Harris for and on behalf of the estate of Harris and Harris v Rapisarda

1. [1]

   The defendants, Mr Horace Rapisarda and a company with which he is associated, H&A Building Designers Pty Ltd trading as MLR Architects, seek to have these proceedings struck out pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 14.28, dismissed pursuant to UCPR r 13.4 or permanently stayed pursuant to s 67 of the Civil Procedure Act 2005 (NSW).

2. [2]

   I will refer to the defendants, together, as the “Architects”.

3. [3]

   The Architects contend that the orders sought should be made on the basis of an Anshun estoppel or on the basis that the commencement of these proceedings is an abuse of process.

4. [4]

   For the reasons that follow, the application should be dismissed.

5. [5]

   The plaintiff, Mr John Harris, is the executor of the estate of his parents who were, at all relevant times, the registered proprietors of a property at Lilli Pilli. I will refer to them as the “Proprietors” and to Mr Harris as the “Executor”.

6. [6]

   In August 2009 the Proprietors engaged a builder, who I will call the “First Builder”, to build a substantial new dwelling on their property.

7. [7]

   The Proprietors became dissatisfied with the performance of the First Builder and, in circumstances not presently relevant, terminated their contract with that builder in May 2011.

8. [8]

   In November 2010 the Proprietors engaged the Architects in relation to the project. They retained the Architects to prepare plans and specifications for:

9. [9]

   In January 2012 the Proprietors entered into a contract with Morabito Holdings Pty Ltd (the “Second Builder”) to complete the project (the “Contract”).

10. [10]

    The Architects prepared the Contract.

11. [11]

    The Executor contends in these proceedings that the Contract was “inadequate” in that it did not:

    1. (1)

       include the Second Builder’s tender in which the Second Builder allegedly represented that its work would achieve “high standards of quality” and a “high standard of workmanship”; and

    2. (2)

       specify that the workmanship of the Second Builder would be of a “high standard”.

12. [12]

    The project achieved practical completion in September 2013.

13. [13]

    In September 2015, the Proprietors commenced proceedings in the NSW Civil and Administrative Tribunal against the Second Builder. Those proceedings were transferred to this Court. The whole of the proceedings was referred to a referee, Mr Barry Tozer, for inquiry and report.

14. [14]

    The hearing before Mr Tozer took nine days spread over four months. There were before Mr Tozer some 25 lever arch folders of documents. The Proprietors served 16 expert reports, including one exceeding 560 pages, as well as five affidavits from the Executor and an affidavit from Mr Rapisarda. The Second Builder served reports from seven experts as well as an affidavit from the principal of the Second Builder, Mr Morabito. The transcript of evidence before Mr Tozer occupies over 750 pages.

15. [15]

    On 31 January 2018 Mr Tozer delivered his report. It was almost 200 pages long. Mr Tozer found that:

16. [16]

    The award of damages proposed by Mr Tozer was very much less than the amount sought by the Proprietors: some $1.65 million.

17. [17]

    On 19 June 2018, McDougall J ordered that Mr Tozer’s report be adopted, except insofar as it deducted from the amount due from the Second Builder to the Proprietors the $57,935.25 on account of variations and delay costs: Harris v Morabito Holdings Pty Ltd [2018] NSWSC 912 at [154].

18. [18]

    His Honour entered judgment in favour of the Proprietors against the Second Builder in the sum of $385,676.47.

19. [19]

    On 24 May 2019 the Executor, on behalf of the estate of the Proprietors, commenced these proceedings against the Architects. The Executor alleges that the Architects:

20. [20]

    By way of heads of loss, the Executor alleges that “by reason of the above breaches, jointly and severally”:

21. [21]

    The Architects contend that in order to adjudicate upon the Executor’s claims, the Court will have to determine what would have occurred but for the alleged wrongful conduct. For example, the Architects contend, in relation to the alleged maladministration of the Contract, the Court will have to determine:

22. [22]

    The Architects contend that these matters ought reasonably to have been raised by the Proprietors in the Morabito Proceedings. The Architects contend that:

23. [23]

    The Architects seek to have the proceedings struck out, dismissed or stayed on the basis that they are barred by an Anshun estoppel, or are an abuse of process.

