PROCEDURE – PLEADINGS – STRIKING OUT – OTHERWISE ABUSE OF
PROCESS – where the applicant entered a contract
to purchase an apartment
“off the plan” from the respondent – where the applicant seeks
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – PLEADINGS – STRIKING OUT – OTHERWISE ABUSE OFPROCESS – where the applicant entered a contractto purchase an apartment“off the plan” from the respondent – where the applicant seeksspecific performance ofthat contract – where the respondent alleged that,among other construction defects, timber floors installed in the apartmentrequired removal and replacement before the contract could complete –where the respondent filed expert evidence addressingthe alleged defects in thetimber floors – where the parties agreed a date on which theapplicant’s expert witness wouldinspect the apartment to prepare a reportaddressing the alleged construction defects, including the defects in the timberfloors– where the respondent caused the timber floors to be removedbefore the date the applicant’s expert inspected the apartment–where the applicant’s expert has provided a report containing opinions,based on the evidence available to him, as
to the likelihood that the timber
floors required removal and replacement – whether the respondent’s
allegations concerning
defects in the timber floors should be struck out on the
basis that a fair trial of those issues is no longer possible
Batistatos v
Roads & Traffic Authority of New South Wales (2006) 226 CLR 256
[2006]
HCA 27, discussed
British American Tobacco Australia Services Ltd v
Cowell (2002) 7 VR 524
[2002] VSCA 197, cited
Clark v New South Wales
(2006) 66 NSWLR 640
[2006] NSWSC 673, followed
Fuji Xerox Australia
Pty Ltd v Lee [2003] QSC 303, cited
Katsilis v Broken Hill Pty Co Ltd
(1977) 18 ALR 181, cited
Palavi v Radio 2UE Sydney Pty Ltd [2011]
NSWCA 264, followed
Sun v He (No 2) [2020] NSWSC 1298,
cited
Uniform Civil Procedure Rules 1999 (Qld) r 165, r 171, r 250
Judgment (40 paragraphs)
[1]
[1] The respondent (CAV) is the developer of a multi-storey residential and commercial building in Newstead, known as 'Luminare'. On 27 February 2020, the applicant (Ms Hennessy) contracted with CAV to purchase an apartment on Level 23 of the building (Unit 2304) "off the plan". The contract contained a sunset clause which gave either party the right to terminate the contract if, by 31 December 2022, CAV had not issued a notice to Ms Hennessy advising her that the community title scheme for the building had been established and separate title had been created for Unit 2304. If this separate title notice had been issued by CAV, it would have commenced a process leading to completion of the contract.
[2] CAV experienced significant delays in the construction of the building. The contract had not completed by the time the sunset date expired, or by 9 August 2024 when Ms Hennessy commenced this proceeding seeking specific performance. In broad summary, Ms Hennessy alleges that CAV breached the contract by not performing the works required to complete Unit 2304 in a timely fashion and by not issuing the separate title notice which would have triggered the process leading to completion of the contract.
[3] On 5 September 2024, after the proceeding had commenced, CAV purported to terminate the contract on the basis that it had not issued the separate title notice before the sunset date. CAV also defends the claim for specific performance on the alternative basis that it was entitled to terminate the contract on the basis that Unit 2304 was "substantially damaged". Both bases upon which CAV now asserts an entitlement to terminate the contract depend upon it establishing that various construction defects affecting Unit 2304 required rectification before the contract could complete. Ms Hennessy disputes that the alleged construction defects meant CAV was entitled to lawfully terminate the contract.
[4] Ms Hennessy has now applied to strike out certain paragraphs of CAV's amended points of defence, or, alternatively, to exclude evidence of the matters pleaded in those paragraphs from the trial. The paragraphs in question allege that there were defects in the timber floors installed in Unit 2304 which required that those floors be removed and replaced. This is one of the alleged construction defects CAV relies upon to establish its entitlement to terminate the contract.
[5] In February 2025, CAV filed the evidence it proposed to rely on at the trial of the application for specific performance. Its evidence includes an expert report prepared by a builder, Mr Schaper, addressing the alleged defects in the timber floors (as well as other alleged construction defects). Mr Schaper prepared his report after he had inspected Unit 2304, including the allegedly defective timber floors.
[6] On 1 April 2025, HWL Ebsworths (HWLE), the solicitors for Ms Hennessy, emailed O'Shea & Partners Lawyers (OPL), the solicitors for CAV, seeking CAV's consent to an order that Ms Hennessy file any expert evidence by 20 May 2025. In an exchange of emails which followed:
[2]
(a) OPL confirmed that CAV consented to the time HWLE had sought for Ms Hennessy to file her expert evidence and asked HWLE for an indication as to when Ms Hennessy's expert(s) wished to inspect Unit 2304;
(b) HWLE requested that access to Unit 2304 be provided to Ms Hennessy's building expert, Mr Groom, on 8 or 9 April 2025.
