Superline Enterprises Pty Ltd v Palassis Architects
[2019] WASC 414
•15 NOVEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SUPERLINE ENTERPRISES PTY LTD -v- PALASSIS ARCHITECTS [2019] WASC 414
CORAM: SMITH J
HEARD: 26 JUNE 2019
DELIVERED : 15 NOVEMBER 2019
FILE NO/S: CIV 2941 of 2015
BETWEEN: SUPERLINE ENTERPRISES PTY LTD
Plaintiff
AND
PALASSIS ARCHITECTS
First Defendant
BCA CONSULTANTS PTY LTD
Second Defendant
P M WHITE & PARTNERS (AUST) PTY LTD
Third Defendant
AVONLANE PTY LTD
Fourth Defendant
CENTIGRADE MECHANICAL CONTRACTING PTY LTD
Fifth Defendant
OBERIX GROUP PTY LTD
Sixth Defendant
SAMSON PLUMBING & GAS PTY LTD
Seventh Defendant
Catchwords:
Procedure - Pleadings - Strike out application - Whether matters pleaded disclose reasonable cause of action - Whether matters pleaded may prejudice, embarrass or delay fair trial of the action - Where pleaded case pleaded at high level of generality - Where contractual dates and terms of contract not specifically pleaded
Evidence - Admissibility of evidence in determination of strike out application - Evidence admissible in strike out application brought under Rules of the Supreme Court 1971 (WA) O 20 r 19(1)
Procedure - Pleadings - Whether it is appropriate to strike out on grounds of a yet unpleaded limitation defence considered - In any event unable to assess when time runs for some progress payment claims dates upon which loss and damage occurred not pleaded
Legislation:
Australian Consumer Law, s 18
Limitation Act 2005 (WA), s 13(1)
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B, O 20 r 2, O 20 r 19(1)
Trade Practices Act 1974 (Cth), s 42, s 82
Result:
Application of first defendant to strike out [11], [12], [13], [19.3.1], [20.3.1], [21.3.1], [25] and [27] of the statement of claim granted
Application of second defendant to strike out the claims made against it granted
Plaintiff granted leave to re-plead
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr N Dillon |
| First Defendant | : | Mr J M Healy |
| Second Defendant | : | Mr T M Clavey |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Arthur Koroveshi Barrister And Solicitor |
| First Defendant | : | Barry Nilsson Lawyers |
| Second Defendant | : | Sparke Helmore Lawyers |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
Case(s) referred to in decision(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers-Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127
Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133; (2010) 273 ALR 664
Charlie Carter Pty Ltd v The Shop Distributive & Allied Employees Association of Western Australia (1987) 13 FCR 413
Coe v Commonwealth of Australia (1979) 24 ALR 118
Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) 113 ALR 677
Culleton v Permanent Custodians Ltd [2018] WASC 251
Day v William Hill (Park lane) Ltd [1949] 1 KB 632
Del Borrello v Friedman and Lurie (a firm) [2001] WASCA 348
DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170
Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431
Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998)
Kidd v Mitchell Frederick Artus trading as Downings Legal [2013] WASC 264
Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251
Lonsdale Investments v OM (Manganese) Ltd [2009] WASC 188
Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384
Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405
Ron Hodgson (trading) Pty Ltd v Belvedere Motors (Hurtsville) Pty Ltd [1971] 1 NSWLR 472
Southern Wine Corporations Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236
Terravision Pty Ltd v Black Box Control Pty Ltd [No 2] [2015] WASC 66
Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321
Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514
SMITH J:
1.0 The applications and the result
The first defendant, Palassis Architects (a firm), and the second defendant, BCA Consultants Pty Ltd each apply pursuant to O 20 r 19(1)(a) and (c) of the Rules of the Supreme Court 1971 (WA) to strike out [11], [12], [13], [19.3.1], [20.3.1], [21.3.1], [25], [27] and [28] of Superline Enterprises Pty Ltd's substituted statement of claim filed on 22 February 2019 (substituted statement of claim).
BCA seek orders that insofar as the substituted statement of claim pleads claims against it, the claims ought to be struck out, alternatively that [29] to [37] be struck out.
BCA also seeks an order that, until further order, Superline be required to obtain leave of the court before filing any amendments to the substituted statement of claim relating to its claim against BCA.
I am of the opinion that the claims made by Superline:
(a)against Palassis Architects in [11], [12], [13], [19.3.1], [20.3.1], [21.3.1], [25] and [27] should be struck out pursuant to O 20 r 19(c), on grounds the pleas may prejudice, embarrass or delay the fair trial of the action; and
(b)against BCA should be struck out pursuant to O 20 r 19(a), on grounds the matters pleaded disclose no cause of action.
2.0 Admissibility of evidence in the determination of a strike out application
Superline seeks to adduce evidence to prove the matters pleaded in the challenged paragraphs of the substituted statement of claim.
Insofar as Palassis Architects and BCA bring their applications on grounds that the matters pleaded disclose no reasonable cause of action, evidence is not admissible in determination of an application under O 20 r 19(1)(a), save for documents pleaded in the statement of claim.[1]
[1] Southern Wine Corporations Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236 [3] (McLure JA); Day v William Hill (Park lane) Ltd [1949] 1 KB 632, 639 (Singleton J).
