Strata Plan No 8017 trading as The Owners – Strata Plan 8017 v Makawi Manly Pty Ltd

Hearing dates: 11 April 2025

Date of orders: 23 April 2025

Decision date: 23 April 2025

Jurisdiction: Civil

Before: Cole DCJ

Decision: (1) The plaintiff has leave to amend its statement of claim in accordance with the draft amended statement of claim forming annexure A to the affidavit of Mr Chedid of 12 February 2025.
(2) The amendment must be effected by 5pm on 23 April 2025.
(3) The first defendant has leave to file an amended defence by 5pm on 7 May 2025.

Catchwords: CIVIL PROCEDURE — Pleadings — Amendment – application to amend Statement of Claim – proposed joinder of additional defendant where claim may be statute barred

Legislation Cited: Civil Procedure Act 2005 (NSW)
Conveyancing Act 1919 (NSW)
Limitation Act 1969 (NSW)
Strata Schemes Management Act 2015 (NSW)
Uniform Civil Procedure Rules (NSW)

Cases Cited: Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127
Cyril Smith & Associates Pty Ltd v The Owners – Strata Plan No 64970 [2011] NSWCA 181
Hawkins v Clayton [1988] HCA 15; 164 CLR 539
Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27
Street and 7 Ors v Luna Park Sydney Pty Ltd and 1 Or [2006] NSWSC 230
Sutherland Shire Council v Heyman [1985] HCA 41; 157 CLR 424
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

Category: Principal judgment

Parties: Strata Plan No 8017 trading as The Owners – Strata Plan 8017 (Plaintiff)
Makawi Manly Pty Ltd (Defendant)

Representation: Counsel:
D Weinberger (Plaintiff)
P Horobin (Defendant)
L Corbett
Solicitors:
Chedid Storey Legal (Plaintiff)
Wight & Strickland (Defendant)

File Number(s): 2023/00423439

Publication restriction: Nil

JUDGMENT

1. By notice of motion filed on 12 February 2025, the plaintiff, Strata Plan 8017, seeks to amend its statement of claim, which was filed on 22 November 2023.

2. The amendment seeks to add to the allegations against the first defendant, Makawi Manly Pty Ltd, and also seeks to join a second defendant, CF Group Piling Pty Ltd (ACN 141 982 292) (‘CF Group Piling’).

3. At the hearing of the application, the existing parties were represented, provided evidence and made submissions, and so did CF Group Piling.

Subject matter of the action

4. The plaintiff is the body corporate of a residential property in Manly under the Strata Schemes Management Act 2015 (NSW) (‘the plaintiff’s property’).

5. The first defendant allegedly undertook excavation and shoring works (‘the works’) at a site which is adjacent to the plaintiff’s property (‘the adjacent site’), starting in about January 2017, as the beginning of the development of a mixed use project on the adjacent site. The development was allegedly completed in about June of 2019.

6. The proposed amendment to the statement of claim would allege that the second defendant also undertook the works.

7. It is alleged that the works, by various means, caused damage to the building on the plaintiff’s property. Negligence and a breach of s 177 of the Conveyancing Act 1919 (NSW) are alleged.

Applicable legislative provisions

8. The Civil Procedure Act 2005 provides, in ss 56, 57 and 58:

56 Overriding purpose

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

(3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.

(3A) (Repealed)

(4) Each of the following persons must not, by their conduct, cause a party to civil proceedings to be put in breach of a duty identified in subsection (3)—

(a) any solicitor or barrister representing the party in the proceedings,

(b) any person with a relevant interest in the proceedings commenced by the party.

(5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs.

(6) For the purposes of this section, a person has a relevant interest in civil proceedings if the person—

(a) provides financial assistance or other assistance to any party to the proceedings, and

(b) exercises any direct or indirect control, or any influence, over the conduct of the proceedings or the conduct of a party in respect of the proceedings.

57 Objects of case management

(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects—

(a) the just determination of the proceedings,

(b) the efficient disposal of the business of the court,

(c) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).

