Nash Bros Builders Pty Ltd v Riverina Water County Council

[2014] NSWLEC 140

Land and Environment Court

New South Wales

Medium Neutral Citation:	Nash Bros Builders Pty Ltd v Riverina Water County Council [2014] NSWLEC 140
Hearing dates:	3 September 2014
Decision date:	03 September 2014
Jurisdiction:	Class 4
Before:	Pepper J
Decision:	Application for joinder and amendment of originating process and points of claim refused.
Catchwords:	PROCEDURE: late application to amend summons to join a new party and to add a new claim - no explanation provided for delay - prejudice to other party - would necessitate adjournment of proceedings - application refused.
Legislation Cited:	Civil Procedure Act 2005, ss 57-60, 64, 149B(2) Local Government Act 1993, s 608 Recovery of Imposts Act 1963, s 4 Water Management Act 2000, s 306
Cases Cited:	Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Category:	Interlocutory applications
Parties:	Nash Bros Builders Pty Ltd (First Applicant) Nash Bros Constructions Pty Ltd (Second Applicant) Riverina Water County Council (Respondent)
Representation:	Mr A Galasso SC with Mr T Prince (First and Second Applicants) Mr R Lancaster SC with Mr N Eastman (Respondent) Bradley Allen Love (First and Second Applicants) Local Government Legal (Respondent)
File Number(s):	40028 of 2014

Judgment

The Applicants Seek Leave to Join an Additional Party and to Amend their Further Amended Summons

1. The applicants, Nash Bros Builders Pty Ltd ("NBB") and Nash Bros Construction Pty Ltd ("NBC"), apply for leave to amend their Further Amended Summons and their points of claim. The purpose of the amendments is to add Grange Lifestyle Village ("Grange") as a third applicant to the proceedings and to add a claim by Grange for repayment of $107,159, and to plead the additional matters necessary to establish this claim.

1. The application was made on the second day of a two day hearing after evidence was elicited in cross-examination from Mr Chris Nash, a witness appearing for the applicants. In order to ensure that the hearing finished in the time allocated, the Court dismissed the application with a promise to publish its reasons at a later date, which it now does.

Background to Application

1. The proceedings concern a challenge to the respondent's, Riverina Water County Council ("Riverina"), lawful authority to charge the applicants development servicing charges in connection with the supply of water to Grange Retirement Village, a seniors' living residential development at Lake Albert, a suburb of Wagga Wagga.

1. Development consent was obtained from Wagga Wagga City Council on 21 July 2008 and was subsequently modified. The consent now provides for the development of 196 detached residential dwellings, 63 assisted living units and a community centre.

1. The applicants have acted for the owner of the land (Grange, a trustee of a unit trust) in obtaining the approvals necessary for the development and in carrying out the development, including its construction, since April 2009.

1. Upon the construction of the dwellings, units and community centre in the Grange Retirement Village, the buildings are to be connected to a water supply. Riverina is the provider of that water supply. It builds and owns the water supply infrastructure and installs and activates the connection between the water supply works and the development.

1. The applicants initially agreed to pay the development servicing charges and connection fees associated with the provision of water by Riverina to the development as individual residences were constructed and that works on the water extension and connections would commence upon payment of 50% of the costs of that work. As a consequence, Riverina issued invoices to the second applicant, NBC, which included amounts described as "development servicing charges".

1. These invoices were paid by the applicants without complaint until mid July 2013, whereupon Mr Chris Nash contacted Ms Tamarin Langley at Riverina and expressed concern about the amount of the increase in the charges in the July 2013 invoice. The increase was due to Riverina no longer applying a commercial development discount to the development. The discount had been applied previously in error by Riverina.

1. On 26 September 2013 solicitors acting for the applicants wrote to Riverina objecting to the payment of the development servicing charges and asserting that Riverina had no legal basis for requiring payment of the charges. Thereafter the payment by the applicants of development servicing charges were said by the applicants to be made "under protest and without prejudice".

