Owners Corporation of Strata Plan 61896 v Multiplex Corporate Agency Pty Ltd

[2009] NSWSC 1226

CITATION:	Owners Corporation of Strata Plan 61896 v Multiplex Corporate Agency Pty Ltd [2009] NSWSC 1226
HEARING DATE(S):	5 November 2009
JUDGMENT OF:	Hammerschlag J
EX TEMPORE JUDGMENT DATE:	5 November 2009
DECISION:	Leave granted to file and serve an Amended Summons and Technology & Construction List Statement joining Brookfield Multiplex Limited as second defendant.
CATCHWORDS:	LIMITATION OF ACTIONS - general - statute of limitation – plaintiff sought to join, under r 6.19 of the Uniform Civil Procedure Rules 2005, an additional defendant (“Brookfield”) to the action so as to make a claim against it in tort – whether the joinder was futile because the claim was statute barred under s 14(1)(b) of the Limitations Act 1969 – held that there was not sufficient information known of the damage suffered by the plaintiff as a result of Brookfield’s negligence and the circumstances in which it was sustained to determine confidently when the plaintiff knew or had the ability to acquire the knowledge that the damage had been sustained – it could not be said at this stage that the claim was statute barred - leave granted to join Brookfield to the proceedings
LEGISLATION CITED:	Home Building Act 1989 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Limitation Act 1969 (NSW)
CATEGORY:	Procedural and other rulings
CASES CITED:	Hawkins v Clayton (1987) 164 CLR 539 Sherson & Associates v Bailey (2001) Aust Torts Reports 81-591 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
PARTIES:	Owners Corporation of Strata Plan 61896 [Plaintiff] Multiples Corporate Agency Pty Ltd [First Defendant] Brookfield Multiplex Ltd ACN 008 087 063 [Second Defendant]
FILE NUMBER(S):	SC 3036/2009
COUNSEL:	F.C. Corsaro SC with F.R. Clark [Plaintiff] S.A. Kerr SC with A. Rao [Defendants
SOLICITORS:	Turnbull Bowles Lawyers [Plaintiff] Bartier Perry [Defendants]

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

HAMMERSCHLAG J

5 NOVEMBER 2009

3036/2009 OWNERS CORPORATION STRATA PLAN 61896 V MULTIPLEX CORPORATE AGENCY PTY LTD

EX TEMPORE JUDGMENT

1 HIS HONOUR: The plaintiff is an Owners’ Corporation which owns a common property of a residential strata development at 68-70 Market Street, Sydney known as The Tower Apartments to which I will refer as “the building”.

2 On 20 February 2009 the plaintiff commenced proceedings in the District Court of New South Wales against the first defendant alleging that it was the builder responsible for the construction of the building and that it had breached its duty of care to the plaintiff and was negligent “in its performance of the building works”.

3 The plaintiff particularised the breach by stating that it relied upon the expert report of Thomas Clark dated 26 February 2003. That report is a letter informing the plaintiff that the majority of the exhaust flows in the building’s air-conditioning system were low. It also stated that there was a problem with access to some of the fire dampers and air-conditioning units.

4 On 27 August 2008 the plaintiff obtained a further report from Engineering Partners, electrical and mechanical consulting engineers, who carried out an inspection of the outside air-conditioning unit located in the roof top plant room on 21 August 2008.

5 The report stated that the purpose of the inspection was to access the unit in relation to problems that had been experienced since its installation. The report referred to numerous and ongoing breakdowns with the equipment. It also referred to inside air-ducting appearing not to be insulated.

6 On 4 March 2009 the plaintiff obtained a report from Australian Cost Planners Pty Ltd estimating at $3,755,585 the cost of rectifying the mechanical ducting to the apartment wet areas.

7 On 17 May 2009 the plaintiff obtained a report from Engineering Partners, the purpose of which was to provide some indications as to whether simply upgrading the fans would rectify the lack of air flow reported since the original completion of the building. The report concluded that Engineering Partners considered that this would not rectify the lack of air flow and they reiterated previous advice that they considered the problem was due to a significant leakage in the ducting system.

8 On 16 June 2009 the proceedings were transferred to this Court because the plaintiff’s claim was clearly beyond the jurisdiction of the District Court.

9 On 14 August 2009 the plaintiff filed a Summons and a Technology and Construction List Statement.

10 It pleads against the first defendant that it constructed the building as head contractor and was responsible for the installation of a defective air conditioning system. It pleads a claim for damages for breach of warranties under the Home Building Act 1989 (NSW) and in tort for breach of duty of care.

11 By amended Notice of Motion dated 30 October 2009 the plaintiff now moves to join as an additional defendant Brookfield Multiplex Constructions Pty Ltd (“Brookfield”) so as to make a claim against it in tort.

12 Mr Corsaro SC and Ms F Clark appeared for the plaintiff. Mr Kerr SC and Ms Rao appears for the first defendant and Brookfield.

