Pedal Patch Pty Ltd v Gallagher & Ors [1999] NSWSC 452 | Case summary

2 Subrule (2) provides that the court may receive evidence on the hearing of such an application, and that where it makes an order under subrule (1), it make such further order as it thinks fit as to subsequent steps to be taken in the proceedings, granting time to any party to file amended documents, and granting leave to a plaintiff to have judgment entered after the striking out of grounds of defence, costs and other consequential orders. 3 The rule has a similar ambit to that of the Supreme Court Rules 1970, Part 15 rule 26(1). 4 Having struck out the plaintiff's Amended Statement of Claim, her Worship dismissed the action and also ordered the plaintiff to pay the costs of all parties. 5 Although the pleadings and a number of other documents referred to in the Stated Case were not annexed to it, copies were tendered before me and a number of admissions made. Although the rule permits evidence to be called on an application under the rule, an application under Part 8 rule 3 essentially depends on the form of the pleading, and the issue is whether the pleading, as pleaded, discloses a reasonable cause of action: Bramson -v- Rocla Concrete Pipes Limited [1982] 2 NSWLR 927 at 941-943. 6 The principles on which the jurisdiction under the rule is to be exercised are authoritatively stated in General Steel Industries Inc. -v- Commissioner for Railways (NSW) (1964) 112 CLR at 125, and have been repeated in a number of subsequent cases to which it is unnecessary to refer. 7 By its Amended Statement of Claim the plaintiff alleged that it was the occupier of certain premises, that it entered into a contract with the defendants to carry out roof works at the premises, that the works were carried out and the plaintiff paid for such work, but subsequently the roof was removed by wind, as a result, it was alleged, of a breach of implied terms of the contract, particulars of which were supplied, whereby the plaintiff suffered loss and damage. It was further pleaded, in the alternative, that the removal and destruction of the roof was due to the negligence of the defendants in carrying out the work, and as particulars of negligence the same matters were specified as were specified as particulars of breach of the implied terms of the agreement. Particulars which were, in effect, the particulars of the cost of repairing and replacing the roof, were set out, totalling $39,574 and that was the amount claimed by the plaintiff. 8 By their Amended Notice of Grounds of Defence the defendants admitted the contract, the carrying out of the works and the payment. They denied that the work was not carried out in a proper or workman like manner and in accordance with the plans and specifications prepared by the plaintiff's architects and under the supervision of the plaintiff as owner/builder of the premises, and that the premises had also been inspected and approved by officers of the relevant local council. They denied the breach of any implied terms of the agreement, admitted that the roof had been subsequently removed and destroyed by wind, but claimed this was not as a result of any breach on their part but due to faulty design and supervision. In respect of the claim in negligence they denied negligence and made similar claims that the removal and damage to the roof was not due to their negligence but to the faulty design thereof. 9 The learned Magistrate gave as her Grounds of Determination in the Stated Case that having pleaded in the Amended Statement of Claim that the plaintiff was merely an occupier and having pleaded no proprietary interest, it was not entitled to recover, either in contract or in tort, damages in respect of structural repairs to the premises claimed and particularised in the Amended Statement of Claim. Accordingly she struck out the Amended Statement of Claim and entered judgment for the defendants. 10 The Amended Statement of Claim alleges a contract for work and labour between the plaintiff and the defendants, the carrying out of such work, payment by the plaintiff for such work and breach of the contract. Those facts establish the essential ingredients of a cause of action in contract. If no damages were established the plaintiff would, nevertheless, be entitled to nominal damages: see Lindgren, Carter and Harland: Contract Law in Australia at para [2106]. 11 The fact that a plaintiff will only be entitled to nominal damages does not justify an action being struck out in accordance with the principles in General Steel Industries Inc. -v- Commissioner of Railways (NSW). 12 The respondent submits that (as found by the learned Magistrate) as the plaintiff was only an occupier and did not have proprietary interest in the premises, it therefore had no interest in the damages allegedly suffered and claimed. In fact, there was evidence before the Magistrate, which amounted to prima facie evidence that the plaintiff was a monthly tenant of the registered proprietors. This, I would have thought, constituted a sufficient proprietary interest in any event, but it is not necessary, for present purposes, to explore this aspect any further. 13 The plaintiff submits that in any event, in this case, if the plaintiff proves its case, it is entitled to considerably more than nominal damages. The plaintiff entered into a contract for the installation and fixing of a roof and, according to the evidence, it paid $9,925 for that work to be done. If the roof blew off in a storm and was destroyed, it is at least arguable that it did not get what it paid for, but got a defective job worth something considerably less, or possibly even nothing at all. Whether it can claim the amount specified, namely the cost of fixing a new roof, may be another matter. 14 The defendants refer to what is submitted to be a general rule in relation to building work, to the effect that the only person who can suffer damage or maintain an action for damages for defective work is a person with a proprietary interest in the building, and submit that this case does not fall into any of the recognised exceptions to that rule. 15 In my view it is not necessary to look for exceptions to the general rule, but the plaintiff is entitled to rely on basic concepts of contract law. If a person spends money to have work done and the work is not done properly, that person has suffered a loss; he, she or it has not received what he, she or it has paid for and the loss, and therefore, the entitlement to damages, is the difference between what the person has paid for and what the person has got. It does not matter in respect of building work if it is for work done on the person's own house or that of someone else. 16 On behalf of the defendants, I was referred in particular to Albacruz -v- Albazero (The Albazero) [1977] AC 774, particularly at 845 and to Linden Gardens Trust Limited -v- Lenesta Sludge Disposals Limited [1994] 1 AC 85 where an exception to what is said to be the general rule has been recognised, at least in England, in respect of building cases in the case of valid assignments of the employer's rights under the building contract. 17 However, in another case heard and reported with the Linden Gardens case, namely St Martins Property Corporation Limited -v- Sir Robert McAlpine Limited, which involved a claim by the original employer who under a building contract had since disposed of his proprietary interest in the premises, but had not validly assigned the contract, Lord Griffiths distinguished The Albazero at 97 and said: "In cases such as the present the person who places the contract has suffered financial loss because he has to spend money to give him the benefit of the bargain which the defendant has promised but failed to deliver. I therefore cannot accept that it is a condition of recovery in such cases that the plaintiff has a proprietary right in the subject matter of the contract at the date of breach". 18 Lord Browne-Wilkinson decided this aspect of the case on the narrower ground of an exception to the general rule and, although the other members of the House concurred with Lord Browne-Wilkinson's reasons, a number of them, particularly Lord Keith of Kinkell at 95 and Lord Bridge of Harwich at 96, expressed sympathy with the broader view of Lord Griffiths, but found it unnecessary to reach a firm conclusion on that point.

