Wang v Intrinsic Project Pty Ltd
[2023] WADC 50
•12 MAY 2023
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WANG -v- INTRINSIC PROJECT PTY LTD [2023] WADC 50
CORAM: REGISTRAR JEYAMOHAN
HEARD: 3 MAY 2023
DELIVERED : 12 MAY 2023
FILE NO/S: CIV 5374 of 2022
BETWEEN: LEI WANG
Plaintiff
AND
INTRINSIC PROJECT PTY LTD
First Defendant
WILL LEE LEONG
Second Defendant
Catchwords:
Practice and procedure - Defendants' application for orders pursuant to O 20 r 19(1)(a) and/or O 20 r 19(1)(c) - Where contractual terms of contract not specifically pleaded - Restitution - Unjust enrichment - Pleadings disclose comprehensible causes of action - Turns on own facts
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)
Legislation:
Australian Consumer Law (WA)
Competition and Consumer Act 2010 (Cth), s 4, s18 of Sch 2, s 236
Fair Trading Act 2010 (WA)
Rules of the Supreme Court 1971 (WA), O 20 r 19(1)(a), O 20 r 19(1)(c) and O 20 r 19(2)
Result:
Application to strike out statement of claim in its entirety, in the alternative, in part, dismissed
Representation:
Counsel:
| Plaintiff | : | Mr M G S Crowley |
| First Defendant | : | Mr M N Blandford |
| Second Defendant | : | Mr M N Blandford |
Solicitors:
| Plaintiff | : | Exceed Legal |
| First Defendant | : | Hoe Lawyers |
| Second Defendant | : | Hoe Lawyers |
Case(s) referred to in decision(s):
Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560
Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 4] [2020] WASC 382
David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353
Day v William Hill (Park Lane) Ltd [1949] 1 KB 632
DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Fremantle Port Authority v Cosco Shipping Bulk (South East Asia) Pte Ltd [2023] WASC 95
Gray v Lavan (a firm) [2022] WASC 417
Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431; (2014) 103 ACSR 137
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
Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516
Southern Wine Corporation Pty Ltd (in liq) v Frankland River Olive Co Ltd [2005] WASCA 236
Technip Oceania Pty Ltd v Cutmere Pty Ltd [2019] WASC 478
Terravision Pty Ltd v Black Box Control Pty Ltd [No 2] [2015] WASC 66
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
REGISTRAR JEYAMOHAN:
Introduction and summary
By chamber summons dated 20 January 2023, heard 3 May 2023, the defendants seek orders that the statement of claim be struck out in its entirety under O 20 r 19(1)(a) and/or r 19(1)(c) of the Rules of the Supreme Court 1971 (WA) (RSC); in the alternative, pars 6.5, 27, 28, 29, 31, 32, 33, 34, 35, and pars A.2 and B of the prayer for relief, of the statement of claim be struck out under O 20 r 19(1)(a) and/or r 19(1)(c) of the RSC, and par 30 be struck out under O 20 r 19(1)(c), with the plaintiff having leave to file an amended statement of claim within 14 days and the plaintiff paying the defendants' costs of the application (Application).
In broad terms, the claim evolves around the existence of a valid and binding Building Contract, issues arising in respect of the timing and commencement of the works, the validity of variations raised, the basis of termination and whether or not there has been conduct amounting to repudiation. The matters and issues arising are in many respects not entirely foreign to building disputes.
The plaintiff raises a threshold question in response to the Application being the admissibility of evidence in an interlocutory strike out application.
For the reasons that follow the Application is dismissed in its entirety.
Background
The plaintiff commenced CIV 5374 of 2022 by writ of summons and statement of claim (SOC) dated 8 December 2022 against each of the first and second defendants. In broad terms, the plaintiff's claim evolves around the terms of a building contract and issues arising in respect of the commencement date of the construction works, whether variations were validly raised and the consequences of this and whether or not there has been conduct amounting to repudiation resulting in breach and damages. The matters and issues arising are, in many respects, typical of building disputes.
The plaintiff has brought this action seeking damages against the first defendant as the builder, and the second defendant as the sole director and secretary of the first defendant. The plaintiff claims that the first defendant is answerable in damages to the plaintiff under general law for repudiatory breach of contract and breach of accrued rights under the contract, and equitable compensation arising out of a total failure of consideration for the payment of a deposit of $22,035. The plaintiff claims that the second defendant is answerable in damages to the plaintiff under s 266 of the Australian Consumer Law (ACL).
A memorandum of appearance was filed on behalf of the defendants on 20 December 2022. No defence has been filed on behalf of either of the defendants.
