Young v Hatley Developments Pty Ltd
[2014] QDC 79
•11 April 2014
DISTRICT COURT OF QUEENSLAND
CITATION:
Young v Hatley Developments Pty Ltd & Anor [2014] QDC 79
PARTIES:
LEE KELVIN YOUNG AND HELEN MAREE YOUNG
(plaintiffs)
v
HATLEY DEVELOPMENTS PTY LTD
(ACN 129 821 914)(first defendant)
and
THE FRUIT SHED PTY LTD
(ACN 115 377 485)(second defendant)
FILE NO/S:
D21/2014
DIVISION:
Civil
PROCEEDING:
Application
ORIGINATING COURT:
Maroochydore District Court
DELIVERED ON:
11 April 2014
DELIVERED AT:
Maroochydore District Court
HEARING DATE:
28 March 2014
JUDGE:
Robertson DCJ
ORDER:
Application granted.
The Plaintiffs’ Claim is dismissed.
The Plaintiffs to pay the Defendants’ costs of and incidental to the proceedings including Claim and Application to be assessed on the indemnity basis.
CATCHWORDS:
JURSIDICTION ; where Plaintiff seeks declarations as to the construction of the terms of a Contract between the parties; where Defendants have applied pursuant to R16UCPR that the Claim should be struck out on the basis that this Court does not have jurisdiction; where Statement of Claim does not allege any breach of Contract or seek damages or allege that monies are owing; where dispute between the parties had been determined by the Magistrates Court and an Adjudicator
Legislation:
Building and Construction Industry Payments Act 2004
Civil Proceedings Act 2011
District Court of Queensland Act 1967
Uniform Civil Procedure Rules 1999
Cases:
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FLR 225
COUNSEL:
Mr E Williams for the First and Second Defendants
SOLICITORS:
Mr B Bathersby, solicitor, Garland Waddington Solicitors for the Plaintiffs
Noel Woodall and Associates for the First and Second Defendants
On 3 February 2014 the plaintiffs filed a Claim seeking the following declarations:
“(a)the first defendant and the second defendant have charged their interest in the certain real property pursuant to a contract in writing between the plaintiff and the first defendant and the second defendant, with due payment to the plaintiffs of all amounts that may become due to the plaintiffs arising out of or in connection with, the said contract in writing; and
(b)the plaintiffs have a caveatable interest as equitable mortgagee in respect of the said real property; and
(c)the plaintiffs are entitled to a mortgage over the said real property as security for the performance by the defendants of all the defendants’ obligations under the contract.”
Relevantly, the Statement of Claim asserts as follows:
“2.At all material times, the first defendant and the second defendant and the second defendant (‘the defendants’) were:
(a)duly incorporated, able to sue and be sued in their own capacity and have their registered office at C/- Charters Partners, Cullinanes Centre, Level 3, 104 Mary Street, Gympie, Queensland; and
(b)the registered proprietors of land situate at 18-20 Primary School Court, Maroochydore, Queensland described as (respectively) Lot 11 and Lot 10 on RP72274, County of Canning, Parish of Mooloolah (title references 12892220 and 12638184, respectively) (‘the site’).
3.On or about 30 August 2011, the plaintiffs and the defendants entered into a contract in writing (‘the contract’).
The Particulars
(a) The contract was contained in or evidenced by:
(i)Master Builders – Commercial Building Contract General Conditions (version LSC2 20 May 2010 EV1) (‘the general conditions’); and
(ii)The schedule to the general conditions comprising three pages and incorporating Annexure A (scope and extent of work) and Annexure B (special conditions) (‘the schedule’).
4.The plaintiffs will rely upon the contract for its full terms, true meaning and effect at the hearing or of the determination of this proceeding.
5.Clause 15(f) of the General Conditions relevantly provides:-
‘The Owner’
(i) charges the Owner’s interests in the Site with due payment to the Contractor of all amounts that may become due to the Contractor arising out of or in connection with the Contract;
(ii) shall, if requested by the Contractor, promptly deliver an executed Mortgage in registerable form to secure the charge;
(iii) consents to the Contractor lodging a Caveat over all or any part of the Site to secure the Contractor’s interest in the Site;
(iv) shall, if requested by the Contractor, do all things and sign all documents necessary to enable the Contractor to lodge a Caveat; and
(v) shall pay to the Contractor, on demand, all Stamp Duty and Registration fees that are payable or paid on the lodgement, withdrawal or release of any Caveat or Mortgage under this Clause.
6. On or about 14 January 2013, as a consequence of the registration of Survey Plan 255837, the real property description of the Site changed and became Lots 1-12 on SP255837, County of Canning, Parish of Mooloolah (Title references 50904185-50904196) (‘the land’).
