Nutek Constructions Pty Ltd v Slotwinski (No 2)

[2017] NSWSC 1814

Supreme Court

New South Wales

Medium Neutral Citation:

Nutek Constructions Pty Ltd v Slotwinski (No 2) [2017] NSWSC 1814

Hearing dates:

19 and 20 December 2017

Date of orders:

20 December 2017

Decision date:

20 December 2017

Before:

Ball J

Decision:

Freezing order granted

Catchwords:

CIVIL PROCEDURE – Interim preservation – Freezing orders

Legislation Cited:

Home Building Act 1989 (NSW)
Uniform Civil Procedure Rules 2005 (NSW) r 25.14

Cases Cited:

Nutek Constructions Pty Ltd v Slotwinski [2017] NSWSC 1795
Shi v Cheng [2017] NSWSC 1004

Category:

Procedural and other rulings

Parties:

Nutek Constructions Pty Ltd (Plaintiff)
Julia Slotwinski (First Defendant)
Mariusz Slotwinski (Second Defendant)
Juno Australia Pty Ltd (Third Defendant)

Representation:

Counsel:

 

I G Archibald (Plaintiff)
DP O’Connor (Defendants)

  Solicitors:
Harrington Lawyers (Plaintiff)
Lou Baker and Associates (Defendants)

File Number(s):

2017/353070

Publication restriction:

Nil

ex tempore Judgment

1. Before me is an application for freezing orders in support of the proceedings the plaintiff, Nutek Constructions Pty Ltd, has brought in the NSW Civil and Administrative Tribunal (the Tribunal) against the defendants.

2. The proceedings before the Tribunal arise out of a building contract entered into by Mrs Slotwinski, the first defendant, as developer and Nutek as builder of three residential units in Balgowlah. The contract is subject to the Home Building Act 1989 (NSW) (the Act). Nutek claims that it lawfully terminated the contract and seeks to recover approximately $283,600 in respect of unpaid work that it did. In addition, Nutek has incurred costs in the order of $170,000. The proceedings in the Tribunal have been heard and the Tribunal reserved its decision on 17 November 2017.

3. On 22 November 2017, Nutek made an ex parte application to Ward CJ in Eq for a freezing order. Her Honour granted that order up until 4 December 2017. It was then extended by Kunc J until 15 December 2017. At the time her Honour granted the freezing order, the evidence before the court was that:

1. all the units in development had been sold,

2. none of the defendants owned any real property in Australia except for the second defendant, Mr Slotwinski, who owned a 5 percent share of lot 482 in deposited plan 870870,

3. Mr and Mrs Slotwinski were in Switzerland and there was some evidence that they did not intend to return to Australia.

4. On 15 December 2017, Stevenson J set aside the injunction granted by Ward CJ in Eq on the basis that the plaintiff had failed to disclose material matters when making its original application (Nutek Constructions Pty Ltd v Slotwinski [2017] NSWSC 1795). The material matters were:

1. Nutek had not effected home warranty insurance as required by s 92 of the Act with the result that it was not entitled to recover damages for breach of the building contract and was not entitled to claim a quantum meruit for the work that it did unless a court or tribunal considered it just and equitable to permit it to do so;

2. special condition 6 of the building contract provides:

6.   Quantity surveyor appointed today, 16.12.2015, to deal with all future progress payments.

Only QS can request any payment from the owner/developer.

Mr Kalantzis, the principal behind Nutek, had agreed in cross-examination that Nutek was bound by special condition 6 and that he could not point to any evidence that a quantity surveyor had made any requests of the kind referred in the special condition (that is disputed); and

3. on 22 December 2016, a company called Sydney's Elite Concrete Pumping Services Pty Ltd had obtained judgment against Nutek in the Local Court at Fairfield in the amount of $41,184.69. By notice of motion filed on 6 January 2017 in the Local Court, Nutek had applied to pay the judgment by instalments and Nutek's financial statements disclosed that its liabilities exceeded, by a small amount, its assets.

5. By the current application, Nutek seeks a freezing order in terms similar to those granted by the Ward CJ in Eq. In order to obtain a freezing order the plaintiff must prove that it has a good arguable case and that there is a danger that its judgment or prospective judgment will go wholly or partially unsatisfied because the defendants' assets will be removed from the jurisdiction or dissipated, or that the defendants would abscond: see for example Uniform Civil Procedure Rules 2005 (NSW) r 25.14; Shi v Cheng [2017] NSWSC 1004 at [8].

6. I am satisfied that the plaintiff has a good arguable case. The plaintiff must satisfy the Tribunal that it would be just and equitable to permit it to recover a quantum meruit for the work that it did. Its case is that it can establish the value of the work that it did through the evidence led by the defendants and that it would be unjust not to permit it to recover the value of that work. When the defendants arranged for another builder to complete the work that work was completed for less than the contract price and the combined insurance obtained by the plaintiff and the new builder was in excess of the value of the completed work. In my opinion that argument satisfies the required threshold.

7. There is a factual dispute concerning whether special condition 6 formed part of the contract. That factual dispute will need to be resolved by the Tribunal, but again it seems to me that the plaintiff's case is reasonably arguable in relation to it. In addition, there must be a real question whether the special condition affects a claim for damages on a quantum meruit following determination.

8. As to the question of whether the judgment will go wholly or partially unsatisfied, the evidence is that apart from a small interest in one property the defendants have sold all their real property that they owned and the individual defendants are in Switzerland.

9. The evidence also is that the defendants are likely to have made substantial profits from the property that they sold. The evidence is equivocal about whether the defendants intend to return to Australia. Some evidence suggests that they do not. Other evidence suggests that they have instructed a real estate agent to look for a property to buy in Australia. It would have been open to the defendants to lead additional evidence concerning their assets and their intentions but they chose not to.

10. Taking those matters into account, I am satisfied that there is a danger that judgment from the Tribunal will go unsatisfied because the defendants will remove their assets from the jurisdiction.

11. Mr O'Connor, who appeared for the defendants, also submitted that the evidence suggested that the plaintiff’s undertaking as to damages had no substance because of its financial position.

12. In light of the submission originally made before Stevenson J, the plaintiff sought to adduce further evidence concerning its financial position. Mr O'Connor objected to that evidence because he had insufficient time to consider it. In the face of that objection I invited the defendants to give an undertaking not to dispose of assets for a short period of time to permit them to give additional consideration to the new evidence but they chose not to do so. In those circumstances I admitted the evidence. That evidence indicates that the financial position of the plaintiff has improved substantially. In addition, it is not clear what prejudice the defendants are likely to suffer if an order is later found to have been wrongly granted.

13. Taking those matters into account I have concluded that the plaintiff is entitled to the freezing order substantially in the form it seeks. I accept that the matter has been brought on urgently and that the defendants had a limited opportunity to respond to the plaintiff's evidence. To some extent, those circumstances arise from the failure of the plaintiff to make full disclosure when it made its first ex parte application. In those circumstances, it seems to appropriate to give the parties and the defendants, in particular, liberty to apply on two days’ notice.

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Decision last updated: 22 December 2017