13 The plaintiff intends to plead against Brookfield that the first defendant and/or Brookfield were the head contractor and responsible for the defective building work. I will refer to the first defendant and Brookfield together as “the defendants”.

14 Although the proposed Amended Summons and Technology and Construction List Statement provided to the Court during oral argument particularise a number of breaches by Brookfield, it was made clear by Mr Corsaro that the only particulars of breach of duty pleaded would be that there is significant leakage in ducting systems throughout the entire property causing lack of air flow. The significance of the narrowing of the plaintiff’s claim appears below.

15 The motion is brought pursuant to Pt 6 r 6.19 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) which permits joinder of two or more persons as defendants if separate proceedings by or against each of them would give rise to a common question of law or fact.

16 There is no dispute that the requirements of UCPR r 6.19, in those terms, are met.

17 The joinder is opposed on the ground that it is futile because the plaintiff’s claim against Brookfield is statute barred under s 14(1)(b) of the Limitation Act 1969 (NSW) which provides as follows:

“An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:
…
a cause of action founded on tort, including a cause of action for damages for breach of statutory duty.”

18 The plaintiff’s proposed claim against Brookfield can be described as one for pure economic loss arising from defective work.

19 Both parties provided the Court with written submissions.

20 The defendants put a brief submission that a different test to the one I will refer to immediately below applies, but the submission was not developed and this is not the occasion for a determination of that question. Suffice it to say that submissions were made on the basis that, in present case the period under the Limitation Act commences to run when the stage is reached when the plaintiff discovered or, if put on reasonable enquiry would have discovered, that the damage has been sustained. By damages is meant the sustaining of more than negligible damage: see Hawkins v Clayton (1987) 164 CLR 539; Sherson & Associates v Bailey (2001) Aust Torts Reports 81-591 at 66,494 - 66,495.

21 For the plaintiff, it was put that that stage was reached only after it received the Engineering Partners’ report of 27 August 2008.

22 It was put that then only did the plaintiff know, or have the means of knowing, that the real problem was that the entire ducting system would have to be replaced because of leakage. It was put that then only did the plaintiff know or have means of knowing, not only what the defects were but that more than negligible loss was suffered from them.

23 For the defendants, it was put that there were various indications that the plaintiff knew from much earlier that there were problems with the air-conditioning. This could be concluded not only from the terms of the 26 February 2003 report but, as well, from minutes of meetings of the plaintiff’s correspondence pre-dating 5 November 2003 (which would be the day upon which the cause of action would have to have arisen for the defendants’ proposition to be accepted) and the terms of a Deed of Settlement, which the developer of the building made, with the plaintiff and under which it agreed to pay compensation for defects including ones with respect to air-conditioning.

24 Reference was also made to an affidavit of Richard Nelson, the plaintiff’s building manager, sworn 26 October 2009 in which he said:

“These proceedings were commenced as a result of a report that was obtained by Engineering Partners dated 27 August 2008 which is annexed hereto and marked with the letter “F”. Following this a report of Australian Cost Planners was commissioned. Annexed hereto and marked with the letter “G” is a copy of that report. Balancing and Commissioning Services Pty Ltd were engaged to measure the airflows at the bathroom grills, annexed hereto and marked “H” is a copy of that report. Engineering Partners provided a further report dated 17 May 2009, annexed hereto and marked “I” is a copy of that report".

25 It was put that Mr Nelson’s evidence cannot be correct given that the District Court Statement of Claim pleaded part of the 26 February 2003 report.

26 Mr Nelson’s evidence was however, not tested and even though the statement of claim pleaded the 2003 report, it may be the case that the 2008 document was the impetus to commence proceedings. The Court is not in a position to decide at this interlocutory stage.

27 In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 Mason CJ, Dawson, Gaudron and McHugh JJ:

“We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question".

28 In my view it cannot be said that the present case is one which may be described as the clearest of cases. As was the case in Wardley Australia Ltd v Western Australia, in my view, insufficient is presently known of the damage suffered by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question that the plaintiff’s claim against Brookfield is now statute barred.

29 The Court is not in a position to answer with confidence whether the plaintiff knew or, with reasonable diligence would have become aware, that it had sustained loss because of defective ducting, of which it now wishes to complain.

30 Of course, it will be open to the defendants to put at the final hearing that a different test applies and as to when the plaintiff acquired or had the ability to acquire the requisite knowledge. Whether the plaintiff’s claim, which will be limited as the plaintiff has stated, is statute barred is a matter properly left to the final hearing.

31 In the circumstances, there will be an order in terms of paragraph 1 of the Amended Notice of Motion. Leave, however, will be restricted to the filing and serving of an amended Summons and Technology and Construction List Statement, circumscribed as I have earlier described.

32 The plaintiff is to pay the costs of Multiplex Corporate Agency Pty Ltd and Brookfield Multiplex Limited ACN 008 678 063 of the Motion.

33 I stand these proceedings over for directions to 13 November 2009.

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