Tresedar Pty Limited & Ors v Property Builders

Judgment 1I propose to dismiss the Motion. These are the reasons. By Notice of Motion filed on 12 July 2013 the defendant, Property Builders (Constructions) Pty Limited (in liquidation) (PBC) seeks an order under r 13.4 of the Uniform Civil Procedure Rules 2005 that the proceedings be dismissed. That application is based upon r 13.4(1)(b) on the basis that no reasonable cause of action is disclosed. 2I will not set out the facts in detail upon which the action is grounded. It is sufficient to say that the dispute concerns building contracts between the plaintiff companies as developers or guarantors and the defendant company as building or project manager in respect of planned multi-unit residential developments at Turramurra and Gordon. 3As a result of a payment claim sent by the defendant, and there being no response to it, proceedings were commenced in this Court seeking judgment for the amount of that claim. Those proceedings were settled on terms set out in the deed dated 14 October 2008. Pursuant to that deed, consent orders were made giving judgment for the defendant against the first plaintiff in the sum of $1,001,015.33. 4Thereafter, the work on the projects continued, but as a result of a failure to make payments under the 2008 deed and the claimed building contracts, the defendant suspended work. The second and third plaintiffs in this action guaranteed the obligations of the first plaintiff under the deed and there was a provision that security was to be given to PBC by way of an unregistered mortgage over the Turramurra property to secure a sum of $300,000, to be protected by caveat. 5There have been various applications before the Court in separate proceedings in respect of the caveat which, generally speaking, have resulted in orders favourable to the caveator. 6By Summons filed on 10 August 2009, the plaintiffs sought damages for breach of contract against PBC. The Technology and Construction List Statement clearly states that the claim is based upon an amended form of a PBC4 contract of the Master Builders Association in respect of the work on the Gordon property and claims damages as a result of the defendant's having suspended works, this being said to be in breach of the building contract. 7An amendment of this statement was filed on 6 November 2009. By then Mr Michael Phontos, a solicitor and director of PBC, was joined as the second defendant; as against the first defendant the claim continued. 8The breach of contract claim raised an issue of breach of statutory warranty under the Home Building Act 1989 and an issue whether the defendants have engaged in misleading or deceptive conduct. Significantly, however, the claim pursuant to the contract was completely different from that originally made. It is alleged that an oral contract was made in 2006 in respect of the Turramurra and Gordon properties. It is then pleaded that the financier for the Turramurra project required a fixed price contract and that PBC, through its agent Mr Phontos, represented that it would prepare one to satisfy the financier, but that the oral agreement would remain the true agreement. 9A cost plus contract was executed in January 2007 and a fixed price contract was executed in May 2007 in respect of the Turramurra land and that similar action was taken to satisfy BankWest, the financier for the Gordon development. The effect of these new claims based on an oral contract amounts to an allegation that the parties had conspired to mislead the financiers and that this was done due to the actions and representations of Mr Phontos as solicitor and also of Mr Phontos as agent of PBC. It is alleged, therefore, that service of the payment claim was contrary to the true oral contract and the plaintiff thereby suffered loss. There is a claim for damages for breach of contract based upon the oral agreement. 10A Further Amended List statement was filed on 30 April 2010. This had the effect of making expanded allegations against Mr Phontos. It is unnecessary to deal with this as the action against Mr Phontos as a defendant has been discontinued or consent orders for discontinuance have been filed, although they have not reached this file. In any event, it is agreed that the claim against Mr Phontos as second defendant has been discontinued. Under that final document the plaintiffs claim against PBC under the oral contract was continued. 11The argument for PBC is that a claim based on the oral contract is clearly a new invention, that it has no chance of success and should be dismissed. In addition, it is claimed that an oral agreement as pleaded is unenforceable under the provisions of the Home Building Act 1989. There are other matters to which I will shortly refer. 12The Court documents are somewhat confusing as the pleading entitled "Defence to the Further Amended Technology & Construction List Statement" was filed on behalf of Mr Phontos only and should be disregarded. In the relevant response of PBC filed on 2 July 2010 there is a claim of estoppel against asserting the oral agreement by reason of the judgment in the 2008 proceedings. There is also included a defence of estoppel by judgment. There may have been intended to be some argument based on an Anshun estoppel although that has not been properly raised and for those purposes I will disregard it. 13I should make it clear at this stage that it is obvious that the claim of the plaintiffs will need to be amended to delete the claims against Mr Phontos in light of the discontinuance. Nothing really turns on that because this requirement was clearly recognised. The argument put forward by Mr RP Freeman, counsel for the defendant, was based solely on the pleading and on the documentary evidence of contracts and other material relating to those contracts, and this was appropriate and a proper course in the circumstances. 14It was argued by Mr Freeman that the test previously applied for summary dismissal applications has changed with the enactment of s 56 of the Civil Procedure Act 2005 and thus there is a lesser burden on the party seeking summary disposal. This was referred to by Hammerschlag J in Simmons v Protective Commissioner [2012] NSWSC 455 but his Honour did not need to decide it. On appeal, Emmett JA said that a court must be highly certain about the ultimate outcome and that summary dismissal should only ever be ordered where there is no real question to be tried: Simmons v Henwood [2013] NSWCA 184. With respect to those who think otherwise, I find it difficult to understand why it should be thought that r 13.4 of the UCPR imposes a test different from that which was regularly applied under Pt 13 r 5 of Supreme Court Rules 1970. The wording is the same although the order of paragraphs in sub-rule 5(1) is different. The overriding purpose rule introduced into the Supreme Court Rules 1970 in Pt 1, r 3(1) in 2000 is now enacted in s 56(1) in the Civil Procedure Act in the same terms other than to extend the overriding purpose to the Act as well as the Rules. In other words, the same principles apply now as applied in 2000. It was not suggested that after 2000 and before the Civil Procedure Act came into force the test in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 did not apply and that there was some lesser hurdle to surmount. What might be described as the lesser burden on an applicant for dismissal under the Federal Court Act 1976 (Cth) is irrelevant here. 15In many ways the overriding purpose can best be achieved by bringing the action on for final hearing. It has been before the Court on over 40 occasions on Notices of Motion and for directions. 16In the present case I consider that the plaintiff has a reasonable cause of action if its claim for an oral contract succeeds. Whether it can succeed depends upon findings of fact, and if it did succeed then the ultimate result will be affected by legal arguments on estoppel and the questions which arise under the Home Building Act. These are matters which cannot be decided on an application for summary judgment. 17It may well be that the claim based on an oral contract does not seem to be strong and is just an attempt to outflank the 2008 settlement and judgment and it may be that as a matter of law some statutory provisions will prevent the oral contract claim succeeding, but those are matters for trial and for argument at the trial. 18In all the circumstances, the Notice of Motion should be dismissed with costs.