Strata Plan 88695 v Metlege

Medium Neutral Citation: Strata Plan 88695 v Metlege [2025] NSWSC 535

Hearing dates: 23 May 2025

Date of orders: 23 May 2025

Decision date: 23 May 2025

Jurisdiction: Equity - Technology and Construction List

Before: Peden J

Decision: At [29]

Catchwords: CIVIL PROCEDURE — Commencement of proceedings — Summons — Setting aside — Whether a high degree of certainty claim would fail at trial — Whether claim so obviously untenable it cannot possibly succeed — Whether respondent was a consumer pursuant to ACL — Whether construction materials were purchased for re-supply — Whether claim was time-barred — Constructive awareness

Legislation Cited: Building Practitioners Act 2020 (NSW)
Competition and Consumer Act 2010 (Cth) sch 2 – Australian Consumer Law ss 3, 54, 272 and 273
Home Building Act 1989 (NSW)
Trade Practices Act 1974 (Cth) s 74B
Uniform Civil Procedure Rules 2005 (NSW) r 12.11

Cases Cited: Abbott v Zoetis Australia Pty Ltd [2022] FCA 1390
Agar v Hyde (2000) 201 CLR 552
AME Hospitals Pty Ltd v Dixon (2015) 48 WAR 139
Commonwealth v Shaw (2006) 66 NSWLR 325
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145
Williams v Toyota Motor Corp Australia Ltd [2024] HCA 38

Texts Cited: Nil

Category: Principal judgment

Parties: 3A Composites GmbH (Applicant)
Casumo Constructions Pty Ltd (Respondent)

Representation: Counsel:
A Smith (Applicant)
B Le Plastrier and W Marshall (Respondent)
Solicitors:
Webb Henderson (Applicant)
Salim Rutherford Lawyers (Respondent)

File Number(s): 2020/00193508

Publication restriction: Nil

EX TEMPORE JUDGMENT (REVISED)

1. Casumo Constructions Pty Ltd is a licensed builder of residential works. In these proceedings, the Owners Corporation of Strata Plan 88695 alleges that Casumo breached its duties under the Design and Building Practitioners Act 2020 (NSW) and the Home Building Act 1989 (NSW) by, inter alia, installing defective aluminium composite panels (ACPs) in three residential apartment buildings in Mascot, New South Wales.

2. Casumo’s fifth cross-claim list statement alleges that a German company, 3A Composites GmbH, who supplied the ACPs to Casumo through a distributor, breached the guarantee as to acceptable quality contained in s 54 Australian Consumer Law (ACL). To the extent Casumo is found liable to the Owners Corporation, Casumo seeks damages for 3A Composite’s alleged breach of that guarantee pursuant to s 272(1)(b) ACL.

3. By notice of motion filed on 16 April 2025, 3A Composites seeks orders that the fifth cross-claim cross-summons be set aside.

4. In its notice of motion, 3A Composites also sought to discharge the orders made by Stevenson J on 14 March 2025 granting substituted service of the fifth cross-claim cross-summons, but abandoned those prayers for relief orally at the commencement of the hearing today.

5. 3A Composites has brought the present application without entering an appearance, which it may do pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 12.11(4), as an application under r 12.11(1) does not amount to submission to this Court’s jurisdiction.

6. For the reasons that follow, 3A Composite’s notice of motion must be dismissed.

Setting aside fifth cross-claim cross-summons

7. UCPR r 12.11(1)(a) empowers this Court to make “an order setting aside the originating process” on the application of a defendant.

8. 3A Composites submits that the fifth cross-claim cross-summons ought be set aside on the basis that it has no prospects of success, because:

9. Casumo did not acquire the ACPs as a “consumer” within the meaning s 3 ACL; instead, it obtained them “for the purposes of re-supply to the building owners”; and

10. 3A Composites would have a complete defence to the cross-claim under s 273 ACL, because Casumo’s action for damages is time-barred.

11. For 3A Composites to succeed in setting aside the fifth cross-claim cross-summons, there must be “a high degree of certainty” that if the claim “were allowed to go to trial in the ordinary way”, Casumo would fail: Agar v Hyde (2000) 201 CLR 552 at [57] (Gaudron, McHugh, Gummow and Hayne JJ).

Was Casumo a “consumer”?

10. Casumo must be a “consumer” within the meaning of s 3 ACL in order to take the benefit of the guarantee as to acceptable quality in s 54 ACL. A person is not taken to be a consumer “if the person acquired the goods, or held himself or herself out as acquiring the goods … for the purpose of re-supply in trade or commerce”: s 3(2)(a)(i) ACL.

11. 3A Composite contended that it was self-evident that Casumo was not a consumer because it purchased the panels for “re-supply”.

12. The ACL does not contain a definition of “re-supply”. I was not taken to any secondary materials for the purposes of the statutory construction of this term.

13. Recent authorities have considered when s 3(2)(a)(i) will be engaged. One example is Williams v Toyota Motor Corp Australia Ltd [2024] HCA 38 (Williams), where Jagot J observed in obiter at [143] that if person A sells a vehicle to a second-hand car dealer, person B, “person B is not a consumer under s 3 [ACL] as person B acquired the [vehicle] for the purpose of re-supply”.

14. Another example is Abbott v Zoetis Australia Pty Ltd [2022] FCA 1390 (Abbott), where Rares J held at [301]-[302] that vets who had acquired vaccines to administer to their clients’ horses had acquired those goods for the purpose of re-supply and were therefore not “consumers”. See also Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145 (Merck Sharp) at [166]-[169] (Keane CJ, Bennett and Gordon JJ, their Honours in that case considering re-supply in the context of s 74B(1)(a) Trade Practices Act 1974 (Cth)).