58 Court to follow dictates of justice

(1) In deciding—

(a) whether to make any order or direction for the management of proceedings, including—

(i) any order for the amendment of a document, and

(ii) any order granting an adjournment or stay of proceedings, and

(iii) any other order of a procedural nature, and

(iv) any direction under Division 2, and

(b) the terms in which any such order or direction is to be made,

the court must seek to act in accordance with the dictates of justice.

(2) For the purpose of determining what are the dictates of justice in a particular case, the court—

(a) must have regard to the provisions of sections 56 and 57, and

(b) may have regard to the following matters to the extent to which it considers them relevant—

(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case.

9. The Civil Procedure Act 2005 further provides, in ss 64 and 65:

64 Amendment of documents generally

(cf SCR Part 20, rules 1 and 4; DCR Part 17, rules 1 and 4)

(1) At any stage of proceedings, the court may order—

(a) that any document in the proceedings be amended, or

(b) that leave be granted to a party to amend any document in the proceedings.

(2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings.

(3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made.

(4) If there has been a mistake in the name of a party, this section applies to the person intended to be made a party as if he or she were a party.

(5) This section does not apply to the amendment of a judgment, order or certificate.

65 Amendment of originating process after expiry of limitation period

(cf SCR Part 20, rule 4; DCR Part 17, rule 4)

(1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings.

(2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64 (1) (b), amend the originating process so as—

(a) to enable the plaintiff to maintain the proceedings in a capacity in which he or she has, since the proceedings were commenced, become entitled to bring and maintain the proceedings, or

(b) to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court’s opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or

(c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court’s opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process.

(3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced.

(4) This section does not limit the powers of the court under section 64.

(5) This section has effect despite anything to the contrary in the Limitation Act 1969.

(6) In this section, originating process, in relation to any proceedings, includes any pleading subsequently filed in the proceedings.

10. The Limitation Act 1969 provides, in s 14(1)(b):

14 General

(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims—

…

(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty, …

Issues

Reason for the delay and approach to interlocutory activities in the proceedings (Civil Procedure Act 2005 s 58(2)(ii), (iii) and (iv))

11. As I have said, these proceedings were commenced by the filing of a statement of claim on 22 November 2023. On 17 January 2025, the solicitors for the plaintiff sent an email to the solicitors for the first defendant, providing the draft amended statement of claim. On 29 January 2025, the defendant’s solicitors responded to that email. On 12 February 2025, the application the subject of this decision was filed.

12. Mr Darcy Campbell, a solicitor employed by the solicitors for the plaintiff, swore an affidavit on 25 March 2025. Mr Campbell said that the plaintiff served copies of its lay evidence in the proceedings during September 2024. A report from Dr Peter Redman, a geotechnical engineer, was obtained by the plaintiff on 3 October 2024 and served on the first defendant on 4 October 2024. A report from Dr Ali Amin, a structural engineer, was obtained by the plaintiff on 17 October 2024 and served on the first defendant on the same day. Mr David Madden, a quantity surveyor, provided the plaintiff with a report and a Scott Schedule on 4 December 2024, and these documents were served on the second defendant on the same day. The first defendant served an affidavit of Mr Vasudev Parulekar, dated 5 December 2024, on the plaintiff by its solicitors, on 9 December 2024.

13. Mr Campbell said, in his affidavit:

12. In December, upon reviewing the Plaintiff’s evidence and the Defendant’s lay evidence it became apparent to the Plaintiff that it should join the Second Respondent to these proceedings.

13. Between 20 December 2024 and 3 February 2025, the District Court was closed for the summer vacation period.

14. Between 20 December 2024 and 6 January 2025 Chedid Storey’s Legal’s office closed and its solicitors took leave over the summer vacation period.

15. On 16 January 2025, Chedid Storey Legal received instructions from the Plaintiff to file the proposed Amended Statement of Claim in these proceedings.