[3]
[7] At a review hearing on 3 April 2025, Muir J made orders by consent, including that Ms Hennessy file any expert evidence by 20 May 2025. Following that review hearing, OPL emailed HWLE stating that CAV would provide access to Unit 2304 for inspection by Ms Hennessy's experts from 17 April 2025 onwards. Access would not be granted earlier because CAV was said to be "short staffed and spread thin across multiple projects". HWLE confirmed that Mr Groom would inspect Unit 2304 on 17 April 2025.
[8] On 7 April 2025, contractors engaged by CAV commenced removing the timber floors from Unit 2304. Consequently, when Mr Groom inspected Unit 2304 on 17 April 2025, he found that most of the timber floors had been removed. All that remained in place were small sections of flooring underneath fixed cabinetry. After inspecting Unit 2304, Mr Groom prepared a report in which he referred to the timber floors having been removed and the difficulty this caused in determining whether the timber floors exhibited the defects alleged by CAV, or whether any defects required that the timber floors be replaced. However, based on his inspection of the small sections of floor left under the cabinetry and photographs taken of the timber floors before they were removed, Mr Groom was able to express some opinions about the likely presence of the alleged defects in the timber floors.
[9] Ms Hennessy submits that CAV's conduct in refusing to grant access for Mr Groom to inspect Unit 2304 until after the timber floors had been removed was an abuse of process which means there cannot be a fair trial of the timber floors allegations.
[10] CAV resists the application on numerous bases.
[11] As a matter of procedure, CAV submits that Ms Hennessy's application should be dismissed because she pleads a non-admission to the timber floors allegations.
[12] More substantively, CAV submits the application should be dismissed because there has been no abuse of process. As to that, CAV asserts that:
[4]
(a) at the time Mr Groom inspected Unit 2304, the removed timber floorboards were still onsite in a bin outside Unit 2304 and in other bins on the lower ground level of the building;
(b) Mr Groom was informed that the bin outside Unit 2304 contained removed floorboards but chose not to inspect or photograph them;
(c) Mr Groom was able to inspect some floorboards in situ in Unit 2304 and express opinions based on that inspection, and photographs of the timber floors, such that Ms Hennessy will not be denied a fair trial on the issue of the alleged defects in the timber floors.
[5]
[13] Ms Hennessy disputes the assertion that Mr Groom was told that the removed timber floorboards were in the bin outside Unit 2304.
[14] Finally, CAV submits Ms Hennessy knew it was continuing to perform the works required to complete Unit 2304 and could have, but did not, seek an order under r 250 of the Uniform Civil Procedure Rules1999 (Qld) (UCPR) for the preservation of property. Based on a statement by HWLE, in correspondence to OPL, that there was unlikely to be a substantial dispute with respect to factual matters, it argues that it had no notice that Ms Hennessy was disputing the timber floors allegations.
[15] On those bases, CAV submits that any prejudice suffered by Ms Hennessy is largely the consequence of failures by herself (or Mr Groom on her behalf), and not the result of any abuse of process. In any event, CAV submits that any prejudice Ms Hennessy might suffer as a consequence of the removal of the timber floors can be appropriately remedied by submissions at trial as to the weight the court should attribute to CAV's evidence concerning the alleged defects in the timber floors or, alternatively, that the court should draw an adverse inference against CAV by reason of it having removed the timber floors before Mr Groom inspected Unit 2304.
[16] Consequently, the issues to be determined on the application are:
[6]
(a) does Ms Hennessy's non-admission of the timber floors allegations preclude her from obtaining the relief she seeks on this application?
(b) was the removal of the timber floors from Unit 2304 on 7 April 2025, prior to Mr Groom's inspection, an abuse of process?
(c) if so, what is the appropriate form of relief?
[7]
[17] Rule 165(2) of the UCPR provides that a party who pleads a non-admission may not give or call evidence in relation to a fact not admitted. Accordingly, CAV is correct in submitting that, as matters presently stand, Ms Hennessy's non-admission of the timber floors allegations means that Mr Groom's evidence would be inadmissible at trial in any event. However, as CAV accepted during oral submissions, that does not mean Ms Hennessy cannot amend her points of reply to deny the relevant allegations.
[18] In this case, the time at which amended pleadings are to be filed was the subject of correspondence between OPL and HWLE in July 2025. On 18 July 2025, OPL sent an email to HWLE stating that CAV proposed to file further expert evidence. In that email, OPL also stated it might be prudent for a timeline to be fixed for the filing of amended pleadings. HWLE replied by email sent on 21 July 2005, confirming that Ms Hennessy did not oppose CAV delivering further expert evidence and, further, did not oppose a timetable being set for amended pleadings to be filed to address matters raised by the expert evidence. The timetable put forward by HWLE was set out in a draft order attached to the email which provided for Ms Hennessy to file amended points of reply by 2 September 2025. However, HWLE went on in the email to state that there was logic in deferring the time for filing amended pleadings until CAV had filed its further expert evidence. OPL replied by email sent on 21 July 2025, stating that CAV agreed that there was logic in deferring the filing of amended pleadings until after the further expert evidence had been delivered. Consequently, OPL deleted the orders for the filing of amended pleadings from the draft order.
