SKJ Qld Pty Ltd v Turul Building Services & Anor

[4] The third claim advanced against Mr Lazar is a restitutionary claim arising, in broad terms, out of the failure of consideration for which a payment was allegedly made to him to carry out building work on the project.

[5] Mr Lazar applied to strike out a significant number of allegations in SKJ's statement of claim against Mr Lazar. An underlying theme of that application was that no claim arising out of the circumstances of the dealings between SKJ and Turul could be pursued against Mr Lazar because of the effect of the small business restructuring plan that the first defendant, Turul, had entered into.[2]

[6] There is no doubt that the proper construction of the effect of that plan, at least in the circumstances of this case, create considerable difficulties. Those difficulties most acutely arise in SKJ's application for the stay of Turul's counterclaim.

[7] Even allowing for the complexities and unresolved construction questions that attend the effect of a restructuring plan, Mr Lazar was not able to persuade me, at least to the level required of a strike out application, that any legal doctrine arose which absolutely prohibited SKJ from pursuing distinct causes of action against Mr Lazar. This conclusion arises notwithstanding an overlap - and sometimes a very significant overlap - of factual issues with the issues raised in the claims against Turul.

[8] There is certainly nothing express in the statutory provisions of the Act and regulations which impact on those rights. There was no suggestion that any express term of the plan, which was ultimately adopted by the company on a majority of creditors, had that effect.

[9] What is left, then, is the possibility that some doctrine of equity or the common law would be effective to limit the rights as between SKJ and a third party, albeit rights arising out of circumstances related to an admissible claim in Turul's restructuring plan.

[10] The matter was listed for hearing over two days. Substantial written submissions were exchanged. I do not discount the possibility that, on a full investigation of all the facts, it might emerge that some legal doctrine does somehow impact on the capacity of SKJ to maintain causes of action against Mr Lazar that overlap with its causes of action against the company affected by the plan, but no submission was made to me by reference to any specific legal doctrine and, therefore, bearing in mind that this is a strike out application of broadly a no cause of action kind, I was unpersuaded that it provided a basis to strike out anything in SKJ's claim against Mr Lazar.

[11] I should make mention of the submission raised by counsel for Mr Lazar relying on the doctrine of approbation and reprobation. That was a new proposition to me and to counsel for SKJ, in that it had not been raised in the written submissions. That is not necessarily something that would prohibit it being raised in an argument like this, although one would imagine courtesy between counsel, essential to the efficient operation of the court, would require a barrister proposing to raise a substantial point not raised in written submissions to do his or her best to inform their opponent well before it was raised in court (whether that did or did not occur in this case).

[12] I was referred by counsel for Mr Lazar to two cases on approbation and reprobation. The first was Stimpson v Allied Rural [2022] QSC 74, a decision of Justice Jackson's where he appeared to apply the doctrine in the circumstance where a party had acted in a way where they took the benefit of the work of an administrator's appointment and then sought subsequently to challenge the validity of that appointment. It is not hard to imagine that some legal doctrine, whether approbation and reprobation or something else, would respond to that situation.

[13] I was also referred to a decision of the West Australian Court of Appeal, Mandurah Enterprises v Western Australian Planning Commission [2008] WASCA 211. In that case, Justice McClure, with whom the other Justices agreed, referred to the doctrine and, at 108, observed that: "It is difficult to confidently identify from the cases the material elements of any independent doctrine of approbation and reprobation." Her Honour then went on to identify various authorities in Australia which tend to support the existence of such a doctrine and concluded, at 118, that:

The authorities support the contention that there is an independent doctrine of approbation and reprobation which falls outside the four categories of election to which I have referred. On any view, the independent doctrine requires that there be a choice between two inconsistent courses of conduct or claims. There is no arguable inconsistency of rights in this case because an invalid taking order cannot be the basis of a right to compensation under the Land Act.

[14] I was not taken to any part of that reasoning, or reasoning in any case, that would persuade me, particularly to the level of certainty required on a strike out based on the no cause of action ground, that the doctrine could apply in the circumstances of this case, not just because of the ambiguous nature of the consequences of a restructuring plan - but also because the claims here are advanced against Mr Lazar personally, not against the company.

[15] Bearing in mind that this is a strike-out and that, apart from anything else, the application of the doctrine may well turn on questions of fact, in my respectful view, the doctrine of approbation and reprobation provided no basis for the striking out of the claims against Mr Lazar.

