Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority [2003] VSC 225

5. By summons dated 23 May 2003 filed by Wynton Stone and directed to Montgomery Watson, Aquatec and JJP, Wynton Stone sought judgment (alternatively, a stay) in respect of the whole of the claims brought against it in a number of pleadings[1] on the ground that each of the claims made against it did not disclose a cause of action or was scandalous, frivolous and vexatious, or was an abuse of the process of the Court within the meaning of Order 23.01 of the Rules.

8. The allegations by Montgomery Watson against Wynton Stone commence at paragraph 32 of Montgomery Watson's Amended Statement of Claim in the Third Party proceeding in which it is alleged that, by agreement ("the M/W agreement") made on or about 26 March 1997, Montgomery Watson engaged Wynton Stone to carry out the structural design and drawings for certain civil works and specified geotechnical and construction inspections and to attend meetings in relation thereto. The M/W agreement is particularised as being partly in writing, by a fax dated 7 November 1996 and a letter dated 26 March 1997, and partly oral, by conversations between Mr Angus of Montgomery Watson and Mr Sloggett of Wynton Stone between November 1996 and March 1997. Paragraph 33B of the Amended Statement of Claim alleges that by a deed of novation made on or about 6 May 1997 between Montgomery Watson, Wynton Stone and TTW, the M/W agreement was novated with effect that TTW undertook to perform the agreement and to be bound by its terms as if it were a party to the agreement in lieu of Wynton Stone. Paragraph 33C alleges that there were terms of the deed of novation, inter alia, whereby Montgomery Watson released Wynton Stone from all claims and demands whatsoever in respect of the M/W agreement. Paragraph 33D alleges, further or in the alternative, that by virtue of the deed of novation the M/W agreement was assigned to TTW with effect from 16 March 1997 (ie, retrospectively), alternatively from 6 May 1997. In addition to pleading contractual matters, paragraphs 34, 34A and 35 allege that until about 1 May 1997, Wynton Stone (and after that date TTW) owed a tortious duty of care in relation to their services and the suitability of their work for the purpose of the waste water treatment plants to Montgomery Watson, Barwon and Aquatec. The ultimate claim by Montgomery Watson against Wynton Stone (and/or TTW) is primarily for relief pursuant to the provisions of s.131 of the Building Act 1993 (Vic).

11. The application by Wynton Stone was supported by an affidavit of Mr Sloggett which exhibited the deed of novation dated 6 May 1997, the parties to which were Montgomery Watson, Wynton Stone and TTW. The deed recites that Montgomery Watson had awarded a contract dated 26 March 1997 to Wynton Stone for engineering consultancy services to be provided in respect to Montgomery Watson's job known as "Lorne & Apollo Bay WWTPs" and that Wynton Stone desired to be released and discharged from the contract and that Montgomery Watson had agreed to release and discharge Wynton Stone upon the terms of TTW's undertaking to perform the contract and to be bound by the terms of the contract. Paragraph 1 of the deed provides that TTW undertakes to perform the contract and to be bound by its terms and conditions in every way as if it were a party to the contract in lieu of Wynton Stone. Paragraph 2 of the deed provides that Montgomery Watson:

"...releases and discharges [Wynton Stone] from all claims and demands whatsoever in respect of the contract and accepts the liability of TTW under the contract in lieu of the liability of [Wynton Stone] and agrees to be bound by the terms of the contract in every way as if TTW was named in the contract as a party thereto to [sic] place of [Wynton Stone]."

15. Paragraph 3 of the deed of novation provides that the effective date for the substitution of TTW for Wynton Stone and the acceptance of same by Montgomery Watson is the date of the deed (ie, 6 May 1997) and that Montgomery Watson undertakes to pay Wynton Stone all moneys due and owing under the contract up to that date and to TTW from that date. This paragraph concludes that Wynton Stone acknowledges that the services to be performed under the contract by Wynton Stone prior to that date have been performed in accordance with its terms.

18. It was submitted, in substance, on behalf of Wynton Stone that it was correct beyond argument that the effect of the deed of novation was to wipe out all possible contractual and tortious liability of Wynton Stone, and that accordingly, there was no tenable claim or cause of action pleaded by Montgomery Watson in relation to Wynton Stone. It was submitted that the terms of the deed were very clear in relation to the substitution of TTW for Wynton Stone in the contract with Montgomery Watson as from the inception of that contract. In relation to tortious liability, it was submitted that the words "all claims and demands whatsoever in respect of the contract" clearly covered tortious liability as well and that, further, Montgomery Watson's statement of claim specifically accepted that Wynton Stone owed no tortious duty of care after 1 May 1997.

21. For the reasons which follow, I do not think that the application for summary judgment, or for a stay, by Wynton Stone should succeed.

24. I consider that the deed of novation is possibly an answer to any claim by Montgomery Watson in relation to Wynton Stone under the contract dated 26 March 1997 as referred to in the recital to the deed, but I do not think that that is so beyond argument. Whether the deed has a totally retrospective operation may depend, inter alia, on the effect of the so-called "acknowledgment" by Wynton Stone in the last sentence of the deed that its services prior to the date of the deed have been performed in accordance with the terms of the contract. It may be that this "acknowledgment" could give rise to some liability in contract even if the deed is apart from that retrospective. Nor do I think that it is sufficiently clear for the purposes of a summary application that the deed of novation has the effect contended for in relation to tortious liability. It may be that any tortious liability of Wynton Stone is coextensive and no greater than its contractual liability under the contract dated 26 March 1997, but this is a matter, in my opinion, which cannot be summarily determined. It may possibly involve an investigation of the facts and the question of law involved cannot be said to be open and shut. Furthermore, it is not clear, either by looking at the pleadings or on such evidence as is before the Court, whether there may not have been relevant breaches of a tortious duty of care prior to the date of the deed of novation. If so, it is not beyond argument that the deed discharges liability for such breaches, even if damage occurred at a later point of time.

27. It was submitted on behalf of Aquatec that its pleading against Wynton Stone was not untenable for similar reasons to those advanced by Montgomery Watson. Aquatech referred to the "acknowledgment" by Wynton Stone (see above), but also emphasised the arguable liability in tort of Wynton Stone to Barwon and the consequent rights which might accrue to Aquatec. It was also submitted on behalf of Aquatec that there may have been an accrued cause of action in negligence against Wynton Stone by Barwon prior to the date of the deed of novation. I accept those submissions. I note that JJP adopted the submissions of Montgomery Watson and Aquatec and that TTW also opposed the final determination of the construction of the deed of novation and said that it might at trial wish to lead evidence relevant to matters which had been argued.

30. Furthermore, affidavit material was filed on behalf of Montgomery Watson which suggests that there may be pleadable cases both in contract and in tort which do not necessarily depend upon the contract dated 26 March 1997. It is unnecessary to state the details, but, not surprisingly, Montgomery Watson has foreshadowed an application to further amend its Statement of Claim in the light of that material. Indeed, an amended Statement of Claim was exhibited but it was provided too late for the parties to obtain any instructions on it.

33. It is now obvious, in order for all issues to be fairly tried, that Montgomery Watson will need to file and serve a Further Amended Statement of Claim. I will of course hear any further submissions which the parties may wish to make about the proposed amendments when leave is sought.

36. The relief sought in Wynton Stone's summons in relation to the various pleadings will be refused. It may be that each of the respondents to this summons will wish to amend its relevant pleadings in relation to Wynton Stone.

[1] The Amended Statement of Claim in the Third Party proceeding by Montgomery Watson, the Amended Statement of Claim by Aquatec and the Statement of Claim for indemnity or contribution and the Contribution Notice of JJP.