By way of the present strike out application, the defendants submit that there is no validly pleaded claim as the plaintiff's claim is premised on the assumption that the first defendant was to complete the construction works within 400 working days of the date on which the building contract is said to have been signed. On the defendants' case, the 400 working days runs from the latest of the dates referred to in cl 9(a) of the Building Contract, being the date on which the builder received approval from all relevant authorities (per cl 9(a)(v)), rather than the date on which the contract was signed. The defendants' position is that this date relevantly is 5 October 2021, being the date on which the building permit is dated, rather than 30 December 2020. The defendants submit therefore that the 400 working days had not elapsed before the plaintiff commenced this action.
The defendants seek to adduce evidence in support of its position and rely on the attachments to the affidavit of Will Lee Leong sworn 20 January 2023 (Leong Affidavit). The defendants' position is that this evidence is admissible in this court's determination of the Application.
Preliminary Issue: Admissibility of evidence
The defendants seek to adduce evidence to prove the matters pleaded in the challenged paragraphs of the SOC. At the hearing of the application, the defendants sought to rely on the Leong Affidavit attaching copies of the following: Current Company Extract of the first defendant dated 20 January 2023; document entitled 'WA HBCA Lump Sum Building Contract dated 30 December 2020' being the purported Building Contract; and document entitled 'Building Permit dated 5 October 2021' (Building Permit).
In support of the defendants' proposition that this court may refer to documents mentioned in the pleadings in the context of this Application, the defendants point to cl 9(a)(v) of the Building Contract and the reference to the date 'on which the Builder has received approval from all relevant authorities'. The defendants submit that the Building Permit is dated 5 October 2021 and it is from the date of the Building Permit that the 400 working days is calculated. Relevantly, the defendants submit that the 400 working days had not elapsed before the plaintiff commenced this action. The defendants point to these matters in support of the proposition that the Building Contract and Building Permit ought to be admitted in the determination of a strike out application because O 20 r 19(1)(c) is enlivened here.
The plaintiff submits that on a strike-out application, a court does not ordinarily intervene, on an interlocutory basis, to pronounce who is right on a point of construction and it never does so by direct reference to a written instrument itself, especially before pleadings are closed.
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 Corporation 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) (William Hill).
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]
[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).
The defendants rely on Technip Oceania Pty Ltd v Cutmere Pty Ltd[3] in support of the proposition that whilst pursuant to O 20 r 19(2) no evidence is admissible on an application under O 20 r 19(1)(a), the court may, however, refer to documents mentioned in pleadings.
[3] Technip Oceania Pty Ltd v Cutmere Pty Ltd [2019] WASC 478 [12] (Technip Oceania).
The plaintiff submits that William Hill stands for the dual proposition that: (a) generally evidence may not be adduced on a strike‑out application, except; (b) where extraneous material is incorporated into a pleading. But 'incorporated' here means more than a bare reference. The plaintiff further submits that Technip Oceania is no authority that a written instrument can be read on a strike‑out application in support of a defendant's contention that the plaintiff's construction of an instrument is wrong.
It is relevant to observe that the plaintiff in Technip Oceania claimed damages for breach of a lease, alternatively for misleading or deceptive conduct, alternatively for restitution of sums paid under the lease which it pleads were an unjust enrichment of the lessor, Cutmere. In Technip Oceania, it was not in dispute that Technip Oceania and Cutmere were parties to a lease, and a deed of variation. The lease and the deed of variation were expressed to be entered into by Cutmere only in its capacity as Trustee of the 333 Trust, and Cutmere has now pleaded that in its defence. It is in this context that Allanson J in Technip Oceaniain citing William Hill, made the following observation:[4]
Although evidence may not be generally adduced on a strike out application, the court is entitled to look at the Lease and Deed of Variation as documents incorporated in the pleadings. For the purposes of this application I have had regard to those agreements. The provisions in each instrument limiting (or purporting to limit) the liability of Cutmere are at the heart of the pleading dispute.
[4] Technip Oceania [12] (footnotes omitted).
Further, as Martin J observed in Built Environs:[5]
For the purposes of evaluating a strike out application advanced upon the basis of a contended failure to disclose a reasonably arguable cause of action, and put against the as pleaded Re-sequencing claim, further evidence is not generally admissible (see Rules of the Supreme Court 1971 (WA) (RSC) O 20 r 19(2)). Conceptually, the plea under challenge must be, in effect, taken at its highest as it presents. However, documents referred to by the pleading may be legitimately referred to in the evaluative process: see Day v William Hill (Park Lane) Ltd [1949] 1 KB 632.
[5] Built Environs WA Pty Ltd v Perth Airport Pty Ltd [No 4] [2020] WASC 382 [10] (Built Environs).
For the purposes of this Application I have had regard to the Building Contract and the Building Permit as part of the evaluative process in determining whether however, the facts are found, there is no basis for the legal conclusion contended by the plaintiff in respect of the matters the subject of the defendants' objection.