1. The applicants commenced proceedings on 23 January 2014, seeking a declaration that Riverina had no statutory power to charge the applicants development servicing charges in relation to the development of the Grange Retirement Village and an order that Riverina repay to the first applicant, NBB, an amount of $127,234, being development servicing charges paid by NBB to Riverina.

1. Proceedings were also commenced by NBB in the Supreme Court of New South Wales on 10 April 2014. However, the Supreme Court made an order transferring those proceedings to this Court pursuant to s 149B(2) of the Civil Procedure Act 2005 ("the CPA"), to be heard and determined together with these proceedings.

1. Riverina contends that the proceedings should be dismissed because it has the statutory power to charge the applicants development servicing charges conferred either by s 608 of the Local Government Act 1993 or s 306 of the Water Management Act 2000.

1. With respect to the order for repayment of the amount referred to above, Riverina asserts that it should not be made because, in addition to the argument that Riverina was entitled, by statute, to charge and receive payment for development servicing charges: the applicants have received a material benefit in consideration of the payments that they have made to Riverina, namely, the benefit of water supplied to the development; Riverina has not been unjustly enriched, so that it would be inequitable to require repayment to the applicants; and the applicants have not discharged their onus of establishing that they have not passed on the charges to other persons (in which case, s 4 of the Recovery of Imposts Act 1963 provides a defence to the claim for repayment), or in the alternative, that the payments were made under compulsion or colour of office so as to enliven any right of recovery or restitution of the payments.

1. In Mr Chris Nash's affidavit affirmed 20 May 2014, he stated (at paragraph 41):

Nash Bros has not passed on the costs of the development servicing charges to the purchasers of villas. The price for the villas in the development is determined by the market and Nash Bros has no ability to increase the price of villas to pass on the development servicing charges to purchasers.

1. The clear inference sought to be projected by this testimony was that NBB was out of pocket by reason of payment of the development servicing charges and that they had not passed on the charges to any other person.

1. However, during the course of Mr Nash's cross-examination he revealed that the applicants had been completely reimbursed by Grange for all of the invoices it had paid to date in respect of the development servicing charges. That is to say, the applicants had passed on the charges to another person, namely, Grange.

1. This evidence was plainly problematic for the applicants insofar as it engaged s 4 of the Recovery of Imposts Act and provided a complete defence to Riverina for the claim for repayment.

1. The applicants submitted that the evidence solicited in cross-examination of Mr Nash established that in carrying out the development, including in making payments to Riverina, the applicants acted on behalf of, and as agent for, Grange and that Grange reimbursed the applicants for the payments made in respect of the development servicing charges. The applicants submitted that it is clear law that a principal may recover money paid by its agent (in these circumstances, the applicants) where, had the principal paid money, the principal would be entitled to recover the money in an action for money had and received. Accordingly, subject to Grange establishing that it has not passed on the cost of the development servicing charges to consumers, Grange is entitled to recover the amounts paid to Riverina within 12 months of the date of the proposed amendment to the Further Amended Summons. The applicants further submitted that the evidence of Mr Nash elicited in cross-examination and re-examination supported the proposition that Grange had not, and could not, pass on the cost of the development servicing charges to its ultimate customers.

1. It is in these circumstances that Grange is sought to be added as the third applicant to the proceedings, together with a claim that Grange be permitted to recover the amount of the development servicing charges paid by NBB in the last twelve months prior to 3 September 2014 (the date of filing the Second Further Amended Summons).