[19] From that email exchange, it is clear Ms Hennessy proposes to file amended pleadings once all the expert evidence has been delivered. That is hardly surprising. As Ms Hennessy submits, it is to be expected that a party will plead a non-admission where an allegation relates to subject matter within the control of the other party, and which cannot be admitted or denied without an expert inspecting the relevant subject matter. The purpose of such an inspection is to permit the expert to investigate the matters raised in the pleading and in the other side's evidence about the relevant subject matter. Once the expert provides an opinion on the subject matter of the allegation, the pleading can be amended to change the non-admission to reflect the case proposed to be run based on the expert's evidence.
[8]
[22] Pursuant to rr 171(1)(e) and 171(2) of the UCPR, the court has power to strike out all or part of a pleading that is an abuse of process. The court also has an inherent power to deal with abuse of process, to protect itself from such abuse and, thereby, safeguard the administration of justice. As Johnson J observed in Clark v State of New South Wales,[1] that purpose may transcend the interest of a party to the proceeding.
[23] In Batistatos v Roads & Traffic Authority of New South Wales,[2] a majority of the High Court stated that what amounts to abuse of process cannot be formulated by reference to closed categories. The destruction of evidence has previously been found to constitute an abuse of process. For example, in Palavi v Radio 2UE Sydney Pty Ltd,[3] the New South Wales Court of Appeal held that the deliberate destruction of material that is significant to the determination of the proceeding, or which results in a real risk of impairment to the case of the other party to the proceeding, may lead to restrictions on the points a party can run at trial or to the striking out of all or part of its pleading.
[24] The destruction of evidence might also be found to constitute an abuse of process in a case where the party responsible for the destruction of the evidence does not intend that, by such destruction, the non-defaulting party should be deprived of the opportunity to deploy that evidence in its case. In Clark,[4] Johnson J stated that the High Court had determined in Batistatos[5] that it is not necessary that there be an element of contumelious disregard, oppressive conduct or moral delinquency before the power to intervene with respect to abuse of process could be exercised. As Johnson J acknowledged in Clark,[6]Batistatos involved abuse of process by reason of delay and not the destruction of evidence. Nevertheless, statements in that case assist in applying the doctrine of abuse of process in the present context. In particular, the majority in Batistatos[7] applied the statement of Deane J in Oceanic Sun Line Special Shipping Co Inc v Fay to the effect that there was no requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff; what was decisive was the objective effect of the continuation of the action. In the present context, it is the objective effect of the destruction of the evidence which assumes significance. The court must consider whether a fair trial may take place in the absence of the destroyed material. If a fair trial cannot take place, the destruction of the evidence can in my view properly be characterised as an abuse of process even if the defaulting party did not intend to subvert the court's procedures.
[9]
The circumstances in which the timber floors were removed
[10]
[28] Mr Cavallucci, the sole director of CAV, gave evidence that from at least 4 August 2023, the timber floors in Unit 2304 had to be replaced. He also gave evidence of further damage which occurred in Unit 2304 because of the failure of a pressure relief valve in the hydraulic cupboard on Level 23 of the building on 16 September 2023. After Mr Cavallucci turned off the pressure relief valve on that occasion, he commenced cleaning up water which had entered Unit 2304. He deposed that, during the cleanup process, he could see that water had penetrated the timber floorboards, showing signs of damage including discolouration, cupping of the timber floors and warping of some lower cabinetry and skirting boards.
[29] Mr Cavallucci also deposed to work undertaken by CAV to address water ingress issues, including: the replacement of the pressure relief valve on Level 23 in September or October 2023; increasing the extent of waterproofing in the hydraulic cupboard on Level 23 at some point after September 2023; removing water-damaged cabinetry from Unit 2304 in September 2023; investigations and attempted rectification of sources of water ingress affecting Unit 2304 between June and December 2024; and removing carpet affected by mould from Unit 2304 in about October 2024.
[30] Mr Cavallucci deposed that CAV engaged a contractor to demolish the existing timber floors and install replacement flooring in about November 2024. The contractor inspected Unit 2034 on 30 January 2025 and provided a quote for removing and replacing the timber floors. Mr Cavallucci deposed to having been informed by the contractor in late March 2025 that, due to high demand, the floor removal could only occur between 7 April 2025 and 18 April 2025. If the demolition did not occur in that time, it would be several months before the contractor could remove the floors.
[31] Mr Cavallucci deposed that he instructed the contractor to proceed to remove the timber floors within the time window available to it so that construction of Unit 2304 could be advanced towards completion. He stated that, when he gave that instruction, his priority was to progress rectification works and prevent further damage from water ingress. Mr Cavallucci stated that his decision to proceed with the removal of the timber floors in the period nominated by the contractor was based entirely on the availability of the contractor; it was not made to impede Mr Groom's inspection of Unit 2304.
[11]
Mr Groom's inspection of Unit 2304 on 17 April 2025
[12]
[40] Both Mr Cavallucci and Mr Groom gave evidence about the inspection of Unit 2304 on 17 April 2025.
