Tincknell v Duthy Homes Pty Ltd - [2018] SASC 44

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
TINCKNELL & ANOR v DUTHY HOMES PTY LTD & ANOR
[2018] SASC 44
Judgment of The Honourable Justice Nicholson
6 April 2018
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS
PROCEDURE - JUDGMENTS AND ORDERS - ENFORCEMENT OF JUDGMENTS AND ORDERS
The appellants are the owners of residential land and engaged the first respondent, a building company, to construct improvements to their land. A dispute between the parties resulted in a trial in the District Court which saw the first respondent succeed in obtaining a balance judgment in its favour for $173,049.41. The Judge also ordered that a bank guarantee for $115,000 provided by the first respondent, intended to secure proper performance of the contract on its part, be returned. The appellants have lodged an appeal. The appellants have also applied for a stay of the order requiring the return of the bank guarantee to the first respondent pending the determination of the appeal.
Held:
1. The order made by the Judge on 26 February 2018 that the bank guarantee be returned to the first respondent (order 2) is stayed until further order.
Supreme Court Civil Rules 2006 r 131, referred to.
Bartley v Myers [2001] SASC 212; Ryan v Urban Construct (SA) Pty Ltd (No 2) (2012) SASR 410, [2012] SASC 193; Essential Beauty Franchising (WA) Pty Ltd & Ors v Pilton Holdings Pty Ltd & Ors (No 3) [2014] SASC 148; Rickard & Ors v Testel Australia Pty Ltd [2017] SASC 144; Hall v Nominal Defendant [1966] HCA 36, (1966) 117 CLR 423, considered.

TINCKNELL & ANOR v DUTHY HOMES PTY LTD & ANOR
[2018] SASC 44
Civil: Application
NICHOLSON J.
Introduction

The appellants (defendants at trial) are the owners of residential land. The first respondent (plaintiff and defendant by counterclaim at trial) is a building company who constructed improvements on the appellants’ land. The parties went to trial in the District Court over a lengthy and complex building dispute. The first respondent succeeded in obtaining a balance judgment in its favour for $173,049.41. The appellants have appealed on numerous grounds particularising a very large number of asserted building defects and failures by the first respondent to observe its contractual responsibilities with respect to all of which they maintain the trial Judge erred. If wholly successful, the appellants expect to receive in their favour a very substantial balance judgment, according to their counsel, in the order of $1.6 million.
Under the building contract, the appellants were entitled to retain a bank guarantee provided by the first respondent in the amount of $115,000. The bank guarantee was intended to secure the first respondent’s proper performance of the contract. One consequence of the trial judgment in favour of the first respondent, if undisturbed, is that the contractual obligation to provide the bank guarantee has come to an end and the appellants are no longer entitled to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] SASC 44
Decision Date: 6 April 2018

CaseChat Overview and Summary

In the matter of Tincknell v Duthy Homes Pty Ltd, the appellants, Tincknell, sought an appeal against the primary judge's decision regarding the enforcement of a bank guarantee and the practical completion date in a construction contract dispute. The case was heard in the South Australian Court of Appeal. The primary issue before the court was whether the bank guarantee provided by the appellants should be returned to the first respondent, Duthy Homes Pty Ltd, and whether a stay of the primary judge's order should be granted pending the outcome of the appeal.

The court considered the risk of prejudice to the appellants if the stay were not granted, particularly concerning the extended duration of the bank guarantee beyond its proper term. The court acknowledged that any prejudice suffered by the first respondent would have occurred regardless of the stay. The court balanced this against the potential prejudice to the appellants if the stay were not granted. The court concluded that the risk of prejudice to the appellants sufficiently outweighed any prejudice to the first respondent, justifying the granting of a stay. The court also noted that, due to the unsatisfactory evidence provided by the first respondent regarding the cost of maintaining the bank guarantee, it would not impose an obligation on the appellants to compensate the first respondent if the appeal were to fail.

Accordingly, the court granted the stay unconditionally, ordering that the primary judge's order for the return of the bank guarantee be stayed until further order. This decision ensures that the appellants are not unduly prejudiced while the appeal is being determined, and it preserves the status quo pending the outcome of the appeal regarding the practical completion date and the enforcement of the bank guarantee.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

NICHOLSON J (dissent)

It is a matter of concern that, were the Judge ultimately found to be correct with respect to the date for practical completion, the bank guarantee will have been in place for a number of years beyond its proper term. However, albeit unfortunately for the first respondent, any prejudice thereby resulting will have been suffered by the first respondent in any event. It is not such as would result from a stay of the Judge’s order made on 26 February 2018. Conclusion I am satisfied that the risk of prejudice to the appellants in the event that a stay were not to be granted sufficiently outweighs the prejudice to the first respondent were a stay to be granted so as to justify the granting of a stay of the Judge’s order. Ordinarily, I would consider imposing on the appellants an obligation to compensate the first respondent for the prejudice it would suffer in the event that a stay proved not to be warranted, that is, in the event that the appeal as to the question of the date for practical completion were to fail. For example, had the first respondent been put to an interest expense or a monthly charge by the bank for maintaining the bank guarantee I would have considered imposing an obligation to reimburse that charge as the price for obtaining the stay. However, the evidence provided by the first respondent as to the true or effective cost to it of maintaining the bank guarantee is quite unsatisfactory. In the circumstances, I propose to grant the stay unconditionally. I order that the Judge’s order 2 made on 26 February 2018 that the bank guarantee is to be returned to the first respondent is stayed until further order.

Ratio Decidendi

Legal Principle Established

Established by:

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