Chapel of Angels Pty Ltd & Ors v Hennessey Building Pty Ltd & Ors [2022] QCA 232

SUPREME COURT OF QUEENSLAND

CITATION: Chapel of Angels Pty Ltd & Ors v Hennessey Building Pty Ltd & Ors [2022] QCA 232

PARTIES: CHAPEL OF ANGELS PTY LTD TRADING AS CHAPEL OF ANGELS / ACN 154 327 867 / (first appellant) / PETER JAMES McQUITTY / (second appellant) / SASKIA PEEK / (third appellant) / v / HENNESSY BUILDING PTY LTD ACN 117 587 998 IN ITS OWN CAPACITY AND ITS CAPACITY AS TRUSTEE FOR THE HENNESSY FAMILY TRUST / ABN 45 515 151 376 / (first respondent) / JOHN PAUL HENNESSY / (second respondent) / AXIA LITIGATION LAWYERS / ACN 629 434 368 / (third respondent) / JENNIFER LAUREN RAPHAEL / (fourth respondent) / ADAM BROWN / (fifth respondent) / PETER TRAVIS / (sixth respondent)

FILE NO/S: Appeal No 7643 of 2022 / SC No 1408 of 2022

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane – [2022] QSC 112 (Flanagan J)

DELIVERED ON: 22 November 2022

DELIVERED AT: Brisbane

HEARING DATE: 8 November 2022

JUDGES: Bowskill CJ and Morrison and Dalton JJA

ORDERS: THE COURT ORDERS THAT: / THE COURT DIRECTS THAT:

CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – DISCLOSING NO REASONABLE CAUSE OF ACTION OR DEFENCE – where the first appellant and the first and second respondents were previously involved in litigation in the District Court in relation to a building contract dispute – where the appellants have exhausted all avenues of appeal from the judgment of the District Court in those proceedings – where the appellants commenced proceedings in the Supreme Court, seeking to set aside the District Court judgment and for damages, on the basis of allegations that the first and second respondents, and their legal representatives, the third, fourth, fifth and sixth respondents, “fraudulently concealed” documents from the appellants, their lawyers, expert witnesses and the District Court – where the primary judge set aside the claim and struck out the statement of claim without leave to replead on the basis the claim is baseless and unsupported by evidence – whether the primary judge gave proper consideration to the whole of the statement of claim – whether the learned primary judge erred in finding that the allegations of fraudulent concealment were without foundation / APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – ADMISSION OF FURTHER EVIDENCE – OTHER MATTERS – where the appellants seek to adduce further evidence on the appeal – where the evidence sought to be adduced was available prior to the hearing in the court below and would not have had any influence on the result / Queensland Building Services Authority Act 1991 (Qld), s 42 / Uniform Civil Procedure Rules 1999 (Qld), r 766(1)(c) / Chapel of Angels Pty Ltd & Ors v Hennessy Building Pty Ltd & Ors [2022] QSC 112, cited / Chapel of Angels Pty Ltd v Hennessy [2021] FCA 875, cited / Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218, cited / Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2021] HCASL 40, cited / Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor (2020) 6 QR 38; [2020] QCA 219, cited / Clarke v Japan Machines (Aust) Pty Ltd [1984] 1 Qd R 404, cited / Hennessy Building Pty Ltd v Pryce [2022] FCA 198, cited / Peek v Hennessy [2021] FCA 1187, cited

COUNSEL: M Ohlson (sol) for the first and second appellants / The third appellant appeared on her own behalf / No appearance for the first and second respondents / A Nicholas for the third, fourth and fifth respondents / D Tay for the sixth respondent

SOLICITORS: Michael J Ohlson Solicitor for the first and second appellants / The third appellant appeared on her own behalf / No appearance for the first and second respondents / Barry Nilsson Lawyers for the third, fourth and fifth respondents / Clyde & Co for the sixth respondent

1. THE COURT: Almost ten years ago, the first appellant, Chapel of Angels, contracted with the first respondent, Hennessy, for the construction of a wedding chapel and surrounds at Montville. After the work was substantially completed, and most, but not all, of the price had been paid, the parties fell into dispute. The dispute was the subject of litigation in the District Court, leading to a seven day trial before Judge Porter QC. The result was a judgment that required Chapel of Angels to pay about $86,000 to Hennessy, as well as legal costs. Chapel of Angels unsuccessfully attempted to challenge that decision by applications to the Court of Appeal (for an extension of time to appeal as they were late) and for special leave to appeal to the High Court of Australia.

2. It then agitated various collateral challenges to the judgment, and the costs orders, in the context of various enforcement proceedings brought against the company and its two directors, the second and third appellants. When all else had failed, and all legitimate appellate avenues had been exhausted, the appellants commenced another collateral challenge, by instituting proceedings in the Supreme Court seeking to set aside the District Court judgment, this time purporting to blame Hennessy’s legal representatives for the outcome they cannot accept, on the basis that those legal representatives (the third, fourth, fifth and sixth respondents) “fraudulently concealed” documents from Chapel of Angels, its solicitors, the District Court and expert witnesses. The claim in these proceedings was set aside and the statement of claim struck out on the basis that the claim “is so obviously untenable that it could not possibly succeed”, “is manifestly groundless”, “is [so] manifestly faulty that it does not admit of argument”, is “entirely without foundation”, and is “baseless and unsupported by evidence”. Each of those descriptors is apt. The appeal should be dismissed, with costs.

Background

3. In December 2012, Chapel of Angels, entered into a building contract with Hennessy for the construction of a wedding chapel and surrounds at Montville. By Christmas 2013, the work on the Chapel building was substantially completed, although some work on the external areas remained incomplete; and much of the price had been paid.¹ By early 2014 the parties had fallen into dispute.