In opposing Palassis Architect's application, Superline seeks to read into evidence an affidavit sworn by its director, Mr Panagioths Nikos Eustratios Manios, on 18 April 2019.
It is conceded by Palassis Architects that evidence is admissible in the determination of a strike out application brought on grounds that rely upon O 20 r 19(1)(c), that is the pleadings may prejudice, embarrass or delay the fair trial of the action. Pleadings are liable to be struck out on this ground because they are evasive, conceal, or obscure the real questions in controversy, are ambiguous or not reasonably intelligible, raise immaterial or irrelevant issues, fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general.[2] For this reason, the affidavit evidence given by Mr Manios in the affidavit sworn by him on 18 April 2019 has been admitted into evidence in opposition to the application made by Palassis Architects, on grounds the affidavit contains material that is relevant to the disposition of the application pursuant to O 20 r 19(1)(c).
[2] Kidd v Mitchell Frederick Artus trading as Downings Legal [2013] WASC 264 [26] (Allanson J) citing Hart-Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998); see also, Terravision Pty Ltd v Black Box Control Pty Ltd [No 2] [2015] WASC 66 [16] (Le Miere J).
In opposing BCA's application, Superline seeks to read into evidence an affidavit sworn by Mr Manios on 16 April 2019.
In support of its application to strike out BCA relies upon the affidavit of Ms Sarah Ellen Richards, sworn 2 April 2019. Ms Richards' affidavit was read into evidence on the basis that it merely annexes documents referred to in the statement of claim. By his affidavit filed 16 April 2019, Mr Manios seeks to adduce evidence of email exchanges between Mr Manios and both Mr Kevin Palassis and Mr Darrel Grant (of BCA), and of email exchanges between Mr Palassis and Mr Grant. The affidavit also annexes, as annexure PM‑8, a copy of a standard form contract AS4122‑2010. The emails (and, in some cases, their attachments) and the standard form contract are, in essence, sought to be adduced to substantiate claims as to the terms on which BCA was engaged to complete the Works. None of the documents sought to be adduced are pleaded in the statement of claim.
I have, however, determined the pleadings made against BCA should be struck out pursuant to O 20 r 19(1)(a). Because of this finding, Mr Manios' affidavit sworn on 16 April 2019 is inadmissible and has not been admitted into evidence.
3.0 Relevant principles ‑ pleadings and strike out
The principles relevant to the applications are as follows:
(a)a statement of claim must state specifically the relief or remedy claimed;[3]
[3] Rules of the Supreme Court 1971 (WA) O 20 r 2.
(b)the essential requirements for a plea are to define and limit the issues for decision, provide the basis for decisions on relevance for trial, and ensure a fair trial by putting the other side on notice of the case they must meet;[4]
[4] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 [124] (Buss JA; Owen & Newnes JJA agreeing); Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [28] (Beech J); Betfair Pty Ltd v Racing New South Wales [2010] FCAFC 133; (2010) 273 ALR 664 [49] (Keane CJ, Lander & Buchanan JJ).
(c)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action.[5] While the court may determine a difficult question in law on such an application, it would usually be appropriate to leave the determination of such questions for trial;[6]
[5] Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [26] (Beech J); applying Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46] (Gleeson CJ, Gummow, Hayne & Crennan JJ); Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57] (Gaudron, McHugh, Gummow & Hayne JJ).
[6] Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431 [26] (Beech J).
(d)in alleging no reasonable cause of action:
(i)the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather the question is whether it would be open to the party (on its pleadings) to prove facts at the trial which would constitute a cause of action;[7]
(ii)'reasonable' means reasonable according to law. If the facts conceivably give rise to relief, then the cause of action should be held to be reasonable;[8]
(e)the mere fact that a case appears weak is not of itself sufficient to strike out the action;[9]
(f)in considering a strike out application, it is now necessary to consider the role of pleadings in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and 4B are often promoted by a clear and precise statement of the issues for decision;[10]
(g)in Barclay Mowlem Construction Ltd v Dampier Port Authority, Martin CJ stated that providing a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action or defence, as the case may be, and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in and derive from a very different case management environment;[11]
(h)a statement of claim must not plead allegations at too high a level of generality. A pleading must be sufficiently particular to conform with one of the primary objects of pleadings, to inform the opposing party the case that it must meet;[12]
(i)pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general;[13] and
(j)a strike out application will not succeed merely because the statement of claim raises some unnecessary matter. However, irrelevant or unnecessary pleas in a statement of claim will be struck out where they prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues.[14]
[7] Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union of Workers-Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54] (Roberts-Smith JA); Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405, 414 (Beaumont J); Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628, 631.
[8] Automotive, Food, Metals, Engineering Printing & Kindred Industries Union of Workers-Western Australian Branch v Bell-A-Bike Rottnest Pty Ltd [2005] WASCA 157 [54] (Roberts-Smith JA).
[9] Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251, 256 (Kirby J); Coe v Commonwealth of Australia (1979) 24 ALR 118, 127 (Gibbs J); Del Borrello v Friedman and Lurie (a firm) [2001] WASCA 348 [61] (Kennedy J).