Relevant principles: Pleadings and strike out
The principles governing strike-out applications are well established and can be briefly stated. They were summarised in Vantage Holdings Group Pty Ltd v Donnelly [No 4].[6] The principles that are particularly relevant to this application to strike out are as follows:[7]
[6] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60(d)] - [60(f)] (Vantage Holdings Group) and approved by the Court of Appeal in English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [56] (Murphy, Mitchell & Vaughan JJA) and in DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97 [226] (Quinlan CJ, Beech & Vaughan JJA).
[7] Vantage Holdings Group [60] (footnotes omitted).
(a)the essential functions of a pleading are to define and limit the issues for decision, to provide the basis for determining discovery and the admissibility of evidence for trial, and to ensure a fair trial by putting the other side on notice of the case it must meet;
…
(d)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action. While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial;
(e)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; and
(ii)'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable;
(f)the mere fact that a case appears weak is not of itself sufficient to strike out the action;
…
It is well accepted that the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action. While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial.[8] In alleging there is no reasonable cause of action, 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 correct 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.[9] In this sense, 'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable.[10] Moreover, the mere fact that a case appears weak is not of itself sufficient to strike out the action.[11]
[8]Vantage Holdings Group [60(d)] (Smith J). See also Great Southern Finance Pty Ltd (in liq) v Rhodes [2014] WASC 431; (2014) 103 ACSR 137 [26] (Beech J).
[9] Vantage Holdings Group [60(e)] (Smith J).
[10] Vantage Holdings Group [60(e)] (Smith J).
[11] Vantage Holdings Group [60(f)] (Smith J).
As Lundberg J observed in Fremantle Port Authority v Cosco Shipping:[12]
Where constructional questions are raised in the context of a summary dismissal or strike-out application, the court may exercise its discretion to refrain from determining the issue in an interlocutory setting, particularly where the question is of some complexity, and it is being considered in an evidential vacuum without a full consideration of the context and purpose of the instrument under review.
Such an approach was adopted in relation to a difficult question of contractual construction, in the context of a strike-out and summary judgment application, in BGC Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2019] WASC 248 [77] (Smith J). That decision was upheld on appeal in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2019] WASC 248 [94] (Murphy JA) and [130] ‑ [132] (Beech and Vaughan JJA).
It is open to the court to form the view in such circumstances that it is inappropriate to resolve the construction question finally on an interlocutory application
[12] Fremantle Port Authority v Cosco Shipping Bulk (South East Asia) Pte Ltd [2023] WASC 95 [19] (Lundberg J).
The statement of claim
The plaintiff pleads the following case.
The plaintiff is and was at all material times registered proprietor of land at 181A Alice Street, Doubleview, in the State of Western Australia, more particularly described in Certificate of Title Volume 2939 Folio 777 (SOC 1). The first defendant is, and was at all material times, a duly incorporated proprietary company capable of being sued in its own name (SOC 2). The second defendant is, and was at all material times, the first defendant's sole director and secretary, and the first defendant's majority shareholder (SOC 3).
Terms of Building Contract
The plaintiff alleges that by a written agreement made between the plaintiff and the first defendant on 30 December 2020, and signed by the second defendant on behalf of the first defendant (SOC 4):
(a)the first defendant agreed to design and construct a residential dwelling at Doubleview (Works) in accordance with, and subject to, the terms of the agreement (Building Contract) (SOC 4) to (SOC 6);
(b)the plaintiff was to pay a total of $339,000 (as varied on 30 December 2020 from $237,300) inclusive of: a deposit of $22,035 with payment to be made in specified stages over the progress of the Works (SOC 6.1.1) to (SOC 6.1.2);
(c)the first defendant could request the plaintiff to vary the Building Contract by agreeing to increase the amount payable by the plaintiff by reason of circumstances that could not have been reasonably foreseen by the first defendant as at 30 December 2020, except by reason only of increases in the costs of labour or materials or both (SOC 6.2);
(d)any request by the first defendant made to the plaintiff to vary the Building Contract was to be by written notice setting out the reason for the variation and the specific additional costs to be incurred given within 10 business days of when the first defendant became aware or should reasonably have become aware of the circumstances relied upon for the variation (SOC 6.3);
(e)on receiving a request from the first defendant to vary, the plaintiff was to agree to the variation within five business days, or not agree to the variation, and, in the latter case, the first defendant was to complete the Building Contract without adjustment or to terminate the Building Contract within a reasonable time by notice in writing (SOC 6.4);
(f)the first defendant was to complete the construction within 400 business days of 30 December 2020, or by 3 February 2022, subject to the first defendant giving the plaintiff written notice of an extension of time occasioned by, and within 10 business days of the first defendant becoming aware of the cause and extent of, a cause beyond the first defendant's control, including (SOC 6.5):
(i)the plaintiff not making a payment that becomes due to the first defendant (SOC 6.5.1), or;
(ii)any delay in the supply of materials, transport or labour (SOC 6.5.2); and
(g)termination of the Building Contract is to be by written notice of termination (SOC 6.6).