[16] If, indeed, Mr Lazar can distil out facts which can be pleaded to give rise to a defence to the claim arising from that doctrine, then it can be pleaded in a defence. Presently, the content of the doctrine, as well as its application to the circumstances of this case, remains obscure.

Mr Lazar's misleading or deceptive conduct submission

[17] Another basis for challenge to SKJ's pleading related to the pleading of the misleading of deceptive conduct case articulated against Mr Lazar. The facts pleaded in the amended statement of claim are complicated. In some respects, that is because of the complicated nature of the contractual dealings. In any event, as I said, the claim was advanced against Mr Lazar personally and alternatively as an accessory to the claims of misleading or deceptive conduct by the company.

[18] These claims related to two invoices for progress claims which were said to have been provided in a context that represented the value of certain work to be done, and that that representation was wrong and thereby misleading or deceptive, or likely to mislead or deceive.

[19] There did not appear to be a challenge to the direct claim against Mr Lazar except in this respect. Paragraph 36 of the amended statement of claim alleges:

Mr Lazar did not inform Mr Johnson that the value and progress of the works that had been carried out at the property at the time of making the invoice 294 progress claim was substantially less than the aggregate progress claims made by Turul, and which difference did, or is likely to, exceed the payment claimed in invoice 294.

[20] The submission was made by counsel for Mr Lazar that that was an inadequate pleading of conduct by silence, which was misleading or deceptive. That submission had some initial attraction until one reflected on the way the misrepresentation case had been pleaded. The omission pleaded in paragraph 36 was pleaded as a fact that, taken with an exhaustive pleading of other facts, gave rise to certain specified representations in paragraph 36A. It is the making of those representations which is the conduct ultimately relied upon. Put in context, paragraph 36 of the pleading was not trying to do the work which the second defendant submitted it was.

[21] There was, I thought, another challenge to the question of knowledge. To the extent that was relevant to the accessory liability claim, Mr Lazar's knowledge was identified at least in respect of invoice 294, in paragraph 35(e). There was a suggestion that these were allegations of constructive knowledge which, of course, would be insufficient for accessory liability. To be a pleading maven about it, paragraph 35(e) probably should have introduced the statements of state of mind listed in (a) to (j), with words expressly stating that those states of mind are inferred from the preceding allegations. However, reading that part of the pleading as a whole, I think it is fairly clear that the states of mind pleaded are to be inferred from the preceding allegations of fact involving Mr Lazar.

[22] I was not persuaded that there was any basis to strike out the misrepresentation claims, at least by reference to the arguments advanced by the second defendant before me in this hearing.

[23] There was challenge to the restitutionary claim pleaded at paragraphs 16A to 16E of the statement of claim. The gravamen of that claim is that Mr Lazar told Mr Johnson, on behalf of SKJ, that if cash was paid to him, Mr Lazar could more efficiently organise work to be done, that the money was paid for that purpose, only part of it was used for that purpose and that, accordingly, a restitutionary claim arose, the unjust factor being identified as failure of consideration. Other unjust factors to call forth a legal obligation to make restitution might be able to be pleaded, but in any event, there was not a challenge to the pleading on that basis.

[24] There were two challenges to that part of the pleading, as I ultimately understood it. One seemed to be inspired by section 42 of the Queensland Building and Construction Commission Act 1991 on the basis that the circumstances of the payment of the money to Mr Lazar allegedly comprised an agreement or undertaking for the carrying out of building work by an unlicensed person. That certainly does seem to be what is alleged, but that had no impact on the viability of a restitutionary cause of action of an owner. Indeed, there is well-established authority in this State on the effect of section 42 that establishes two relevant propositions:

1. It does not impact on the rights of an owner or other person who seeks to have building work undertaken; and

2. There is a right to restitution of all money paid for unlicensed work, subject to the carveouts in section 42(4).

[25] The idea that section 42(1) provided a basis to strike out this claim was wrong.

[26] A further basis was advanced for strike out of the restitutionary claim though as I understand it, that basis was abandoned. However, I should say something about it. The restitutionary claim was pleaded in the alternative to an allegation of contractual claim with more or less the same consequence as that alleged in the restitutionary claim.

[27] It was submitted that the restitutionary claim could not be pleaded as an alternative to the contract claim. To this end, counsel relied on the exception to the right to plead alternatives for the circumstance where a party knows that the facts in one of the alternatives are false.

[28] That submission should not have been made. It involved an allegation, seemingly, that the guiding mind of SKJ actually knew that facts alleged in the restitutionary claim allegation were false.

[29] To demonstrate that state of mind (on a summary basis and seemingly without notice) it had to be established against the background of the following legal principles.

