Northern Territory of Australia v Bellamack Pty Ltd [2025] NTSC 44

Northern Territory of Australia v Bellamack Pty Ltd [2025] NTSC 44 | Case summary | Zoe

[61]

[18] It was the Plaintiff's position that the issue for determination was whether the 2ASOC containing paragraph [23] plead an arguable claim for damages for breach of contract appropriate to send the matter to trial.
[19] The Plaintiff submitted that it had properly addressed Huntingford J's criticisms in respect to the strike out of paragraph [23] of the ASOC.[14]
[20] It was the Plaintiff's position that authority establishes that it is entitled, in respect to a breach of contract, by an award of damages, to be placed in the position it would have been if the contract had been performed. It was submitted that one form of loss capable of compensation is the value of what a promisee would have received if the promise had been performed. In this case the Plaintiff submitted the focus should have been on the task of identifying the loss of the value of what the Plaintiff would have received if the Defendant had performed the contract. The Plaintiff says, in determining the loss, it is not necessary to focus on the loss of third parties incurred on separate transactions, being the owners of the Affordable Homes, and that any such loss is irrelevant to the loss suffered by it. The Defendant, the Plaintiff says, was required to make available Affordable Homes which complied with the requirements of the Development Agreement, which had nothing to do with obligations owed to third parties. It follows, as it is alleged the Defendant did not do that, the task of the Court is to place the Plaintiff, so far as money can do it, in the position it would have been had the Development Agreement been performed, and the Court must quantify the loss of the value of what the Plaintiff would have received if the promise by the Defendant had been performed. It was submitted that, in paragraph [23] of the 2ASOC, the Plaintiff pleads that loss and its value, namely the necessary and reasonable cost of rectification or of demolishing and rebuilding the Completed Affordable Homes where that is the reasonable cure.
[21] In respect to the argument that the Territory could not have suffered a loss because it had no legal obligation to rectify the defective building work and any loss was suffered by purchasers from the Defendant, the Plaintiff argues that that contention arises by virtue of Huntingford J's statement that "it was unclear why the Territory was required to replace or rebuild the houses". The Plaintiff submitted that it did not contend that it was required to rebuild or replace the houses, but rather it was entitled to rebuild or replace the houses to procure what the Defendant was required to do under the Development Agreement and by breaching its contractual obligations had failed to do.
[22] It was the Plaintiff's position that, it was not its claim that it held any proprietary or equitable interest in the land or it had any obligation to repair them. Further, it was argued that it mattered not that the land had left the ownership of the Plaintiff and become the property of the Defendant and then the property of third parties.
[23] The Plaintiff relied on a number of authorities to the effect that, notwithstanding that land with a defective building on it was sold or otherwise ceased to be owned by a party, that any such sale did not affect the entitlement of the person, to whom contractual obligations to build was owed, to compensation for that breach of the building contract.

[84]