19 The matter has recently been considered by the English Court of Appeal in Darlington Borough Council -v- Wiltshier Northern Limited [1995] 1 WLR 68 and Alfred McAlpine Construction Limited -v- Panatown Limited (unreported - 5 February 1998). In the former case there had been a valid assignment of the employer's rights to the owner of the premises so the case came within the exception relating to building cases expressed by Lord Browne-Wilkinson, but Steyn LJ at 80 expressed his agreement with Lord Griffiths' "wider principle" which he described as "based . . . . . on classic contracts theory". Similarly in the Alfred McAlpine Construction Limited case the Court of Appeal again found it unnecessary to consider whether Lord Griffiths' principle should be applied because, as it was a building case, it came within the exception approved by Lord Browne-Wilkinson. 20 The matter was referred to in passing by Hunter J in Downie -v- Hashman (Supreme Court NSW - unreported - 29 August 1995), but his Honour found it unnecessary to express any concluded opinion on whether Linden Gardens Trust Limited -v- Lenesta Sludge Disposals Limited [1994] 1 AC 85 represented the law in Australia. 21 The most that can be said, therefore, is that the extent of the exception and whether, apart from the so-called exception, there is a broader principle as outlined by Lord Griffiths, is unclear, and courts of high authority have not finally resolved the matter. It was therefore not appropriate, for the Local Court to strike out an Amended Statement of Claim on the grounds that it disclosed no reasonable cause of action. 22 This is also related to another issue that arises, to which I have already referred, which is whether there was sufficient evidence to justify a finding that the plaintiff was a lessee of the premises and, therefore, did have a proprietary interest. In all the circumstances this is not a case where the Amended Statement of Claim should be struck out under the rule. The proposed pleadings could have been tidied up in relation to the claim in contract, but the Local Court is not a court of strict pleading and it should have regard to the real merits of the case rather than dry and expensive arguments about the form of pleadings. 23 As to the case in negligence, I would have thought that whether possessed of a proprietary interest or not, an occupier who claims to have been deprived of a roof over the premises because of what is alleged to have been the negligent manner in which the defendant installed the roof, would be a person who has a sufficient degree of proximity to be owed a duty of care, and being deprived of the roof would constitute sufficient damage to justify bringing an action in negligence. 24 Once again, I would have thought, the damages in that case would not be the cost of replacing the roof, but would be a claim for unliquidated damages, and it can fairly be said that the way the Amended Statement of Claim is drafted it does not make it clear that it is a claim for unliquidated damages. But once again these pleading points could have been rectified, if anyone considered it necessary to rectify them, by amendment of the pleadings. The Amended Statement of Claim should not have been struck out and a judgment should not have been entered for the defendants. 25 Another question that may still arise is whether the proceedings should be amended by joining the registered proprietors as co-plaintiffs pursuant to Part 6 rule 2 of the Rules. These matters can all be dealt with in due course.

Pedal Patch Pty Ltd v Gallagher & Ors

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