4. A significant element of the dispute involved the contention that Hennessy did not hold the appropriate contractor’s licence for the type of building that was constructed. In October 2014, Chapel of Angels commenced proceedings in the District Court, among other things, for damages for breach of contract and/or repayment of the money already paid under the building contract. Hennessy defended the claim on grounds including that, even if part of the work was unlicensed, it would be entitled to reasonable remuneration for the work it had carried out, having regard to s 42 of the Queensland Building Services Authority Act 1991 (Qld)² (QBSA Act). That section provided, at the relevant time:³

“42 Unlawful carrying out of building work

(1)A person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under this Act.

(3)Subject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.

(4)A person is not stopped under subsection (3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed –

(a)is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and

(b)does not include allowance for any of the following –

(i)the supply of the person’s own labour;

(ii)the making of a profit by the person for carrying out the building work;

(iii)costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred; and

(c)is not more than any amount agreed to, or purportedly agreed to, as the price for carrying out the building work; and

(d)does not include any amount paid by the person that may fairly be characterised as being, in substance, an amount paid for the person’s own direct or indirect benefit.”

5. The dispute eventually went to trial – over seven days, before Judge Porter QC, in September 2018. His Honour delivered comprehensive reasons for judgment on 12 November 2018.⁴

6. It was uncontroversial that Hennessy held two contractor’s licences: a “builder – low rise” licence and a carpentry licence. The learned trial judge held that the chapel was a class 9b building which, because it had two storeys, required “Type B Construction” and that this was outside the scope of Hennessy’s “builder – low rise” licence. Consequently, Hennessy had, in the building contract, undertaken to carry out building work without the appropriate class of licence, in breach of s 42(1) of the QBSA Act.⁵ However, most of the work done by Hennessy in building the chapel was found to be within the scope of its carpentry licence.⁶

7. Although the trial judge observed that an interesting question arose as to whether all payments made under a contract for building work would be recoverable, in circumstances where only part of the work under the contract was unlicensed, it was unnecessary to address that question because Hennessy accepted that, if Chapel of Angels succeeded on the licensing point (which it did), it would be entitled to recover all payments made under the contract.⁷

8. However, Hennessy asserted that it was entitled to a restitutionary remedy, on a quantum meruit basis. That argument involved consideration of s 42 of the QBSA Act, in circumstances where some of the building work carried out was within the scope of Hennessy’s licences and some of it was not.

9. In that regard, the trial judge held that, on a proper construction of s 42, Hennessy was entitled to recover:(a)reasonable remuneration for so much of the building work it had carried out which was within the scope of any licence it held; and(b)reasonable remuneration, as modified by s 42(4), for so much of the building work it had carried out which was not within the scope of any licence it held.⁸

10. The correctness of that finding was later confirmed by the Court of Appeal.⁹ As the Court of Appeal explained, in [53]:

“… In this kind of case the building contract is unenforceable by the contractor in relation to the unlicensed work. Where (as in this case and as is commonly the case) the promise to carry out the unlicensed work is not severable from the balance of the contract, the contractor is unable to enforce the contract at all. Any non-contractual right the contractor may have to recover reasonable remuneration for the unlicensed work is restricted by s 42(4) and the contractor is exposed to prosecution for an offence for contravening at least one of the two prohibitions in s 42(1). From the consumer’s perspective the results of this construction also do not seem obviously unreasonable. The consumer may be found liable to pay reasonable remuneration not limited in accordance with s 42(4) only in relation to the benefit the consumer has obtained as a result of the contractor carrying out building work for which it held a licence of the appropriate class, and the consumer will benefit from the limits in s 42(4) in respect of any work for which the contractor did not hold a licence of the appropriate class.”

11. In order to work out what amount of money Hennessy was entitled to, at the trial Hennessy relied upon expert evidence from Mr Carey, a quantity surveyor. Chapel of Angels filed no expert report in reply, and led no evidence on the question of the correct restitutionary measure in respect of the work actually undertaken.¹⁰

12. The trial judge’s conclusions in relation to the sum of money to which Hennessy was entitled are helpfully summarised in the Court of Appeal’s decision, at [11] and [12], as follows:

“[11] … The primary judge concluded that:

(a)The expert report of Mr Carey, a quantity surveyor, permitted the calculation of the amount to which Hennessy Building was entitled.

(b)The carpark and external works were within Hennessy Building’s ‘builder – low rise’ licence and Chapel of Angels made no submission to the contrary.

(c)Hennessy Building’s carpentry licence authorised a substantial part of the building work of the chapel (‘licensed work’).

(d)Mr Carey assessed the reasonable remuneration for the construction of the whole of the works (excluding overheads and profit) at $542,680.51.

(e)Mr Carey assessed the reasonable remuneration for the work involved in the construction of the chapel that fell outside the scope of the carpentry licence (‘unlicensed work’) at $26,071.19.

(f)The reasonable remuneration for the licensed work, excluding overheads and margin, was $516,609.32 ($542,680.51 - $26,071.19).

(g)Allocating one half of the figure for overheads attributable to the total cost of the whole of the works, but excluding any allowance for margin (because it was precluded in relation to unlicensed work by s 42(4)(b)), the total reasonable remuneration for the unlicensed work was $27,635.46 (excluding GST).

(h)Hennessy Building was not entitled to recover any amount for the unlicensed work because it failed to fulfil the onus upon it of proving either the amount paid by Hennessy Building in supplying materials and labour for carrying out the building work (s 42(4)(a)) or the amount agreed as the price for carrying out the unlicensed work (s 42(4)(c)).

