R & D Building Pty Ltd v Bank of Queensland Limited
[2010] WASC 371
•14 DECEMBER 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: R & D BUILDING PTY LTD -v- BANK OF QUEENSLAND LIMITED [2010] WASC 371
CORAM: BEECH J
HEARD: 22 NOVEMBER 2010
DELIVERED : 14 DECEMBER 2010
FILE NO/S: CIV 2372 of 2009
BETWEEN: R & D BUILDING PTY LTD
Plaintiff
AND
BANK OF QUEENSLAND LIMITED
First DefendantThe Official Trustee in Bankruptcy As Trustee In Bankruptcy of Justine Alison Oxley
Second Defendant
Catchwords:
Practice and procedure - Preliminary issues - Application for separate trial - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr P J Hannan
First Defendant : Mr J C Yeldon
Second Defendant : Mr J C Yeldon
Solicitors:
Plaintiff: Williams Ellison
First Defendant : Jackson McDonald
Second Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Carlo Nobili S.p.A Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47
Hopkinson v Rolt (1861) 9 HL Cas 514; (1861) 11 ER 829
Landsdale Pty Ltd v Moore [2009] WASCA 176
Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd [2010] WASC 137
Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1
BEECH J:
Introduction
This is an application for a trial of preliminary issues.
In this action the parties are in dispute as to the entitlements to the proceeds of the sale of property. The plaintiff (the Builder) is a building company. It entered a building contract with the owner of land (the Property) in Hamersley Road, Subiaco.
The first defendant (the Bank) is the registered mortgagee of the Property.
After the Bank's mortgage (the Mortgage) was registered, the Builder built a house on the Property.
Subsequently, the Bank exercised its power of sale under the Mortgage.
The Builder applies for the trial of a preliminary issue. It seeks the trial of only those issues relating to its claim that the Mortgage is unenforceable, to a certain extent, by reasons of provisions of the Stamp Act 1921 (WA). The Bank opposes the application and contends that the action as a whole should be progressed to trial as soon as possible.
For the reasons that follow, I am not persuaded that an order for the trial of separate issues should be made.
I begin by outlining the principles relevant to an application for trial of a separate issue.
Legal principles
The starting point is that, generally speaking, all issues of fact and law in an action should be determined at the one time. In Landsdale Pty Ltd v Moore [2009] WASCA 176 [19] ‑ [21] Newnes JA (Buss JA agreeing) made the following observations
The respondents' application for separate trials of liability and damages was founded on the proposition that such a course would result in a more efficient and cost-effective resolution of the proceedings. There is no doubt that at a time when the time and cost involved in litigation is a matter of legitimate public concern, it behoves the court to approach each case which comes before it with the object of eliminating any unnecessary delay or cost, and ensuring the efficient and timely resolution of the case, consistent with doing justice to both sides. That is reflected in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA). But while that will often require a more flexible approach than might have been taken in the past, at the same time it is important that the lessons of the past are not forgotten, and that the court and the parties do not succumb to the immediate attraction of apparently more efficient but less conventional procedures without careful regard to past experience with such procedures.
In relation to the present case, experience has shown that the attraction of the separate trial of issues is often illusory; it is a course that often causes the very delay, additional expense and uncertainty of outcome it was intended to avoid. It is self-evident that generally a trial on liability alone will be shorter and less costly than a trial on both liability and damages. But it is equally self-evident that separate trials will not necessarily lead to the overall action being resolved sooner or at a lesser cost. If the plaintiff is successful on liability and it is necessary to have a further trial on the issue of damages, the contrary may well be the case. Separate trials also raise the prospect of separate appeals on the findings on liability and quantum, which, if it occurs, will increase the time and expense involved in the overall action. The vagaries of litigation are such that its course often does not run smoothly, or predictably. An application for the separation of issues is therefore to be approached with some caution. See generally Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1, 55.
The starting point is that ordinarily the trial of an action should include all issues arising in the action. The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues, bearing in mind the uncertainties inherent in litigation, and that, once embarked upon, it is a course from which it may be difficult and even impossible to retreat. It should only be embarked upon where its utility, economy and fairness to the parties is clearly made out: Tepko (55)
Although some of his Honour's observations relate to the particular context of splitting issues of liability and damage in tort cases, many of the observations are of general application.
The fact that the resolution of a separate trial may determine the litigation is relevant: Carlo Nobili S.p.A Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47 [4]. Nevertheless, in Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 [169] Kirby and Callinan JJ observed that a party whose whole case is knocked out on a trial of a preliminary or single issue may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests.
The circumstances in which it is appropriate for there to be a separate trial of some issues defy comprehensive description. Each case will turn upon the whole of its circumstances. It is relevant whether there is a clear line of demarcation between the issues the subject of the application and the other issues, and whether the determination of one in isolation from the other is likely to result in a substantial saving in time, inconvenience and expense: Landsdale [22].
Whether trying issues separately is likely to assist in leading to a settlement is also a relevant consideration: Landsdale [29].
A party applying for a trial of separate issues should put before the court evidence or other material to enable an informed assessment to be made about the scope and likely length of the trial of the action as a whole, as against the scope and length of the issues the subject of the application for a trial of preliminary issues: Landsdale [12], [26].
See also Tap (Harriet) Pty Ltd v Burrup Fertilisers Pty Ltd [2010] WASC 137 [4]
Overview of pleadings and issues
There is a great deal of common ground on the pleadings. The issues between the parties appear to be in quite narrow compass. I will return to this point.
Unless I say otherwise, the following are matters pleaded in the statement of claim and admitted in the defence.