[10] Culleton v Permanent Custodians Ltd [2018] WASC 251 [33] (Allanson J).
[11] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [7].
[12] DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170 [32] (Beech J); applying Charlie Carter Pty Ltd v The Shop Distributive & Allied Employees Association of Western Australia (1987) 13 FCR 413, 417; Lonsdale Investments v OM (Manganese) Ltd [2009] WASC 188 [5].
[13] DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170 [34]; applying Hart‑Roach v Public Trustee (Unreported, WASC, Library No 980044, 11 February 1998); Kidd v Mitchell Frederick Artus trading as Downings Legal [2013] WASC 264 [26].
[14] Ron Hodgson (trading) Pty Ltd v Belvedere Motors (Hurtsville) Pty Ltd [1971] 1 NSWLR 472, 477 (Asprey JA; Holmes JA agreeing & Moffett JA relevantly agreeing).
4.0 Background
The writ of summons in this matter was filed on 4 December 2015.
Superline filed a statement of claim on 7 February 2017. Superline filed an amended statement of claim on 7 February 2018. On 13 November 2018, Superline filed a further amended statement of claim.
On 22 February 2019, Superline filed the substituted statement of claim.
Palassis Architects contend (and Superline does not dispute) that the substituted statement of claim is the seventh iteration of the statement of claim, including iterations which were provided by Superline to the defendants for the purpose of conferral and not filed.
Superline's claims concern building works on adjacent lots, lot 828 Parry Street, East Perth and lot 829 Newcastle Street, East Perth, and the construction of two, four storey office buildings with two car park levels at ground and on an upper level. Superline is the registered proprietor of the land upon which the buildings were constructed.
In the substituted statement of claim the works to be undertaken to build the buildings are defined as the 'Works' and the buildings erected are referred to as the 'Buildings'.[15]
[15] Substituted statement of claim [9].
Superline is a special purpose vehicle associated with the Manios family. Palassis Architects, acting through its principal Mr Palassis, has had a long-term relationship with the Manios family pursuant to which Palassis Architects has, for reward, provided architectural and construction supervision services to companies and parties associated with the Manios family.
Superline entered into construction contracts with Morago Nominees Pty Ltd as trustee for Gavin Homes Unit Trust trading as Gavin Constructions (Builder) for the following Building Contracts:[16]
(a)in relation to lot 828, a contract dated 28 May 2008 in the form of an ABIC MW‑1 2003 major works contract, for $10,054,008, plus GST of $1,005,400, for a lump sum of $11,059,408; and
(b)in relation to lot 829, contract dated 28 May 2008 for $14,101,813, plus GST of $1,410,181, for a lump sum of $15,511,994.
[16] Substituted statement of claim [10].
The Works were undertaken from in or about May 2008. It is pleaded in the indorsement in the writ of summons that Palassis Architects breached an architect agreement it entered into with Superline in or about 2007, and were negligent and engaged in misleading or deceptive conduct.
Superline claim that BCA was engaged to provide the following services, even if not formally engaged, to provide consultancy services to install in the Buildings:[17]
(a)electrical services;
(b)vertical transport services/lifts services;
(c)mechanical services; and
(d)fire services.
[17] Plaintiff's submissions in response to second defendant's application to strike out, filed 15 April 2019 [4].
Superline claim that Palassis Architects as its appointed architect for the Works, negotiated the terms of the appointment or engagement of BCA, undertook the supervision of the services to be provided by BCA and maintained all documentary records in relation to the services to be undertaken by BCA and, more generally, in relation to the construction of the Buildings and the Works.[18]
[18] Plaintiff's submissions in response to second defendant's application to strike out, filed 15 April 2019 [6].
Superline has not yet been able to identify a specific agreement or contract pursuant to which Palassis Architects or BCA provided services.
Superline, however, has been provided with inspection and copies of all hard copy documents held by Palassis Architects, and has been informed by BCA that it has been unable to locate a copy of any written contract between it and Superline.
5.0 Palassis Architects' application
5.1 The terms of the architects contract - paragraphs 11 and 12 of the substituted statement of claim
Superline pleads that at a date prior to the building contracts being entered into, Superline and Palassis Architects entered into a contract for Palassis Architects to provide architectural services (defined as the Architect Agreement in the substituted statement of claim),[19] the terms of which 'were relevantly to the following effect':
(a)Palassis Architects would prepare the design and construction specifications and drawings to complete the works;
(b)Palassis Architects's design and construction specifications would be such so as to achieve the outcome that the buildings would be classified under the Australian Building Greenhouse Rating system as 4.5 stars and the Property Council of Australia rating as A grade (4.5 Star/A Rating);
(c)Palassis Architects would agree to accept the nomination as the architect pursuant to the terms of the building contracts and to comply with all the contractual terms in the building contracts as imposed on the nominated architect; and
(d)Palassis Architects would be paid in consideration for preparing the design and construction specifications and drawings and for accepting the nomination a fee of 3% of the construction costs of the works.
[19] Substituted statement of claim [11].