[35] Paragraph [23(a)] of the 2ASOC pleads what the Plaintiff should have received in terms of expectation. Paragraphs [23(b) and (c)], particularly through the use of the words "as a result of" plead what the Defendant's breaches caused. Paragraph [23(c)] begins with the statement from Robinson v Harman, further qualified by the statement that such damages are to be the reasonable and necessary cost of rectification or demolition/rebuilding so as to give the Plaintiff the equivalent of a building which is substantially in accordance with the contract. That qualification is in accordance with the principles in Bellgrove and Harris. Particulars of the loss, are provided in terms of the reasonable and necessary costs of rectification or demolition, which comprises: costs of assessing the nature, extent and cost of repairs (paragraph [23(i)]), the costs of demolishing and rebuilding homes under the HBCF claims (paragraph [23(ii)]), Costs of acquisition, demolition, resale of lots to third parties minus amounts received on resale for certain other HBCF homes (paragraph [23(iii)]) and in respect to eight homes either the costs and expenses of demolishing and rebuilding, or costs of acquisition, demolition, resale to third parties less amounts received from sale (paragraph [23(iv)]). The pleadings state that particulars of loss and damage are set out in an attached schedule and that further particulars of quantum will be provided when identified and otherwise prior to trial, with which no issue was taken.
[36] As noted above, a decision to strike out a pleading should not be made lightly and should be made on the basis of there being no reasonable prospect of success, and in respect to a cause of action, no reasonable prospects of success in respect to the raising of a reasonable cause of action.
[37] On its face there is a reasonable cause of action pleaded, namely that there has been a breach or breaches of the development agreement, and as a result of that breach or breaches, a loss was caused (i.e. damage). The loss or damage, that is "the something of value", is the loss of expectation that the houses were to be built in accordance with the contract, the Development Agreement, and through the remedy of damages, the Plaintiff is entitled to be put into the position it should have been had the contract been performed. The measure of which, in the circumstances, is the necessary and reasonable cost of rectification of the defective homes or of demolition and rebuilding of the homes. That entitlement to damages would arise regardless as to whether the Plaintiff had in fact already rectified or demolished/rebuilt the homes, as damages are assessed in a "once and for all basis".[29] Further, on the authority of Harris, the entitlement to the remedy of damages may be unaffected by a subsequent sale of a defective property, or the fact that the promisee did not have an interest in the property at the time of the suit. As Gibbs J stated in Harris, the Plaintiff "may resolve to put the building in order after it has been sold because he feels morally, although not legally, bound to do so" and that has "nothing to do with the builder, whose liability to pay damages has already accrued". It is therefore not necessary, given the manner in which the Plaintiff's case is pleaded, to plead why the Plaintiff was actually required to replace or rebuild the houses because that is not the Plaintiff's case.
[38] At hearing the Defendant made the point that it was not my role to act as an appeal of Huntingford J's decision in striking out paragraph [23] of the ASOC. In determining these applications I am not doing so. I am determining the applications, made and argued before me, on the basis of submissions and the authorities referred to. Her Honour examined the nature of contractual damages without reference to Harris[30] but with reference to Bellgrove. Reference was made to by her Honour certain English authorities. I can only discern from that, that the argument was not fully developed before her Honour in those respects, and had it been so, possibly a different result may have arisen.
[39] It may be that the Plaintiff faces issues at trial. It may be that the circumstances of this case, given the nature of the contract and the dealings with the land, this case is distinguished from the general principles which applied in Harris, and the manner of the sale of the property displaces an entitlement to damages. Alternatively, it may be that if the Bellgrove measure of damages applies it may be found that the damages claimed were not reasonable or necessary, or too remote. Those risks were acknowledged by the Plaintiff. Those matters, in my view, are certainly arguable and substantive matters which should be determined at trial, in light of a reasonable cause of action.
[40] On the basis of the above, and the authorities referred to, I am satisfied that the Plaintiff's pleading at paragraph [23] of the 2ASOC discloses a reasonable cause of action which should not be struck out. That part of the Defendant's application is dismissed.

[86]