The Applicants Submit That the Court Should Grant the Application

1. The applicants' submissions as to why the Court should accede to the amendment and joinder application may be summarised as follows:

(a)   first, joinder is necessary in order to avoid a multiplicity of proceedings. Grange could commence separate proceedings immediately seeking recovery of the money paid to Riverina;

(b)   second, in order to avoid the additional cost and time both to the parties, and the Court, occasioned by Grange commencing separate proceedings;

(c)   third, the issues raised by the amendment and joinder application are limited in compass and arise directly out of the existing matters before the Court. The proposed amendments, which are procedural in nature, ensure that the real question in dispute, that is to say, whether the payments are recoverable from Riverina, is resolved. The only matter of controversy is whether Grange, as opposed to the applicants, had passed on the costs of the development servicing charges to customers. This was a matter raised by Mr Nash's affidavit evidence, and therefore, was a matter about which Riverina was on notice;

(d)   fourth, had Grange been an original applicant no additional costs would have been incurred as the proceedings would still have been maintained. Thus no costs are thrown away by granting the application for amendment and joinder;

(e)   fifth, Riverina would not suffer any relevant prejudice as a result of the amendment because the relevant witnesses were still before the Court and further evidence could be elicited from Mr Chris Nash or Mr Scott Nash on behalf of the applicants; and

(f)   sixth, the amendments would not jeopardise the completion of the case in the allotted time period.

The Application is Refused

1. In my opinion, the application must be refused for the reasons submitted by Riverina. These are as follows:

(a)   first, the application to amend is late with no cogent explanation by the applicants for the delay (Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [34]-[35], [92]-[93], [102]-[103], [106] and [109]). Undoubtedly, the explanation for this is because it was not until Mr Nash was cross-examined that the deficiency in the applicants' case was revealed. But this is evidence that was, or ought to have been, known to the applicants. The reliance by Riverina on s 4 of the Recovery of Imposts Act is a matter about which the applicants have had abundant notice. The applicants therefore knew that they would be required to discharge their onus of establishing that they had not, or would not, pass on the development servicing charges to other persons, namely, Grange;

(b)   second, Riverina would be prejudiced if the application were granted. Mr Richard Lancaster SC, appearing on behalf of Riverina, indicated to the Court that Riverina would be required to gather evidence on whether or not Grange would pass on the charges to the residents of the retirement village. Although Mr Chris Nash indicated in his oral evidence that Grange could not, or would not, do so, Riverina was nevertheless entitled to challenge this evidence. For example, Riverina stated that it would need to obtain the loan and contribution documents referred to by Mr Nash in support of his claim that Grange could not, or would not, pass on the charges to the residents. I agree with Riverina, that reliance on Mr Nash's oral observations on how the loans and contributions were arranged as between Grange and the residents were not sufficient. This is particularly so in circumstances where, by his own admission, Mr Nash was neither a director nor shareholder of Grange. In short, Riverina was entitled to obtain evidence about Grange's financial arrangements, particularly with respect to the fixing of its costs in order to meet Grange's claim. It was no answer to Riverina's prejudice to assert, as the applicants did, that it could be cured through the cross-examination of the applicants' witnesses;

(c)   third, contrary to the submission of the applicants, for the reasons given immediately above, the proposed amendment and joinder is not merely procedural in nature;

(d)   fourth, it is tolerably clear that an adjournment would be required in order to permit Riverina to obtain the evidence referred to above. Subpoenas and/or notices to produce would need to be issued, the documents produced reviewed and appropriate instructions obtained. Obtaining this evidence, together with the correlative adjournment, would augment the costs of litigation for both parties and delay the final resolution of the proceedings by the Court; and

(e)   fifth, it is not clear that a refusal of the application would inevitably result in a multiplicity of proceedings. It would be illogical for Grange to commence separate proceedings until such time as this litigation had been resolved. This is because if Riverina's position was accepted by the Court and it was accepted that there was a statutory basis for levying the development servicing charges, it would be unlikely that any litigation pursued by Grange would be successful. Equally, if the submissions of Riverina were rejected by the Court, it may reasonably be anticipated that Grange and Riverina would endeavour to settle their dispute absent the need for Court intervention.

1. For these reasons, the applicants' application must be dismissed having regard to the overriding purpose contained in s 56 of the CPA, as informed by ss 57-60 and 64 of that Act.

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Decision last updated: 05 September 2014