24. [24]

    Alternatively, the Architects seek to have a number of paragraphs of the Technology & Construction List Statement struck out on the basis that they are embarrassing and not reasonably arguable.

Anshun estoppel

1. [25]

   It has been pointed out that although named after the decision of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45, Anshun estoppel has “like most other species of estoppel, a long pedigree”: P W Young, C Croft and M L Smith, On Equity (2009, Thomson Reuters) at [12.70].

2. [26]

   That pedigree includes the well-known words of Sir Wigram VC in Henderson v Henderson (1843) 3 Hare 100 at 115; (1843) 67 ER 313 at 319:

3. [27]

   In the Anshun decision itself, the High Court said at 602-604:

4. [28]

   More recently, in Timbercorp Finance Pty Ltd (in liq) v Collins; Timbercorp Finance Pty Ltd (in liq) v Tomes (2016) 259 CLR 212; [2016] HCA 44, the High Court, at [97], quoted this passage from Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [22], that an Anshun estoppel:

Abuse of process

1. [29]

   In UBS AG v Tyne (2018) 360 ALR 184; [2018] HCA 45 at [1], Kiefel CJ, Bell and Keane JJ said of abuse of process:

2. [30]

   The plurality, at [7], cited with approval the observations of Lord Bingham in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31; [2001] 2 WLR 72, that what is required is:

The Architects were not parties to the earlier proceedings

1. [31]

   Unlike the Anshun decision itself, this is not a case where a plaintiff brings second proceedings against the same defendant. The Architects were not parties to the earlier proceedings.

2. [32]

   An Anshun estoppel may arise in circumstances where the defendant to the second proceedings was not a party to the earlier proceedings. But absent an assertion in the second proceedings of a proposition inconsistent with those agitated in the first, or some other circumstance bespeaking an abuse of process, it is hard to envisage an Anshun estoppel arising in such a case.

3. [33]

   An example of a case where an Anshun estoppel arose where the present defendant was not a party to the earlier proceedings is Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142. But in that case, the plaintiffs were seeking in the second proceedings to re-litigate an issue, their reliance on particular financial statements, that had been decided against them in the first proceedings: per Handley JA at [38].

4. [34]

   This issue was considered by Warren CJ, with whom Neave JA agreed, in Solak v Registrar of Titles (2011) 33 VR 40; [2011] VSCA 279 at [67]-[71]:

5. [35]

   Similarly, in Ekes v Commonwealth Bank of Australia [2014] NSWCA 336 Bathurst CJ, with whom Beazley P and Emmett JA agreed, having referred to the passage I have set out above from Ashun said, at [131]-[133]:

The Executor is not seeking inconsistent findings

1. [36]

   Further, this is not a case where a plaintiff proposes to seek findings inconsistent with those made in earlier proceedings. On the contrary, the Executor’s case is premised on the correctness of Mr Tozer’s conclusions and McDougall J’s adoption of them.

2. [37]

   Indeed, Mr Bambagiotti, who appeared for the Executor, informed me that the Executor undertook to the Court not to seek in these proceedings any finding inconsistent with those made by Mr Tozer, and adopted by McDougall J, in the earlier proceedings. Rather, the Executor to proposes to rely upon the findings made by Mr Tozer, and adopted by McDougall J, that the standard of workmanship called for by the Contract was “the ordinary standard applied to building work” other than some special, higher standard.

3. [38]

   The Executor’s case will be that the Architects prepared the Contract (as McDougall J found at [18]) and the fact the Contract did not call for a special, higher standard was, to adopt Mr Bambagiotti’s submissions, “the subject of, and product of, the Architect’s breaches of its retainer, negligent conduct and misleading or deceptive conduct contrary to, inter alia, the Australian Consumer Law.

4. [39]

   As Warren CJ observed in Solak, the fact that the Executor is not seeking to advance any proposition inconsistent with the findings in the earlier proceedings “is a significant factor militating against a finding that an Anshun estoppel has arisen” (see [34] above).

5. [40]

   Determination of the Executor’s claim against the Architects will involve consideration of the quality of the work that would or should have been undertaken by the Second Builder, had the Contract have provided for a “high standard” of workmanship on the part of the Second Builder, and had the Architects supervised the Second Builder’s work and ensured that a “high standard” was achieved. In effect, the Executor will run an “alternative transaction” case which will proceed on this hypothesis.

