The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd

JUDGMENT

1. The plaintiff is the Owners Corporation of a large residential apartment building in Strathfield ("the Building"). The Building was constructed between 2009 and 2011.
2. The defendants are members of the group of companies associated with the Bechara family.
3. The first defendant, Omaya Holdings Pty Ltd, was the builder of the project (the "Builder"). The second defendant, Arinson Pty Ltd, was the registered proprietor of the development property at the time of the construction and the developer (the "Developer"). There was a written building contract dated 4 September 2009 between the Builder and the Developer (the "Building Contract").
4. The Owners Corporation alleges that there are general building and fire safety defects in the Building. It seeks damages from the Builder and Developer for the alleged breach of warranties implied into the Building Contract by s 18B of the Home Building Act 1989 (NSW) and the alleged breach of the statutory warranty contained in s 37 of the Design and Building Practitioners Act 2020 (NSW).
5. The matter is fixed for hearing for five days commencing on 11 November 2024.
6. The matter before me concerns the position of the third defendant, Omaya Investments Pty Ltd.
7. Until 9 August 2024, the Owners Corporation alleged that Omaya Investments was also a party to the Building Contract with the Developer. Thus, the Owners Corporation alleged: "The [Builder] entered into a contact (Building Contract) with the [Developer] and [Omaya Investments], whereby the [Builder], or in the alternative, [Omaya Investments], agreed to undertake works and provide goods and services for the construction of a building on the Land (the Works). Particulars Particulars of the Building Contract will be provided after discovery." (Emphasis in original.)
8. By Notice of Motion filed on 21 June 2024, more than five years after these proceedings were commenced, and more than nine months after the proceedings had been set down for hearing, Omaya Investments sought, relevantly, summary dismissal of that claim.
9. By judgment delivered on 9 August 2024, [1] McGrath J struck out the Owners Corporation's claim against Omaya Investments formulated in the manner set out at [7] above and granted the Owners Corporation liberty to replead the allegations against Omaya Investments.
10. The Owners Corporation circulated a revised Fourth Amended Summons and Fourth Amended Technology and Construction Fourth Amended List Statement and, by Notice of Motion filed on 23 August 2024, seeks leave to file it.
11. In the revised List Statement, the Owners Corporation revises its claim against the Builder and the Developer in a manner that is not controversial.
12. It also claims a new allegation concerning Omaya Investments.
13. That allegation is in proposed cl 12A in the following terms: "On or around 2007 and on around 2009, [Omaya Investments] entered into a contract (the Omaya Investments Building Contract) with the [Developer], whereby [Omaya Investments] agreed to undertake works and provide goods and services for the construction of the Building (the Omaya Investments Works), being the following: a. Design and construction of fire safety measures in the Building and/or alternatively certification of construction of fire safety measures in the Building; b. Coordination and engagement of design consultants in matters directly or indirectly related to fire safety measure required for the purposes of compliance with the Building Code of Australia (BCA); c. Coordination and engagement of consultants in matters directly or indirectly related to the certification of fire safety measures required for the purposes of compliance with the BCA." (Emphasis in original.)
14. In proposed cl 14B, the Owners Corporation makes a corresponding allegation that the "Omaya Investments Works" comprised "construction work" for the purposes of the Design and Building Practitioners Act.
15. The contract alleged in cl 12A (the "Alleged Contract") is said to be an express contract, the existence of which is to be inferred from what Mr Ashhurst SC and Mr Mobellan, who appeared for the Owners Corporation, described as "evidentiary admissions made by [Omaya] Investments in its Cross-Claim against the Cross Defendants". The Cross-Defendants are an architect and certifier.
16. The allegations relied on as "evidentiary admissions" are, first, a statement in the Developer's and Omaya Investments' Amended List Statement for the Cross-Claim against the architect and certifier, under the heading "Nature of Dispute": "4 [The Developer] engaged [the Builder] and [Omaya Investments] to carry out certain residential building works at the Property."
17. Second, as against the architect, the Developer and Omaya Investments allege in the Cross-Claim, under the heading "Claim against [the architect]", that: "15 In about 2007, [Omaya] Investments engaged [the architect] to provide it with architectural design and construction associated services in relation to the development of the Property."
18. Third, as against the architect, the Developer and Omaya Investments allege in the Cross-Claim, under the heading "Common law duty of care": "22A The salient features of the relationship between [the architect], and each of: (a) [the Developer], as the registered proprietor of the Property; and (b) [Omaya] Investments, as the party who engaged [the architect] to provide the IDG Architectural Services; were that: … (d) [the architect] knew or ought to have known that: … (ii) [the Developer] had engaged [Omaya] Investments to carry out residential building work on the building at the Property; …"
19. The Developer and Omaya Investments make corresponding allegations in the Cross-Claim against the certifier, save that it is alleged that Omaya Investments appointed the certifier in November 2009. [2]
20. The Amended List Statement for the Cross-Claim was not verified, but contained a certificate by the solicitor for the Developer and Omaya Investments under cl 4 of Sch 2 of the Legal Profession Uniform Law Application Act 2014 (NSW): "[T]here are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim for damages in this List Statement has reasonable prospects of success."
21. The Owners Corporation has served a Notice to Produce on the defendants seeking production of a wide range of documents relevant to whether any contract existed between the Developer and Omaya Investments. The Owners Corporation has also served 17 subpoenas on third parties seeking such documents. Although the defendants have responded to the Notice to Produce, and although almost all of the subpoenas have been answered, the Owners Corporation tendered no documents produced in support of its application for leave to amend. I infer from this that no documents have been produced that would assist the Owners Corporation.
22. Thus, at the moment, the sole basis on which the Owners Corporation contends for the existence of the Alleged Contract are the "alleged evidentiary admissions".
23. The defendants oppose the Owners Corporation's application to amend its List Statement in the manner I have described on a number of bases, but primarily on the basis that no admissions have been made, and on the further basis that McGrath J has made a finding to that effect.