(i)Adopting as reasonable the figures for overhead and margin assessed by Mr Carey, the total reasonable remuneration for the licensed work (excluding GST) was $636,462.67, resulting in an amount inclusive of GST of $700,108.20.

(j)The net amount due by Chapel of Angels to Hennessy Building was $67,492.88 ($700,108.20 - $632,615.32¹¹).

[12] The primary judge therefore ordered:

(a)a declaration to the effect that, by the building contract dated 6 December 2012, Hennessy Building undertook to carry out building work for which it did not hold a contractor’s licence of the appropriate class under the Act; and

(b)that Chapel of Angels pay Hennessy Building the amount of $85,989.86 (which included interest of $18,496.98 on the net sum owing to Hennessy Building of $67,492.88).”

13. Chapel of Angels was later ordered to pay Hennessy’s, and its director, John Hennessy’s costs of the proceeding.¹²

14. Chapel of Angels did not initially appeal the District Court decision; it made a deliberate decision not to, initially considering proceedings against the lawyers who had represented it in those proceedings.¹³ It later applied for an extension of time in which to seek leave to appeal. That was refused by the Court of Appeal on 7 October 2020, after a detailed consideration, both of the central statutory construction question in relation to s 42 and also of the additional issues which Chapel of Angels indicated it wished to agitate, had the appeal been permitted to proceed. The application was dismissed, with costs.

15. In the application before the Court of Appeal, Chapel of Angels was represented by counsel instructed by Ohlson’s Lawyers & Barristers.

16. Chapel of Angels applied to the High Court for special leave to appeal from the judgment of the Court of Appeal. That application was dismissed in March 2021, with Gordon and Edelman JJ holding that “[t]he proposed grounds of appeal do not identify any reason to doubt the correctness of the decision of the Court”.¹⁴ Again, Chapel of Angels was ordered to pay Hennessy’s costs of the application. Mr Michael Ohlson appeared for the applicants.

17. Each of Hennessy and its director, Mr Hennessy, issued statutory demands to Chapel of Angels, seeking to recover the costs judgments in their favour. By proceedings in the Federal Court of Australia, Chapel of Angels applied to set the statutory demands aside, on the basis of a challenge to the correctness of the District Court judgment, including the costs orders. Those applications were dismissed, with indemnity costs.¹⁵ Mr Ohlson appeared for the applicants.

18. Subsequently, bankruptcy notices were issued to Ms Peek and Mr McQuitty, who are the directors of Chapel of Angels.¹⁶ An application to the Federal Court to set aside the bankruptcy notices was also dismissed, again with indemnity costs.¹⁷ The basis of these applications was again, in essence, that the District Court judgment was wrong; and that the Federal Court should ignore that decision, the Court of Appeal’s decision and the High Court’s decision and set aside the bankruptcy notices. As Rangiah J said, at [45] of the decision on these applications:

“The judgment of Judge Porter QC of 11 December 2018 was a final judgment, and the applicants have exhausted their rights to appeal from or otherwise challenge that judgment. The Orders made by the Registrar and the Deputy Registrar respectively on 17 February 2021 against Chapel of Angels Pty Ltd for costs are also final judgments since they finally dispose of the rights of the parties in relation to costs. The process of review of the costs assessments upon which those Orders were based has been exhausted. I reject the applicants’ submission that, because of their assertion that the District Court’s judgment involves some misconstruction or misapplication of the QBSA Act and the QBSA Regulation, there are no final judgments.”

19. Justice Rangiah then referred to the relevant authorities in relation to the limited power of the Court to go behind a final judgment or order on which a bankruptcy notice is based, and said, at [47]:

“In the present case, there is no suggestion that the orders of the District Court made on 17 February 2021 that Chapel of Angels Pty Ltd pay costs, or the judgments given by Judge Porter QC on 12 November 2018 and 11 December 2018, were obtained by fraud or collusion, or that there was a miscarriage of justice. The claim is simply that the judgments of Judge Porter QC, and the subsequent decisions of the Court of Appeal and the High Court, are wrong and should be ignored. The applicants have had a full trial on the merits. They simply seek to relitigate, on the same evidence, a dispute which has already been fully litigated in adversarial proceedings in the District Court. They have not established any basis for going behind the judgments.”

20. That seems to have given the appellants and/or their legal advisers an idea. Having exhausted every possible, and a number of impossible, avenues for Chapel of Angels and its directors to avoid paying the judgment debts, the appellants, assisted by their lawyers, Mr Ohlson and Mr Redmond, came up with the idea of challenging the District Court’s judgment on the basis of “fraudulent concealment” – by the legal representatives who had acted for Hennessy in the District Court proceedings.¹⁸ As Mr Ohlson told this Court on the hearing of the appeal, in relation to who drafted the statement of claim, “I prepared a draft… and then Mr Redmond of counsel spent extensive time on it… and in fact, the fraudulent concealment phrase was designed by Mr Redmond, not me”.

21. On 4 February 2022, proceedings were commenced in the Supreme Court of Queensland, by Chapel of Angels, Mr McQuitty and Ms Peek (as first, second and third plaintiffs, respectively) against Hennessy Building Pty Ltd (first defendant), John Hennessy (second defendant), Axia Litigation Lawyers (third defendant), Jennifer Raphael (fourth defendant), Adam Brown (fifth defendant) and Peter Travis (sixth defendant). Ms Raphael and Mr Brown, of Axia Litigation Lawyers, were the solicitors for Hennessy and John Hennessy in the District Court proceedings. Mr Travis was their barrister. The claim sought the following orders:

“1. An order setting aside the judgment of the Brisbane Queensland District Court in Matter No. BD4124/14 of 12 November 2018.