7. On 17 January 2014, the Plaintiffs lodged caveat no. 715549433 (‘the caveat’) over that part of the land comprising Lots 2,3,5,6,7,8,9,10 and 11 on SP 255837 (‘the land the subject of the caveat’).
8. In the caveat, the Plaintiffs, as Caveator:-
(a) claim an equitable share or interest in an estate in fee simple as equitable mortgagee as the builder pursuant to the Contract; and
(b) identified the following Grounds of Claim:-
(i) an equitable interest in the land, charging the land with payment of monies pursuant to Clause 15(f) of the General Conditions to the Contract.
9. As a consequence of the matters pleaded herein, the Plaintiffs:-
(a) have a caveatable interest in the land the subject of the caveat; and
(b) are entitled to a mortgage over the land the subject of the caveat as security for the performance by the Defendants of all of the Defendants’ obligations under the Contract.”
The defendants filed a Conditional Notice of Intention to Defend on 28 February 2014 in which they assert that this Court does not have jurisdiction to entertain the claim.
As revealed in the affidavit of Mr Woodall (the defendants’ solicitor) filed 26 March 2014, and the Annexures to that affidavit, the defendants have been seeking to have the plaintiffs discontinue for some time, without success. On the same day as they filed the Conditional Notice of Intention to Defend, the defendants applied to this Court for a number of orders pursuant to r 16 UCPR to this effect:
“(a)A declaration that the proceeding has not, for want of jurisdiction, been properly started;
(b)Further or in the alternative an order that:
(i) the claim be set aside;
(ii) the proceeding be permanently stayed;
(iii) the claim and statement of claim be struck out;
(iv) the plaintiffs’ claim be dismissed.”
The defendants’ application also seeks an order that the defendants’ costs be paid by the plaintiffs on the indemnity basis.
The defendants’ application was heard on 23 March 2014. Mr Williams of Counsel represented the defendants and Mr Bathersby, solicitor from Garland Waddington Solicitors, appeared for the plaintiffs to oppose the application and to argue that the Court has jurisdiction to entertain the claim pursuant to s 68(1)(b)(viii) of the District Court Act 1967. Section 68(1)(b)(viii) of the District Court Act 1967 is in the following (relevant) terms:
“The District Court has jurisdiction to hear and determine:
(b) The following actions and matters:
(viii)for the determination of any question of a construction arising under (an) … other written instrument, and for a declaration of the rights of the persons interested where the sum or the property in respect of which the declaration sought does not exceed in amount or value the monetary limit.”
Before dealing with the competing contentions, it is necessary to set out a number of factual issues which are (at this point in time) uncontested. The following summary derives from Mr Woodall’s affidavit and the Annexures to that affidavit. Apart form an essentially formal affidavit sworn by Mr Bathersby and filed by leave at the hearing, to which is annexed a copy of the contract between the parties; there is no evidence from the plaintiffs as to the course of dealings between the parties which, in my opinion, is essential to understand the nature of the defendants’ application.
Summary of dealings
On or about 30 August 2011, the parties entered into a commercial building agreement for the construction of 12 units with basement car park at 18-20 Primary School Court, Maroochydore, for a contract price of $1,505,472.64. The contract is undated but it is agreed that it was signed around that date.
For present purposes the contract has been completed. The Claim lodged by the plaintiffs does not assert that they are owed any monies, nor does it allege any breach of the contract by the defendants.
The Contract did allow for variations of five percent, subject to clause 17 of the standard terms and conditions.
In his affidavit at paras 35-36 Mr Woodall refers to proceedings in the Magistrates Court between the parties over a variation claim for $143,475.29.
A copy of Magistrate Hennessy’s decision dated 10 December 2013 is annexed to Mr Woodall’s affidavit. On its face, the proceedings concerned an application for judgment for a claim for a variation of the contract for that amount. The claim apparently was made pursuant to provisions of the Building and Construction Industry Payments Act 2004 (Qld), and not pursuant to the terms of the contract itself. As I have noted, it appears (from her Honour’s judgment) that the claim which was dated 21 February 2013 was for a variation, whereas the Act, or the sections discussed by her Honour, relate to progress claims. This makes sense as the contract did provide for payment claims in clause 14. Her Honour, however, determined by reference to s 14(1)(b)(iii) of the Act, that the claim for a variation could be regarded as a progress claim, but was not caught by the Act as, on the evidence, she determined she was not satisfied that it had been agreed to by the defendants. No appeal has been lodged from that decision.