[41] Mr Cavallucci first addressed the inspection in an affidavit he swore on 14 August 2025. In that affidavit Mr Cavallucci deposed that, before entering Unit 2304, Mr Groom took photographs of a bin located in the hallway outside the unit. Those photographs were included in the report Mr Groom prepared after the inspection. Mr Cavallucci deposed that he told Mr Groom, when he took the photographs of the bin, that CAV was undertaking rectification works in Unit 2304 and that the bin contained the timber floors which had been removed from the unit. He deposed that Mr Groom did not open the bin, inspect its contents or take any photographs of the contents of the bin.
[42] Mr Groom prepared a supplementary report dated 15 September 2025 for the purposes of this application. In that report, Mr Groom confirmed that he did not look in the bin when he photographed it before entering Unit 2304. However, he stated that he briefly looked at the contents of the bin when he subsequently left Unit 2304 to inspect the hydraulic cupboard. Mr Groom stated that he did this as part of his standard inspection process. When he looked in the bin it contained only minor rubbish, dust and debris. It did not contain any significant items of construction waste.
[43] Mr Cavallucci swore a further affidavit on 19 September 2025, in which he deposed that he had accompanied Mr Groom throughout the inspection, including when Mr Groom left Unit 2304 to inspect the hydraulic cupboard. He said that Mr Groom did not open or look inside the bin. Nor did Mr Groom ask to inspect the removed timber floorboards which remained on site on the date of the inspection.
[44] In cross-examination, Mr Cavallucci accepted that he did not say to Mr Groom that the bin outside Unit 2304 contained timber flooring which had been removed from the unit. Mr Cavallucci also accepted that he had walked out of Unit 2304 towards the hydraulic cupboard in front of Mr Groom and, consequently, could not see whether Mr Groom looked in the bin when he left the unit.
[45] When Mr Groom was cross-examined, he maintained that he looked briefly in the bin when he left Unit 2304 to inspect the hydraulic cupboard. He said that Mr Cavallucci had left Unit 2304 before him and was walking towards the hydraulic cupboard. Mr Groom said he had followed Mr Cavallucci out of the unit and looked in the bin as he came out the front door. At that time, he was three or four metres behind Mr Cavallucci.
[13]
Did the removal of the floorboards amount to an abuse of process?
[14]
[52] I am satisfied that the removal of the timber floorboards from Unit 2304 was an abuse of process.
[53] For the reasons explained in [36]-[39] above, I do not accept Mr Cavallucci's explanation that his decision to proceed with the removal of the timber floors on 7 April 2025 was based on the availability of the contractor and CAV's desire to progress the construction of Unit 2304.
[54] Further, I do not accept Mr Cavallucci's statement that he did not intend to impede Mr Groom's inspection of Unit 2304. That statement cannot be reconciled with the various matters about which, by his own admission, Mr Cavallucci was aware when he made the decision: that CAV had pleaded the issue of water damage to the timber floors in Unit 2304 and the need for those floors to be replaced; that CAV relied upon Mr Schaper's report addressing the alleged defects in the timber floors which had been prepared after Mr Schaper inspected Unit 2304; that Ms Hennessy would have the opportunity to respond to CAV's evidence, including Mr Schaper's report; the purpose of HWLE's email on 1 April 2025, asking that CAV provide Mr Groom with access to Unit 2304 on 8 or 9 April 2025, was to enable Mr Groom to prepare a report which Ms Hennessy would file in accordance with the consent orders made on 3 April 2025; that Mr Groom would inspect Unit 2304 to investigate the same issues that Mr Schaper's report had addressed, including the timber floors; that he allowed CAV's contractor to proceed with the removal of the timber floors on 7 April 2025, knowing that it had been arranged that Mr Groom would not inspect the unit until 17 April 2025. In those circumstances, I infer that Mr Cavallucci knew the removal of the timber floors on 7 April 2025 would be likely to impede Mr Groom's inspection of those floors and impair his ability to respond to Mr Schaper's evidence about the alleged defects in the floors, but he directed the contractor to remove the timber floors regardless.
[55] Having reached that conclusion, I do not accept CAV's submission that it had no reason to think that the timber flooring defects were in issue. That submission is based on a letter HWLE sent to OPL on 2 September 2024, less than one month after the proceeding had commenced. The letter stated that, based on the affidavit material filed at that time, the main issues in the proceeding would be legal issues and that there was unlikely to be substantial issues of fact to be determined. HWLE expressed that view at a time when no pleadings had been filed and CAV had not yet filed Mr Schaper's report addressing the alleged construction defects in Unit 2304, including the timber floors allegations. Having regard to the matters Mr Cavallucci was aware of when he decided to proceed with the removal of the floors, it is clear the scope of the dispute had changed by April 2025 and that Mr Cavallucci was aware of the relevance of the timber floors allegations in the context of the request that Mr Groom be granted access to inspect Unit 2304.
[15]
"30. Most internal timber floors have been removed at the time of this inspection [sic, from] various locations other than where the floor has not been installed as a part platform floor with cabinetry etc, over the flooring. This means there is no cupping evident at the time of this inspection to unit 2304 as there is no timber floors installed in a reasonable manner at the time of this inspection. It was, however, noted at the time of this inspection that none of the timber floors that remain under the cabinetry as shown in the photos ... show any signs of cupping or water damage that would warrant the replacement of the timber engineered flooring system.