An order that the Defendants pay to the Plaintiffs the sum of One Million Six Hundred and Fifty-Seven Thousand, Eight Hundred and Six Dollars and Twenty-Two Cents ($1,657,806.22).

A declaration that the Plaintiffs are relieved from all liability to the First Defendant and Second Defendant from all prior Queensland Costs Assessor decisions, District Court, Supreme Court, Court of Appeal, Federal Court of Australia and High Court of Australia Orders touching and concerning Brisbane District Court proceedings Matter No. BD 4124/14.

Interest on the sum of One Million Six Hundred and Fifty-Seven Thousand Eight Hundred and Six Dollars and Twenty-Two Cents ($1,657,806.22) from the date of the Court Order pursuant to the provisions of the Common Law Practice Act 1867 (Qld).

Costs.”

22. The statement of claim records that it was settled by Francis Redmond of Counsel.

23. The central allegation is in paragraph 41 of the statement of claim, which alleges that throughout the District Court proceedings, various documents (primarily, correspondence from the QBCC, including an Infringement Notice issued by the QBCC) were “fraudulently concealed by non-disclosure” by the defendants, from the District Court, Hennessy’s expert witnesses, Mr Fullarton and Mr Carey, the plaintiff’s expert witness, Mr Dunstan, and all three plaintiffs.

24. The allegations of “fraudulent concealment” were also relied upon in the context of further proceedings in the Federal Court of Australia, opposing a creditor’s petition filed by Hennessy, seeking sequestration orders against the estates of Mr McQuitty and Ms Peek (also known as Pryce). In reasons given on 8 March 2022, for adjourning the further hearing of the creditor’s petition (because it appears there were attempts to resolve the matter between the parties), Derrington J made the following important observations:¹⁹

“[2] The underlying disputation between the parties has a long history involving other substantial litigation, particularly in the District Court of Queensland. Similarly, the bankruptcy proceedings have been protracted. In general terms, during the course of these proceedings, the respondents have raised a wide variety of grounds in order to stave off their obligations to pay the judgment creditor. Some have been fanciful and farfetched. It is apparent that they were raised for the purposes of delay only.

[3] However, the most serious of such grounds relied upon by the respondents was that raised in the Notice of Grounds of Opposition to the creditor’s petition. By it, Mr McQuitty and Ms Pryce, through their legal advisors, alleged that the judgment creditor, Hennessy Building Pty Ltd (Hennessy Building), its director, Mr John Hennessy, Axia Litigation Lawyers, the solicitors Ms Jennifer Lauren Raphael and Mr Adam Brown, and Counsel Mr Peter Travis, had engaged in the fraudulent concealment of certain documents in the course of the District Court proceedings from which the judgment debt which underpins the bankruptcy notice arose. I have read and examined closely all of the material filed in these proceedings and in particular, the respondents’ affidavits and other documents which were relied upon to make those allegations. From that careful consideration, it can only be concluded that:

(a)The allegations of fraudulent concealment against each of the persons identified were absolutely baseless. They were not supported by any evidence at all.

(b)There was no evidence that the documents in question were concealed from the respondents or any other entity. In fact, the evidence makes it pellucidly clear that the documents in question were provided by Hennessy Building and its solicitors, including Ms Raphael and Mr Brown, to the opposing solicitors in the District Court proceedings.

(c)There was, in fact, no duty on the solicitors or Hennessy Building or anyone else to provide the documents in question to any other party or entity. The alleged foundation for suggesting the existence of a duty to disclose them was fanciful, and it is not possible to believe that any reasonable practitioner could have thought otherwise.

(d)It is a matter of grave concern that the falsity of the allegations of fraudulent concealment could have been discovered by the simplest of investigation. A letter, email or telephone call to Axia Lawyers, Ms Raphael or Mr Brown, or even the opposing solicitors in the District Court proceedings would have disclosed that no concealment had occurred.

[4] In summary, the allegations of fraudulent concealment made by the respondents were baseless and bereft of any substance at all. They ought never to have been made. There is not a skerrick of evidence to support them. In fact, the evidence which is available demonstrates that the legal representatives of Hennessy Building acted with the utmost propriety in relation to the documents in question. In particular, in the District Court proceedings, Ms Raphael acted in the best interests of her client by maintaining that the documents were not relevant, but in order to avoid a costly interlocutory application, provided them to the opposing solicitors. Similarly, there is nothing to suggest that Mr Travis of Counsel acted other than with complete propriety at all times. On the basis of the evidence available on this application, it is difficult to avoid the conclusion that the allegations of fraudulent concealment were made in an attempt to intimidate Hennessy Building, its directors, its legal advisors or to otherwise vex and harass them. It is not possible to understand how any legal professional could have made the allegations of such misconduct in any public document.”

25. At the hearing before Derrington J, Mr Redmond of counsel appeared, instructed by Ohlson Lawyers. Subsequently, on 24 March 2022, Derrington J made a further order requiring the Queensland District Registrar of the Federal Court to refer the matter to the Legal Services Commission of Queensland.²⁰

26. Returning to the Supreme Court proceedings, on 10 March 2022, the third, fourth and fifth defendants filed a conditional notice of intention to defend, and an application to have the claim set aside and to strike out the statement of claim.

