statement made does not relate to any of the issues in dispute, any suggestion of compromise or shifting of ground, nor does it disclose confidential information. For the purposes of this application I am of the view that it is relevant and as this application does not, in any way, address the merits of either party’s case it is not embarrassing.
Application
18. Against this background and following on from the facts already pleaded in the original defence, the application is brought to add a cause of action which the parties concede is not within the jurisdiction of QCAT. The application is also made in the face of clear evidence that Van der Vegt was considering this possibility back in June 2009 and did nothing to progress the taking up of that position until the filing of the application on 3 June 2010.
19. The proposed amendments to support the trade practices claim and the joinder are as follows:
43.The conduct of both the Applicant and the Second Respondent pleaded by paragraphs 28 to 35 above (“the Applicant and the First Respondent’s conduct”) was:
a) relied upon by the First Respondent as pleaded by paragraph 36 as above;
b) misleading or deceptive or likely to mislead or deceive the First Respondent in the manner and respects pleaded by paragraph 40 above;
c) insofar as the same was constituted by representations, either oral or written, made without reasonable grounds for the same; and
d) in the premises, contrary to s.52 of the TPA.
The First Respondent has, by the Applicant’s and the Second Respondent’s conduct, suffered loss and damage in the manner and respects pleaded by paragraph 41 above.
Mr Ray was knowingly concerned in the Applicant’s and the Second Respondent’s conduct.
In the premises, Mr Ray is liable personally, pursuant to s.75B of the TPA, for the First Respondent’s loss and damage.
20. The reasons for the application, which are set out in it, are relevant and are as follows:-
“On 26 March 2010 the second respondent made written applications for directions and stated therein that it intended to rely upon alleged breaches of the Trade Practices Act by the applicant and Ray Wells as grounds for its defence and a Cross-Claim. The applicant submitted that QCAT lacks jurisdiction to hear such a defence and Cross-Claim. The second respondent in that application submitted that the claims in both proceedings arise out of the same factual background and that a successful trade practices claim would extinguish the current QCAT proceeding. On 5 May 2010 Member O’Callaghan issued certain orders. The application is pursuant to those orders”.
21. This highlights the fact that Van der Vegt has not been proactive in seeking to add Mr Ray, or amend the defence, but this came about as a consequence of a Direction made by QCAT on 5 May 2010. Quite obviously the issue of both the joinder and amendment must have been raised at that Directions Hearing. The point here is that it seems it was only through the review process that this matter was brought to a head despite, Van der Vegt agitating this issue in correspondence between itself, QCAT and MDC’s Solicitors in March of this year.[2]
[2] Refer to annexures to the affidavit of Justin Twig sworn 21 June 2010
22. In support of the application Ms Schwede has filed an affidavit[3] in which she reiterates facts that are not only already contained in the defence but also raises new issues about Mr Ray’s license details as a result of searches from the Queensland Building Services Authority. In paragraph 7 of her affidavit she sets out again, those facts that are pleaded in a more general way but nothing new is raised that was not already known to her or Van der Vegts at the time the defence was filed. In paragraphs 9, 10 and 11 she states why the amended defence counter-claim and cross claim against MDC and Ray Wells are necessary and that Van der Vegts seek to claim damages pursuant to the Trade Practices Act.
[3] Sworn 23 May 2010
23. Nowhere in the affidavit is there any explanation for the delay in bringing the trade practices claim when all the known facts needed to support such a claim were known to her and Van der Vegt certainly at the commencement of this proceeding, and on the submission from Mr Whitten, counsel for MDC, at the time the contract was entered into between it and Van der Vegt. There are a number of emails annexed to Mr Twig’s affidavit which show that Sam Ray was holding himself out as the Director of MDC Developments at the same time he was acting as Project Manager. I infer from these documents that Van der Vegt was aware that Mr Ray was wearing two hats at all material times during the project.
The Submissions
24. Mr Matthews, in his written submissions addressed Mr Ray’s licensing details to support the amendments proposed in respect of those contained in paragraphs 47-52 of the proposed amended defence. The insertion of those paragraphs and the claim made pursuant to section 42(2) of the QBSA Act are not objected to by MDC. However, with respect to the Trade Practices Act claim Mr Matthews makes the following submission:-
“We submit that Mr Sam Ray, Ray Wells and MDC took part in deceptive and misleading conduct which resulted in the monies claimed by MDC for the works performed being blatantly excessive.