The plaintiffs then sought to have the claim, or a very similar claim, adjudicated pursuant to the provisions of the same Act. The adjudicator’s reasons are annexed to Mr Woodall’s affidavit. As the adjudicator noted, after the unsuccessful application for judgment in the Magistrates Court, the plaintiffs served another claim on the defendants dated 28 January 2014 which the adjudicator determined was “essentially the same as the previous claim” determined by the Magistrate. In his adjudication dated 15 March 2014 the adjudicator determined the matter against the plaintiffs, describing the later claim as “for the same variations, many of which are for the same value and there are only a few departures..”.
On the basis of both decisions, practical completion of the contract took place on either 31 December 2012 or 10 January 2013.
On 17 January 2014 the plaintiffs lodged a caveat over the site in which they assert:
“(a)an equitable share or interest in an estate in fee simple as equitable mortgagee as the builder pursuant to the contract; and
(b)identified the following grounds of claim:
(i)an equitable interest in the land, charging the land with payment of monies pursuant to clause 15 of the general conditions of the contract.”
In his written submissions (but nowhere in any sworn evidence from his clients) Mr Bathersby identifies that “the sum” referred to in s 68(1)(b)(viii) of the District Court Act 1967 is indeed the $148,268.23 (the claim referred to by the adjudicator) pursuant to what he describes as “the balance payable under the contract”.
Mr Woodall has consistently on behalf of the defendants requested that the plaintiffs discontinue these proceedings and lift the caveat. After the filing of the Conditional Notice of Intention to Defend, Mr Bathersby, perhaps in an unguarded moment, informed Mr Woodall as follows:
“We refer to your client’s conditional notice of intention to defend and their application filed on 28 February 2014.
We intend to apply to the court pursuant to s 28 of the Civil Proceedings Act 2011, for an order transferring the proceeding to the Supreme Court of Queensland. That application will be made returnable on 28 March 2014, the same day as your client’s application. We invite your clients to consent to that order.
If your clients are agreeable, we will appear at the hearing of both applications as your unpaid agent to have that order made and your client’s application dismissed.”
Section 28 of the Civil Proceedings Act 2011 is in the following terms:
“28 Transfer because claim beyond jurisdiction
(1)This section applies if the court in which a proceeding is pending (the relevant court) considers it does not have jurisdiction for the proceeding (other than because of a counterclaim).
(2)If the relevant court considers another court has jurisdiction for the proceeding, the relevant court may, by order, transfer the proceeding to the other court.
(3)Unless an order is made under subsection (2), the relevant court—
(a)must strike out the proceeding; and
(b)may order the party who started the proceeding to pay the costs of any other party to the proceeding.”
Not surprisingly Mr Woodall did not agree to that course, and repeated his request that Mr Bathersby’s clients withdraw the caveat and discontinue the proceedings in this court. The plaintiffs have not applied pursuant to s 28 of the Civil Proceedings Act 2011.
Discussion
Mr Bathersby’s argument about this Court’s jurisdiction completely misconstrues s 68(1)(b)(viii). His client’s Claim does not allege any breach of the contract nor does it allege that there is any money owing to them by the defendants. This Court’s jurisdiction is derived from statute and it is not a court like the Supreme Court that has general jurisdiction. Unless there is a claim for monies allegedly owing under the contract, there can be no issue relating to the construction of the contract. The claim as pleaded lacks utility, and is nothing more than an attempt by the plaintiffs to support their lodgement of the caveat. It is not necessary for me to determine the res judicata argument.
The defendant’s application is granted. The plaintiff’s claim is dismissed. The application seeks costs on the indemnity basis. I have not heard the parties in relation to costs and I will invite written submissions in that regard.
Costs
The defendants have made a submission in writing that their costs should be assessed on the indemnity basis in accordance with their application. Mr Bathersby has advised that he has no instructions to respond on the costs issue. In a letter to Mr Bathersby dated 21 March 2004, Mr Woodall requested that his clients discontinue the District Court proceedings, and withdraw the caveat and agree to pay the defendants’ costs “to date” “on a solicitor and client (i.e. indemnity) basis”. This proposal was not accepted.
This Court clearly has power to award costs on the indemnity basis: r 703 UCPR. Sheppard J’s decision in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FLR 225 is often cited in relation to this issue, and the principles set out in his judgment have been applied frequently both in this Court and the Supreme Court including the Court of Appeal. A number of those principles apply here. The Claim was doomed to fail and yet the Plaintiffs continued in the face of repeated warnings from Mr Woodall to that effect. As noted above, Mr Bathersby appeared to appreciate the jurisdictional barrier in one of his responses to Mr Woodall. The only inference to be drawn is that his clients elected to proceed in wilful disregard of the known facts and the established law.
It is a clear example in which the Court should exercise its power to award indemnity costs, and I order that the Plaintiffs pay the Defendants’ costs of and incidental to the proceedings including Claim and Application on the indemnity basis.
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