On or about 15 September 2021, the plaintiff paid the first defendant $22,035 by way of deposit pursuant to the term pleaded at par 6.1.1 (SOC 7).
On or about 20 November 2021, the first defendant completed the 'Ground Slab Stage' by laying the concrete foundation for the dwelling (SOC 8) and on or about 25 November 2021, the first defendant demanded payment of $67,800 for completion of the 'Ground Slab Stage', pursuant to the term pleaded at par 6.1.21 (SOC 9), particulars of which are pleaded, with payment being made on or about 6 December 2021 (SOC 10).
Variations to Building Contract
The plaintiff alleges that the plaintiff was notified of the following variations to the Building Contract.
Bricklaying Variation
On 25 February 2022, the first defendant notified the plaintiff of a variation of the Building Contract requiring the plaintiff to pay an additional $26,099.70 inclusive of GST on account of an increase in the first defendant's costs of materials and/or labour (Bricklaying Variation) and issued a Variation Certificate dated 25 February 2022 (SOC 11). The plaintiff asserts that:
(a)the Building Contract conferred no right on the first defendant to vary the plaintiff's obligations under the Building Contract as pleaded at par 6.2;
(b)the plaintiff did not approve the Building Variation within five days or at all (SOC 12);
(c)the first defendant affirmed the Building Contract or waived its right to terminate under the term pleaded at par 6.3 (SOC 13).
The plaintiff pleads that the first defendant was obliged to complete the Building Contract in accordance with the term pleaded at par 6.4 (SOC 13).
Further variation proposed
On 21 April 2022, the second defendant on behalf of the first defendant notified the plaintiff in writing by letter dated 21 April 2022 of a variation to the Building Contract requiring the plaintiff to pay an additional $99,499.95 inclusive of GST on account of changes to the fixtures and fittings of the dwelling (SOC 15). The plaintiff asserts that the plaintiff did not approve the Building Variation within five days or at all and the first defendant affirmed the Building Contract or waived its right to terminate under the term pleaded at par 6.3 (SOC 16).
The plaintiff pleads that the first defendant was obliged to complete the Building Contract in accordance with the term pleaded at par 6.4 (SOC 17).
Express refusal to complete the Building Contract
On 4 May 2022, the second defendant, on behalf of the first defendant, refused in writing by email dated 4 May 2022, to complete the Building Contract unless the plaintiff approved the Bricklaying Variation (SOC 18). The plaintiff asserts that the plaintiff did not approve the Building Variation within five days or at all and the first defendant affirmed the Building Contract or waived its right to terminate under the term pleaded at par 6.3 (SOC 19).
The plaintiff pleads that the first defendant was obliged to complete the Building Contract in accordance with the term pleaded at par 6.4 (SOC 20).
Variation of a variation proposal
On 7 June 2022, the first defendant again notified the plaintiff by letter dated 21 April 2022 of a variation to the Building Contract and required the plaintiff to pay an additional $75,783.95 inclusive of GST on account of changes to the fixtures and fittings of the dwelling (SOC 21).
The plaintiff asserts that the plaintiff did not approve the Building Variation within five days or at all (SOC 22).
Alleged breach, damage and claim under the Australian Consumer Law
The plaintiff pleads that the first defendant has not ever given a written notice of termination in accordance with the term pleaded at par 6.6 and has done no work at the Doubleview site at all since not later than November 2021 (SOC 23) and (SOC 24).
The plaintiff alleges that the first defendant repudiated the Building Contract by reason of the matters pleaded at pars 11 ‑ 24 of the SOC (SOC 25). The plaintiff accepted the first defendant's repudiation by the issue and service of the writ, alternatively by giving a written notice of termination on 23 November 2022 (SOC 26).
The plaintiff pleads that by reason of the first defendant's repudiatory breach of the Building Contract, the plaintiff has lost the benefit of the Building Contract and has lost the benefit of the construction of the dwelling at the agreed price by the agreed date, and has suffered consequential loss in consequence of the delay in construction being (SOC 27):
(a)the difference between the contract price and the cost of construction by an alternative builder;
(b)the cost of alternative accommodation occasioned by the delay beyond 3 July 2022 (being 400 business days from the date of the Building Contract);
(c)the loss of opportunity to sell the dwelling since 3 July 2022 calculated by reference to the difference in sale price between then and date of judgment.
