The Owners - Units Plan No. 3676 v Morris Construction Corporation Pty Ltd (No 2)
[2019] ACTSC 95
•11 April 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | The Owners – Units Plan No. 3676 v Morris Construction Corporation Pty Ltd (No 2) |
Citation: | [2019] ACTSC 95 |
Hearing Dates: | 22 March 2019 |
DecisionDate: | 11 April 2019 |
Before: | McWilliam AsJ |
Decision: | See [34] |
Catchwords: | PRACTICE AND PROCEDURE – PLEADINGS – Court Procedures Rules 2006 (ACT) rr 1145 – application to strike out paragraphs of statement of claim – application to amend claim – where disputed paragraphs fail to plead material fact necessary to support breach of duty of care – leave granted to re-plead |
Legislation Cited: | Court Procedure Rules 2006 (ACT) rr 406, 425, 502 Building Act 2004 (ACT) s 149 |
Parties: | The Owners – Units Plan no. 3676 (Plaintiff) Morris Construction Corporation Pty Ltd (ACN 136 947 834) (First Defendant) MPG Construction Services Pty Ltd (ACN 131 066 906) (Second Defendant) AWT Consulting Engineers Pty Ltd (ACN 093 828 794) (Third Defendant) Australian Capital Territory (Fourth Defendant) Alexander Anthony Scionti (Fifth Defendant) Saba Bros Tiling (Third Party) |
Representation: | Counsel Mr R De Meyrick with Ms K Weston-Scheuber (Plaintiff) Mr P Walker with Mr Robert Clynes (Fourth Defendant) |
| Solicitors Lovegrove & Cotton Lawyers (Plaintiff) ACT Government Solicitor (Fourth Defendant) | |
File Number: | SCA 343 of 2017 |
McWilliam AsJ:
The plaintiff is the owners corporation for a group of owners of a residential apartment block of 120 units in Kingston (Kingston Place) involved in a now protracted dispute about defective building work of a structural nature. The plaintiff has sued in negligence the builder, the developer, the design engineer, the Construction Occupations Registrar (Registrar), and the License Holder and Builder’s Nominee.
The fourth defendant, the Australian Capital Territory (Territory) represents the Registrar pursuant to s 149(2) of the Building Act 2004 (ACT) (BuildingAct). The substantive complaint against the Registrar is that in 2011 he negligently issued a Certificate of Occupancy and Use (COU) which certified that the building work listed on the certificate had been completed substantially in accordance with the prescribed requirements and was considered fit for occupation and use.
The application before the Court
The present interlocutory dispute between the Territory and the plaintiff arises from an application in proceedings filed by the Territory on 29 November 2018 concerning the plaintiff’s pleading.
The application originally sought to strike out parts of the plaintiff’s statement of claim and to have judgment entered for the Territory, pursuant to r 425 of the Court Procedure Rules 2006 (Rules).
In response, the plaintiff proposes to file what it describes as a further amended statement of claim dated 28 February 2019. There is no amended statement of claim filed. The terminology of a ‘further’ amendment is not yet necessary. Either way, the plaintiff needs the Court’s leave to amend its claim and such leave is opposed by the Territory. An oral application for such leave was assumed at the hearing, with the Territory having prior notice of the amendments sought to be made.
Issue for resolution
The Territory’s application has thus been somewhat overtaken by the plaintiff seeking to amend its pleading. The consequence is that the Territory no longer seeks summary judgment, but does still press for certain paragraphs of the proposed amended document to be struck out. There are three paragraphs in dispute: 68, 69 and 69A which all relate to a breach of duty of care. Some of the allegations in those paragraphs were in the original Statement of Claim filed, and others are new.
To the extent that the allegations are new, the first question, logically, is whether leave should be granted to the plaintiff to amend the claim in the manner now proposed. The Court would not grant leave to amend a document that contains paragraphs it then determines should be struck out.
The issue then, is whether the plaintiff should have leave to proceed on paragraphs 68, 69 and 69A as contained in the proposed amended pleading.
The Court’s power
The Court has the power to give leave for a party to amend its pleading in the way it considers appropriate: r 502(1) of the Rules. The Court may give leave or give a direction on application by the party or on its own initiative: r 502(2) of the Rules.
Should paragraph 68 be allowed to remain?
Some context to the proposed amendments is necessary. The claim against the Territory is for negligence in issuing the COU. It commences at [58] of the proposed amended pleading.