27. That application was heard by Flanagan J on 10 May 2022.

28. For the reasons published on 3 June 2022, Flanagan J set aside the claim, and struck out the statement of claim, with no leave to replead.²¹

29. His Honour observed, at [39], that:

“By their claim and statement of claim the plaintiffs seek to have the judgment of Judge Porter QC set aside on the basis of fraud. The central allegation is that the defendants fraudulently concealed documents, in particular the QBCC Compliance Report. As set out at [24] above, Ms Peek made a Right to Information application to the QBCC on 28 April 2020 and received various documents on 10 July 2020. The plaintiffs therefore rely on an allegation of fraud based on their receipt of alleged fresh evidence received after the conclusion of the District Court proceedings.”

30. After setting out the relevant principles – the correctness of which is not challenged on this appeal – Flanagan J said that:

“[42] Having considered the statement of claim, I am of the view that the plaintiffs’ claim ‘is so obviously untenable that it could not possibly succeed, that it is manifestly groundless, that it is manifestly faulty that it does not admit of argument and that it does not disclose a case’.²² The statement of claim makes extremely serious allegations of professional misconduct said to amount to fraudulent concealment of documents in breach of what is pleaded as ‘paramount duties’. The pleading is unclear as to whether these ‘paramount duties’ constitute tortious, contractual or statutory duties. As a breach of these ‘paramount duties’ is alleged to give rise to a claim for damages, it is implicit that the plaintiffs are alleging that such duties were owed to them. While legal advisors owe their client a duty of care in both contract and tort, such a duty is not ordinarily owed to a third party.

…

[46] The type of fraud required to set aside a judgment is, as discussed above, actual fraud in the strict legal sense. The statement of claim does not plead any material facts to support the serious allegation that the legal representatives of Hennessy intentionally concealed documents that should otherwise have been disclosed in the proceeding. Nor is there any pleading of material facts which identifies how a breach of the alleged ‘paramount duties’ constitutes actual fraud on the part of the legal representatives of Hennessy.”

31. His Honour referred to the comments made by Derrington J in the earlier application to set aside the creditor’s petition, and to the evidence of Ms Raphael which was before the court (to the effect that the relevant documents were either provided to the solicitors acting for Chapel of Angels in the District Court proceeding or were not in the possession or control of the defendants during that proceeding) and found that the allegations in the statement of claim that documents were “fraudulently concealed by non-disclosure” were entirely without foundation (at [48] and [50]).

32. His Honour found that the defects in the statement of claim and the evidence of Ms Raphael constituted a sufficient basis for setting aside the claim and striking out the statement of claim without leave to replead (at [51]).

33. As to paragraph 3 of the claim, Flanagan J added that, even if an order was made setting aside the judgment of the District Court on the basis of fraud, the Supreme Court has no jurisdiction to make declarations affecting orders made by the Court of Appeal, Federal Court of Australia and High Court of Australia (at [52]). That much at least appears to have been conceded by Mr Redmond of counsel at the hearing before Flanagan J.

The parties to the appeal

34. Each of the company, Chapel of Angels Pty Ltd, and its directors, Mr McQuitty and Ms Peek, seek to appeal from Flanagan J’s decision. Although the application before Flanagan J was only made by the third, fourth and fifth defendants, the appellants named all six defendants as respondents. There is no suggestion that was inappropriate – as all defendants could be affected by the appeal.

35. Before the hearing of the appeal, Hennessy and John Hennessy (the first and second respondents) advised the Court that they did not wish to actively participate in the appeal. They contended that a settlement had been reached between Chapel of Angels and both of them. In correspondence to the Court, Ms Peek accepted that there had been a settlement reached with the company, Hennessy; but said it was not the case that any settlement had been reached with its director, Mr Hennessy. A preliminary review hearing was held to address this issue, and it was agreed by all that there was no reason why the first and second respondents were required to participate in the appeal, if they did not wish to. The factual dispute – as to whether a compromise has been reached or not – could be determined if the appeal was successful and the matter returned to the trial division. Accordingly, only the third, fourth, fifth and sixth respondents actively participated in the appeal.

36. At the hearing of the appeal, Mr Ohlson appeared for the first and second appellants (the company, and Mr McQuitty). Ms Peek represented herself.

Applications to adduce fresh evidence

37. There are five applications before this Court to adduce what is claimed to be “fresh” evidence. All are misconceived, for the following reasons.

38. Rule 766(1)(c) of the Uniform Civil Procedure Rules 1999 confers a discretionary power on the Court of Appeal, on special grounds, to receive further evidence as to questions of fact. The test of “special grounds” has been long settled: Clarke v Japan Machines (Aust) Pty Ltd [1984] 1 Qd R 404 at 408. Three conditions must be fulfilled:(a)it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial;(b)the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive; and(c)the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.

39. The first application, by Ms Peek (filed on 11 July 2022), seeks to adduce evidence of a letter that Ms Peek instructed Mr Ohlson to write to the third and fourth respondents in February 2021. This is said to be in answer to what Derrington J said in [3(d)] of his Honour’s reasons delivered on 8 March 2022²³ (set out at paragraph [24] above), which was referred to by Flanagan J in [23] of the judgment under appeal. The letter from Mr Ohlson makes various allegations about the third and fourth respondents having mislead various courts. It is responded to in strong terms of denial by Mr Brown, the fifth respondent. There are no grounds to permit this evidence to be adduced on the appeal: it is correspondence between the parties that was plainly available prior to the hearing before Flanagan J and in any event could not rationally have affected the outcome in any way. This application should be dismissed, with costs.