Superline pleads that the terms of the Building Contracts that Palassis Architects agreed to comply with were the terms entered into by the Builder and Superline on 28 April 2008. Superline pleads that the terms of the Building Contracts[20] required Palassis Architects to:[21]
(a)administer the Building Contracts on behalf of Superline as owner [A6];
(b)act as assessor, valuer and certifier and in doing so to act independently and not as the agent of Superline [A6];
(c)assess all progress payment claims made by the builder and to certify those claims including making allowances for the costs of rectifying defects [N4];
(d)assess any final claim once the builder had rectified all defects and finalised all incomplete work and to issue a final certificate pursuant to which either the plaintiff or the builder was repaid any amount so certified [N11]; and
(e)certify practical completion when the works were substantially complete and without defects the rectification of which would not reasonably affect occupation or use of the buildings [M1].
[20] These terms are numbered in the Building Contracts by the capitals and numbers referred to at the end of each of the subparagraphs.
[21] Substituted statement of claim [12].
Counsel for Superline put oral submissions that:[22]
(a)the first commission, Palassis Architects was required to carry out, pursuant to the terms of the Architect Agreement, was to supervise the design and specifications for the buildings and then to employ (engage) specialist consultancy subcontractors such as BCA, and then to employ contractors and supervise the entire Works;
(b)in undertaking the last task in (a) Palassis Architects were required to supervise the Works in accordance with the Building Contracts which set separate activities or responsibilities for Palassis Architects; and
(c)the first obligation under the Building Contracts was to supervise works for the owner, Superline. The second was to certify independently of Superline and the Builder progress payments, practical completion and final claims.
[22] ts 103 ‑ 104, 26 June 2019.
However, the staging of work to be carried out by Palassis Architects and the obligations counsel argues arise under the Architects Agreement is not what is pleaded by Superline. If this is intended, it should be pleaded as such.
It is apparent that the terms referred to in [11.1] and [11.2] (to prepare the design and construction specifications and drawings) contemplate that certain work would be carried out by Palassis Architects and could only be agreed to and carried out prior to the Building Contracts being entered into.
In my view, the defects in [11] and [12] of the substituted statement of claim are not capable of being rectified by the provision of particulars.
As Palassis Architects point out, the pleas in [11] and [12] of the substituted statement of claim failed to identify a proper foundation for a breach of contract claim for a number of reasons.
It is not pleaded, or indeed particularised, whether the Architect Agreement was in writing, oral, or by conduct, or a combination of those things. Counsel for Superline submitted that if the court were minded to order particulars it would plead that the terms of the contract were oral or 'terms coming out of the contact between the parties'.[23] Whilst in other matters the provision of particulars of this kind may be sufficient, such particulars would not cure the following defects:
(a)insofar as the words 'relevantly to the following effect' are used as part of the chapeau to the plea in [11] to define the material terms, such words have the effect of rendering the pleaded terms imprecise;
(b)no date is pleaded as to when the architect agreement is said to have been purportedly entered into, although the endorsement of claim to the writ of summons alleges that it was in or about 2007;
(c)when [11] and [12] are read together it appears that the contractual obligations (requiring compliance with all of the contractual terms in the Building Contracts) have the effect of creating obligations which postdate the alleged entry into the architect agreement. In [12] the terms of the Building Contracts which are said to be agreed by Palassis Architects (at a date prior to the Building Contracts being entered to), are the express terms of the Building Contracts that were entered into at a date subsequent to the Architect Agreement; and
(d)the matters pleaded in [11] are not pleaded on the basis that they are post-contractual conduct or are a variation to the Architect Agreement. As a result, [11] and [12] plead that the terms of the Building Contracts are incorporated into the Architect Agreement as at the date the Architect Agreement was entered into. Plainly such a pleading is not reasonably intelligible.
[23] ts 105, 26 June 2019.
For these reasons, [11] and [12] of the substituted statement of claim should be struck out.
5.2 Implied terms ‑ paragraph 13 of substituted statement of claim
Superline pleads, in [13], that on the proper construction and operation of the terms pleaded in subparagraphs 12.2, 12.3, 12.4, and 12.5 that Palassis Architects were under a duty to exercise reasonable skill and care to carry out the specified Work identified in each of those subparagraphs of [12].
It is also pleaded in [13.1.4], in the alternative, that each of the terms pleaded in [12] were subject to an implied term that in complying with those terms Palassis Architects would exercise reasonable skill and care. The implied term is particularised as:
(a)a term implied in law;
(b)alternatively, the term is reasonable and equitable and is necessary to give business efficacy, it is obvious, it is clearly expressed and does not contradict any express term; or
(c)in the further alternative, the term is implied by custom in the provision of services to be provided by an architect who agreed to accept nomination as the architect under the building contracts.
Superline puts a submission that, by accepting a commission or nomination as the architect under the Building Contracts, the pleaded breaches are each a breach of the over-arching obligation on Palassis Architects to comply with the terms of the Building Contracts as imposed on the nominated architect. However, this point does not emerge from the plea in [13]. This is because:
(a)the plea in [13] is dependent upon the effect of the pleas in [11] and [12] of the substituted statement of claim, the plea in [13] is ambiguous;
(b)it is not clear whether the terms sought to be implied by [13] are to be implied into the Architect Agreement or the subsequent Building Contracts;
(c)if the terms are to be included in the Building Contracts then they give rise to a false issue because there is no plea by Superline of any breach by Palassis Architects of the Building Contracts; and
(d)each of the matters alleged in [13] relate to circumstances which occurred after the Architect Agreement was entered into. Terms cannot be retrospectively implied into the Architect Agreement because post-contractual conduct is inadmissible for the purpose of reaching the proper construction of the Architect Agreement.