…

14. The Court record shows that the plaintiff was in default of the timetable in these proceedings for the first time on 7 February 2024 when it failed to provide further and better particulars as directed on 29 January 2024.

15. On 26 February 2024, the plaintiff was directed to file and serve any evidence it relies on, including expert evidence, by 9 May 2024. The plaintiff failed to comply with this direction.

16. On 30 May 2024, further directions were made and the plaintiff was directed to “file and serve its Scott Schedule and any Reply and any evidence it relies on, including expert evidence, on or before 17 June 2024”. The plaintiff failed to comply with this direction.

17. On 14 August 2024, the Judicial Registrar made further directions extending the time for the plaintiff to file its lay evidence and a Reply to 23 August 2024 and extending the time for the plaintiff to serve expert liability and quantum/damages evidence and Scott Schedule to 13 September 2024. The Judicial Registrar made the following further direction:

Any further orders for plaintiff’s evidence to be supported by an affidavit otherwise the matter will be listed for show cause.

The Judicial Registrar recorded the following comment:

I have to say the tale of the plaintiffs of preparing this case is one of disorganisation, some of it not satisfactory and not acting with despatch. If this continues the question has to be asked should the plaintiff’s proceedings be dismissed and recommenced once the plaintiff has the ability and intention to litigate with despatch. The plaintiff is in control of its preparation, which should include engaging experts promptly and with certainty, solicitors cannot leave all matters and decision making in the hands of the experts.

18. The plaintiff, once again, failed to comply with the directions.

19. On 25 September 2024, the Judicial Registrar made further directions including the following:

1. Plaintiff is to serve expert liability evidence (excluding evidence on quantum) and Scott Schedule by 4 October 2024, after which the plaintiff may not rely on any expert evidence without leave of the Court.

2. Plaintiff to serve evidence on quantum/damages by 19 October 2024.

The plaintiff failed to comply with direction no. 2.

20. On 13 November 2024, the Judicial Registrar extended the time for the plaintiff to file and serve its completed Scott Schedule and quantum expert report to 25 November 2024.

21. On 15 November 2024, the Judicial Registrar referred the matter to the trial list judge for further management, commenting:

The plaintiff has become somewhat immune to orders…

22. On 20 November 2024, Judge Abadee made the following directions, among others:

1 Extend the date for the Plaintiff to file and serve its completed Scott Schedule and quantum expert report to 25 November 2024.

As I have said in [12] above, the report of the quantity surveyor and the Scott Schedule were not served on the first defendant by the plaintiff until 4 December 2024.

23. It is clear that the reason for the delay on behalf of the plaintiff in seeking to add CF Group Piling as the second defendant is not primarily attributable to the summer holidays of 2024/2025, but is, rather, primarily attributable to the persistent failure on the plaintiff’s part to undertake the preparation of this matter expeditiously. The same is true in relation to those parts of the amended statement of claim which seek to add to the allegations against the first defendant.

24. In the words of s 58(2)(b)(ii) and (iii) of the Civil Procedure Act 2005*,* the plaintiff has not been timely in attending to interlocutory activities, and there is no evidence before me which explains satisfactorily the reason for that lack of expedition. There has been no suggestion and no evidence that the failure to attend to the expeditious preparation of the matter has been beyond the plaintiff’s control.

25. The plaintiff’s lack of expedition is particularly concerning in circumstances where the first defendant has pleaded in its defence as follows:

20. In answer to the whole of the Claim, the Defendant says that any damage said to have been caused by the Defendant manifested or was otherwise discovered by the Plaintiff in early to mid-2017, being more than 6 years before the commencement of the Claim on 23 November 2023.

26. The extent of the delay and the plaintiff’s lack of expedition in preparing the plaintiff’s case, together with the plaintiff’s persistent failure to comply with the directions of the District Court, contrary to s 56(3) of the Civil Procedure Act 2005, weigh against the granting of leave to amend the statement of claim.