The plaintiff pleads that in lieu of terminating the Building Contract, the first defendant's obligation was to complete the Building Contract in accordance with the term pleaded at par 6.4, but the first defendant failed to complete the Building Contract within 400 business days of the date of the Building Contract or by 3 July 2022 or at all prior to termination (SOC 28). The plaintiff pleads that by reason of the first defendant's breach of rights accruing under the Building Contract before termination, the plaintiff claims to have suffered consequential loss as a result of the delay in construction being (SOC 29):
(a)the cost of alternative accommodation occasioned by the delay beyond 3 July 2022 (being 400 business days from the date of the Building Contract); and
(b)the loss of opportunity to sell the dwelling since 3 July 2022 calculated by reference to the difference in sale price between then and date of judgment.
The plaintiff pleads that by reason of the matter pleaded at par 26, there was a total failure of consideration for the payment of the deposit of $22,035 as pleaded at par 7, and it would be unjust or unconscionable for the first defendant to retain the benefit conferred thereby (SOC 30).
The plaintiff pleads that by reason of the matters pleaded at par 4 of the SOC, the second defendant engaged in conduct in the trade or commerce of the first defendant within the meaning of s 4 of the ACL, with the conduct conveyed or represented to the plaintiff being that there was a reasonable basis as at 30 December 2020 for the first and second defendant's promise to construct the dwelling at Doubleview within 400 business days and/or for $339,000 (SOC 31) to (SOC 35). The plaintiff relied on the second defendant's representation in binding itself to the Building Contract and has suffered loss and damage by reason of the pleaded contravention (SOC 35).
Prayer for relief
As a result of the matters pleaded in the SOC, the plaintiff claims: as against the first defendant damages under general law and equitable compensation (SOC A.1) and (SOC A.2), as against the second defendant, damages under s 236 of the ACL (SOC B.1), and pre‑judgment interest under s 32 of the Supreme Court Act 1935 (WA).
I turn to evaluate the defendants' arguments as regards each of these pleadings in turn.
Paragraphs 6.5, 27, 28 and 29
The defendants point to the Building Contract and Building Permit in the context of the matters pleaded in par 6.5 of the SOC. That paragraph reads in full as follows:
6.5.The first defendant was to complete the construction within 400 business days of 30 December 2020, or by 3 February 2022, subject to the first defendant giving the plaintiff written notice of an extension of time occasioned by, and within 10 business days of the first defendant becoming aware of the cause and extent of, a cause beyond the first defendant's control, including:
6.5.1.the plaintiff not making a payment that becomes due to the first defendant, or;
6.5.2.any delay in the supply of materials, transport or labour;
The defendants submit that the Building Permit is dated 5 October 2021: Leong Affidavit, page 34 and that it is from the date of the Building Permit, namely 5 October 2021, that the 400 working days is calculated. On the defendants' case, the 400 working days had not elapsed before the plaintiff commenced this action. The defendants assert therefore that on this basis, pars 6.5, 27, 28 and 29, and the entire SOC, should be struck out under O 20 r 19(1)(a) and/or r 19(1)(c).
Clause 9(a) of the Building Contract is entitled 'Time for performance' and reads in full as follows:
(a)Subject to this Contract the Builder shall commence the Works within the number of working days specified in Item 9(a) of the Schedule or as soon thereafter as may be reasonably practicable calculated from the latest of the following dates:
(i)on which the Owner shall have complied with the conditions referred to in Clause 2;
(ii)on which the Owner satisfied all requirements under Clause 3(c), if applicable, and Clause 3(d);
(iii)on which the Builder is satisfied that the boundaries of the Site have been adequately delineated;
(iv)on which the Builder is satisfied that both an adequate water supply and an adequate power supply for the carrying out of the Works are available to the Site;
(v)on which the Builder has received approval from all relevant authorities.
Discussion
There is no express reference to the 400 days in cl 9. The reference to the 400 working days in fact appears in the Schedule of Particulars to the Building Contract at Item 9, and even in that context, requires a mathematical exercise to be carried out to reach the number 400. Item 9 of the Schedule of Particulars to the Building Contract relevantly reads in full as follows:
Time to commence/complete works (Clause 9)
(a)Time to Commence Works (Clause 9(a)) 10 working days
(b)Time to Complete Works (Clause 9(b)) 390 working days
from the date on which work commenced or should have commenced under Clause 9(a).