40. The second application is made by the second appellant, Mr McQuitty (filed 1 August 2022). By this application, Mr McQuitty seeks to adduce evidence of a quote that he gave Chapel of Angels, on 15 April 2013, for concreting work for $34,350. He says his company was never engaged to carry out the work, and yet the Quantity Surveyor (presumably, Mr Carey) included an amount of $34,350 (presumably, in the calculation of reasonable remuneration). Mr McQuitty submits this is evidence of “actual fraud”. Again, this is evidence that plainly was available prior to the hearing before Flanagan J (and, for that matter, at the District Court trial). It could not have had any influence on the matter Flanagan J was required to determine; its asserted relevance mistakes the nature of a restitutionary claim, which requires assessment of reasonable cost, rather than cost actually charged. This application should also be dismissed, with costs.

41. The next application is by Ms Peek (filed 19 August 2022), seeking to adduce evidence “that will prove that the reasons at [23] [3] (a) and (b) of His Hon Judge Flanagan J decision requires further investigation to ensure the administration of justice has not been perverted by the Respondents because the Queensland Building and Construction Commission Right to Information Compliance report 1107059 addressed to Hennessy Building Pty Ltd has a footer with page numbering. The QBCC compliance report exhibited in the affidavit of the Fourth Respondent. Pages that are relevant to the First Respondent are also missing.”

The grounds of appeal

44. The grounds of appeal are premised upon a persistent refusal on the part of Chapel of Angels, Ms Peek and Mr McQuitty (and, for that matter, Mr Ohlson) to accept the conclusion reached by Judge Porter QC in the District Court proceedings, despite having availed themselves of every option available to attempt to challenge that conclusion. Relevantly, that conclusion is that, notwithstanding some of the work undertaken by Hennessy did not fall within the scope of its contractor’s licence(s), Hennessy was still entitled to be paid for the work that it did, on a quantum meruit basis. In so far as the work was within the scope of Hennessy’s licences, it was entitled to recover reasonable remuneration unaffected by s 42(4). In so far as the work was not within the scope of Hennessy’s licences, it could only recover reasonable remuneration limited by s 42(4). What the appellants, and Mr Ohlson, persist with arguing – despite the District Court’s and the Court of Appeal’s decisions to the contrary – is that because part of the building work was unlicensed, the whole of Hennessy’s claim to payment had to be restricted by s 42(4). That is not maintainable, in circumstances where the District Court judgment was final, and all avenues of appeal have been exhausted.

45. The appellants’ numerous grounds of appeal – as well as Mr Ohlson’s additional “illegality” argument – are premised on the misconception that, despite this, they can continue to challenge the District Court’s decision.

46. For convenience, Mr Ohlson’s “illegality” argument will be dealt with first. This emerged in a supplementary outline of argument filed on 31 October 2022. In this document it is contended by Mr Ohlson, for the first and second appellants, that Judge Porter QC’s orders, for payment of money by Chapel of Angels to Hennessy, are “illegal as they are forbidden” by s 42(3) of the QBSA Act (as it was at the relevant time). That is because s 42(3) says “[s]ubject to subsection (4), a person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so”. Mr Ohlson contends that Hennessy did not make any claim in the District Court proceedings for payment in accordance with s 42(4); therefore it should not be entitled to any payment at all. Consequently, he submits, Judge Porter QC’s orders are “illegal”. There is no sensible basis for this contention. It is clear that the interpretation and application of the whole of s 42 was central to the issues for determination in the District Court proceeding.

47. In addition, Mr Ohlson seeks to challenge the finding made by Judge Porter QC as to which parts of the construction work were within the scope of one or other of the licences held by Hennessy, and which parts were not; pressing for a conclusion, it seems, that none of the work fell within the scope of any licence. He also seeks to challenge – by reagitating an argument put to, but rejected by, the learned District Court judge – the proper construction of s 42, where a single project comprises work which is within, and work which is outside, the scope of a relevant licence. None of that is relevant on the present appeal – for the reasons already given by a number of judicial officers who have dealt with parts of this litigation. The dispute is the subject of a final judgment of the District Court, in respect of which all avenues of appeal have been exhausted. It is clear that the new argument – of “fraudulent concealment” by Hennessy’s legal representatives – is a device to try to get around that fact.

“The type of fraud required to set aside a judgment is, as discussed above, actual fraud in the strict legal sense. The statement of claim does not plead any material facts to support the serious allegation that the legal representatives of Hennessy intentionally concealed documents that should otherwise have been disclosed in the proceeding. Nor is there any pleading of material facts which identifies how a breach of the alleged ‘paramount duties’ constitutes actual fraud on the part of the legal representatives of Hennessy.” [underlining added]

(iv)The expert witness, Mr Carey, prepared a written report and was called at the District Court trial to give evidence. He was extensively cross-examined by counsel who appeared for Chapel of Angels at that trial, Mr Di Carlo.²⁶ To the extent there was any deficiency in the documents provided to Mr Carey, the facts which underpinned his opinion, or the methodology he adopted to quantify the reasonable remuneration, the appellants had the opportunity to challenge his evidence at the trial. They also had the opportunity to call their own evidence, but elected not to do so.

(v)To now contend that Hennessy’s legal representatives engaged in fraudulent conduct in the manner in which their own expert was briefed is baseless. The learned primary judge plainly considered this allegation, as part of the statement of claim as a whole, and properly dismissed it.

