The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd

Supreme Court of NSW|2023-03-17|Before: Rees J

Solicitors: Holding Redlich (applicants) Colin Biggers & Paisley (respondent) File Number(s): 2020/00112369

ex tempore Judgment - Application to amend pleading

Her Honour: This is an application by the plaintiffs to amend their pleading. The plaintiffs already seek damages from the contractor in respect of a contract entered into in October 2014 and a second contract entered into in May 2015, to effect construction and refurbishment works at Star Casino. The plaintiffs now seek to add a claim for damages for breach of a third contract between the plaintiffs and the defendant contractor.
The contractor accepts that the claim now sought to be brought is not time-barred. The problem is that a cross-claim by the contractor against its subcontractor is likely time-barred; the amendment is opposed for this reason.

Submissions

The plaintiffs accepted that the contractor's inability to sue Ausrise by cross-claim was a significant factor that weighed in the Court's determination as to whether to grant leave to amend. However, that inability was not dispositive. Ausrise had already pleaded that the claims under the first and second contracts were time-barred. This may be referable to the fact that the contracts between the contractor and its subcontractors were not by deed, such that a shorter limitation period applied. The contractor's choice in this regard should not be visited upon the plaintiffs, where their claim against the contractor was within time.
The plaintiffs submitted further that it was open to the contractor to move the Court to back-date any consequential amendment of the cross-claim to 10 June 2022 under section 65(2) of the Civil Procedure Act 2005 (NSW). The contractor accepted that, if such an order was made by the Court, its additional claim against Ausrise would not be time-barred.

Consideration

As Sackar J observed in Owners - SP 67635 v Metlej Developments Pty Ltd [2013] NSWSC 1564 at [12]: The prejudice occasioned by the deprivation from a defendant of a means to deflect liability to a third party by reason of a delay by the plaintiff in including a particular claim in its pleadings against the defendants, is a factor particularly relevant to the exercise of my discretion in the present application.
It is also a critical factor to be considered on this application. Here, of course, there is no suggestion that the delay in adding this potential claim is the plaintiffs' fault per se as the alleged defect appears to be latent. There is no suggestion that the plaintiffs have been dilatory in identifying the problems with the building.
The prejudice which the defendant may suffer is the prospect that it cannot cross-claim against Ausrise. It is safe to proceed on the assumption that Ausrise will contend that the additional claim is time-barred and oppose any back-dating of an amended cross-claim to 10 June 2021.
What is not known is how the Court may deal with such an application by the contractor. I was invited by the contractor to defer determination of this motion until such time as it could be heard together with a motion brought by the contractor to amend its cross-claim against Ausrise and have the amended cross-claim backdated to 10 June 2021. I decline to make such an order. There is enough information to exercise the Court's discretion in respect of the amendment application now. Doing so will also make the next judge's task in deciding any future application easier.
In addition to the prejudice which the defendant contractor may suffer, I take into account that the plaintiffs' proposed additional claim against the contractor is, without argument, within time.
Second and relatedly, If I refuse leave to amend on the basis of the contractor's inability to recover from its subcontractor, it is open to the plaintiffs to commence separate proceedings, presumably in the District Court, seeking the same damages as are sought to be added to these proceedings. The contractor would have to defend the District Court proceedings notwithstanding that it may not be entitled to seek to recover any loss from its subcontractor. It would be undesirable to have a multiplicity of proceedings between the parties in respect of the same issues of fact and law.
Third, the plaintiffs' claim is not suggested to be unmeritorious.
Fourth, the contract between the contractor and Ausrise includes an indemnity provision: clause 14.3. Even if the contractor is unable to recover any damages from Ausrise by cross-claim in these proceedings, it may enforce the contractual indemnity. There is a carve-out in the indemnity clause that provides that the indemnity does not apply "to the extent" that the damages are caused by "the negligence of the Contractor or the Principal." The contractor submitted that this carve-out may have the effect of nullifying the indemnity. While that is possible, the carve-out does not provide that the indemnity is nugatory in circumstances where there has been any negligence by the Contractor or the Principal. The carve-out is limited "to the extent" that such damages are caused by the negligence of the Contractor or the Principal. Unless the damages are entirely attributable to the Contractor or Principal's negligence, the indemnity clause will likely provide some recompense for the contractor.
Having regard to these considerations, in particular, the potential prejudice to the contractor if it is not able to recover any additional damages from its subcontractor, I consider it is appropriate in all the circumstances to grant the plaintiffs leave to amend.

Costs

As to the costs of the motion, the plaintiffs accept that they need to pay the contractor's costs thrown away as a result of the amendments, but press for their costs of the motion, given the late narrowing of issues and the fact that they had put the contractor on notice of their wish to amend for some time. The contractor submits that the plaintiffs are seeking an indulgence.
The plaintiffs did notify the contractor at an early time of their wish to amend their pleadings and, even before that correspondence, kept the contractor informed of the discovery of further ACPs and the fact that it would likely be added to these proceedings. The plaintiffs do not appear to have had the courtesy of any response to several pieces of correspondence.
Whilst the plaintiffs have been granted an indulgence today, the costs of the motion may have been avoided if the contractor had engaged in the subject matter of this motion earlier, or at all. For these reasons, I order the contractor to pay the plaintiffs' costs of the motion. I make orders 1, 2 and 3 in the plaintiff's motion filed on 6 February 2023.

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: 30 March 2023

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