Further, the defendants' position does not appear to allow for any consideration of intersecting and/or interrelated contractual terms referenced in cl 9 of the Building Contract, which the defendants point to in support of its Application. For example, the defendants rely on the Building Permit on the assumption that cl 9(a)(v) is the latest of the dates contemplated in cl 9(a). However, this assertion does not address why this position is correct as a matter fact. By way of context, in the context of the latest of the dates contemplated in cl 9(a), there is a reference in cl 9(a)(i) to cl 2 of the Building Contract. Clause 2 entitled 'Necessary Approvals', states as follows at cl 2(a):
(a)Subject to Clause 2(b), this Contract is conditional on the following occurring within FORTY FIVE (45) working days from the date of this Contract:
(i)a building permit under the Building Act 2011 being issued in respect of the Works;
(ii)where a condition is attached to the building permit which will result in a variation to this Contract, the Owners and the Builder acknowledging in writing that each of them accepts that condition;
…
(b)A condition referred to in Clause 2(a) does not apply to this Contract:
(i)To the extent that the subject matter of the condition was completed before this Contract was entered into; or
(ii)Where the only work to be performed under this Contract is the construction or carrying out of associated work (as defined in section 3(1) of the Home Building Contracts Act 1991) or any other work prescribed for the purpose of section 9(5)(c) of that Act.
(c)The Builder shall:
(i)do all things that are reasonably necessary to be done to ensure any condition referred to in Clause 2(a)(i) and (iii) applicable to this Contract is fulfilled; and
(ii)not unreasonably decline to accept a condition or direction referred to in Clause 2(a)(ii) or (iv) that applies to this Contract.
…
(e)If a condition referred to in Clause 2(a) and applicable to this Contract is not fulfilled the consequences to, and the rights and remedies of, the parties are set out in Clause 22.
In the context of the reference to cl 22 in cl 2 of the Building Contract, cl 22 entitled 'Consequences of non-fulfilment of conditions' deals with the consequences of certain conditions including the following:
(a)If any condition set out in Clause 2(a) is not fulfilled solely because the Builder has failed to comply with the Builder's obligations under Clause 2(c), this Contract is not affected by remains in force on the same terms and conditions except as otherwise agreed between the parties.
(b)If any condition set out in Clause 2(a) is not fulfilled solely because the Owner has failed to comply with the Owner's obligations under Clause 2(d) this Contract remains in force on the same terms and conditions until the parties agree otherwise but subject to the provisions of Clause 22(d).
(c)If any condition set out in Clause 2(a) is not fulfilled and both the Owner and the Builder have, or neither the Owner nor the Builder has, failed to comply with their respective obligations under Clause 2(c) and (d), this Contract remains in force on the same terms and conditions until the parties agree otherwise but subject to the provisions of Clause 22(d).
(d)Where Clause 22(b) or (c) or Clause 6(b) applies:
(i)The Builder may by notice in writing to the Owner:
a.Increase the Contract Price by an amount set out in the notice; and
b.Specify when any increased amount is payable, which must be either:
1)not later than TEN (1) working days after the notice is given; or
2)at the time of the next progress payment.
…
Even a cursory review of the Building Contract demonstrates that merely having regard to cl 9(a)(v) in isolation to the balance of the contractual terms is no answer to why the defendants' interpretation of the time from which the 400 working days is calculated is the correct or preferred position.
As to when the Works commenced or should have commenced within the meaning of the Building Contract, these are matters of fact which, whilst this court does not have the benefit of any filed defence, based on the submissions put before me in the context of this Application, appear very much to be the subject of dispute as between the parties.
Recognising the caution with which strike‑out applications should be approached, I have reached the view that it would be inappropriate to resolve these questions on this Application, in the absence of proper findings of fact. The facts that are found at trial, will, to all intents and purposes, determine the date for commencement. Having regard to my reasons, this aspect of the strike-out application must fail.
Defendants' position: Paragraph 30 & prayer for relief
The plaintiff pleads in par 30 of the SOC that by reason of the matter pleaded at par 26 of the SOC, there was a total failure of consideration for the payment of the deposit of $22,035 as pleaded at par 7 of the SOC, and it would it be unjust or unconscionable for the first defendant to retain the benefit conferred thereby. The plaintiff pleads in full as follows at par 26 of the SOC:
The plaintiff accepted the first defendant's repudiation by the issue and service of the writ, alternatively by giving a written notice of termination on 23 November 2022.
Particulars
The notice was dated 23 November 2022 and provided to the defendant's solicitor. A copy is available for inspection at the office of the plaintiff's solicitor.
The defendants submit that par 30 is prejudicial, embarrassing, or would delay the fair trial of an action, because, it is said, there is not a 'total' failure of consideration as pleaded. The first defendant's position is that for the plaintiff to succeed in her claim to recover the deposit because of a total failure of consideration, the failure must be total and that if the first defendant has commenced any part of the agreed counter-performance, the consideration will not totally fail.
