Niclin Constructions Pty Ltd v Yatala Formwork Pty Ltd [2023] QSC 285

• [1] Niclin Constructions Pty Ltd is a building company. It contracted with Yatala Formwork Pty Ltd as a subcontractor for Yatala to carry out formworks at a building in Springwood.
• [2] Niclin claims that Yatala failed to achieve practical completion as required by the contract and is, therefore, entitled to liquidated damages. Yatala raises many matters in its defence of the claim.
• [3] By this application, Niclin seeks to have five questions determined separately.

The principles to be applied on an application for a separate question

• [4] Rule 483 of the Uniform Civil Procedure Rules 1999 provides:

"The court may make an order for the decision by the court of a question separately from another question, whether before, at, or after the trial or continuation of the trial of the proceeding."

• [5] The ultimate question to be determined on an application under r 483 is whether the making of the order is "just and convenient" and this must take into account the nature of the judicial process.[1]
• [6] The general principles that govern an application such as this were summarised by Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society:[2]

(a) the judicial determination of the question must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties;[3]

(b) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined;[4]

(c) care must be taken in utilising this procedure to avoid the determination of issues not "ripe" for separate and preliminary determination. An issue may not be "ripe" in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved;[5]

(d) factors which tend to support the making of an order include that the separate determination of the question may:

(i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or

(ii) contribute to the settlement of the litigation;[6]

(e) factors which tell against the making of an order include that the separate determination of the question may:

(i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;[7]

(ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding;[8] and

(iii) prolong rather than shorten the litigation.[9]

• [7] In CBS Productions Pty Ltd v O'Neill,[10] Kirby P (as his Honour then was) said:

"[a] matter is "ripe" for separate and preliminary determination where it is a central issue in contention between the parties, the resolution of which will either obviate the necessity of litigation altogether or substantially narrow the field of controversy."

• [8] While Reading has been referred to with approval by judges of this Court for its summary,[11] there is another factor to be taken into account - the need to take a cautious approach. It was put this way by Applegarth J in Brisbane Airport Corp Pty Ltd v Arup Pty Ltd:[12]

"[16] The starting point is that generally all issues of fact and law in a matter should be determined at one trial. The ultimate question is whether it is just and convenient to make an order for separate determination. A cautious approach should be adopted in deciding to order a separate trial."

• [9] Similar expressions can be found in POS Media Online Ltd v Queensland Investment Corp[13] and McConnell Dowell Constructors (Aust) Pty Ltd v Cardno (Qld) Pty Ltd.[14]

(a) there was a construction contract between Niclin as contractor and Yatala as subcontractor dated 23 February 2023;

(b) the date for practical completion was 1 July 2022;

(c) Yatala failed to reach practical completion by 1 July 2022; and

(d) Niclin is entitled to claim liquidated damages at a rate of $4,500 per day until practical completion has been reached, being $1,350,000 on the date the claim was filed.

• [11] Yatala pleads several defences which include:

(a) the subcontract was not entered into until 4 April 2022;

(b) practical completion was reached on 2 March 2023;

(c) Niclin caused various delays preventing Yatala from reaching practical completion; and

(d) the prevention principle prohibits Niclin from claiming liquidated damages.

• [12] Niclin has either denied or not admitted Yatala's pleaded defences. This means there is a significant factual dispute between the parties. The parties estimate that the trial would take between seven and eight days.

• [13] Niclin's amended application seeks that the following questions be heard and determined separately:

(a) whether, on the proper construction of the subcontract between the plaintiff and the defendant:

(i) the defendant had the right, under clause 19 of the general conditions of the subcontract, to claim extensions of time or damages for any prevention or delay caused by the plaintiff;

(ii) the plaintiff is entitled to liquidated damages, even if it is found that it prevented or delayed the defendant in achieving practical completion;

(b) whether, on the proper construction of the subcontract, the defendant's obligation to achieve practical completion by the date for practical completion was capable of being set at large, if it is found that it prevented or delayed the defendant in achieving practical completion (second prevention question);

(c) whether clause 22(b) of the general conditions and the rate for liquidated damages under the Subcontract are a penalty and, thereby, unenforceable and void (penalty question);

(d) whether the representations pleaded in paragraphs 6D(a)(ii) to (iv) of the defence and paragraph 10 of the counterclaim were capable of being conveyed by the matters pleaded in paragraphs 4E to 4F of the defence (estoppel question); and

(e) whether the representations pleaded in paragraphs 9(a) to (e) of the counterclaim (and each of them) were capable of being conveyed by the matters pleaded in paragraphs 4 to 8 of the counterclaim (misleading or deceptive conduct question).

• [14] Niclin submitted there were several grounds for allowing the separate questions. These are:

(a) the answers to the separate questions have the potential to avoid the need to establish some or all of the conduct which the defendant claims gives rise to the prevention principle;

(b) if there are answers that

(i) Niclin is entitled to liquidated damages even if it engaged in prevention conduct;

(ii) the prevention conduct was not capable of causing time to be set at large;

(iii) Niclin is not estopped from asserting entitlement to liquidated damages; and

(iv) Niclin did not engage in misleading or deceptive conduct

then that will mean the whole issue of any prevention principle conduct becomes irrelevant;

(c) if it is held that the liquidated damages clause is a penalty then Niclin's whole claim must fail;

(d) while an answer to the separate questions may not dispose of the entire proceeding, it will substantially narrow the issues;

(e) the questions will otherwise need to be resolved at trial;

(f) the questions of the prevention principle are questions of construction of the subcontract and are not a factual dispute;

(g) the question of the penalty clause will involve no, or very little, dispute of fact; and

(h) the factual inquiry for the questions on misleading and deceptive conduct and on estoppel will be limited.