Paragraphs 17.1.1 to 17.1.3, 17.2.1 to 17.2.3 and 19, 20.3.1, 21.3.1 - should these paragraphs be struck out because they plead claims out of time?
Palassis Architects contend that the substituted statement of claim in [17.1.1] to [17.1.3], [17.2.1] to [17.2.3] and [19] plead breaches of contract which occurred in September and October 2009. In circumstances where the alleged breaches are said to have occurred more than six years before the writ was filed, on 4 December 2015, Palassis Architects says these claims are precluded from being advanced pursuant to s 13 (1) of the Limitation Act 2005 (WA).[24]
[24] First defendant's outline of submissions in support of application to strike out, filed 3 April 2019 [10] ‑ [12].
Palassis Architects point out that the writ of summons and [27] of the substituted statement of claim, pleads a misleading or deceptive conduct claim as to skill and competence under s 18 of the second schedule of the Competition and Consumer Act 2010 (Cth). This claim is brought in respect to conduct that is alleged to have occurred in 2007 when the Architect Agreement is said to have been entered into, and damage which is said to have been suffered as early as September and October 2009 (as pleaded in [17.1], [17.2] and [19]). Palassis Architects says that these pleadings raise the following three issues:[25]
(a)the alleged causes of action accrued prior to the enactment of the Competition and Consumer Act;
(b)leaving the first issue aside, the alleged causes of action accrued more than six years before the writ of summons was filed on 4 December 2015, and are therefore precluded from being advanced under s 52 and s 82 of the Trade Practices Act 1974 (Cth); and
(c)as the six year limitation period under s 82(2) of the Trade Practices Act has now expired, leave ought not be granted to amend the endorsement contained in the writ to plead a cause of action under the Trade Practices Act.[26]
[25] First defendant's outline of submissions in support of application to strike out, filed 3 April 2019 [9].
[26] It is noted that if leave is necessary Superline applies for leave to amend what is said to be an error on the part of the original pleader of the writ; ts 118, 26 June 2019.
In [17.1] and [17.2], Superline pleads that Palassis Architects certified for payment progress payment claims submitted by the Builder pursuant to the lot 828 contract and the lot 829 contract on specified dates from 4 September 2009 to 7 December 2009. In [19] and [19.3] it is pleaded that certifying the progress payment claims was in breach of the Architect Agreement. The loss and damage which is said to have been incurred by Superline is pleaded in [22] as the costs in rectifying defects in the works undertaken by the Builder pursuant to the Building Contracts.[27] It is notable, however, that the dates upon which each of the specified defects occurred is not pleaded, nor are the date or dates pleaded as to when the loss or damage was suffered.
[27] The defects are pleaded in [16] of the substituted statement of claim.
In Wardley Australia Ltd v The State of Western Australia, the plurality made the point that by virtue of s 82(2) of the Trade Practices Act, the period of limitation begins to run at the time when the cause of action under s 82(1) of the Trade Practices Act accrues, that is by the contravening conduct of another person.[28] Consequently, the cause of action does not accrue until actual loss or damage is sustained.
[28] Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 525 (Mason CJ, Dawson, Gaudron & McHugh JJ); Townsend v Roussety & Co (WA) Pty Ltd [2007] WASCA 40; (2007) 33 WAR 321 [96] (Buss JA; Wheeler & McLure JJA agreed).
It may also be relevant to consider whether any relevant pleaded contractual obligations have, by those terms, a specific time for performance, or in relation to any obligation, or obligations, whose time for performance is not specified, whether time runs from the latest time upon which the obligations could have been performed.[29]
[29] Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384.
Palassis Architects have yet by a pleading in a defence raised any limitation of action defences. In an application for a strike out, it is not appropriate to pre-emptively evaluate foreshadowed defences of limitation before they are pleaded.
In Wardley Australia Limited v The State of Western Australia,[30] their Honours made this point very clear:
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.
[30] Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514, 533 (Mason CJ, Dawson, Gaudron & McHugh JJ).
As at this point in time it is not sufficiently clear on the pleadings whether any limitation defence will defeat Superline's claims as it is not entirely clear when the pleaded causes of action accrue. Nor is it appropriate in the circumstances to determine whether to amend the original endorsement of claim on the writ. One of the questions to be determined on an application to amend an endorsement on the writ is whether a new cause of action arises from the same facts or substantially the same facts as those alleged. Counsel for Superline, when making submissions in opposition to the application to strike out, stated that if it were necessary the original endorsement on the writ should be amended. However, in the absence of any submission as to whether the cause of action arises out of the facts originally found in the endorsement of claim,[31] I am of the opinion that argument on this issue should be left to another day.