1. First, that an allegation of fraud should only be made with a reasonable basis and on reasonable notice; and

2. Second, that to reach such a conclusion. Mr Lazar would have to confront the Briginshaw v Briginshaw test.

[30] A cursory glance at the allegations of the cash contract and the restitutionary claim demonstrates that there is no arguable basis for such inconsistency.

[31] The fraud exception is an exception that would rarely arise, and it did not properly arise here. It will be a rare case where it does. Mulivai v Utaileio [2022] QCA 173 is an example of the unusual circumstances which engage that exception.

[32] A second defendant was an insurer with respect to a motor vehicle accident. The first defendant was the person involved. In the course of the trial - that is after a good deal of evidence had been led - the insurer sought to amend its pleading as to who was the driver in a manner which was inconsistent, seemingly, with the evidence that had been given at the trial, I infer, by the first defendant. Leave to amend was granted.

[33] That leave was overturned by the Court of Appeal. As Justice Bond pointed out, ordinarily the second defendant insurer would be perfectly entitled to make such an amendment. But since they were, in broad terms, pursuing the proceeding on behalf of the first and second defendant, the insurer could not be heard to say something which the position of the first defendant demonstrated was false.

[34] Ultimately, the proposition was not pressed. However, it should not have been raised and a good deal more care needs to be exercised before ever making any submission that any person has been deliberately dishonest. The restitutionary claim stands.

[36] One related to a challenge to an allegation that the so called second contract was lawfully terminated by SKJ's company on a certain date. The continuing relevance of that allegation was not challenged in the strikeout proceeding. The challenge was in respect of certain breaches relied upon to support the proposition that Turul was in substantial breach and SKJ was entitled to terminate the contract. One example is sufficient to demonstrate the difficulty with the submission.

[37] One of the breaches relied upon in paragraph 42 as justifying the entitlement to terminate was a breach said to have occurred by delivering a progress claim in, it seems, September 2022, which overclaimed work for which payment was authorised under the contract. That was correctly characterised as a breach in respect of a contractual obligation relating to a progress payment.

[38] The submission was made, in respect of paragraphs 39 to 42 of the amended statement of claim, that that breach could not have justified the termination some days later because it related to a progress claim and more work would have been done after delivery of the payment claim in question.

[39] I note, of course, that if that was an allegation relied upon in answer to the statement of claim, that would have to be pleaded in the defence. However, the underlying legal proposition was wrong anyway.

[40] According to SKJ, the breach arose from the delivery of a progress claim which was inconsistent with the terms of the contract. SKJ argues the breach was complete at that time. It is possible that such a breach might not itself justify a termination of the contract; such a breach might be waived or there might be some decision to affirm the contract inconsistent with the maintenance of that breach as a basis to terminate. There might be waiver or any other number of possible ways that that breach might not, sometime later, have justified termination of the contract. However, that was not Mr Lazar's submission. His submission was the incorrect proposition that a breach somehow ceased to be a breach because the wrongful conduct under the contract was reversed by later conduct of Turul. That is not how the law of breach of contract works.

[41] Another argument was advanced in relation to allegations in the amended statement of claim that contracts were pleaded as contracts to carry out domestic building work, without properly pleading all the work which was excluded work. I have dealt with that submission before in SKJ Qld Pty Ltd v Turul Building Services & Anor [2024] QDC 109 at [34] to [38]. There I reached the conclusion that excluded work was not a matter that had to be pleaded in the statement of claim. To that extent, I was not persuaded by the submission of the then defendants to strike out the allegation of domestic building work on that basis.

[42] The amended statement of claim filed after that hearing did, however, identify some items which were excluded work. The second defendant was inspired by that to advance, in effect, the same submission as before. No persuasive argument was advanced as to why the analysis I undertook on the last occasion was incorrect, and I still cannot see any basis why it would be incorrect, so I am not persuaded that there is anything wrong with the statement of claim.

[43] In fact, given that on the last occasion I decided it was sufficient just to allege that the contract was to carry out domestic building work without any specification of excluded work, it is difficult to understand how one could conclude that the pleading was objectionable because it pleads that and identifies some such exclusions.

[44] I dismiss the second defendant's application.

[1] The plaintiff's application for a stay succeeded: see SKJ Qld Pty Ltd v Turul Building Services & Anor (No.3) [2025] QDC 35.

[2] The circumstances of that plan are set out in SKJ Qld Pty Ltd v Turul Building Services & Anor (No.3) at [47] to [62].