Degree of injustice that would arise from the amendment (Civil Procedure Act 2005 s 58(2)(vi))

27. The first defendant protested about the extent of the plaintiff’s delay and failure to comply with directions, and argued that the amendments would have the effect of starting a new round of evidence to be exchanged, creating further delay. The first defendant stated, in its submissions:

The plaintiff’s re-working of its case after such a long time puts the defendant at a forensic disadvantage.

28. Submissions were made in relation to the application on behalf of CF Group Piling.

29. CF Group Piling submitted that the evidence served by the plaintiff indicates that the claim against it is well out of time.

30. CF Group Piling referred to the decision of the High Court in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at p. 533 (‘Wardley’) where the plurality said:

31. We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.

31. CF Group Piling referred to the decision of the Western Australia Court of Appeal in Belgravia Nominees Pty Ltd v Lowe Pty Ltd [2017] WASCA 127, in which the Court said, at [46] – [47]:

46 … the following principles can now be taken to be established:

…

(f) however, in a case in which a defendant indicates an intention to plead a limitation defence to a cause of action barred by statute at the time it is proposed to be added by amendment, the court will disallow the amendment if there is no doubt that such a defence would defeat the claim.

47 Generally speaking, however, limitation issues are best decided at trial, with the consequence that an amendment will only be disallowed on the basis of such a defence in the clearest case. Examples of the type of case in which the availability of a limitation defence will be sufficiently clear and uncontroversial as to justify disallowance of an amendment which would inevitably be defeated by such a defence are provided by the circumstances in Dye and Rossen. However, in all but cases of that character, the appropriate course is to allow the amendment (assuming there is no other valid objection to it), enabling the defendant to plead any limitation defence which can then be determined at trial.

32. CF Group Piling submitted that, if it is joined to the proceedings, the proceedings will be taken as having commenced against it on the day of joinder (Uniform Civil Procedure Rules r 6.28 and Street and 7 Ors v Luna Park Sydney Pty Ltd and 1 Or [2006] NSWSC 230).

33. The Limitation Act 1969, in s 14(1)(b), limits the bringing of an action in negligence or breach of statutory duty to six years from the date on which the cause of action first accrued to the plaintiff. CF Group Piling pointed out that, in order for the action the plaintiff wishes to bring against it to be within time, the plaintiff would have to show that the action accrued within the period of 6 years before the date of joinder, which, at the earliest, would be a date in April 2019.

34. CF Group Piling submitted, in its written submissions, that the evidence served upon it by the plaintiff shows that the demolition work started on October 2016 and that between October 2017 and February 2018, a number of residents in the plaintiff’s property could feel vibrations. Further, four residents noticed damage in the form of cracks in the building on the plaintiff’s property in 2017.

35. The plaintiff argued, in summary, that the evidence of individual residents of the building on the plaintiff’s property could not necessarily be attributed to the plaintiff. The plaintiff submitted that there is no evidence of when the plaintiff became aware either of the damage to the building on the plaintiff’s property or of the reason for that damage.

36. As I understood it, the plaintiff argued that time should be taken to run, in relation to CF Group Piling, from the time when the plaintiff discovered the defect which gave rise to the damage to the building on the plaintiff’s property.

37. The plaintiff relied upon the judgment in Cyril Smith & Associates Pty Ltd v The Owners – Strata Plan No 64970 [2011] NSWCA 181 (‘Cyril Smith’) which concerned damage to a building arising from a latent defect in a building, namely the faulty design of windows which allowed the ingress of water. Basten JA, writing for the Court, said, at [26] referring to Sutherland Shire Council v Heyman [1985] HCA 41; 157 CLR 424, Hawkins v Clayton [1988] HCA 15; 164 CLR 539 and Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27:

