The application under UCPR r 13.4
16The real complaint made by Mr Rodney Khoury is under this rule, namely that the proceedings are liable to be dismissed because no reasonable cause of action is disclosed.
17In General Steel Industries v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, Barwick CJ in the well known passage at 128-129 said that: -
"...the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion."
18The test has been variously expressed, including "so obviously untenable that it cannot possibly succeed" and "manifestly groundless": General Steel at 129 per Barwick CJ. See also Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon J; Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507 at 514; Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598 at 602-603; Cosmos E-C Commerce Pty Ltd v Bidwell & Associates Pty Ltd [2005] NSWCA 81 at [37]-[38].
19My attention has been drawn to the observations of the Court of Appeal in Wickstead v Browne (1992) 30 NSWLR 1 at 11 where Handley and Cripps JJA said: -
"By launching [an application of the kind now before me] a defendant undertakes the burden of establishing that there is no triable issue. On such an application the defendant bears the onus of proof and where the facts are particularly within the defendant's knowledge the plaintiff's action should not be dismissed because of gaps in the case if the necessary evidence might be obtained as a result of discovery or interrogatories."
20The question of summary judgment application by a defendant was recently considered by the High Court in Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118. The Court was there considering the provision in the Federal Court of Australia Act 1976 (Cth) corresponding to UCPR r 13.4. Unlike UCPR r 13.4, s 31A of the Federal Court of Australia Act provides, in terms, that a proceeding need not be "hopeless or bound to fail" to have no prospects of success.
21Hammerschlag J in Simmons v Protective Commissioner of NSW [2012] NSWSC 455 (at [62]) recently opined that the combination of the word "reasonable" in UCPR r 13.4 and the provisions of s 56(2) of the Civil Procedure Act has the effect that the approach that this Court should adopt in exercising the power under UCPR r 13.4 is the same as that described by the High Court in Spencer.
22In Simmons, Hammerschlag J reviewed a number of decisions of the Federal Court following upon the High Court's decision in Spencer. His Honour referred to Bennett J's "useful and concise summary of what emerges from Spencer" in Expo-Net Danmark A/S v Buono-Net Australia Pty Ltd (No 2) [2011] FCA 710 as follows: -
(1)there is a discretion reposed in the judge hearing the application to grant summary judgment;
(2)the power should be attended with caution and involve a high degree of certainty about the ultimate outcome of the matter if it were to go to trial;
(3)more complex cases are unlikely to be capable of being resolved by summary judgment without discovery and oral evidence; and
(4)the relevant provision requires that a practical judgment be made, and the inquiry is whether there is a reasonable prospect of prosecuting the proceedings, not whether a certain and concluded determination can be made that the proceedings would necessarily fail.
23In the application before me, Mr Young, who appeared for the plaintiff, pointed out that Mr Rodney Khoury has not denied being a builder, despite being given a number of opportunities to do so.
24One of those opportunities was when, before the commencement of these proceedings, the plaintiff's solicitor wrote to Mr Rodney Khoury, inviting him to say whether or not he had been engaged by Merrag to design and/or construct the building. Ultimately, Mr Rodney Khoury's solicitors replied declining to make any response to that inquiry, and observing that the plaintiff's solicitors had "erroneously assume[d] our client has an obligation to assist your client".
25Further, Mr Rodney Khoury has sworn an affidavit on this occasion in which he does not deny being a party to an agreement with Merrag acting to design or construct the building.
26It is true that Mr Rodney Khoury was not obliged to respond to the plaintiff's solicitor's letter, and that it was not for him to assist the plaintiff prove its case.
27However, now that Mr Rodney Khoury has brought this application, he has the onus of showing that the plaintiff has no reasonable prospect of prosecuting the proceedings and, in particular, that the plaintiff has no reasonable prospect of showing that Mr Rodney Khoury was a party to a contract with Merrag or another, pursuant to which he (a licensed builder) designed and constructed the building.
28There is some indication in the evidence before me that there may have been a contract of the kind the plaintiff alleges.
29In the letter written by the plaintiff's solicitor to Mr Rodney Khoury to which I have referred, the plaintiff's solicitor stated amongst other things: -
"I am instructed that you may have been engaged by Merrag to design and/or construct this development. Susan Khoury [who I am told is the wife of the second defendant Mr Michael Khoury and the director of Warrenby] was present at the most recent general meeting of the owners corporation and she nominated you as the builder."