[31] On this issue generally, see the observations of Owen J, with whom Malcolm CJ and Kennedy J agreed, in Dye v Griffin Coal Mining Co Pty Ltd (1998) 19 WAR 431, 434; Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127.
For these reasons I am not satisfied that [17.1.1] to [17.1.3], [17.2.1] to [17.2.3] and [19], [20.3.1], [21.3.1] ‑ should be struck out on grounds that rely upon a limitation defence.
5.3 Certification of the progress payments, final claims and practical completion by Palassis Architects - paragraphs 19.3.1, 20.3.1 and 21.3.1
In each of these paragraphs it is pleaded by Superline that in certifying for payment particular progress payment claims, the final claims, and certifying practical completion, Palassis Architects was in breach of the Architect Agreement. In this plea, no term of the Architect Agreement that is claimed to have been allegedly breached is identified.
Superline argue that the plea in:[32]
(a)[19.3.1] relates to the payment of progress claims pleaded in [17.1] and [17.2], and fixes on the terms pleaded in [12.2] and [12.3];
(b)[20.3.1] relates to the final claims in [18.1.1] and [18.1.2], and fixes on the term pleaded in [12.4]; and
(c)[21.3.1] relates to the certifications pleaded in [18.1.2] and [18.2.2] and deal with the certification of 'practical completion' and, accordingly, fixes on the term pleaded in [12.5].
[32] Plaintiff's outline of submissions in response to first defendant's application to strike out, filed 17 April 2019 [37] ‑ [39].
Whilst counsel may have intended, when settling the substituted statement of claim by a plea of a general plea of breach of contract without pleading the material term, to put such an argument, pleadings must be capable of being understood in the absence of oral argument where material facts are stated. Plainly, the relevant material terms are not pleaded.
In the absence of any identification of the material terms which are said to constitute each of the breaches, the pleas are embarrassing and accordingly [19.3.1], [20.3.1] and [21.3.1] ought to be struck out.
5.4 Misleading and deceptive conduct - paragraphs 25 and 27
The pleas in [27] rely upon alleged representations that Palassis Architects, by entering into the Architect Agreement pleaded in [11.2] and [11.3], had the necessary skill and competence to design and nominate the construction specifications to achieve the outcome that the Buildings would be classified as having a 4.5 Star/A Rating, and comply with the contractual terms in the Building Contracts.
The first difficulty with the plea in [27] is that the basis of the plea is premised on purported obligations pleaded in [12] which postdate the alleged entry into the Architect Agreement, and potentially raise representations as to 'future conduct'. On this ground alone, [27] should be struck out.
Leaving this issue aside, it is necessary to plead the basis for the contention that is a matter of fact (at the material time) that Palassis Architects did not have the skills and competence required to do the acts, matters or things it allegedly represented it could do.
Superline claims that in [27.4] it pleads that Palassis Architects did not have the necessary skill and competence by:
(a)reference to the particulars in [25.3.1] and [25.3.2] (repeated in [27.4.2]) which plead that rather than achieving a 4.5 Star/A Rating, in 2018 the Buildings were classified as having a lesser rating; and
(b)the plea in [27.4.2] that Palassis Architects were required to comply with the contractual terms in the Building Contracts, as imposed on the nominated architect.
Statements as to future conduct can only be found to be misleading if their maker is shown not to have reasonable grounds for making the statements at the time they were made.[33]
[33] Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) 113 ALR 677, 694 (Sheppard J).
However, the plea in [27] makes no plea as to the grounds on which the representations could be said to not be reasonable and generally has no degree of specificity necessary to define the issues. In addition, the dates upon which the alleged representations are said to have been made should be particularised. There is no such plea. Nor is there a plea of any material facts as to how Superline is said to have relied upon the representations. Paragraph 27.3 simply makes a general plea that Superline relied upon the representations in entering into the Architect Agreement and did not engage with another party or parties who are suitably qualified. No material facts of reliance are pleaded.
In these circumstances, the level of generality in [27] is too great for Palassis Architects to know with any precision what case it has to meet. Accordingly, [27] should be struck out.
As to [25], Palassis Architects contend that the alleged events in [25.3] (that the buildings did not achieve the required environmental ratings) and [19], [20] and [21] (insofar as these paragraphs plead breaches of contract and a duty of care in administration of the Building Contracts going to 'Defects' (as defined in [16]) in the Works, which are said to render the representations misleading or deceptive, are events pleaded to have all occurred after the representations were made. As such, those events cannot be used to establish that the alleged representations were misleading or deceptive at the time that they were made. I am not persuaded by the entire argument made by Palassis Architects on this point. The certifications relating to the progress payments, final claims and practical completion appear to relate to Defects pleaded in [16] and not to the 4.5 Star/A Rating representations pleaded in [25].