[16]
... [T]here is insufficient evidence in any of the photos or details [sic, showing] that there was any water related damage or issues with respect to the timber engineered strip flooring. The minor leakage ... shown ... can in my opinion be repaired adequately and properly with either drying the area or small areas around the window being repaired without full demolition and uplifting of the floor as observed at the time of my inspection.
As the timber floors have been largely removed, I cannot determine if all of the timber floors or some of the timber floors needed removal and replacement due to cupping. I can however confirm ... that it is unlikely that water from the riser cupboard leaked into unit 2304 to any notable degree, and if water entry did occur to this unit then the engineered timber floor under the kitchen cabinetry which [sic, is] some of the closest timber on this floor to the riser cupboard, does not appear to show any significant signs of cupping or water damage. In my opinion evidence shows not all the floor if any of the floor required replacement based on the evidence available at this time.
It is not possible to determine when the cupping [sic, occurred] as all timber floors other than the areas under cabinetry and the like [sic, have] been removed prior to my inspection. A platform floor is when the floor is laid prior to the installation of the cabinetry ... and then the cabinetry is installed on top of the flooring.
In this case the cabinetry is holding the floor down with the floor running underneath the cabinetry and the like and all other areas have been removed. This means it is difficult to comment on the condition of the timber strip flooring as it is not in the unit at the time of this inspection.
[17]
It is not possible to determine or identify the cause of the cupping or if there is or was cupping to the timber floor to require full removal as there is inadequate evidence to confirm that all of the engineered timber floors had to be removed due to cupping. As noted above ... the timber engineered flooring under the cabinetry does not exhibit any significant cupping that would warrant the replacement of the floor to the kitchen areas which are closest to the front entry door and hydraulic riser.
[18]
There does not appear to be any photographs in any of the affidavits presented in this brief that shows or indicates that the engineered timber flooring was sufficiently damaged to require uplifting of the floor, noting that the floor had been fully removed to most areas at the time of my inspection. Please refer to the below photo example ... that shows alleged damage to the floor. The alleged damage in my opinion does not justify replacement of the entire floor.
Review of all of the affidavits [sic] I cannot find any photos that show any significant cupping to the floor that would justify the whole floor to be uplifted. The photos shown below which are extracts from the affidavits show small sections of affected floor which could in my opinion be easily and reasonably repaired without the removal of the entire floor.
There is insufficient evidence in any of the affidavits or documents provided in this brief that justify the full uplifting of the entire floor and based on the evidence provided there is only minor damage which could in my opinion be easily repaired [sic, without] major disturbance to the floor ..."
[19]
[62] Similar statements appear in paragraphs 252, 257 and 258 of Mr Groom's report.
[63] On a fair reading of these paragraphs, Mr Groom's opinions are limited by the evidence which was available after the timber floors had been removed. In Mr Groom's opinion, that limited evidence - the floorboards left in place under the cabinetry and photographs of the timber floors - does not justify the removal of all the timber floors. The difficulty for Ms Hennessy, however, is that CAV's case is based on evidence beyond that considered by Mr Groom. Both Mr Schaper and Mr Cavallucci will give evidence about their observation of the condition of the timber floors before they were removed from Unit 2304 and, based on that condition, of the need to replace all the timber floors. The underlined parts of Mr Groom's report extracted above make it clear that his inability to inspect the timber floors in situ in Unit 2304 has hampered Ms Hennessy's ability to effectively challenge CAV's direct evidence. In those circumstances, I do not accept CAV's submission that the opinions Mr Groom has proffered provide a sufficient evidentiary basis for Ms Hennessy to defend CAV's contention that the timber floorboards required complete removal and replacement.
[64] Accordingly, even though a fair trial does not mean one that is perfect or ideal, I am satisfied that CAV's removal of the timber floors before Mr Groom had the opportunity to inspect them in situ in Unit 2304, has created a substantial risk that a fair trial of the timber floors allegations is not possible. Further, I do not consider that this difficulty could be adequately addressed by Ms Hennessy asking the court to draw an adverse inference against CAV. Such an inference - that the condition of the timber floors would not have assisted CAV's case that water damage to the timber floors required their complete removal and replacement - would fall to be assessed as part of the body of evidence to be considered. Again, the difficulty for Ms Hennessy is that an adverse inference may not be sufficient to outweigh the direct evidence CAV would lead from Mr Schaper and Mr Cavallucci about their observation of the condition of the timber floors.
[65] In summary, the effect of CAV removing the timber floors is that, if there is a trial of the timber floors allegations, only CAV will be able to lead evidence from witnesses who observed the alleged water damage while the timber floors were in place. I am satisfied that it would be unfair to require Ms Hennessy to defend the timber floors allegations in those circumstances.
[20]
[66] I accept that the power to strike out part of a party's pleading is a drastic remedy which must be exercised sparingly and in exceptional circumstances. I further bear in mind that the power exists to safeguard the proper administration of justice by ensuring a fair trial; it does not exist to punish a defaulting party.