Mr Ray preferred his own interest to those of the owners.
QCAT does not have jurisdiction to hear a claim under the Trade Practices Act.
We submit that the claim by MDC cannot continue in QCAT and that the entire proceeding should be transferred to the Supreme Court as part of a proceeding under the Trade Practices Act”.
25. Interestingly, nothing new is raised in this submission that is not already pleaded in the original defence other than of course the possibility of a claim for damages pursuant to section 82 of the Trade Practices Act.
26. Both parties agree that if the Trade Practices Act is included then this Tribunal does not have jurisdiction to consider that claim. To ensure that all issues are determined at the same time, the whole of the proceeding, subject to the exercise of discretion of a Judicial Member of QCAT, would have to be transferred to the Supreme Court. Mr Matthews, despite complaints about his client not putting on its statements evidence, considers this an advantage to MDC because the Uniform Civil Procedure Rules would come in to play requiring strict adherence to pleading rules with the pleaded facts having to be supported by particulars. Therefore the criticism made by Mr Whitten about the proposed amended defence and counter-claim could be tested under the Rules. In addition, the disclosure requirement under the Rules would also apply. This would also be to the advantage of MDC.
27. Mr Whitten for MDC, Ray Wells and proposed additional respondent Mr Ray, contends that the proceeding is too far advanced to consider amendments to add a cause of action at this late stage. MDC and Ray Wells would be disadvantaged and prejudiced by any late amendment.
28. He contends that Van der Vegt has a forensic advantage because MDC has put on its statements of evidence and if the UCPR were to apply, there is no requirement for Van der Vegt to deliver any statements of evidence. Therefore the matter could go to trial in circumstances where Van der Vegt would have the statements of evidence of the MDC and Ray Wells, and all they would have would be Van der Vegt’s pleadings. This does, prima facie, put MDC and Ray Wells at a disadvantage.
29. In addition, Van der Vegt, despite invitations or suggestions made mid 2009, has failed, without reason, to amend its pleadings at a timely stage so that all causes of action could be pleaded, before the statements were filed.
30. If the matter were to now go to the Supreme Court there would be unnecessary delay and costs thrown away which may not be recovered. It is very easy to say that a party who is disadvantaged by late amendment can be compensated with costs however, the recovery of costs itself may necessitate further delay and will involve some costs that may not be recovered. As Mr Whitten quite rightly points out, had Van der Vegt, on the facts pleaded in the original defence, made the claim under the Trade Practices Act and had the proceeding been transferred, in all probability the hearing in the Supreme Court would have either be concluded, or be very close to being heard this year.
31. Mr Whitten is critical of the amended statement of claim annexed to Ms Schwede’s affidavit. Although that is a consideration, it is not, in my view, decisive of this application. Mr Matthew points out that if there are any deficiencies in the pleading the UCPR will come to MDC’s assistance in ensuring that Van der Vegt pleading does comply with the Rules, as referred to above.
32. Of importance, had Van der Vegt complied with the Tribunal’s order of May 2009 as soon as MDCs material was filed, this proceeding would now be ready for either a compulsory conference or a hearing. If not, the proceeding would be well advanced, whereas if an amendment were allowed it would, in effect mean, that the proceeding would be starting afresh. All parties would have to plead to the amended defence perhaps with subsequent pleadings in reply by Van der Vegt.
33. Applications in QCAT are actively case managed. Mr Whitten urges that I should apply the reasoning of the High Court in Aon Risk Services Australia Ltd v Australia National University[4] where the majority said:-
“The objectives stated in rule 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying can not be overlooked. Whilst R21 assumes some ill-effects will flow from the fact of the delay that will not prevent the parties dealing with its particular effects in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably assume to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trail dates. Rule 21 makes it plain that the extent and affect of delay and the costs that are regarded as important considerations and the exercise of the courts discretion. Invariably the exercise of that discretion will require an explanation be given where there is delay in applying for amendment.
The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in JL Holdings. Generally speaking, where discretion is sought to be exercised in favour of one party and to the disadvantaged of another, an explanation will be called for. Importance attached to r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the courts attention, so that they may be waved against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.”