Nevertheless, I agree that [25.1] and [25.2] should be struck out. This is because:
(a)[25.1] sets out inadmissible pre‑contractual negotiations which appear to be a chapeau to the plea in [25.2] of vulnerability (which is relevant to a plea in negligence, but not to a plea of breach of contract);
(b)[25.2] pleads a breach of contract or breach of tortious duty. Insofar as [25.2] pleads a breach of tortious duty on grounds of vulnerability this plea should be made in [26] only; and
(c)the pleading in [25.2], when read with [25.1], is somewhat inelegant. It appears what is attempted to be pleaded is vulnerability from circumstances of reliance (that is said to arise prior to entering into the Architects Agreement) that the design and construction specifications would be such as to achieve the outcome that the buildings would be classified as 4.5 Star/A Rating, on the basis that the Architects Agreement contained such a term (which in turn relies upon [11.2] which is to be struck out).
However, whilst I would not otherwise be persuaded that the remainder of [25] should be struck out, as the entire plea in [25] is dependent upon the plea in [11.2] and [11.3] (which, for the reasons I have already stated, should be struck out) the whole of [25] should be struck out.
6.0 BCA's application
6.1 Causes of action pleaded against BCA
Superline pleads three causes of action against BCA for economic loss. These claims are for:
(a)breach of contract (the contract is defined as the BCA consultancy agreement);[34]
(b)professional negligence in providing the services contracted for in the BCA consultancy agreement;[35] and
(c)a contravention of s 18 of the Australian Consumer Law based on an alleged representation that BCA had the specialist skill and competency to undertake the consultancy work, and provide the services to be provided under the BCA consultancy agreement.[36]
6.2 Paragraphs 29 and 30 - has there been a failure pleaded the terms of the BCA contract?
[34] Substituted statement of claim [29], [33].
[35] Substituted statement of claim [31], [33].
[36] Substituted statement of claim [35.1] ‑ [37]; at the hearing of the applications to strike out, counsel for BCA adopted the submissions made by counsel for Palassis Architects on the limitation point. I have not found it necessary to deal with this point.
By [29], Superline alleges that BCA entered into the BCA consultancy agreement and agreed to provide 'consultancy services' for electrical services, vertical transportation services, mechanical services and fire services 'in accordance with' several scopes of work that are identified in [29.1] to [29.4]. The identified scopes of works are each pleaded to be specifications for the particular services, which specifications were provided to BCA by (drafted by) Palassis Architects.
BCA points out that [29] does not plead the conduct that constitutes the formation of the contract or whether the contract is oral or in writing. It says all that is pleaded in [29] is the conclusion that the parties entered into a contract. As counsel for BCA, concedes, however, a plea of a conclusion is not always a bad pleading. Yet a plea of a conclusion is not sufficient if no terms of contract are pleaded.
No material facts of 'consultancy services' are pleaded. This issue is plainly revealed when one asks the question whether the identified scopes of work constitute the terms of the 'consultancy services' or whether they are scopes of work to be carried out by subcontractors.
In [30], Superline plead that it was either an express or, alternatively, an implied term of the BCA consultancy contract that BCA was under a duty to exercise reasonable skill and care in providing the contracted consultancy services. Whilst the specifications of scopes of work are identified, these are the only terms pleaded. In the particulars of implication, the term is pleaded to be implied in law or, alternatively, on the basis that it is reasonable and equitable, is necessary to give business efficacy, it is obvious, it is clearly expressed and does not contradict any express term. In the further alternative, the term is said to be implied by custom in the provision of specialist consultancy services, of the type to be provided by BCA, under the BCA consultancy contract.[37]
[37] Substituted statement of claim [30](a) ‑ (c).
In written submissions, Superline contend that the contract with BCA would have been in the form of a RAIA client and secondary consultant agreement (RAIA Agreement) and subject to the Australian Standard 4122 Engagement of Consultants Contract (Australian Standard 4122), but it is more likely that the terms of the contract are set out in the form of Australian Standard 4122.[38]
[38] Plaintiff's submissions in response to second defendant's application to strike out, filed 15 April 2019 [10] ‑ [11].
In their written submissions, Superline submits that it is to be assumed that BCA do not have or do not know the terms of the contract entered into between it (Superline) and BCA. Further, if BCA do know the terms and/or has identified the contract, then it is in a position to specifically plead to the matters in [29] and [30].[39]
[39] Plaintiff's submissions in response to second defendant's application to strike out, filed 15 April 2019 [18].
In circumstances where BCA solicitors have informed the solicitors for Superline prior to the date of the hearing of the application to strike out that no written contract can be found,[40] speculation on the part of Superline as to whether the terms of the contract were in the form of Australian Standard 4122 or in the form of a RAIA agreement is irrelevant and inadmissible.
[40] ts 121, 26 June 2019.
For these reasons, it is plain that BCA's application pursuant to O 20 r 19(1)(a) is made out.
Superline cannot now maintain that it is not in a position to plead that the terms of the contract between it and BCA are either oral or to be inferred by conduct. Nor can it say it is not in a position to plead the terms of the contract. In these circumstances, [29] and [30] of the substituted statement of claim should be struck out on grounds that the material facts constituting the terms of contract are not pleaded, which facts are necessary to establish a cause of action.
6.3 Professional negligence - can [31] to [35] survive in the absence of plea in contract?
When regard is had to the pleas in [31] to [35], the short answer to this question is no. This is because the pleas in [31] to [35] may or may not be able to be sustained if there is a concurrent plea in contract. Whether it can be sustained depends upon the terms of the contractual obligations.