26 This material demonstrates that the referee was searching for material, in the relevant period, indicating that the Owners Corporation either did, or should have, identified not merely that the windows were defective (a physical condition) but that responsibility lay in the design of the windows (the cause of the defect). The authorities do not support that approach. For example, there was no suggestion in Sutherland Shire Council , or Pullen , that the cause of action did not accrue until the owner knew or ought to have known, not merely that the footings of the buildings were inadequate, but the cause of the inadequacy. The appellant's submissions were partly correct in alleging that the referee had erroneously sought, not merely signs of the defect, but that "those defects were due to the act or omission of the alleged tortfeasor": see judgment, at [72]. The referee did not go so far as to require knowledge that responsibility lay with the architect, rather than the engineer or the builder, but he did erroneously look not merely for knowledge of the defect, but also the cause of the defect. Her Honour was, therefore, in error in rejecting that aspect of the submission: at [73].

38. The judgment in Cyril Smith and the relevant cases referred to in that judgment all related to latent building defects which existed in the same building as the building which suffered the damage and loss the subject of the claim, such as defective windows allowing damaging water ingress and inadequate foundations leading to the cracking of walls. In the present case, the allegations are of damage occurring in one existing building arising from the building methods used in the building of a new building on an adjacent property. There was no suggestion that the first defendant or CF Group Piling was responsible for any pre-existing latent building defect in the building on the plaintiff’s property, and there was no suggestion that the building that the first defendant built on the property adjacent to the plaintiff’s property relevantly contained a latent defect. As I understand it, the allegation is that soil on the development site was loosened and displaced on the land adjacent to the plaintiff’s property by reason of vibrations which occurred during the excavation for the foundations of the building being built, causing movement in the ground supporting the plaintiff’s property which, in turn caused cracking in the building on the plaintiff’s property. For the purpose of calculating the time within which proceedings can be brought, it seems that the plaintiff now seeks to characterise the cause of the damage to the building on the plaintiff’s property as both an event, for the purpose of its claim for breach of statutory duty (Conveyancing Act 1919 s 177), and also as a circumstance analogous to a latent defect.

Just quick and cheap resolution (Civil Procedure Act 2005 s 58(1)(a) and s 56(1))

39. The plaintiff’s dilatory conduct of its case to date weighs against it in relation to the application to amend the statement of claim.

40. The plaintiff’s argument that the cause of action accrued sometime in the six year period beginning on a date in April 2019 appears, on the basis of the material before me, to be tenuous. However, I do not have sufficient evidence before me in relation to precisely what activities the plaintiff says were undertaken by CF Group Piling (or the first defendant) and caused the damage to the plaintiff’s property, and such evidence as has been provided has not been tested. I also do not have sufficient evidence before me in relation to precisely when it is alleged that those activities occurred. I note that it is alleged that building works began in January 2017 and were completed in about June 2019, but there is no evidence before me as to when the precise works to which the damage complained of is attributed ceased. There is also no evidence of when the plaintiff (as opposed to its members) became aware of the damage to the building on the plaintiff’s property, should that be relevant.

Conclusion and Orders

41. The relevant considerations in relation to whether the plaintiff should be permitted to amend its statement of claim to join CF Group Piling are finely balanced. However, bearing in mind the decision in Wardley, it is necessary, in the interests of justice, to give leave to the plaintiff to amend its statement of claim to join CF Group Piling in order that the evidence regarding the question of whether the action is out of time under the Limitation Act 1969 can be tested and the argument about how the time should be calculated should be heard in full.

42. As to the proposed amendments in relation to the first defendant, in the absence of any specific prejudice, the additional burden can be dealt with by way of an order for costs, if appropriate.

43. The plaintiff is on notice that both defendants have an argument that the claim against them is statute barred. The just, quick and cheap resolution of the matter may well best be served by the hearing of that argument as soon as possible, and, perhaps, separately from the trial.

44. The following orders will issue:

45. The plaintiff has leave to amend its statement of claim in accordance with the draft amended statement of claim forming annexure A to the affidavit of Mr Chedid of 12 February 2025.

46. The amendment must be effected by 5pm on 23 April 2025.

47. The first defendant has leave to file an amended defence by 5pm on 7 May 2025.

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