Meriton Apartments v Fair Trading Administration Corporation

DECISION : I order that the hearing of the proceedings today before me be vacated. I stand over to the motions list on 3 September 2010 the plaintiff's notice of motion filed on 12 April 2010 and the defendant's notice of motion filed on 19 May 2010. I reserve the costs of today.

CATCHWORDS : PROCEDURE - judgments and orders - application by plaintiff to set aside stay of proceedings made by another first instance judge and for leave to amend summons and list statement - application by defendant for dismissal of plaintiff's application - whether appropriate to revisit orders - whether relevant change of circumstance - no change in factual circumstances - hearing of proceedings vacated.

Building Services Corporation Act 1989 (NSW) LEGISLATION CITED : Civil Procedure Act 2005 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Supreme Court Act 1970 (NSW)

PARTIES : Meriton Apartments Pty Limited (Plaintiff) Fair Trading Administration Corporation (Defendant)

COUNSEL : D G Russell QC / M N Allars (Plaintiff) M Christie SC / B D Kaplan (Defendant)

SOLICITORS : Daniel Grynberg (Plaintiff) Susan Robosa (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST

30 August 2010 (ex tempore - revised 31 August 2010)

2009/298792 MERITON APARTMENTS PTY LTD v FAIR TRADING ADMINISTRATION CORPORATION JUDGMENT

1 HIS HONOUR: The plaintiff (Meriton) is a developer and builder. Among its many projects is a strata title residential apartment block at 99 Jones Street, Ultimo (the property). The Owners Corporation of that strata title development claims that the building work was carried out defectively. It has made claims under the comprehensive insurance scheme administered by the defendant (FTAC). FTAC has paid, to date, in excess of $2.2 million for the cost of rectification of allegedly defective work. 2 FTAC has a right of indemnity under s 98 of the former Building Services Corporation Act 1989 (NSW) (now the Home Building Act 1989 (NSW)) for amounts paid by it "under BSC insurance". That statutory right is to be indemnified by the person by whom the residential building work in question was done or contracted to be done: in this case, Meriton. It seems that FTAC has notified Meriton that it may wish to enforce that statutory right of indemnity. However, FTAC has not commenced proceedings to enforce that claimed right.

3 Meriton commenced these proceedings, seeking declarations that the amounts paid by FTAC to the Owners Corporation were paid without statutory authority, or, alternatively, were paid "in excess of their reasonable value". As I have said, at the time the proceedings were commenced, FTAC had not sought, by litigation in a court of competent jurisdiction, to enforce its claimed right of indemnity. Meriton's proceedings were in effect a pre-emptive strike. 4 In those circumstances, FTAC sought, by notice of motion, an order "that the proceedings be dismissed generally". That application was heard by Einstein J on 13 November 2009. His Honour gave judgment on 17 November 2009 ([2009] NSWSC 1238). His Honour ordered that the proceedings "be stayed until the occasion when the defendant commences recovery proceedings against the plaintiff". No such recovery proceedings have as yet been commenced. 5 No application was made for leave to appeal from his Honour's order (which, I interpolate, was not an order sought by either party). Nor has Meriton (or, for that matter, FTAC) sought to re-argue the matter before his Honour. Nonetheless, by notice of motion filed on 12 April 2010, Meriton seeks orders including that the stay "be set aside" and that it have leave to amend its summons and technology and construction list statement. FTAC has replied to that notice of motion by its own notice of motion filed on 19 May 2010 seeking, among other things, an order that Meriton's notice of motion be dismissed. 6 Mr D G Russell of Queen's Counsel, who appeared with Ms M Allars of counsel for Meriton, submitted that it was possible to deal with his client's notice of motion without seeking to cavil with either the reasons of or the orders made by Einstein J. Mr M G Christie of Senior Counsel, who appeared with Mr B D Kaplan of counsel for FTAC, submitted that if the matter were to be re-agitated, this should be done either before Einstein J or in the Court of Appeal. However, Mr Christie's primary position was simply that his Honour's orders should remain in place, so that Meriton's proceedings would remain stayed until (if at all) FTAC sought to enforce its claimed right of indemnity. 7 For reasons that do not require elaboration, the current notices of motions were fixed for hearing before me. At the outset of the hearing, I raised with Mr Russell the problem that, in effect, his client was asking one judge of first instance to review an interlocutory decision of another judge of first instance, in circumstances where, arguably, such a review had not been within the contemplation of the judge who made the orders. (I say "arguably" because Mr Russell submitted, for reasons that I will come to in a moment, that the reasons of Einstein J did contemplate that his Honour's orders could be revisited before, if at all, FTAC commenced proceedings for indemnity.) 8 One of the difficulties in my dealing with the matter is that, as I have said, the order made by Einstein J was not one for which either party had contended. His Honour's reasons for making that order were, in substance, that:

(1) earlier cases dealing with the right of a party in the position of Meriton to challenge decisions made by FTAC or its predecessor the Building Services Corporation were dealt with on a final basis, whereas the application before his Honour was of an interlocutory nature; thus, the question of final entitlement was not one that could be dealt with;

(2) although the Court's power to grant declaratory relief is, in a strict sense, very wide, nonetheless there might be factual situations where, as a matter of discretion, that power might not be exercised; and