[67] Bearing those cautions in mind, I consider that the circumstances in which Mr Cavallucci decided to proceed with the removal of the timber floors from Unit 2304, knowing that would occur before Mr Groom's inspection, can properly be described as exceptional. For the reasons given above, CAV's conduct was an abuse of process which has seriously prejudiced the availability of a fair trial of the timber floors allegations. In those circumstances, I consider this to be an appropriate case in which to exercise the power.
[68] Ms Hennessy accepts that the prejudice resulting from the removal of the timber floors does not justify striking out the whole of CAV's amended points of defence. There are other issues, unrelated to the timber floors allegations, which will still have to be determined.
[69] The timber floors allegations are pleaded in paragraphs 8(i)(i), 8(i)(iv), 8(l) and 12(d) of the amended points of defence. I am satisfied that an order striking out those paragraphs would be responsive and proportionate to the prejudice suffered by Ms Hennessy by reason of the abuse of process.
[70] Ms Hennessy submits that further paragraphs (or parts of paragraphs) of the amended points of defence, which rely upon the timber floors allegations, must also be struck out because once the timber floors allegations are removed the further paragraphs disclose no reasonable defence and would have a tendency to prejudice or delay the fair trial of the proceeding.
[71] These further paragraphs plead CAV's entitlement to terminate the contract on the alternative basis that Unit 2304 was substantially damaged before the completion date. That entitlement was conferred by clause 13.1(g) of the contract, which provides:
[21]
"[CAV] may terminate the Contract by written notice to [Ms Hennessy] if ... the Building or Lot is destroyed or substantially damaged before the Completion Date."
[22]
[72] First, Ms Hennessy seeks to strike out the words "and 13.1(g)" from paragraph 16(b)(i) of the amended points of defence. That paragraph presently pleads as follows:
[23]
"... as of 7 March 2024 [CAV] had a lawful right to terminate the contract pursuant to clause 8.3 of the contract (as amended by special condition 40.4) or alternatively pursuant to clause 13.1(a) and 13.1(g) of the contract as pleaded in paragraph 25 below;"
[24]
[73] Secondly, Ms Hennessy seeks to strike out paragraph 25(c) of the amended points of defence, which is the subject of the cross-reference in paragraph 16(b)(i) extracted above. Paragraph 25(c) presently pleads as follows:
[25]
(i) as at 5 September 2024 the Lot was 'substantially damaged' within the meaning of clause 13.1(g) of the contract by reason of the damage pleaded in sub-paragraphs 8(i)(i) to 8(i)(iv), 8(i)(xiv), 8(l), 8(m), 8(n), 12(c) to 12(d) above;
(ii) in the premises of sub-paragraph (i) above there existed a lawful right of termination as at 5 September 2024 and the contract was therefore terminated by the correspondence dated 5 September 2024 from [CAV's] solicitors to [Ms Hennessy's] solicitors."
[26]
[74] Of the paragraphs CAV relies upon in paragraph 25(c)(i) as the bases for its alleged entitlement to terminate under clause 13.1(g) of the contract, paragraphs 8(i)(i), 8(i)(iv), 8(l) and 12(d) are to be struck out. Further, paragraphs 8(i)(ii) and 8(i)(xiv) had previously been deleted from the amended points of defence. That would leave the matters pleaded in paragraphs 8(i)(iii), 8(m), 8(n) and 12(c) as the bases for the purported termination of the contract under clause 13.1(g). Ms Hennessy submits that, taken at their highest, those matters are incapable of supporting a finding that Unit 2304 was substantially damaged within the meaning of clause 13.1(g) of the contract. I am not persuaded that is an issue that should be summarily determined on this application. The existence of the matters pleaded in those remaining paragraphs, and (if those matters are established) the question whether Unit 2304 was substantially damaged as a result, are issues which should be left for trial. I decline to grant the relief Ms Hennessy seeks in relation to paragraphs 16(b)(i) and 25(c) of the amended points of defence.
[27]
[75] For the reasons set out above, I will order that paragraphs 8(i)(i), 8(i)(iv), 8(l) and 12(d) of the amended points of defence filed on 29 May 2025 be struck out.
[15]Clark, 655-6 [63], 666 [103], 672 [147]; Palavi, [93]; Sun v He (No 2)[2020] NSWSC 1298, [150] (Sun).
[39]
[16]British American Tobacco 577 [152], 588 [178], citing Logicrose Ltd v Southend United Football Co Ltd (High Court of Justice, Millet J, 5 February 1988); Palavi, [93]; Sun, [151].
[20] Even if Ms Hennessy was unable to change her non-admission to a denial, I do not accept that would be a proper basis to refuse relief if it is found that CAV's removal of the timber floor amounts to an abuse of process. If a party's expert is unable to inspect the subject matter of an allegation, that party may be unable to plead anything other than a non-admission. If the reason the expert is unable to undertake such inspection is because the subject matter of the allegation has been destroyed by conduct amounting to an abuse of process by the opposing party, then the inability to deny the allegation as a consequence of the defaulting party's abuse of process could not be a proper basis to deny the non-defaulting party such relief as might be appropriate in the circumstances of the particular case.
[21] For these reasons, I do not accept CAV's submission that the application should be dismissed because Ms Hennessy presently pleads a non-admission in respect of the timber floors allegations.
