Tarastar Pty Ltd v Sullivan, Virginia Elizabeth and Dunne

[2009] VCC 941

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
COMMERCIAL LIST

BUILDING CASES DIVISION

Case No. CI-09-02440

TARASTAR PTY LTD	Plaintiff
(ACN 006 769 526)
v
VIRGINIA ELIZABETH SULLIVAN	First Defendant
and
BRENDAN JOHN DUNNE	Second Defendant

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JUDGE:	HIS HONOUR JUDGE SHELTON
WHERE HELD:	Melbourne
DATE OF HEARING:	26 August 2009
DATE OF JUDGMENT:	9 September 2009
CASE MAY BE CITED AS:	Tarastar Pty Ltd v Sullivan, Virginia Elizabeth & Dunne, Brendan John
MEDIUM NEUTRAL CITATION:	[2009] VCC 0941

REASONS FOR JUDGMENT

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Catchwords: Summary judgment application – Building and Construction Industry Security of Payment Act 2002, ss.7(2)(b) and 16(2)(a)(i) – Section 57 Domestic Building Contracts Act 1995 – Whether “action arising wholly or predominantly from a domestic building dispute” – Domaine Homes (Vic) Pty Ltd v Ria Building Pty Ltd [2005] VCC 111 – Professional Floor Services Pty Ltd v Techcor Developments Pty Ltd [2009] VCC 560 – Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 – Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 – Glenrich Builders Pty Ltd v 1–5 Grantham Street Pty Ltd and Anor [2008] VCC 1170 – Hope v Bathurst City Council (1980) 29 ALR 577.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R Andrew	Noble Lawyers
For the Defendants	Mr G J Burns	Hassall’s Litigation Services
HIS HONOUR:

Introduction

1 I have before me two applications. Firstly, there is an application for summary judgment pursuant to Order 22 of the County Court Rules. The application is based upon s.16(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002 (“the Act”).

2 Secondly, the defendants have made application for me to stay this proceeding pursuant to s.57 of the Domestic Building Contracts Act 1995 (“the DBC Act”).

The Facts

3          On 23 October 2004 the first defendant purchased a property at 6–8 Walstab Street, Brighton (“the property”). There were two residences on the property. In an affidavit sworn by her on 8 July 2009 she states that neither she nor the second defendant, who is her domestic partner, were “sure of what we were going to do with the property”. After settlement of the purchase of the property in December 2004, they were rented out. The first defendant states that she and the second defendant were considering for some time what they should do with the property, including the possibility of demolishing the two houses on the property, building two townhouse units, selling one, and retaining the other.

4          By contract dated 8 August 2007, the plaintiff agreed to erect two units on the property for the first defendant for the sum of $1.3 million. In her affidavit the first defendant states:

“At that time we had decided to build the two townhouses, one on each of
the titles, and then to sell one and possibly retain the other to live in.”

5          On or about 5 July 2008 the plaintiff and the first defendant entered into a cost plus contract which superseded the contract of 8 August 2007. The second defendant guaranteed the first defendant’s obligations under this contract.

6 On 1 April 2009, the plaintiff served on the first defendant a claim for the sum of $111,939.07 pursuant to the 5 July 2008 contract. The plaintiff claims that this is a payment claim pursuant to s.14 of the Act. It is not in issue that no payment schedule was provided pursuant to s.15 of the Act. It is this sum of $111,939.07 which the plaintiff claims pursuant to the Act.

Discussions and Conclusions

7          It is convenient to consider firstly the defendants’ stay application. In Domaine Homes (Vic) Pty Ltd v Ria Building Pty Ltd [2005] VCC 111, it was not in dispute that “a domestic building dispute” was in existence. The plaintiff, as here, claimed, against the defendant, damages for breach of contract, or alternatively for a debt due and payable under the Act. It was also conceded there that the Victorian Civil and Administrative Tribunal (“VCAT”) could not hear the claim under the Act, since it was not a “court of competent jurisdiction” as required by s.16(2)(a) of the Act as it then was (now s.16(2)(a)(i) of the Act). The issue before me was whether I should stay the claim for breach of contract to enable it to be determined at VCAT. Did s.57(1) of the DBC Act apply? This required a determination as to whether “action” in s.57(1) of the DBC Act meant “cause of action” or “proceeding”. I determined that it meant “proceeding”, and that therefore s.57(1) of the DBC Act did not apply. Therefore I had no power to grant a stay pursuant to s.57(2) of the DBC Act.

8          Here, I do not have a concession that VCAT is not a “court of competent jurisdiction”. I note, however, that in Professional Floor Services Pty Ltd v Techcor Developments Pty Ltd [2009] VCC 560 I concluded that VCAT was not a court of competent jurisdiction for the purposes of s.16(2)(a)(i) of the Act, and set out my reasons for so concluding.

9          Thus, even assuming for the purposes of this application that the contract is a domestic building contract to which the DBC Act applies, and that there is a domestic building dispute between the plaintiff and the first defendant, I would refuse the stay application.

10        Turning to the summary judgment application, the approach to be taken is as stated by the High Court in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 89 as follows:

“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”

11        To similar effect is the statement of Herring CJ and Lowe J in Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 at 334 that:

“Where there is a real case to be investigated either in fact or law, leave

to defend should be given.”

12 Section 7(2)(b) of the Act provides that the Act does not apply to:

“a construction contract which is a domestic building contract within the meaning of the Domestic Building Contracts Act 1995 between a builder and a building owner (within the meaning of that Act), for the carrying out of domestic building work (within the meaning of that Act), other than a contract where the building owner is in the business of building residences and the contract is entered into in the course of, or in connection with, that business.”

13        Here, in my view, it is arguable that the contract is “a domestic building contract”. Mr Andrew, who appeared for the plaintiff, relied upon my decision in Glenrich Builders Pty Ltd v 1–5 Grantham Street Pty Ltd and Anor [2008] VCC 1170 where I held that the DBC Act does not apply to owner developers. There, the works related to the construction of 103 residential units for a contract sum in excess of $10 million. The situation here is, in my view, arguably different, where the first defendant was building only two units and states that she may have lived in one. I appreciate that Brian Joseph Devlin, a real estate sales representative employed by Buxton (Brighton) Pty Ltd estate agents, in an affidavit sworn 17 July 2009 states that in late November 2007 or early December 2007 he was approached by the second defendant to sell both townhouses, and that the second defendant by affidavit of 20 July 2009 explains that this was done to satisfy Westpac, which was financing the development of 6–8 Walstab Street. Such a conflict cannot be resolved on the hearing of a summary judgment application.

14 Mr Andrew submitted that even if the contract was “a domestic building contract”, the second defendant was “in the business of building residences”, and that “the contract [was] entered into in the course of, or in connection with, that business”, and therefore s.7(2)(b) did not apply. In Hope v Bathurst City Council (1980) 29 ALR 577 at 582, Mason J, as he then was, interpreted “business” in the Local Government Act 1919 (NSW) as:

“... a commercial enterprise in the nature of a going concern, that is activities engaged in for the purpose of profit on a continuous and repetitive basis.”

15        Again, I think it arguable that the first defendant was not in the business of building residences in light of the particular factual situation here.

16        In the circumstances I refuse the summary judgment application.

17        I will hear from the parties on the question of costs and the further conduct of this proceeding.

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