15. 3A Composites submits that Casumo was not a “consumer” of the ACPs, because Casumo acquired the ACPs for the purpose of re-supplying them to the building owners through the installation of the panels in the buildings.

16. It has not previously been decided whether a builder who acquires materials to install in the construction of a client’s premises is in an analogous position to those situations contemplated in Williams, Abbott and Merck Sharp. As Casumo submitted, it is at least arguable that Casumo can be said to have supplied “its entire contractual obligation being the entire and completed building, which included the cladding” to the building owners, rather than having simply “re-supplied” the ACPs. It was submitted that the supplies in the cited cases involved the re-supply of exactly the same goods, not ones incorporated into something else.

17. I do not accept it is appropriate to come to a concluded view about the proper construction of “re-supply” on an application such as this. I consider that Casumo’s contention that it is a “consumer” is not “so obviously untenable that it cannot possibly succeed”: (1964) 112 CLR 125 () at 129 (Barwick CJ). Therefore, 3A Composite’s argument that Casumo is not a consumer is not a reason to dismiss the fifth cross-claim cross summons.

Is Casumo’s claim time-barred?

18. 3A Composites also submits that the Casumo’s claim is time-barred under s 273 ACL. That section provides (emphasis added):

An affected person may commence an action for damages under this Division at any time within 3 years after the day on which the affected person first became aware, or ought reasonably to have become aware, that the guarantee to which the action relates has not been complied with.

19. I was not taken to any authority that has considered the proper construction of that section. I note that the section contains multiple components concerning awareness, or what might be called “constructive awareness”, about “the guarantee to which the action relates has not been complied with”.

20. I was taken to authorities that have considered the issue of a plaintiff’s awareness in the context of seeking from a Court an extension of time after particular limitation periods in relation to personal injury negligence claims had expired: AME Hospitals Pty Ltd v Dixon (2015) 48 WAR 139; Commonwealth v Shaw (2006) 66 NSWLR 325. Both of these authorities indicate that the inquiry as to the proper construction of the particular sections in question there were multifaceted and fact-heavy as to the timing of the awareness of the plaintiff of matters relevant to their injury.

21. There are no authorities on the proper construction of s 273 ACL. However, intermediate appellate courts have considered in detail the proper construction of what the parties considered were arguably similar provisions. These factors tell against it being appropriate to determine the issue of the proper construction of s 273 ACL on a strike out application. This is further so in circumstances where the evidence is not obviously one way. That is a sufficient reason to reject 3A Composite’s submissions.

22. However, to the extent it is necessary to decide, I also do not consider the evidence here is sufficient for 3A Composite’s purposes, because it does not satisfy the General Steel test.

23. The Owners Corporation commenced these proceedings against Casumo on 30 June 2020. 3A Composite contends that from about that date, Casumo knew, or ought reasonably to have known, of the matters it now pleads in the fifth cross-claim. Consequently, because Casumo only filed the fifth cross-claim cross-summons on 19 September 2024, 3A Composites argues that Casumo’s claim, having been filed after more than three years, is out of time and has no prospects of success.

24. I do not accept, even adopting the construction advocated for by 3A Composites, that it is clear on the evidence that Casumo could have attained the requisite awareness on the date around which the Owners Corporation’s pleading was filed, or around the time that the Owners Corporation sent Casumo some expert reports and a letter.

25. Ms Su Johnson, solicitor for Casumo, gave evidence that “[o]n the basis of the List Statement alone”, she “was not satisfied that there were reasonable grounds for believing … that a cross-claim against 3A Composites had reasonable prospects of success”. The reason for that belief was that:

As far as the Contractor and I were aware there was no basis for the Contractor to commence a cross-claim against 3A Composites, because the plaintiff’s case did not articulate the nature of the alleged ‘defective cladding’ that would justify filing a crossclaim against 3A Composites for breach of the consumer guarantees arising from the manufacturing of the cladding. The Contractor and I considered that ‘defective cladding’ could mean many things, including that the panels were … damaged, bent, scratched or cracked … poorly cut …. poorly aligned [etc] …

None of those possibilities would give rise to an arguable claim against 3A Composites for breach of the consumer guarantees under the ACL.

26. I note that no particulars of combustibility were provided in the list statement, nor were any particulars provided before the expiry of the limitation period. I do not accept that Casumo’s receipt of expert reports on 31 July 2020 and 5 February 2021 about the combustible component of the cladding was sufficient to mean I am satisfied at the level required by General Steel that Casumo had failed to meet the limitation period in s 273 ACL. I note, for example, that two reports were dated 25 May 2020, and, read together, appear to indicate that further testing may be required and/or that some cladding could remain in place.

27. It was only in 2024 when the Owners Corporation served a Scott Schedule that Casumo was put on notice that a complaint in the proceedings was that the cladding panels were combustible and the Owners Corporation would rely on the earlier reports but also further reports from 2024, which were not in evidence on the motion.

28. I consequently do not consider that 3A Composite’s limitation argument renders Casumo’s claim “so obviously untenable that it cannot succeed”: General Steel at 129.

Orders

29. For these reasons, the Court makes the following orders:

30. The applicant/fifth cross defendant's notice of motion filed on 16 April 2025 is dismissed.

31. The applicant on the motion to pay the costs of the fifth defendant concerning orders 2 and 3 of the notice of motion on a gross sum basis in the sum of $10,000.

32. The applicant on the motion to pay the fifth defendant's costs of the balance of the motion, as agreed or assessed on the ordinary basis.

33. Costs to be payable forthwith.

34. Liberty to apply on two days’ notice.

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Amendments

28 May 2025

Corrected orders to reflect those which were made and entered.