30Mr Rodney Khoury's solicitor responded to that letter expressing Mr Rodney Khoury's puzzlement at the request for information about his involvement, "when the request is based on nothing more than a gratuitous comment at an owners corporation meeting".
31Significantly, Mr Rodney Khoury did not instruct his solicitors to deny that Ms Susan Khoury had made the comment attributed to her.
32The plaintiff's solicitor wrote a corresponding letter of inquiry to Warrenby and Mr Michael Khoury. The solicitor acting for those parties, Bannermans Lawyers, wrote to the plaintiff's solicitors on 26 September 2012 making certain allegations.
33I infer that that letter was written on instructions from Mr Michael Khoury and reflects the evidence that Mr Michael Khoury will give in these proceedings.
34In their letter, Bannermans Lawyers said that their instructions were that Warrenby and Mr Michael Khoury "were not the builders of the Development, nor were they responsible for its design or construction". The letter continued: -
"My clients' involvement was at the beginning of the project. In May 2004, my clients were permanently thrown off the site, after a dispute arose. Michael Khoury was not involved in the balance of the works, neither as a Director of Warrenby or his personal capacity...
After being thrown off the site in May 2004, my clients cannot definitively comment about the identity of the builder but to say [sic] it would appear that Rodney Khoury performed the works and held the relevant builder's licence at the time. Therefore, in all likelihood, the building works were carried out under that licence.
Michael Khoury and Warrenby were not paid by Merrag Pty Ltd or Rodney Khoury to do building works at the site...
I suggest making contact with Rodney Khoury regarding the documents. Since the dispute, Michael has had very little contact with Rodney Khoury."
35My attention has also been drawn to letters written to Merrag in late October 2005 by various subcontractors which are marked to the attention of Mr Rodney Khoury.
36Further, on 21 November 2005, a solicitor known as Ms Mary Khoury, who was evidently acting for Merrag on the sale of one of the units in the Building, wrote to the purchaser's solicitors stating: -
"We advise that a meeting first took place on site between your clients...and our client Rodney Khoury...The meeting was arranged by your client...who called Rodney Khoury to access the building in order to discuss the position and finishes".
37On 16 June 2008, Mr Kevin Hitchcock, evidently then an owner of one of the units in the Building, and who described himself as the chairman of the Building Executive Committee, wrote to Warrenby and Mr Michael Khoury stating: -
"As discussed in our previous email there are a number of warranty issues we would like investigated and rectified. All of these issues have been raised at different times with both George and Rodney Khoury, in our belief that as the builders on site they were responsible for correcting faulty work. At no time did they indicate that another member of the family was listed as the licensed builder responsible."
38In my opinion, this material points to the conclusion that the plaintiff has some prospect, perhaps some significant prospect, of showing that Mr Rodney Khoury was a party to contracts of the kind referred to in the pleadings.
39It is certainly true, as Mr George, who appeared for Rodney Khoury, emphasised, that there were indications the other way.
40First, the November 2003 contracts themselves were clearly between Warrenby and Merrag.
41Further, my attention has also been drawn to the undated email from Mr Brad Belcher, who I am told was then the chairman of the Executive Committee of the Strata Plan. That email was addressed to Mr Michael Khoury, and complained of cracking and water ingress at the Building.
42Mr Belcher said amongst other things: -
"Firstly, during our conversation yesterday you indicated to me that Rodney was the licensed builder and that I should contact him to discuss the issues. I telephoned Rodney this morning who indicated that he is not the licensed builder listed for the above mentioned property as stated by you, and that you are the listed builder. We concur with this, and would like to bring the following issues to your attention [Mr Belcher went on to refer to various cracks and other problems with the building]."
43On 21 February 2011 Mr Michael Khoury completed a "Proof of Debt" form in the liquidation of Merrag in which he stated that Warrenby was a creditor of Merrag in the sum of $492,000. The particulars of debt referred to in that proof of debt refer to a contract of 4 November 2003; evidently one of those to which I have referred.
44That should be read together with a note Mr Michael Khoury appears to have made in which he recorded that Warrenby entered into a contract with Merrag to do the work, that Warrenby has attended to the warranty and defect works and is still honouring its obligations under the relevant warranty.
45There is a tension between that evidence and the material to which I have referred, concerning the allegation that Mr Michael Khoury was "thrown off the site" in May 2004.
46However, this is not the occasion upon which I can or should resolve that evidentiary conflict. This is very much a case where discovery, oral evidence and cross-examination are likely to be needed, in order that the issues be resolved.