(a) the proposed questions will not resolve the proceedings;

(b) the first three questions are hypotheticals and are vague;

(c) the questions are not ripe for determination as the interpretation of the contract and the operation of the extension of time provisions will require a recourse to the events and circumstances they were made. It will be necessary to identify the commercial purpose and objects of the contract to assist in determining what a reasonable businessperson would have understood the words in the contract to mean. Further, amendments to the pleadings are likely once disclosure has been completed;

(d) even if the proposed separate questions were answered in favour of the plaintiff, the vast bulk of the matters in issue in the proceeding, and the most time-consuming issues, would remain unresolved and left for determination at the trial;

(e) there is significant overlap between the evidence that would need to be adduced and the witness required on the hearing of the separate questions and the matters that would remain for determination at the trial;

(f) it is entitled to call witnesses to give information with respect to the formation and surrounding circumstances of the subcontract;

(g) the answer to the question of whether the defendant has the right to claim extensions of time is hypothetical and will not assist in quelling the dispute;

(h) the evaluation of whether a representation was or was not conveyed for the purpose of the misrepresentation claim should be done in a trial; and

(i) the witnesses the defendant wishes to call in respect of the proposed questions are the same witnesses the defendant wishes to call for the remainder of the issues.

• [16] A determination that the liquidated damages clause is a penalty could resolve the entire proceeding. Counsel for Yatala submitted that the proceeding is not at a stage where this separate question could be heard. The pleadings are not at a state where this issue could be determined at this time.
• [17] In any event, the answer to this separate question would only resolve the proceeding if it were answered in favour of Yatala. An answer in favour of Niclin would only resolve this particular defence. The parties would still be required to have a trial.
• [18] The hearing of this question may have been appropriate if it were also being heard with other questions where the cumulative answers to which would resolve significant parts of the proceeding. It is not.

• [19] There are some serious issues raised which are interlinked and the resolution of which will depend upon decisions made on other issues. The matters which appear to be in dispute include, at least, the following:

(a) the true date of the contract;

(b) whether events displaced the date for practical completion;

(c) whether Niclin was required to provide Yatala with access to the site and when access was provided;

(d) whether the acts of prevention pleaded by Yatala did occur and did cause the alleged delays;

(e) whether Yatala was entitled to make the claims for extensions of time;

(f) whether there were common assumptions arising from either Niclin's conduct or representations which lead to Niclin being estopped;

(g) whether Niclin breached its obligation to cooperate;

(h) whether Niclin engaged in misleading and deceptive conduct;

(i) by what date it was reasonable for Yatala to reach practical completion;

(j) what was the date of practical completion; and

(k) whether the liquidated damages clause is a penalty.

• [20] If separate questions were to be ordered, and the answers did not lead to a resolution of the entire case, then it would be almost certain that witnesses called on the separate questions would be required to be called again.
• [21] It is not appropriate for me to make any findings or tentative conclusions about these issues. I bear in mind that the general principle applied in our system of civil litigation is that all issues of fact should be determined at the same hearing. A cautious approach should be adopted and a comfortable level of certainty should exist about the utility and fairness of requiring the parties to embark upon the hearing of separate questions. I am not satisfied that the separate question sought to be heard would not mean that decisions on facts would need to be made upon an assessment of the credit of witnesses. This is to be avoided if there is any reasonable prospect that there might need to be a further hearing.
• [22] The pleadings demonstrate substantial disagreement and there are issues which will require more than the construction of clauses of the contract.
• [23] As I have referred to above, the parties estimate that a full trial of these matters would take 7 to 8 days. The applicant was confident that these are separate questions could be resolved in a two-day hearing. I do not share that sanguine approach. On the material before me, I would expect that the hearing would take at least three days. For the reasons I have given above and taking into account the current state of the pleadings, this is not a case in which the questions nominated by Niclin should be determined at a separate hearing.

(a) the application is dismissed; and

(b) I will hear the parties as to costs.

[1] Cairns City Council v Xontan Pty Ltd [1999] QSC 215 at [15] (Jones J), citing Bass v Permanent

Trustee Company Ltd [1999] HCA 9; (1999) 198 CLR 334 at [56].

[2] [1999] FCA 718; (1999) 217 ALR 495 at [8].

[3] Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at [45].

[4] Jacobson v Ross [1995] VicRp 24; [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1969] UKHL 3; [1970] AC 179; Bass

v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at [45]

[5] CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 at 606 (per Kirby P).

[7] GMB Research & Development Pty Ltd v Commonwealth [1997] FCA 934.

[8] GMB Research & Development Pty Ltd v Commonwealth; Arnold v Attorney-General (Vic)

(unreported, Fed C of A, Sundberg J, Nos VG629-37 of 1995, 8 September 1995, BC9502745).

[9] GMB Research & Development Pty Ltd v Commonwealth [1997] FCA 934.

[10] (1985) 1 NSWLR 604 at 606.

[11] Queensland Harness Racing Ltd v Racing Queensland Ltd [2011] QSC 125; Body Corporate for Sun

City Resort CTS 24674 v Sunland Constructions Pty Ltd [2010] QSC 463.

[12] [2020] QSC 202.

[13] [2000] FCA 1451 at [8].

[14] [2019] QSC 320 at [32].