(3) in circumstances where FTAC had not commenced recovery proceedings, and might not do so, it was inappropriate to deal with the claim brought by Meriton because, as I understand his Honour's reasons, there was no present threat to any legal right of Meriton, and thus, arguably, no standing to seek the relief that had been prayed. 9 Having said that, his Honour said at [25] that "whilst the making of a stay order...does not achieve the plaintiff's [sic; defendant's] intent, it does leave for another day, a decision as to whether and if so when, the stay should be lifted." 10 Mr Russell submitted that, by those words, his Honour had contemplated that the stay that he ordered could be revisited even if no recovery proceedings had been commenced by FTAC. I do not think that this is correct. I think that what his Honour had in mind was that, if and when those recovery proceedings were commenced, the Court, being better apprised of the issues, could decide whether to lift the stay and (as contemplated as a possibility at [24]), whether the existing proceedings could be consolidated with the hypothetical recovery proceedings. 11 In any event, the order that his Honour made did not include any reservation of leave; and the stay was not "until further order" but, as I have now said more than once, until a specified event occurred. 12 In those circumstances, there being no relevant change of circumstance (and I will return to this), I do not think that it is appropriate for me in effect to review the order made by Einstein J. If that is to be done, there are two ways to do it. One is to list the present motions before his Honour, and for Meriton to ask his Honour to recall the relevant paragraphs of his reasons and review the order made (assuming that this can be done; and I do not know whether his Honour's order has been entered). Alternatively, it would be possible to seek leave to appeal from his Honour's order. 13 It is implicit in what I have just said that I do not accept that I can deal with Meriton's notice of motion without revisiting, in a substantive fashion, the stay ordered by Einstein J. The notice of motion itself makes that clear. The first order sought is an order that the stay be set aside. It is only if the stay is set aside that the application for leave to amend can be considered. Accordingly, in my view, I am placed in the position where, as one judge at first instance, I am being asked to review an interlocutory decision made by another judge at first instance. 14 The authorities are reasonably clear that the course that I have just outlined can be undertaken where there has been a relevant change in circumstances. I said earlier that I did not think that there had been any relevant change of circumstances. It is necessary to elaborate a little on that. If it is permissible to look at the amendments sought to be made to the summons, what Meriton seeks to do is:

(1) abandon the prayers for relief that it had earlier pressed; (2) substitute a prayer seeking relief in the nature of certiorari (s 69 of the Supreme Court Act 1970 (NSW)) quashing some 22 identified determinations made by FTAC, in respect of claims made by the Owners Corporation, apparently on the basis that they were invalid because they were beyond power, having been made out of time and there being no valid basis for extensions of time; (3) add prayers for declaratory relief, in respect of those determinations; (4) claim relief in the nature of certiorari in relation to the decision to extend time; (5) seek declarations in relation to the decision to extend time, including a claim of denial of procedural fairness; and (6) seek orders in the nature of prohibition in relation to the implementation of one determination and the making of any others. 15 The amendments to the list statement are, as one might expect from the amendments to the summons, equally extensive. I do not propose to go through them. 16 One of the matters that, according to the submissions provided to the Court for today's hearing, Meriton wishes to raise is that any claim for recovery under s 98 of the BSC Act is a "building action" as defined in s 109ZI of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) and thus falls within the limitations set out in s 109ZK of the EPA Act. That was urged on me as being a relevant change in circumstances. If an action under s 98 of the BSC Act is a building action for the purposes of s 109ZK, then it is arguable that it could not be brought more than 10 years after the date on which a final occupation certificate had been issued, or more than 10 years after the dates of certain other specified events.

17 It appears, however, that if there is a relevant 10 year limitation, that limitation had expired back in November 2009. Thus, the factual circumstances that give rise to the argument under s 109ZK of the EPA Act were present when the earlier notices of motion were dealt with by Einstein J. The fact that the application of s 109ZK was not then seen to be relevant, but is now seen as a source of relief, does not seem to me to be a relevant change in circumstances. 18 In those circumstances, I do not think that it is appropriate for me to undertake the task, which as I have said is inherent in Meriton's notice of motion, to revisit the orders made by Einstein J on 17 November 2009. I come to that conclusion with reluctance because it does not seem to me to be consistent with the just, quick and cheap resolution of the real issues in dispute. However, important as s 56 of the Civil Procedure Act 2005 (NSW) is, it does not override the very real limitations that, for very good reason, are placed on the power of one judge at first instance to review even interlocutory decisions made by another judge at first instance. 19 In those circumstances, it seems to me that the appropriate course is to send the matter back to the list judge so that Meriton, if so advised, can ask for its notice of motion to be listed before Einstein J. If Meriton wishes to take that course, it could ask his Honour to take such steps as seem to be appropriate to revisit the order that he made in light of whatever Meriton contends are relevant changed circumstances. It would of course be a matter for his Honour whether, and if so to what extent, to accede to that application. 20 Accordingly, I order that the hearing of the proceedings today before me be vacated. I stand over to the motions list on 3 September 2010 the plaintiff's notice of motion filed on 12 April 2010 and the defendant's notice of motion filed on 19 May 2010. I reserve the costs of today. **********

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