[4] 2009 HCA 27 at paragraphs 102-103
34. It is also worth noting the comments of the Chief Justice as follows:
“Save for the dissenting judgment of Lander J in the Court of Appeal, the history of these proceedings reveals that an unduly permissive approach at both trial and appellant level to an application that was made late in the day, was inadequately explained, necessitated the vacation or adjournment of the dates set down for trial and raised new claims not previously agitated apparently because of a deliberate tactical decision not to do so. In such circumstances, the party making the application bears a heavy burden to show why, under proper reading of the applicable Rules of Court leave should be granted.
In a proper exercise of the primary Judge’s discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge in the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessary delay in proceedings. Moreover, the time of the court is a publicly funded resource. In efficiencies in the use of that resource, arising of the vacation or adjournment of trials, are to be taken into account. So to is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of satisfactory explanation for seeking it, the amendment of ANU’s statement of claim should not have been allowed. The discretion of the primary judge miscarried”[5].
[5] Para 4 ff.
35. Although this Tribunal is not governed by rules of court of the type referred to in Aon, it is the Tribunal’s function to have regard to the objects and the Act and in particular, section 3 (b):
“to have the Tribunal deal with matters in a way that is accessible, fair, just, economical, informal and quick.”
36. The Tribunal’s discharge of its functions having regard to the objects of the Act are set out in section 4 and relevantly are:-
“(b) encourage the early and economical resolution of disputes before the Tribunal, including, if appropriate, through alternative dispute resolution processes; and
(c) ensure proceedings are conducted in an informal way that minimises costs to parties, and is as quick as is consistent with the chief in justice;”
Discussion
37. I have come to the conclusion that the application to amend the defence to include the trade practices claim should be refused. I do so in reliance on what the High Court has said in Aon, and having regard to the objects of the QCAT Act and the functions of this Tribunal.
38. I am particularly mindful of the following:-
a) There is no satisfactory, or any, explanation for the delay in raising the trade practices claim, particularly when facts relied upon were first pleaded by Van der Vegt in March 2009.
b) There is ample evidence to suggest that Van der Vegt had proposed agitating such a claim as far back as March 2009 and more precisely in June 2009
c) Van der Vegt has not complied with Tribunal orders as to the filing of statements of evidence and therefore has unnecessarily delayed the prosecution of this proceeding
d) MDC and Ray Wells had been put at an unfair disadvantage by having to put on statements of evidence. I accept the submissions of Mr Whitten that this may put MDC at a forensic disadvantage if this proceeding was moved to another court.
e) Coming to the opinion that costs would not adequately compensate MDC at this very late stage.
f) Any further delays would offend the objectives of the QCAT Act as prescribed by sections 3 and 4.
g) In any event, any findings of fact about the conduct of Mr Ray in this proceeding may assist the second respondent if it chooses to take separate proceedings under the Trade Practices Act.
39. Van der Vegt has chosen to sit on its hands throughout the whole of 2009 and halfway through 2010 and that inexplicable delay should not result in any forensic advantage of the type contended for by Mr Whitten, by permitting it to broaden its claim to one under the Trade Practices Act. This will undoubtedly result in further unreasonable delay in having this proceeding finalised. This conduct does not call for or result in a favourable exercise of discretion.
40. There being no objection to the inclusion of paragraphs 47-52 (inclusive) of the proposed amended defence and counter-claim, I propose to permit the Ray Wells to amend the defence to include those paragraphs but not paragraphs 42-46 inclusive.
41. As the only claim that is sought be made against Mr Ray is under the Trade Practices Act, it follows that I should also refuse the application to join him as a party to the proceeding.
42. Therefore the Tribunal will make the following directions:-
a) The First Respondent is granted leave to amend the defence and counter-claim by inserting paragraphs 47-52 inclusive as set out in the document titled “Appendix ‘A’” and filed in the Tribunal on 25 May 2010.
b) The First Respondent file and serve any statements of evidence including expert evidence by 31 July 2010.
c) The application is listed for a Directions Hearing on 12 August 2010.
d) The parties file and serve any written submissions on costs of the application by 16 July 2010.
e) The decision on costs will be decided on the papers.
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