(b)Paragraph 65:²⁷Paragraph 65 is connected to paragraph 41 (which alleges “fraudulent concealment” by the alleged failure to disclose the “QBCC Compliance Report”). Paragraph 65 pleads that, if the first and second defendants (Hennessy and Mr Hennessy) had disclosed, and the third, fourth and fifth defendants (their legal representatives) had produced the QBCC Compliance Report to the District Court and to the expert, Mr Carey, then, in effect, the outcome would have been different because a different conclusion would have been reached in relation to the licensing issue, such that the “reasonable remuneration” would have been quantified wholly by reference to s 42(4), rather than only partially.This paragraph was considered by the primary judge at [30] of the judgment below.As the premise of the allegation in paragraph 65 is the allegation in paragraph 41, the primary judge’s conclusion, that the allegations of “fraudulent concealment” of the QBCC documents are “entirely without foundation” applies with equal force to the allegation in paragraph 65.The learned primary judge found, at [48] of the judgment below, that a consideration of Ms Raphael’s affidavit (which was not challenged in the proceedings below) showed that the allegations in the statement of claim that documents were “fraudulently concealed by non-disclosure” were entirely without foundation, because that evidence showed that the relevant documents were either provided to the solicitors for Chapel of Angels, or were not in the possession or control of the defendants.The QBCC Compliance Report is, as defined in paragraph 56 of the statement of claim, a document that came in to the possession of Ms Peek in about July 2020, following a Right to Information Act 2009 (RTI) request that she made to the Queensland Building and Construction Commission. The highest the appellants can put their contention in this Court is that a comparison between the documents disclosed by Hennessy’s lawyers (as revealed by Ms Raphael’s affidavit), with those in the QBCC Compliance Report (obtained by Ms Peek in July 2020), reveals that some footers (page numbers) are missing from some pages; the “payment options” page (a pro forma document on the second page/back page of an infringement notice issued on 15 March 2017) was missing; a duplicate of the cover letter for the infringement notice, dated 13 March 2017 was missing²⁸ (the actual cover letter, dated 15 March 2017, was there); and there appeared to be some other pages missing, that may have been an ASIC company search.²⁹ There is no suggestion that the solicitors acting for Hennessy and Mr Hennessy ever had the pages said to be missing. There is no basis to think that the pages said to be missing were of any significance to the appellants’ case in the District Court. It is improper for a party to legal proceedings, let alone a legal practitioner, to put forward an allegation of fraud on this basis.In any event, the question whether the works undertaken were, or were not, within the scope of either of the licences held by Hennessy was fully canvassed in the course of the District Court proceedings, at which the appellants were, as already discussed, legally represented.

(c)Paragraph 68(p) and 74(3) (sic, 74(e)):³⁰Paragraph 68 of the statement of claim pleads that all the defendants, in breach of their “paramount duty”, fraudulently concealed from Mr Carey “critical documents” and failed to inform Mr Carey about relevant legislation. Particularising one of those “critical documents”, paragraph 68(p) alleges that the defendants concealed from Mr Carey the relevant District Court pleadings, in which an admission about some work not carried out was made (paragraph 74(e) also refers to the pleadings).The learned primary judge referred to these paragraphs in [31] and [32] of the judgment below, as part of a comprehensive overview of the whole of the statement of claim. The pleadings are documents which all parties to the District Court proceedings had, as did the Judge. If there was a point to be made about the admission, it was open to Chapel of Angels’ counsel to do so in cross-examination of Mr Carey. There is no basis to this allegation; it is properly captured within Flanagan J’s conclusion that the allegations of fraud contained within the statement of claim are baseless and unsupported by evidence (judgment below, at [50]).

(d)Paragraph 68(i) and (j):³¹Paragraph 68(i) pleads that the defendants concealed from Mr Carey “the QBCC documents and Queensland building licensing laws and regulations”. Paragraph 68(j) makes an allegation that the letter of instructions from Hennessy’s lawyer to Mr Carey “implied” something about Hennessy’s carpentry licence. The observations made in the immediately preceding subparagraph above apply with equal force to these paragraphs.

(e)Paragraphs 80, 84 and 86:³²Paragraph 80 pleads that the District Court decision “relied entirely upon the evidence in the Lloyd Carey report and the fraudulent written and oral submissions of the Sixth defendant”. There is no particularisation of the scandalous allegation that counsel who appeared for Hennessy in the District Court made “fraudulent” submissions and no basis for it in any of the material.Paragraph 84 repeats the allegations about concealment of the QBCC Compliance Report; and paragraph 86 pleads that, but for that “fraudulent concealment”, the outcome would not have been that Chapel of Angels owed Hennessy a balance of $67,492.88 (the difference between what Chapel of Angels had already paid, and the “reasonable remuneration” determined by the Court) but rather would have been that Hennessy owed Chapel of Angels $671,947. It may be observed that if that were correct, Chapel of Angels would have its Chapel and surrounds, fully constructed, for no payment at all.These paragraphs were also considered by the learned primary judge (judgment below at [33]) and are equally captured by his Honour’s conclusions.

(f)Paragraphs 105:³³Paragraph 105 pleads that the sixth defendant, counsel who appeared for Hennessy and Mr Hennessy at the District Court trial, breached various of the Bar Association of Queensland’s Rules (the Barristers’ Conduct Rules), and mislead the Court as to both legal and factual issues and promoted the fraudulent concealment.The paragraph is referred to as part of the learned primary judge’s survey of the statement of claim as a whole (judgment below at [34]). His Honour had earlier referred to the observations made by Derrington J in the 8 March 2022 decision, namely, that “there is nothing to suggest that Mr Travis of Counsel [the sixth respondent] acted other than with complete propriety at all times”.It is unnecessary to say more about this. The matters already addressed are sufficient to make the point that this allegation is completely unfounded and should never have been made. The learned primary judge’s overall conclusions apply with equal force.