[25] A fair trial does not mean one that is perfect or ideal as trials may be fair even if evidence is missing.[10] The fairness of the trial and whether it has been put at risk require an evaluation of the potential consequence of the abusive conduct; that is, the nature and extent of the prejudice to the non-defaulting party by reason of the default, and all the other circumstances.[11] In assessing whether a trial would be unfair, the court should consider whether any unfairness could be adequately addressed by adverse inferences drawn against the defaulting party.[12] However, the effect of an inference that evidence, if available, would not assist the defaulting party's case must be assessed in circumstances where that inference "merely becomes part of the body of evidence to be considered".[13] Further, there may be a substantial risk that a fair trial is not possible even though the non-defaulting party might be able to establish its case based on other evidence.[14]
[26] It is important to recognise that, because the denial of a party's right to rely on their pleading, in whole or in part, is a drastic remedy, the power to grant such relief requires exceptional circumstances; it is to be used sparingly.[15] The power should not be exercised to punish the party in default, but to ensure the proper administration of justice, in particular to ensure that a fair trial can be held; the court must guard against the temptation of giving effect to its indignation.[16]
[27] Where there has been an abuse of process, the remedy must be responsive and proportionate to the prejudice suffered by the non-defaulting party.[17]
[32] Mr Cavallucci further deposed that CAV did not agree to Mr Groom inspecting Unit 2304 on 8 or 9 April 2025 because Mr Cavallucci needed to be present during the inspection to explain the issues to Mr Groom - based on his knowledge as engineer, builder and draftsman for the development - and he was not available on the proposed dates.
[33] In cross-examination, Mr Cavallucci confirmed that he provided instructions to OPL to file CAV's points of defence and its amended points of defence which raised the timber floors allegations. He also confirmed that he provided instructions to OPL to consent to the order made on 3 April 2025, fixing the time for Ms Hennessy to file her expert evidence (see [6]-[7] above).
[34] When Mr Cavallucci gave instructions to consent to the order made on 3 April 2025, he was aware of the content of Mr Schaper's report. Mr Cavallucci was present when Mr Schaper had inspected Unit 2304 and was aware that Mr Schaper had looked at the timber floors during that inspection. He was aware that OPL had provided Mr Schaper's report to HWLE and that court procedures would provide Ms Hennessy with an opportunity to respond to CAV's evidence, including Mr Schaper's report. He was aware of the possibility that Ms Hennessy's expert would want to inspect Unit 2304 to respond to Mr Schaper's report.
[35] Mr Cavallucci confirmed that he had seen the email HWLE sent to OPL on 1 April 2025, asking that CAV provide Mr Groom with access to Unit 2304 on 8 or 9 April 2025. When he read that email, Mr Cavallucci understood that the purpose of Mr Groom inspecting Unit 2304 was to look at the same issues that Mr Schaper had addressed, including the timber floors. He understood that Ms Hennessy was requesting access for Mr Groom so that her expert evidence could be prepared and filed by the date the parties had agreed, and which was subsequently included in the consent order. With that understanding, Mr Cavallucci instructed OPL to refuse to agree to Mr Groom accessing Unit 2304 until 17 April 2025 or later. Mr Cavallucci accepted that he allowed CAV's contractor to proceed with the removal of the timber floors from Unit 2304 on 7 April 2025, knowing that it had been arranged that Mr Groom would not inspect the unit until 17 April 2025.
[36] Mr Cavallucci rejected the suggestion in cross-examination that there was no urgency to remove the timber floors from Unit 2304 in April 2025. That response is difficult to reconcile with CAV's conduct concerning the timber floors both before their removal on 7 April 2025 and in the months since.
[37] As to the period before the timber floors were removed, Mr Cavallucci confirmed that, even though CAV's case is that the requirement to replace the timber floors in Unit 2304 had existed since at least 4 August 2023, he did not speak to the contractor about removing the floors until November 2024, more than a year later. It was then not until 30 January 2025 that the contractor inspected Unit 2304, and then not until late March 2025 that Mr Cavallucci instructed the contractor to proceed to remove the floors. In circumstances where it took more than 18 months from 4 August 2023 for Mr Cavallucci to give the instruction to remove the floors, I do not accept that there was any urgency for the floors to be removed in April 2025. In any event, Mr Cavallucci accepted that the contractor CAV engaged to remove the timber floors from Unit 2304 was not the only contractor capable of performing that work. There are many other contractors who could have performed that work once Mr Groom had inspected Unit 2304.
[38] As to the period after the timber floors were removed, Mr Cavallucci accepted that in a period of more than five months, CAV has done nothing further to replace those floors. Mr Cavallucci agreed that work required to fix water leaks and prepare the concrete slab in Unit 2304 before replacement timber floors can be installed has not been performed. Accordingly, Mr Cavallucci accepted that CAV is still months away from installing replacement timber floors.
[39] In those circumstances, I do not accept Mr Cavallucci's evidence that he instructed the contractor to remove the timber floors so that construction of Unit 2304 could be progressed. After the timber floors were removed, that progress has ceased.