[41] The second aspect of this proceeding is that the Defendant seeks paragraphs [6] and [19] of the 2ASOC be struck out as an abuse of process pursuant to Rule 23.02(d) and the former paragraphs be re-instated.
[42] The Plaintiff, in turn, seeks leave, pursuant to Rule 36.03(b), to amend the ASOC, to amend various paragraphs. Some amendments are of a minor grammatical nature and are of no issue. The substance of the amendments relate to paragraphs [6] and [19] (and [17]) of the ASOC in so far as reference is made to a home which was developed and retained by the Defendant in the course of development (referred to as House No.9 in paragraph [17] of Huntingford J's judgment extracted above).
[43] The Defendant's position is that leave was not granted to amend paragraphs [6] and [19], they should not have been amended and leave should not be granted now.
[44] On an analysis of Huntingford J's judgment, although the final order is framed in terms of "The Territory has leave to file and serve a further amended statement of claim" it was clearly not intended that be carte blanche in terms of amendment, rather the leave granted was referable to the defects in the pleadings identified by her Honour, most notably those arising in paragraph [23]. There were no arguments before Huntingford J about the adequacy of paragraphs [6] or [19] such that they required amendment and it is difficult to see why the Plaintiff would have thought that any order for leave to amend extended to those provisions. In submissions, the Plaintiff stated that whilst the leave granted might properly encompass the relevant amendments, it acknowledged that the better course may have been to seek consent to amend or, absent that, make application to amend.[31] I agree with the latter. The Plaintiff ought not to have amended paragraphs [6] or [19] of the ASOC without seeking leave of the Court. Rule 36.03 provides that a party may amend a pleading once before the close of pleadings. Pleadings have not yet closed and the Statement of Claim was amended once already, arguably using up the one opportunity to amend before the close of pleadings.[32] On its face, filing an amended statement of claim, amending parts of a statement of claim for which leave was not granted, would amount to an abuse of process. However, leave has now been sought, ex post facto, under Rule 36.03(b) and I will proceed to consider the amendments sought.
[45] The law in respect to seeking leave to amend pleadings is well established. Authorities make it clear that the general approach to applications to amend pleadings is liberal and amendment should be allowed if it can be made without injustice to the other side.[33] Parties should not be punished for mistakes in the conduct of their cases, unless fraudulent or intended to be over-reach.[34] Further, where the withdrawal of an admission in a pleading is sought, an explanation may be required which is sensible and based on substantial evidence.[35] Considerations as to the administration of justice, proper case management and prejudice to the non-amending party are all relevant.
[46] In this particular instance the amendments concern deletion of reference to House No. 9 from paragraphs [6] and [19] (and paragraph [17]), of the ASOC. House No. 9, as found by Huntingford J at paragraph [17] of her judgment, was constructed by San Industries and retained by the Defendant who made payment to the Plaintiff in accordance with the Development Agreement. House No. 9 was described by her Honour as one of the 10 houses "subject" to the HBCF scheme of insurance.[36] As noted by her Honour, the owners of each of the 10 houses covered by the HBCF scheme had made a claim under the scheme for rectification defects. As her Honour also noted, the Territory, had at that point in time assessed that the HBCF scheme covered all of the claims, other than that made by Bellamack which remained outstanding, and that that claim had not been resolved.[37] Subsequent to hearing before Huntingford J, the Defendant's HBCF claim was determined on 17 May 2024. The Defendant was informed by letter of 17 May 2024 that its claim had been rejected as the "HCBF policy does not respond to the HBCF claim. That is because, inter alia, Bellamack Pty Ltd does not fall under the definition of "Owner" under the HBCF Policy". In response on 17 June 2024, by letter, the Defendant stated that the Plaintiff's position was inconsistent with the admission made by it in paragraph [19] of the ASOC. It was the Defendant's position that the admission put the matter of the indemnity (i.e. that the policy applied to House 9 and an indemnity was provided) beyond doubt.
[47] On 27 June 2024 the Plaintiff responded indicating that it would be taking steps to withdraw the alleged "admission" after Huntingford J's decision was received.[38]
[48] The Defendant's position is that the amendments to paragraphs [6] and [19] (and [17](c)(i)) of the ASOC are seeking to withdraw an admission previously made in the ASOC and leave to do so should not be granted.
[49] Formal admissions may be made in a number of ways: through statements of the party or counsel, express admissions in pleadings (Rule 35.02(1)), a failure to deal with an allegation of fact in a pleading (Rule 13.12), an answer or failure to answer a notice to admit facts (Rule 35.03), answer to interrogatories or as agreed between the parties. The Defendant's written submissions originally referred to Rule 35.02 and the process under that Rule for the withdrawal of an admission. Rule 35.02 applies to a notice served on one party voluntarily admitting facts. That does not apply here. Rather, this is an application for amendment under Rule 36.03(b) for leave to be granted to amend a pleading. The question is whether what is contained in the pleading is an admission and if so, should leave to withdraw it be granted. If it was an admission it would need to be an informal one. If it is not an admission the "regular" principles in respect to amendments should apply.
[50] The Defendant submitted that the inclusion of Home No. 9 in paragraph [19] of the ASOC represented an admission by the Territory that the HBCF Policy "responds to the claim by Bellamack in relation to the property". "Responds to the claim" is a reference to what is pleaded in paragraph [19] of the ASOC namely:

[88]