In summary, the plaintiff pleads over [58]-[67] of the proposed amended pleading:
(a)The Registrar is capable of being sued and if sued, any liability attaches to the Territory;
(b)The Registrar was appointed to carry out certification functions, including considering and assessing applications for a COU;
(c)The assessment involved considering whether building work had been completed in accordance with the requirements of the Building Act, which in turn required that the work was completed in a proper and skilful way and in accordance with approved plans.
(d)The Registrar may exercise its power in a number of ways, including issuing a COU if the building work is not strictly in accordance with the prescribed requirements or issuing a certificate in respect of only part of a building.
(e)In exercising its power, the Registrar must consider the prescribed matters in the Building Act and associated regulation.
(f)On 19 September 2011, the Registrar issued a COU for Kingston Place which certified that the building work listed had been completed substantially in accordance with the prescribed requirements (being those under the Building Act) and was considered fit for occupation and use.
(g)At the time the COU was issued, the Registrar knew or ought to have known that an owners corporation would be established and be responsible for the common property, that people would buy the units and those people would not have the benefit of any statutory warranties because the building was more than 3 storeys.
(h)It was reasonably foreseeable that if the Registrar failed to carry out his functions with due care and skill, and in accordance with all laws and legal requirements, that the plaintiff would suffer loss and damage.
(i)People buying the units relied upon the COU in completing their purchases and the Registrar knew or ought to have known that they would do so and were thus vulnerable to any economic consequences of him failing to exercise due care and skill in carrying out his functions.
(j)In those circumstances, the Registrar owed the plaintiff and the unit owners a duty of care.
(k)The content of the duty was:
(i)To exercise reasonable care in issuing a COU, including the statements made on it;
(ii)To issue a COU only where there was sufficient information available to the Registrar on which the Registrar could find that the legislative requirements for a COU were made out;
(iii)To issue a COU only if satisfied on reasonable grounds that the building work complied with all legal requirements and the building was fit for occupation and use.
The next paragraph is the disputed [68], which is in the following terms:
Breach of duty of care
In the premises, the Registrar should not have issued the COU in circumstances where the Building Work had not been completed substantially in accordance with the requirements for the Building Act 2004 because the Building Work was significantly defective.
Particulars
The [p]laintiff refers to the Particulars subjoined to paragraph 18 above. Some of the defects have structural implications, in particular the cracking to the basement carpark areas and water retention/detention tank.
Paragraph 18 of the proposed amended pleading sets out a number of defects concerning the concrete basement slabs which were cracking, leaks from a basement stormwater detention/retention tank, defects to balconies, leaking from planter boxes on the common property and air-conditioning issues. The term ‘Building Work’ is defined at [12] of the proposed amended pleading to mean the construction of Units 1 to 120, associated car parking and common property areas, and providing related goods and services
The Territory argues that this paragraph amounts to an allegation that the Registrar breached his duty of care simply because it later turned out that the building was defective in the manner described in [18]. It is an allegation akin to strict liability. In effect, the Registrar is embarrassed, because he is unable to know how it is alleged that he failed to comply with his duty to exercise reasonable care and skill.
I accept this submission. The words ‘in the premises’ are entirely unclear. They do not specify the circumstances to support an allegation that the Registrar should not have issued the COU. Tracing back to [18] does not help, because all that paragraph does is set out defects.
Paragraph [68] describes what the defects were and alleges that the work was not in accordance with the Building Act, but it does not plead the material fact to link the defective building work to something that the Registrar either did or did not do, so as to properly plead the breach of duty. For example, did the Registrar fail to properly inspect the building to see that it was built according to the approved plans? Did the Registrar fail to notice something on a plan provided to him that was structurally flawed? Did the Registrar fail to ask for a particular document that would have revealed a defect? It is not axiomatic that the existence of a structural defect means that the Registrar breached his duty of care.
In its present form, [68] fails to plead the material fact relied upon to found the breach of duty and is otherwise embarrassing. It thus fails to comply with r 406 of the Rules. These are defects of substance given that breach is an essential element of the cause of action in negligence. Although they could perhaps be remedied by the provision of further particulars, given that the plaintiff is seeking leave to amend the pleading in any event, it would be more convenient to simply have the plaintiff re-plead that aspect of the claim in light of these reasons.
Paragraph [68] is in the existing statement of claim as well as the proposed amended pleading. It will be struck out.