[46] Mr Groom accepted that he had not said anything in his first report about having looked in the waste bin outside Unit 2304, or about his usual practice being to look in bins when he undertakes inspections. He explained that was because he did not consider his instructions required him to address those matters in his report.
[47] Mr Groom also accepted that he did not ask Mr Cavallucci where the removed timber floorboards were located or whether he could inspect them. Again, Mr Groom considered this beyond the scope of matters about which he had been instructed to provide an opinion.
[48] Further, Mr Groom said that damage caused to the timber floorboards by the force used to remove them would have made inspecting those floorboards futile; such inspection after removal would not have provided reliable information to inform his consideration whether, prior to removal, the floorboards exhibited damage which required that they be replaced. In his supplementary report, Mr Groom stated that if any of the removed timber floorboards had been in the bin at the time of his inspection it would have been impossible for him to reliably assess whether any cupping, warping or staining observed on those boards was caused by water ingress into Unit 2304 or the removal of the timber floor from the substrate it was attached to. Once removed, the boards would no longer be in their original installed context, making it impossible to distinguish between pre-existing defects and damage caused to the floorboards during removal. Mr Groom considers that any post-removal inspection of the timber floorboards, whether in the bin outside Unit 2304 or elsewhere, would be inherently compromised and not a suitable basis upon which to assess the original cause of any cupping or warping.
[49] When he was cross-examined about this aspect of his evidence, Mr Groom accepted that it would have been possible to see staining or discolouration due to water damage after the floorboards had been removed. However, he adhered to his evidence that cupping or warping observed on floorboards after they had been removed might be the result of heat generated by cutting the boards during the removal process and, consequently, did not provide a reliable basis to conclude that the cupping or warping was present in the floorboards before they were removed.
[50] Mr Schaper also provided a supplementary report which addressed the information that could have been obtained from an inspection of the removed floorboards. He stated that water-stained boards would still be stained after they were removed. He also stated that there may be cupping apparent on boards that were affected by water. A check of the demolished material could have provided some information on the condition of the floorboards before they were removed. Mr Schaper also stated that although the removal of the floorboards may have caused mechanical damage in the form of splintering on some locations, the cutting of the floorboards was unlikely to have caused cupping.
[51] When cross-examined, Mr Schaper said that it would have been possible, although it would have been difficult and taken a very long time, to look at every floorboard that had been removed from Unit 2304 and attempt to identify where the various floorboards were located in the unit. He accepted, however, that even if that had been done it would not have been possible to make a reliable assessment of when any water damage observed on the floorboards might have occurred. He also agreed, when shown photographs of the removed floorboards, that care had not been taken during the removal process to preserve those floorboards.
[56] I also do not accept CAV's argument that its removal of the timber floors before Mr Groom inspected Unit 2304 was justified because Ms Hennessy did not apply for an order for the preservation of property under r 250 of the UCPR. In circumstances where the parties had agreed on the date for Mr Groom's inspection, I cannot see any reason why Ms Hennessy or HWLE should have thought such an application would be necessary. Although Mr Cavallucci knew that the timber floors would be removed before Mr Groom's inspection, he did not provide that information to Ms Hennessy. If he had, Ms Hennessy might have applied under r 250, or alternatively for a direction requiring that Mr Groom be granted access to inspect Unit 2304 before the timber floors were removed. But in the events which occurred, CAV's reliance upon the lack of such an application is misplaced.
[57] I do not accept Mr Cavallucci's affidavit evidence that he told Mr Groom some of the floorboards removed from Unit 2304 were in the bin outside Unit 2304. Mr Cavallucci retreated from that evidence in cross-examination and, instead, agreed that he did not make such a statement. In any event, in circumstances where Mr Groom referred in his report to the timber floors having been removed, I expect he would have also recorded any statement by Mr Cavallucci that the removed floorboards had been placed in the bin outside.
[58] By contrast, I accept Mr Groom's evidence that he looked in the bin when he followed Mr Cavallucci out of Unit 2304 to inspect the hydraulic cupboard, and that he did not see any major construction waste in that bin. Again, under cross-examination Mr Cavallucci retreated from his evidence that he could say with certainty that Mr Groom did not look in the bin and, instead, agreed that after he walked out of Unit 2304 to the hydraulic cupboard, he could not see whether Mr Groom looked inside the bin. Based on these findings, I do not accept CAV's submission that Mr Groom was informed that the bin outside Unit 2304 contained removed timber floorboards but chose not to look at those floorboards.
[59] Even if Mr Groom had been informed that he could look at the removed floorboards, Mr Schaper's evidence about the difficulties in obtaining reliable information from an inspection of the floorboards after they had been removed leads me to doubt the utility of such an exercise. I am satisfied that once the timber floors had been removed from Unit 2304, Mr Groom's ability to investigate the alleged defects was significantly compromised. Again, CAV's submission that Mr Groom was at fault for not having inspected the removed timber floorboards is without merit.
[60] Finally, I do not accept that the opinions Mr Groom has proffered in his report about the likely presence of defects in the timber floors, which he adhered to in cross-examination, mean that Ms Hennessy has not been prejudiced by the removal of the timber floors.
[61] The relevant parts of Mr Groom's report state as follows: