Nutek Constructions Pty Ltd v Slotwinski

The plaintiff, Nutek Constructions Pty Ltd, has brought proceedings in the New South Wales Civil and Administrative Tribunal (NCAT) against the defendants, Julia Slotwinski, Mariusz Slotwinski and Juno Australia Pty Ltd, for damages for breach of a contract the subject of the Home Building Act 1989 (NSW).

NCAT heard evidence in those proceedings on 3 and 4 August and 17 November 2017. Directions have now been made for final submissions.

On 22 November 2017, Nutek made an application, ex parte, to Ward CJ in Eq, sitting as a Duty Judge, for a freezing order in aid of its position in the NCAT proceedings.

The evidentiary basis advanced on behalf of Nutek for the making of the freezing order was contained in an affidavit sworn by its solicitor, Mr George Hayek of 21 November 2017.

It was to the following effect:

Her Honour was persuaded to make a freezing order. It has been extended, by consent, until 5pm today.

The only record of what was disclosed orally to her Honour on 22 November 2017 is a note sent to the defendant's solicitors by Mr Hayek as follows:

By notice of motion filed in Court this morning, the defendants seek to have the freezing order set aside on the basis that, on the application for the freezing order, Nutek failed to disclose to her Honour material matters.

One of the matters pleaded by the defendants in the NCAT is that, in breach of s 92 of the Home Building Act, Nutek did not have in place the requisite home warranty insurance.

The effect of that contention, if it is made out, is that by reason of s 94 of the Home Building Act, Nutek is not entitled to recover damages for breach of the contract on which it sues and, unless Nutek obtains leave under s 94 (1A), is not entitled to maintain a claim on a quantum meruit.

At NCAT, Mr Kalantzis acknowledged in cross-examination that Nutek had not effected home warranty insurance as required by s 92.

Special condition 6 of the contract in which Nutek sues in NCAT provides that:

At NCAT, Mr Kalantzis also agreed in cross-examination that Nutek was bound by special condition 6 and that he could not point to any evidence that a quantity surveyor had made any request of the kind referred to in the special condition.

Counsel appearing for Nutek before her Honour (who appears for Nutek in the NCAT and also appears for Nutek before me today) did not disclose to her Honour either of these matters. As he was present during the NCAT proceedings, he must have known of them. Before me today, he has not said otherwise.

According to the note to which I have referred, what counsel did disclose to her Honour was that, "the major component of the defence" at NCAT was that Nutek had wrongly repudiated the building contract.

That disclosure was not complete. Mr Kalantzis's concessions in cross-examination established the prospect, perhaps the strong prospect, of the defendants making out two grounds of defence, which would each be a complete answer to Nutek's claim.

Those matters should have been disclosed to the Court.

Nor did counsel disclose that:

It may be that counsel was not aware of those matters. But Nutek was. That matter was plainly relevant to the question of the value of the undertaking as to damages that Nutek gave to the Court on 22 November 2017.

That matter should also have been disclosed.

On an application for ex parte relief, an applicant is obliged to make full disclosure to the Court of all relevant matters, including those matters within its knowledge that the respondent may have raised, if present, in opposition to the relief sought.

Parties applying for ex parte relief bear a heavy onus of frankness and candour in placing material before the judge in connection with the application: Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955 (at [38]) there citing Isaacs J in Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 (at 681-2).

Failure to comply with the obligation will result in an ex parte injunction being dissolved, although such dissolution is without prejudice to any further application that a party may wish to make on fresh materials: Harrem Pty Ltd v Tebb [2006] NSWSC 1415 at [15]-[17] (Palmer J).

The Court requires a high standard of candour and responsibility from those who seek ex parte orders: Hilton v Lord Granville (1841) 4 Beav 130; 49 ER 288; Dalglish v Jarvie (1850) 2 Mac & G 231; 42 ER 89.

Had the matters to which I have referred been disclosed to her Honour, I have no doubt that her Honour would have thought them material.

Indeed, I doubt that her Honour would have made the freezing order on an ex parte basis in those circumstances, had the matters been disclosed.

In those circumstances the freezing order must be set aside. I so order.