The defendants submit that the test is whether the first defendant has commenced performing the contractual obligations owed. The defendants assert that as the first defendant commenced performing its obligations under the Building Contract and had laid down the slab as pleaded by the plaintiff in par 8 of the SOC, the plaintiff's claim for restitution is entirely inconsistent with her own pleading and on this basis, par 30 of the SOC should be struck out under O 20 r 19(1)(c).
Defendants' position: Prayer for relief
It is appropriate to include the defendants' position on par A.2 of the SOC. The defendants submit that par A.2 of the prayer for relief seeks equitable compensation from the first defendant, but the plaintiff does not plead an equitable cause of action. The defendants' position is that as there is no basis for the prayer for relief sought, par A.2 of the SOC should be struck out under O 20 r 19(1)(a) and/or r 19(1)(c).
The plaintiff points to par 30 of the SOC by way of submission in response. The plaintiff's position is that par 30 of the SOC is a claim in restitution, which the plaintiff asserts is an equitable claim informed by concepts of unjust enrichment, for which the plaintiff asserts equitable compensation is the quintessential remedy.
Discussion
A restitutionary claim for unjust enrichment requires some 'injustice', in the form of a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration, by reason of which the enrichment of the defendant is treated by the law as unjust.[13] Unjust enrichment so identified gives rise to a prima facie obligation to make restitution. The prima facie liability can be displaced by circumstances which the law recognises would make an order for restitution unjust.[14]
[13]Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 [150]; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560 [20], [73], [141]; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, 379 (Mason CJ, Deane, Toohey, Gaudron & McHugh JJ).
[14] Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498 [30] (Equuscorp).
A failure of consideration or basis has been recognised as a factor entitling a plaintiff to recovery.[15] As Curthoys J observed in Gray v Lavan (a firm):[16]
29… The term 'consideration' in this context is not to be understood according to its modern contractual meaning. Rather, the term is used in a broader sense to refer to the value received by a plaintiff and the value provided by the defendant. In other words, it refers to the basis, specifically, the reason, purpose or condition, for the transfer of the money from the plaintiff to the defendant.
30A failure of consideration 'is not limited to non-performance of a contractual obligation' but 'embraces payment for a purpose which has failed as, for example, where a condition has not been fulfilled, or a contemplated state of affairs has disappeared'.[17]
[15] Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 [14] - [15] (Gleeson CJ, Gaudron & Hayne JJ), [62] - [63], [75], [93], [100] (Gummow J) (Roxborough); Equuscorp [31] (French CJ, Crennan & Kiefel JJ), [134] (Heydon J)
[16] Gray v Lavan (a firm) [2022] WASC 417 [29] - [30].
[17] Roxborough [16] (Gleeson CJ, Gaudron & Hayne JJ).
In the present matter, the question for determination in the context of the plaintiff's pleaded case at par 30 of the SOC is whether restitution of the deposit paid by the plaintiff to the first defendant of $22,035 is available to the plaintiff in circumstances where the first defendant had completed the 'Ground Slab Stage' as pleaded in par 8 of the SOC. At the hearing, plaintiff's counsel submitted that it is open for the plaintiff to plead that the benefit bargained for by the deposit is completion of the Works.
The plaintiff's pleaded case is that the Building Contract was for construction in stages, conditional upon separate payments, in amounts tailored to the work to be performed at the specific stage, at specific points in time and that a deposit of $22,035 be paid. The plaintiff submits that the agreement, as pleaded, is severable. It pleads a multi‑stage, separately priced Building Contract. Counsel for the plaintiff submits that it is entirely open to the plaintiff to contend that the deposit is consideration for the completion of each of the stages rather than to secure compliance with just one stage of the building process: otherwise, the builder would be free to complete, say stage one, for $67,800, decline to complete the balance of the stages, and then keep the $22,500 deposit.
To adopt from the court's position in Vantage Holdings Group, 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.
Matters to do with the deposit and progress payments are set out in cl 7 of the Building Contract and Item 7 of the Schedule of Particulars. The question of whether payment of the deposit was in respect of the first defendant's performance of the entirety of the contract works or a portion thereof, is a question of some complexity that cannot be considered in isolation of the applicable contractual terms.
My view is that this question is not an appropriate one for resolution on an interlocutory application of this nature and would not justify a strike out of the paragraphs identified by the defendants.
Defendants' position: Paragraphs 31, 32, 33, 34 and 35, par B of the prayer for relief
The defendants contend that pars 31 ‑ 35 of the SOC, in which the plaintiff pleads a misleading or deceptive conduct claim against the second defendant, 'are without a proper basis in law'. The defendants submit that these paragraphs relate to the claim against the second defendant personally and are without a proper basis in law. The defendants point to par 35 of the SOC. Paragraph 35 reads in full as follows:
The plaintiff relied on the second defendant's representation in binding itself to the Building Contract and has suffered loss and damage by reason of the pleaded contravention.