Should leave be granted to amend [69] and [69A]?
Paragraph [69] is in the following terms:
The Registrar breached its duty described at paragraph 67(a) by:
(a)issuing the COU when the Building Work was not compliant with the requirements under the Building Act 2004;
(b)issuing the COU when the Building Work did not comply with all relevant Australian Standards and/or the Building Code of Australia;
(c)approving Building Work that was not carried out in a proper and workmanlike manner;
(d)failing to ensure the Building Work was carried out with due care and skill and in accordance with all laws and legal requirements.
The proposed amendments are contained in sub-pars (a) to (d).
Paragraph [69A] is as follows:
The Registrar breached its duty described at paragraph 67(a) and (b) by:
(a)Issuing the statement referred to at paragraph 62 when:
(i)the Building Work did not substantially comply with the prescribed requirements; and
(ii)the Building was not fit for occupation and use.
Counsel for the plaintiff argued that [69] and [69A] were tied to [68] so that if [68] was struck out, the other two paragraphs would also need to be re-pleaded. That may be correct.
The allegations appear to suffer from a similar defect as that discussed above. The mere fact that it transpires after a COU was issued that building work was defective or non-compliant, but was certified to be otherwise, does not speak to what the Registrar was obliged to do in exercising reasonable care and skill.
That the plaintiff is now dealing with structural leaks and cracks that are very expensive to fix when the Registrar had signed off on the building being fit for purpose does not explain how the Registrar failed in his duty. Was the Registrar required to be on site to observe that the Building Work was performed in a workmanlike manner? Was the Registrar entitled to rely on someone else to perform that task, who failed to perform it?
The Registrar is entitled to know what it is alleged he should have done or known or sought to find out, as that is the material fact which constitutes the alleged breach of duty of care to the plaintiff.
Accordingly, leave will not be granted to amend the pleading in the manner for which the plaintiff presently contends with respect to paragraphs [69] and [69A].
Conclusion
The remaining paragraphs which are sought to be amended are not disputed by the Territory. Accordingly, leave will be granted to amend the pleading with respect to those paragraphs, and the plaintiff will be given an opportunity to plead the allegations in the disputed paragraphs having regard to these reasons.
To save two further amended pleadings being filed, the proposed amended statement of claim giving effect to these reasons (and incorporating the amendments for which leave has been given) should be served on the Territory within 28 days. I have had regard to the intervening Easter public holidays in allowing that period of time. If there is no objection to the additional paragraphs pleading further breaches of duty against the Territory, consent orders can be made.
If there remains an objection to the case pleaded on breach of duty, the parties can agitate the issue when the proceeding is next before the Court.
As to costs, the plaintiff has been successful with regard to a number of the amendments made. However, it was originally facing an application for summary judgment which has now not been pressed due to the subsequent proposed amendments which appear to have substantially resolved the issue for the Territory.
The Court has not adjudicated on whether the Territory would have been successful in its initial application for summary judgment, and it is not appropriate to embark on considering that question for the purpose of resolving costs of an interlocutory application.
However, the usual course would be that the plaintiff pay the costs thrown away by the filing of an amended pleading and those costs may include part of the cost of bringing the initial application for summary judgment.
The Territory has been successful on the issue of the three paragraphs that were disputed in the proposed amended pleading. They were the sole subject of the hearing of the application as ultimately argued. It should therefore also have its costs of appearing at the hearing on 22 March 2019. Otherwise, the parties should pay their own costs of the application.
The orders are as follows:
1. Paragraph [68] of the Statement of Claim filed 6 September 2017 is struck out.
2. Leave is granted to the plaintiff to file an amended statement of claim substantially in the form of the document dated 28 February 2019 served on the fourth defendant, save as to paragraphs [68], [69] and [69A].
3. Leave is granted to the plaintiff to further plead any breach of duty of care against the fourth defendant, and the plaintiff is to serve on the defendants any proposed amended statement of claim on or before 9 May 2019.
4. The fourth defendant is to notify the plaintiff of any objection to the document referred to in Order 2 on or before 20 May 2019.
5. The plaintiff is to pay the fourth defendant’s costs thrown away by the amendments referred to in Order 2 and of appearing at the hearing on 22 March 2019 only.
6. The proceeding is listed for further directions on 23 May 2019.
| I certify that the preceding thirty-four [34] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: |
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