(g)Paragraphs 34, 37 and 106 to 107:³⁴Paragraph 34 pleads the existence of the Australian Solicitors’ Conduct Rules. Paragraph 37 pleads various Bar Association of Queensland Rules. Paragraph 106 pleads that the third, fourth, fifth and sixth defendants were subject to 17 “paramount duties” and paragraph 107 pleads that they each, by their conduct, fraudulently and complicitly contravened their paramount duties throughout the entire District Court and related subsequent Court proceedings, including the legal costs assessments.The learned primary judge addressed these allegations at [35]-[37] of the judgment below and, in terms of the legal hurdle – as to whether any such duty could be said to be owed to the plaintiffs (who were not their clients) – addressed the legal principles at [43]-[45], before reaching the conclusion expressed in [46] of the judgment below that:

“The type of fraud required to set aside a judgment is, as discussed above, actual fraud in the strict legal sense. The statement of claim does not plead any material facts to support the serious allegation that the legal representatives of Hennessy intentionally concealed documents that should otherwise have been disclosed in the proceeding. Nor is there any pleading of material facts which identifies how a breach of the alleged ‘paramount duties’ constitutes actual fraud on the part of the legal representatives of Hennessy.”

(iii)The conclusion of the learned primary judge in that respect is unquestionably correct.

(h)Schedule 1:³⁵Schedule 1 is described as “Quantity Surveyor Report v Calculations from Actual Invoices cross checked with Exhibit 19 Hennessy Building Pty Ltd MYOB Job Transaction Report”.It is described in ground 1(k) as providing “the particulars of the First Defendant’s fraudulent money claims supported and promoted by Lloyd Carey and the First, Second, Third, Fourth, Fifth and Sixth Defendants”.The observations already made above apply equally to this part of the pleading.

51. The learned primary judge did give proper consideration to the whole of the statement of claim, including each of the paragraphs referred to in ground 1 of the notice of appeal. No error has been shown in the conclusions reached by the learned primary judge, leading to the conclusion that the allegations of fraudulent concealment – whether by reference to the QBCC documents, the pleadings, legislation or other documents – were completely without foundation. We would add that the allegations were scandalous, vexatious and an abuse of process. The learned primary judge was correct in striking out the claim, and the whole of the statement of claim, without leave to replead.

52. That conclusion addresses grounds 1, 2 and 3. Grounds 4, 6, 9 and 10 are all dependant on the success of ground 1 and so need not be further considered.

53. Ground 5 challenges the correctness of [28] of the judgment below. All that appears in [28] is a statement that “these rules”, which in context is a reference to the Australian Solicitors’ Conduct Rules and the Bar Association of Queensland’s Barristers’ Conduct Rules, “are later referred to in the statement of claim at paragraph 106 which is headed ‘The Paramount Duties’”. That is correct – they are referred to in that paragraph of the statement of claim.

54. Ground 7 contends that the learned primary judge erred in fact and law in [47] of the judgment below by placing undue reliance upon the observations of Derrington J (in the 8 March 2022 decision), which are said to be “irrelevant to the legal principles to be considered concerning the strike out application”. The observations of Derrington J are entirely relevant, given that the very same allegations were being relied upon in those proceedings, in opposing a creditor’s petition for a sequestration order.³⁶ There was no error in the learned primary judge referring to, and relying on them.

55. Ground 8 contends the learned primary judge erred in fact and law in [47] of the judgment below by placing reliance on the observations by Derrington J that the alleged “fraudulent concealment” could have been discovered by the plaintiffs simply writing a letter. The appellants contend this was an error because the plaintiffs’ solicitor did write a letter, about some related but similar allegations, and received a strong response by way of denial.³⁷ Therefore, the appellants submit, it is to be assumed that if their solicitor had written to the defendants about the allegations the subject of the present statement of claim, they would have received the same response. The appellants miss the point: the baseless allegations of fraudulent concealment ought not have been made in documents filed in a court proceeding. Acting reasonably, an enquiry by correspondence would be expected to have elicited the explanation which appeared in Ms Raphael’s affidavit, which it would have been reasonable to accept. The learned primary judge’s point, at [47] of the judgment below, goes one step further, it might be said: having been the beneficiaries of the pellucidly clear reasons of Derrington J, delivered on 8 March 2022, the appellants ought not to have proceeded with their claim in the Supreme Court.

Conclusion and orders

57. None of the grounds, or other arguments, raised by or on behalf of the appellants raise any doubt about the correctness of the judgment below. The appeal will be dismissed, with costs.

58. We will also make an order directing the Registrar to refer the documents filed in this Court, the transcript of the hearing in this Court and this judgment to the Legal Services Commissioner, in relation to the conduct of Mr Redmond and Mr Ohlson, making and/or encouraging the making of baseless allegations of fraud, inconsistently with rule 64 of the Barristers’ Conduct Rules and rule 21.4 of the Australian Solicitors’ Conduct Rules, respectively.

Footnotes

1. Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218 (DC decision) at [60]-[67]; Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd (2020) 6 QR 38; [2020] QCA 219 (COA decision) at [1]. ↩

2. Now called the Queensland Building and Construction Commission Act 1991 (Qld). ↩

3. As identified in the COA decision at [3], the relevant version of the act is in a reprint that was current from 1 January 2011 to 31 October 2013. ↩

4. Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218. ↩

5. DC decision at [106]-[111]; COA decision at [7]. ↩

6. DC decision at [156]; COA decision at [25]. ↩

7. DC decision at [125]-[129]. ↩

8. DC decision at [134]; COA decision at [9] and [10]. ↩

9. COA decision at [57]. ↩

10. DC decision at [140] and [141]; COA decision at [60]. ↩

11. That is, the total reasonable remuneration amount, less the $632,615.32 Chapel of Angels had already paid. ↩