The "evidentiary admissions"

1. I doubt that the allegations made by the Developer and Omaya Investments in the Cross-Claim can truly be characterised as "admissions". The general rule is that allegations contained in pleadings are not admissible as an admission against the party filing them. [3] That is because pleadings are statements of the case the pleading party seeks to make, which are to be admitted or denied by the opposite side, and are not positive allegations of the truth of their contents. [4]
2. However, allegations in pleadings may involve an implied representation that the party filing the pleading honestly believed it had a fair chance or prospect of success. [5]
3. The matters in the Amended List Statement for the Cross-Claim that I have set out at [16] to [18] above appear to be clear allegations of the existence of a contract to the effect of the Alleged Contract.
4. The solicitor for the Developer and Omaya Investments has given the certificate that I have set out at [20] above.
5. I see that certificate as the representation by the Developer and Omaya Investments, by their solicitor, that there were reasonable grounds for believing that the allegations in the Cross-Claim could be made out.
6. I see this as a sufficient basis for the Owners Corporation to allege the existence of a contract to that effect.
7. It is true, as McGrath J observed, [6] that these allegations are made in the context of a Cross-Claim that assumes, contrary to the denials of the defendants in their List Response, that the Developer or Omaya Investments are found to be liable to the Owners Corporation.
8. In that sense, the allegations in the Cross-Claim are conditional, are predicated on and are only to be enlivened, in the sense of being pursued by the Developer and Omaya Investments, if the Owners Corporation makes those claims.
9. But the allegations I have set out are not made conditionally in the sense of being made if, and only if, the Owners Corporation succeeds against the Developer and Omaya Investments. That is, although the Developer and Omaya Investments would have no cause to prove the contract between them as against the architect and certifier were the Owners Corporation's claims to fail, their allegation that such a contract exists is not conditional on the Owners Corporation's success. As Mr Ashhurst SC put it, the Developer and Omaya Investments are not saying, vis-a-vis the architect and certifier "we only have a contract with you if we're liable to them".
10. To the extent that McGrath J has expressed a different view, [7] I respectfully disagree.
11. At the end of the day, the assertions made by the Developer and Omaya Investments in their Cross-Claim, and such representations as may be found to arise from them, may not be a sufficient basis upon which to establish the Alleged Contract.
12. But I see the case as being at least arguable, such that the Owners Corporation should be granted leave to make the allegation and endeavour to establish it at hearing.

The limitation point

1. Although the allegation of the Alleged Contract is new, in the sense that it has not previously been alleged, and would otherwise be out of time, it arises from the same facts as those giving rise to the cause of action hitherto pleaded as set out at [7] above and the pleading now made in substitution thereof.
2. I therefore propose to allow the amendment under ss 64(1)(b) and 65(2)(c) of the Civil Procedure Act 2005 (NSW).

Delay

1. The proposed amendment is made long after these proceedings were commenced, but only shortly after the defendants, for the first time, sought to agitate the question of Omaya Investments' involvement in the proceedings. [8]
2. I do not see delay as a relevant factor here.

Prejudice

1. A suggestion of prejudice was made on behalf of the defendants arising from an undertaking given to the Court by Mr Bechara not to deal with a property he owns elsewhere in Strathfield and the recent introduction of the State Environmental Planning Policy (Housing) Amendment (Transport Oriented Development) 2024 under the Environmental Planning and Assessment Act 1979 (NSW).
2. The effect of this policy was said to "significantly reduce" the value of that Strathfield property. How that could translate into relevant prejudice was not developed.

Decision

1. I grant the Owners Corporation leave to make the proposed amendments.
2. The Owners Corporation must pay the costs thrown away by the amendments.
3. The costs of the Owners Corporation's Notice of Motion filed on 23 August 2024 will be its costs in the cause.

Endnotes

1. The Owners - Strata Plan No. 82089 v Omaya Holding Pty Ltd [2024] NSWSC 992.
2. Rather than 2007, in the case of the architect.
3. Boileau v Rutlin (1848) 2 Ex 665 at 679-81; 154 ER 657 at 663 (Parke B); [1848] EngR 661; Buckmaster v Meiklejohn (1853) 8 Exch 634 at 637 (Parke B, Alderson and Martin BB agreeing); 155 ER 1506 at 1507; [1853] EngR 415; McKinlay v North Australian Co (1869) 3 SALR 135 at 139 (Wearing J); [1869] SALawRp 21; Austin v Austin [1905] VLR 564 at 566-7 (Hodges J); (1905) 11 ALR 337; [1905] VicLawRp 48; Kleeners Pty Ltd v Lee Tim (1959) 78 WN (NSW) 746 at 747-8 (Maguire J); British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 1 Ch 203 at 206 (Russell J); British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160 at 164 (Pollock MR), at 170 (Atkin LJ).
4. Jamieson v R (1993) 177 CLR 574 at 580 (Deane and Dawson JJ); [1993] HCA 48 quoting Boileau v Rutlin (supra) at 680-81 (Parke B) and Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85 (Mason CJ and Brennan J); [1990] HCA 31.
5. Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 at 698-700 (Handley JA, Mahoney and Clarke JJA agreeing).
6. At [36]-[37].
7. At [38], [52] and [53].
8. See [7] and [8] above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 September 2024