In Townsend v Roussety, Buss JA relevantly observed: [41]
Professional negligence may give rise to concurrent liabilities in both contract and tort. Prima facie, a plaintiff may claim against an accountant or other professional adviser in either contract or tort or both. See Astley v Austrust Ltd (1999) 197 CLR 1 per Gleeson CJ, McHugh, Gummow and Hayne JJ at 20 [44].
Since the decision of the High Court in Astley, a professional person does not have a 'penumbral' duty in tort which requires the giving of advice on matters which are beyond the limits of his or her retainer. Where there is a contract of retainer with a professional person, it is the contract that defines the relationship of the parties so that, ordinarily, the presumed intention of the parties is that any duty in tort is limited or excluded. See Heydon v NRMA Ltd (2000) 51 NSWLR 1, where McPherson A‑JA said, at 118 [364]:
'At one time a solicitor's duty was considered to be limited by the terms of the retainer from the client, there being no affirmative legal obligation to give advice going "beyond the specifically agreed task or function". Then, in Hawkins v Clayton (1988) 164 CLR 539 at 585, it was held that there was no justification for imposing a contractual duty of care that was co-extensive with the parallel duty independently imposed in the law of negligence. It followed that an obligation might arise requiring a solicitor to take positive steps, beyond the specifically agreed professional task or function, to avoid a real and foreseeable risk of economic loss being sustained by the client, or even by others who were not the clients who had retained the solicitor. The result was that in Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642 at 652, a majority of this Court held that an affirmative duty to advise might exist in relation to matters that were not directly within the ambit of the retainer from the client. The decision on this point in Waimond Pty Ltd v Byrne has since been followed on several occasions. More recently, however, in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 at 193–194, the House of Lords rejected the reasoning of Deane J in Hawkins v Clayton, holding instead that there was "no sound basis for a rule which automatically restricts the claimant to either a tortious or a contractual remedy", and that it was the contract that defines the relationship of the parties, so that ordinarily "the parties must be taken to have agreed that the tortious remedy is to be limited or excluded". In Astley v Austrust Ltd (1999) 197 CLR 1, the High Court decided to follow the reasoning in Henderson v Merrett Syndicates Ltd, in preference to that of Deane J in Hawkins v Clayton. The result, in my respectful opinion, is that what was said by Deane J in Hawkins v Clayton has ceased to be good law in Australia. Because it formed the or a pivotal point in the reasoning in Waimond Pty Ltd v Byrne, it is no longer possible to say that there is a "penumbral" duty in tort requiring a solicitor to advise on matters going beyond the limits of his or her retainer. On that aspect, the decision in Waimond Pty Ltd v Byrne is inconsistent with the reasoning in Astley v Austrust Ltd, and should, in my opinion, no longer be followed. It had the effect of enlarging or extending the range of matters on which a solicitor, and possibly also a barrister, might be required by the law of tort to advise a client or other persons.'
[41] Townsend v Roussety [2007] WASCA 40 [115] ‑ [116] (Wheeler & McLure JJA agreed).
As [31] to [35] expressly plead the existence of the BCA consultancy agreement pleaded in [29], these paragraphs must necessarily be struck out. Whether a concurrent duty in tort is found to exist with a professional person or is excluded by the terms of a contractual obligation will depend upon the construction of an express or implied term that obliged the professional person to exercise reasonable skill and care.
6.4 Paragraphs 36 and 37 ‑ alleged contravention of s 18 of the Australian Consumer Law
Section 18 of the Australian Consumer Law prohibits a person, in trade or commerce, from engaging in misleading or deceptive conduct.
In [35.1], Superline pleads that BCA made a representation that it had the necessary skills and competence to undertake the consultancy work and provide the services under the agreement pleaded in [29]. The representation is said to have been made by BCA's conduct in entering the BCA consultancy agreement.
As [36] and [37] rely upon the existence of the BCA consultancy agreement pleaded in [29] these paragraphs must necessarily be struck out.
7.0 Conclusion - leave granted to re‑plead
Paragraphs 11, 12, 13, 19.3.1, 20.3.1, 21.3.1, 25, 27, and 29 to 37 of the substituted statement of claim filed on 22 February 2019 should be struck out.
Whilst I have upheld all of BCA's application to strike out the cause of action against it, and a substantial part of Palassis Architects' application to strike out particular paragraphs of the substituted statement of claim, I am of the view that Superline should be given leave to re‑plead. Whilst Superline has had several unsuccessful attempts to plead its case over a lengthy period of time, it appears that it should now be clear to Superline that if it intends to allege the terms of contract between it and Palassis Architects, and it and BCA, are oral, or to be inferred, Superline, if properly advised, could plead its case in a way that properly pleads all the material facts with the degree of specificity necessary to define the issues and inform Palassis Architects and BCA in advance of the case they each have to meet.
I will hear the parties further as to the orders that should be made.
I am presently of the view that given the persistent failure of Superline to properly plead its case that, subject to it showing cause otherwise, Superline should be ordered to pay the costs of Palassis Architects and BCA on an indemnity basis.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EH
Research Associate/Orderly to the Honourable Justice Smith15 NOVEMBER 2019
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