From 4 November 2005, until the bank exercised its power of sale, Ms Justine Oxley was the registered proprietor of the Property.
On 6 July 2007 Ms Oxley executed the Mortgage in favour of the Bank.
In or about late July 2007 the Bank stamped the Mortgage with an amount of duty appropriate to a mortgage securing an advance of $560,000.
On 24 July 2007 the Builder and Ms Oxley entered into a building contract by which the plaintiff agreed to build on the Property.
The building contract contained a charging clause by which Ms Oxley charged the Property with moneys owing to the Builder under the building contract. There is a dispute between the parties as to the proper construction of the charging clause.
On or about 25 July 2007 the bank made an initial advance (the First Bank Loan) to Ms Oxley and her de facto partner, on the security of the Mortgage.
On 1 August 2007 the bank registered the Mortgage under the Transfer of Land Act.
On or about 18 September 2007, and at various times thereafter, the bank made further advances (termed 'the Second Bank Loan') to Ms Oxley and her de facto partner, on the security of the Mortgage.
In the second half of 2008, the Builder made progress claims to Ms Oxley under the building contract. The claims totalled about $161,000. The claims are unpaid.
On 9 February 2009 the Bank took possession of the Property pursuant to the Mortgage. The Bank sold the Property under its powers as mortgagee. Settlement occurred on 25 August 2009.
Part of the proceeds of sale have been preserved pending the determination of these proceedings.
The Bank pleads that on 1 September 2010 the Office of State Revenue issued a stamp duty assessment notification in respect of the Second Bank Loan in the sum of $1,540 and that, on 17 September 2010, the Bank paid that sum, together with a relevant penalty. The Builder has indicated that it will admit those allegations.
The Builder pleads three causes of action in the statement of claim.
First, there is a claim of unjust enrichment. In summary, it is claimed that the Bank took the benefit of the works that the Builder carried out to the Property, and was thereby enriched to the extent of the higher price at the mortgagee sale obtained as a result of those works.
Secondly, the Builder pleads that the Bank knew or ought reasonably to have known that the Builder was carrying out building works on the property or of the building contract and of the charge. The Builder claims that its charge entitles it to priority over the interest of the Bank. The Builder relies on the rule in Hopkinson v Rolt (1861) 9 HL Cas 514; (1861) 11 ER 829.
Thirdly, the Builder claims that, on the proper construction of the Stamp Act 1921 (WA), the Bank is only entitled to obtain from the proceeds of the mortgagee sale an amount not exceeding the amount of the advance for which the Mortgage was stamped with duty. This claim, which I will refer to as 'the Stamp Act claim', is what the Builder seeks to be the subject of preliminary issues to be separately determined, before the balance of the action.
Should a preliminary issue be ordered?
I begin with a preliminary point. At the hearing of the application, I raised a question with counsel for the Builder about an aspect of the merits of the Stamp Act claim. The question was raised whether the section relied on by the Builder was capable of applying to the present case at all, and whether, if not, this was an unusual case in which the clear absence of merits of the proposed preliminary issue meant that the application should be refused. As a result, the Builder filed supplementary submissions, with leave, about that aspect of the Stamp Act claim. Those submissions satisfy me that there is arguable merit in the Stamp Act claim. Thus, the usual approach applies: the merits of the claim on the proposed preliminary issues are not relevant considerations on the application.
The Builder's submissions emphasise that the Stamp Act claim would, if determined in its favour, mean that the other claims would be unnecessary and would fall away. The Builder says that it would not need to, and would not, pursue its other claims if it succeeded on its Stamp Act claim.
Further, the Builder submits that there would appear to be no factual issues pertaining to the Stamp Act claim, so that it is capable of being tried on affidavit evidence with submissions which would not occupy much time.
I accept that that is so. On the face of it, that is a factor in favour of an order for a separate trial. However, it is important to place the issues sought to be the subject of a separate trial into the context of the action as a whole. Attention should be given to the scope and likely length of a trial of the action as a whole. It seems to me that the Builder's application has not given adequate attention to those matters. Those matters are not referred to at all in the written submissions. When I raised questions about these matters at the hearing of this application, the responses from counsel gave me the distinct impression that insufficient attention has been given by counsel and solicitors for all parties to identifying the scope of the factual issues and steps that can be taken to bring the matter expeditiously to a trial.
The only factual issues which counsel identified in relation to the action as a whole were an issue as to notice and an issue as to the extent to which the work done under the building contract increased the value of the property.
The question of notice relates to whether the Bank had notice of the charging clause in the building contract. The Bank admits that it had a copy of the building contract. There is nothing in the particulars of the statement of claim to suggest that the Bank would lead any further evidence on that point.
There is an issue as to the proper construction of the charging clause. Neither party intends to lead any evidence on that issue. Rather, it will be determined simply on a reading of the instrument.
Based on what was said in submissions, the only point on which evidence may be contentious is the question of the extent to which the building works enhanced the value of the Property.
Consequently, it seems that the trial of the action as a whole will not involve substantial factual issues, and will be quite short in duration. The benefit of trying the Stamp Act claim separately must be seen in that context.
On this understanding of the likely issues in the action as a whole, and bearing in mind the caution necessary before ordering a trial of preliminary issues, I am not persuaded that any such order should be made. Rather, the parties' lawyers should:
(a)give immediate attention to identification and possible narrowing of the real issues in the action as a whole;
(b)consider the scope for an agreed statement of facts;
(c)identify the steps to be taken to bring the action to a trial as soon as practicable; and
(d)confer in these respects.
Conclusion
For the reasons I have given, I would dismiss the application.
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