6. [41]

   It may well be, as Mr Shipway, who appeared for the Architects submitted, that in these proceedings alleged defects already considered in the earlier proceedings will be revisited.

7. [42]

   As an example, Mr Shipway pointed to the fact that, in the earlier proceedings, the Proprietors sought some $340,000 for “damage to the anodised window frames, sliding door frames and internal sliding doors”.

8. [43]

   The complaint made by the Proprietors about the window frames and doors was not as to their function, but merely as to their appearance. As Mr Shipway said, it was an aesthetic issue only. As Mr Tozer and McDougall J concluded that the Contract did not call for a “high standard” of workmanship, the Proprietors recovered only a nominal amount on account of this matter.

9. [44]

   If the Executor establishes in these proceedings that the Contract should have provided for a “high standard” of workmanship, the proper characterisation of this defect, and the work required to rectify it, will need to be reconsidered.

10. [45]

    But I cannot see how that will result in inconsistent findings to those made by Mr Tozer and adopted by McDougall J in the earlier proceedings. Those findings were made in the context of what Mr Tozer and McDougall J concluded was the proper construction of the Contract.

11. [46]

    The Proprietors’ case before the Referee and McDougall J was that, on its proper construction, the Contract called for a higher standard of workmanship than the “ordinary” standard.

12. [47]

    Against the possibility that such contention be rejected, it would no doubt have been possible for the Proprietors to have joined the Architects as defendants in the earlier proceedings and to argue, in the alternative, and on the assumption that their construction of the Contract was incorrect, that the Architects should pay damages by reason of not ensuring that the Contract did have the construction for which they contended.

13. [48]

    But that would have been a risky course to adopt, particularly as the Proprietors called Mr Rapisarda as a witness in their case.

14. [49]

    Mr Shipway submitted that, had the Architects been joined as defendants in the earlier proceedings and the Proprietors run alternative cases against the Second Builder and the Architects, it is likely that issues as the alleged defects and the steps needed to rectify them, on the alternative bases of the Contract calling for “ordinary” workmanship and “high standard” workmanship would have been more efficiently dealt with than will be the case now that separate proceedings have been commenced against the Architects.

15. [50]

    Mr Shipway also drew attention to observations of Gageler J in UBS AG v Tyne that these questions must be considered not only by reference to the interest of the parties to the proceedings, but also to the “public interest in the timely and efficient administration of civil justice” (at [70]).

16. [51]

    However, I cannot draw any conclusion as to whether greater efficiency would have been achieved, and at less cost to the parties and the community, had the Proprietors proceeded as Mr Shipway contended they should have.

17. [52]

    More to the point, I cannot conclude it was unreasonable of the Proprietors to not take that course.

18. [53]

    As Hodgson JA said in Redowood, “plaintiffs should be permitted reasonable latitude in deciding whether to sue just one defendant, or to join a number of defendants in alternative claims” (see [34] above).

Conclusion re Anshun and abuse of process

1. [54]

   I am not persuaded that the Executor is estopped from bringing these proceedings, nor that bringing these proceedings is an abuse of the process of the Court.

2. [55]

   The Architects’ application to have the proceedings struck out or stayed should be dismissed.

Particular paragraphs of the Technology & Construction List Statement

1. [56]

   Mr Shipway submitted that pars C22, 24, 27, 36, 38, 40 and 42 of the Technology & Construction List Statement were liable to be struck out as being embarrassing.

2. [57]

   In submissions, Mr Bambagiotti accepted that each of the paragraphs could be more clearly expressed.

3. [58]

   I propose to give the Executor leave to produce an Amended Technology & Construction List Statement in order that such a result be achieved.

Conclusion

1. [59]

   I make the following orders and directions:

   1. (1)

      The defendants’ Notice of Motion filed on 5 August 2019 is, so far as concerns the relief sought in paragraphs 1 and 2, dismissed with costs.

   2. (2)

      Direct the plaintiff to serve a proposed form of Amended Technology & Construction List Statement by 5pm on 30 August 2019.

   3. (3)

      Direct the defendants to notify the plaintiff by 5pm on 5 September 2019 whether they oppose the plaintiff having leave to amend.

   4. (4)

      Stand the balance of the Notice of Motion, and the proceedings over to the motions list on 6 September 2019.