[51] Particulars are provided to paragraph [19](a)] which provides that "The owners of the Completed Affordable Homes made claims under the HBCF insurance policy on the following dates (HBCF Claims)" and thereby follows a further table in which the claim details of all 10 homes are listed including House No. 9, which the Plaintiff now seeks to amend by deletion. Paragraph [20] of the 2ASOC then goes on to state that the Plaintiff is liable to settle or had settled each of the HBCF claims in the following ways - (a) by reference to Homes 10, 12 and 18 of the table pleaded in [6], by demolition and rebuilding (called the Demolish and Rebuild HBCF Claims) and (b) by reference to Homes 11 and 13-17 of the table pleaded in [6], by acquisition and sale (called the Acquisition HBCF Claims). There is no reference to Home No. 9.
[52] The Defendant says that the ASOC contains an admission that Bellamack came within the policy terms of the HBCF insurance policy (not an admission of liability under the policy per se), that is, it was prima facie covered by the policy. The relevance of whether Bellamack comes within the policy terms is important, the Defendant says, because broadly the Plaintiff wishes to advance an argument that it was obliged to insure the subsequent purchasers of the Homes covered by the HBCF scheme (and seek to rely on the indemnity in clause 8.2 of the Development Agreement), because the subsequent purchasers of those homes come within the definition of "owners" as defined in the policy. The Defendant disputes that the policy extends to any other owners other than itself. In any event, the Defendant says, inclusion of reference to its house in the ASOC, was an admission that the policy applied to it as well, as an owner. That broader argument is set out in more detail in paragraphs [36] - [47] of Huntingford J's judgment.
[53] It is the Defendant's case that the ASOC has been in its current form since the beginning of the proceedings, and it was only now that the Plaintiff sought to abandon something it had agreed to.
[54] In response, the Plaintiff submitted that the relevant parts of paragraphs [6] and [19] of the ASOC were not an admission for the purposes of the pleadings rules, and therefore their proposed amendment does not constitute a withdrawal of an admission. The Plaintiff submitted that the statements were mere assertions, and assertions made in a pleading do not constitute an admission by the party filing the pleading. As such, specific leave to withdraw an admission is not required. Reliance was placed on the High Court decision of Laws v Australian Broadcasting Tribunal (footnotes omitted):[39]

[94]

[55] The Plaintiff says that reference to the Defendant's Home No. 9 was included in error in the table in paragraph [6] and subsequently by back reference to it in paragraph [19] of the ASOC. The table at paragraph [6] of the ASOC refers to the allocation, by the Defendant, of lots to be Affordable Allotments where Affordable Homes were constructed on each Affordable Lot.[40] It follows that, according to the definition of Affordable Allotment in Clause 3.1(a) of the Special Conditions of the Development Agreement (at [5](i) ASOC), it was to be a lot allocated by the Developer, with the approval of the Plaintiff, for the construction and sale of Affordable Homes. The Plaintiff submits that the Defendant built House No. 9 on a lot, but kept it for its own purposes, and as such it was not an Affordable Allotment (as defined in the Development Agreement). As such, House No. 9 was included in error in the table in paragraph [6] of the ASOC, of Affordable Allotments, and as result it was referenced as a Completed Affordable Home that the HBCF insurance coverage responded to at paragraph [19] of the ASOC. As an error, which should be corrected, the Plaintiff submits that leave to amend in the ordinary course should be granted.
[56] I am not satisfied that paragraph [19] of the ASOC was an admission. I do so on the basis of the authority of Laws and the relevant authorities referred to therein, namely that an assertion made in an unverified pleading does not, or cannot, amount to an admission.[41] Even on the more liberal test expounded by Hunt J in Singleton v John Fairfax & Sons Ltd,[42] the relevant paragraphs are internally inconsistent, such that it could not logically or rationally amount to an admission. I accept reference to House No. 9 in paragraphs [6] and [19], and in paragraph [17(c)(i)] of the ASOC, was a mistake by the Plaintiff as claimed, and ought to be corrected. The distinction between House No. 9 and the other Houses, was, as the Plaintiff's counsel pointed out, a point of distinction which was made by the Defendant in submissions before Huntingford J in which it was said necessitated separate consideration of the engagement of the HBCF policy in respect to that particular home.[43]
[57] I therefore do not take the inclusion of Home 9 in the ASOC as an admission but rather an error in the pleading in assertions made therein. In the exercise of the discretion to allow the amendment, there is no significant prejudice or injustice which would flow to the Defendant. The proceeding, in terms of pleadings and case management, is at very early stage, and the Defendant is yet to file a defence. Even if prejudice arises, it could be otherwise met by an application for costs if necessary.
[58] Leave is therefore granted for the Plaintiff to make amendments in terms of the 2ASOC as filed in this proceeding, and the 2ASOC as already filed shall be taken to be so filed in accordance with leave granted.

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