Particulars
(a)The difference between the contract price and the cost of construction by an alternative builder.
(b)The cost of alternative accommodation occasioned by the delay beyond 3 July 2022 (being 400 business days from the date of the Building Contract).
(c)The loss of opportunity to sell the dwelling since 3 July 2022 calculated by reference to the difference in sale price between then and date of judgment.
The defendants' position is that the second defendant was not a party to the Building Contract, and so he was not bound by it. In support of this, the defendants point to par 4 of the SOC where the plaintiff pleads that the building contract was 'signed by the second defendant on behalf of the first defendant, the first defendant promised …'. Paragraph 4 reads in full as follows:
By a written agreement made between the plaintiff and the first defendant on 30 December 2020, signed by the second defendant on behalf of the first defendant, the first defendant promised to design and construct a residential dwelling at Doubleview in accordance with, and subject to, the terms of the agreement (Building Contract).
Particulars
The agreement was in writing and comprised: (a) the instrument styled 'WA HBCA Lump Sum Building Contract' dated 30 December 2020, and; (b) a written instrument styled 'Western Australia Variation to Contract' also dated 30 December 2020. Copies are available for inspection at the offices of the plaintiff's solicitor.
On this basis, the defendants' position is that the second defendant did not bind himself to, and is not bound by, the Building Contract.
The defendants submit that on the plaintiff's own pleading there is no basis for the plaintiff's reliance and so no basis for the claim against the second defendant and on this basis pars 31, 32, 33, 34, 35 of the SOC and par B of the prayer for relief, should be struck out under O 20 r 19(1)(a) and/or r 19(1)(c).
The plaintiff disagrees with the defendants' construction of par 35. On the plaintiff's view, it is the plaintiff's conduct in binding the plaintiff to the Building Contract that constitutes the reliance. Further, the plaintiff points to the representation pleaded at par 32 of the SOC in the context of the second defendant having allegedly engaged in conduct in the trade or commerce of the first defendant when signing the Building Contract on behalf of the first defendant pursuant to which the first defendant promised to perform the Works. Paragraph 32 reads in full as follows:
The conduct referred to immediately above conveyed or represented to the plaintiff that there was a reasonable basis as at 30 December 2020 for the first and second defendant's promise to construct the dwelling at Doubleview within 400 business days and/or for $339,000.
The plaintiff submits that the defendants' position in respect of the strike out of these paragraphs ignores that par 32 pleads a representation, in orthodox fashion, made by the second defendant. The prayer for relief at par B.1 of the SOC pleads as against the second defendant damages under s 236 of the ACL.
Discussion
In my view, the cause of action is not so untenable that I would strike it out. In the present matter, it remains open to the plaintiff (on her pleadings) to prove the facts at trial the subject of the plaintiff's cause of action against the second defendant, giving rise to the relief claimed. In addition, the surrounding circumstances, and any reasonable inferences, assumptions and expectations, will need to be examined as part of the contextual enquiry in considering whether the representation should be found to have been made, and whether it was in fact misleading. The failure to provide particulars in itself is not fatal to a pleading, and as and where necessary, particulars can be requested, and if appropriate, provided.
Conclusion
The whole point of a pleading is to allow a defendant to understand the case it has to meet. The plaintiff must plead material facts which, if established, would lead to the grant of certain relief. The plaintiff has put its version. The defendants either agree with the plaintiff's version of the contract or have their own version.
The defendants have yet to file a defence so any view of the defendants' version of the facts is at this stage not set out in a pleaded form. If the defendants intend to allege that the plaintiff is wrong and there are other terms and conditions, or no terms in relation to certain matters were agreed, then that is something that can be put in the defence either by way of a denial or pleading an alternative position. Once a defence has been filed, the differences between the parties should crystalise.
In relation to an application to strike out a pleading, as a general rule a plaintiff is entitled, as of right, to have their case heard, and it is only in cases where, from the outset however the facts are found, there is no basis for the legal conclusion contended for by the plaintiff that the pleading should be struck.
For the above reasons, the defendants' application to strike out the plaintiff's statement of claim should therefore be dismissed. In so doing, I am not expressing any view as to the merits of the plaintiff's causes of action, other than to say that they are not obviously unsustainable nor do they prejudice, embarrass or delay the fair trial of the action.
At the conclusion of the hearing I indicated that I would deal with the question of costs on the delivery of these reasons. Costs should follow the event.
Orders
Accordingly, I propose to make the following orders:
1.The defendants' Application is dismissed.
2.The defendants pay the costs of the application, such costs to be taxed if not agreed.
3.Within seven days of the making of these orders, the parties confer with a view to providing the court with a proposed minute of directions.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
AC
Court Officer
12 MAY 2023
20
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