Collins v Blackham [2016] QDC 152

DISTRICT COURT OF QUEENSLAND CITATION: Collins v Blackham & Blackham [2016] QDC 152 PARTIES: Jeffery Collins (appellant) v Michael Blackham & Dawn Blackham (respondents) FILE NO/S: 3863/15 DIVISION: Appellant PROCEEDING: Appeal from Magistrates Court ORIGINATING COURT: Magistrates Court, Redcliffe DELIVERED ON: 17 June 2016 DELIVERED AT: Brisbane HEARING DATE: 1 June 2016 JUDGE: Dearden DCJ ORDER: 1. Appeal granted (in part) 2. That the appellant be provided with a copy of the document entitled “Release, Discharge and Indemnity” contained in a sealed envelope on District Court Appeal file 3863/15. CATCHWORDS: CASES: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – PRODUCTION AND INSPECTION OF DOCUMENTS – GROUNDS FOR RESISTING PRODUCTION – PRIVILEGE – where respondent settled with second defendant – where respondent’s cause of action against the second defendant arises because of a statutory warranty to which the appellant is subject - whether the first defendant is entitled to inspect agreement settling proceedings between the respondent and second defendant Baxter v Obacelo Pty Ltd and Anor (2001) 205 CLR 635 Carr & Purves v Thomas [2009] NSWCA 208 -- 1 of 6 -- 2 LEGISLATION: Competition and Consumer Act 2010 (Cth) s 61 Queensland Building Services Authority Act 1991 (Qld) s 47 Uniform Civil Procedure Rules 1999 (Qld) ss 443, 444 COUNSEL: R Cameron for the appellant. C M Tam for the respondents. SOLICITORS: Gleeson Klein Stegman Lawyers for the appellant. RB Lawyers for the respondents. Introduction [1] Jeffrey Collins (the appellant) is the first defendant in civil proceedings in the Redcliffe Magistrates Court brought by Michael Blackham and Dawn Blackham (the respondents). The appellant appeals the decision of the learned magistrate at Redcliffe on 4 September 2015 refusing the appellant’s application for disclosure of documents or instruments that evidence the terms of compromise between the respondents and Ross Edward Pedley (second defendant) and Debra Pedley; and dismissing an application to join Ross Pedley as a third party out of time. [2] The appellant in his outline of argument abandoned that part of the appeal in respect of the learned magistrate’s refusal to grant leave to file and serve a third party notice against Ross Pedley and Debra Pedley (trading as “Residential Roofing Solutions”). Further, upon agreement between Mr Cameron (counsel for the appellant) and Mr Tam (counsel for the respondent), after I viewed a copy of the instrument of compromise between the respondents and the second defendant, and in the light of my assurance that the document appeared on its face to encapsulate the settlement of the proceedings between the respondent and the second defendant, Mr Cameron indicated the appellant was no longer pursuing that part of the appeal which related to disclosure of “without prejudice” communications between the respondents and the second defendant in the proceedings. [3] What remains in contention is the issue as to whether the appellant is entitled to disclosure of a document titled “Release, Discharge and Indemnity,” the effect of which, in a letter dated 14 January 2015, the respondents’ lawyers advised the appellant’s lawyers represented was that “…an amount of $25,000 [which] was paid on behalf of the second defendant to our client [the respondents] in full and final -- 2 of 6 -- 3 settlement of any claim that our clients might have against the second defendant” [and] “…the release of course did not include your client”.1 Background [4] The respondents contracted with the appellant on 15 April 2011 to purchase a property at 51 Roma Street, Scarborough, Queensland, and settled that contract on 27 May 2011. [5] In January 2011, Ross Pedley and Debra Pedley, trading as Residential Roofing Solutions, undertook roofing works at the house at 51 Roma Street, Scarborough. Ross Pedley was declared bankrupt on 12 February 2013. [6] On 1 March 2013 the respondents commenced proceedings for damage against the appellant and Ross Pedley based on a breach of statutory warranty, alleging that they had suffered loss or damage due to water penetration arising from defects in the roof of the house at 51 Roma Street, Scarborough. The respondents contend that the appellant was an “owner/builder” and accordingly was subject to a statutory warranty under s. 47 of the Queensland Building Services Authority Act 1991 (Qld) (“QBSA Act”). Relevantly, the defective building works, relied upon by the respondents as a breach of the statutory warranty, are the roofing works carried out by the Pedleys. [7] On 25 March 2013 the appellant filed a notice of intention to defend, and a defence in the proceedings. This was served on 28 March 2013. On 30 April 2013 the respondents and the appellant participated in a court ordered directions conference but the proceedings did not settle at that stage. The parties agreed, however, that the proceedings were to be adjourned to the registry to enable the first defendant to make a complaint to the Queensland Building Services Authority in relation to the Pedleys. [8] On 25 April 2014 the respondents filed an application in the Magistrates Court seeking leave to join Ross Pedley as a defendant in the proceeding. On 1 May 2014, the respondents’ solicitor served a copy of the joinder application on the appellant’s solicitor, and the appellant consented to the joinder of Ross Pedley, as a party to the proceedings. 1 Exhibit MK1, affidavit of Michael Klein, sworn 6th of July 2015 (AB 24). -- 3 of 6 -- 4 [9] On 14 August 2014 Barry & Nielsen Solicitors wrote to the appellant’s solicitors on behalf of Ross Pedley in respect of the roof works. [10] On 14 January 2015 the respondents’ solicitors wrote to the appellants and advised that their client had accepted a payment of $25,000 in settlement of their claim against the second defendant and that “the release of course did not include your client.” [11] On 25 February 2015 the appellant’s solicitor wrote to the respondents’ solicitors requesting disclosure of all correspondence passing between them and the legal representative for the second defendant, including any deed of settlement evidencing the terms of the settlement of compromise reached in respect of the plaintiff’s claim against the second defendant. [12] On 10 June 2015 the appellant’s solicitor again wrote to the respondents’ solicitor requesting disclosure of the relevant documents, pursuant to Uniform Civil Procedure Rules 1999 (UCPR) r. 444. On 11 June 2015 the respondents’ solicitors responded pursuant to UCPR r. 443.2 Issue upon the appeal [13] After expressly abandoning that part of the appeal which related to the learned magistrate’s refusal to grant the appellant leave to file and serve a third party notice against Ross Edward Pedley and Debra Pedley; and in oral submissions (after identification that the instrument of settlement contained the whole of the terms of the settlement compromised between the respondents and the second defendant) abandoning that part of the appeal that related to correspondence between the respondents and the second defendant (covered by “without prejudice” privilege and/or legal professional privilege), the practical focus of the appeal came down to just one issue – whether the appellant was entitled to a copy of the document titled “Release, Discharge and Indemnity,” which contained the agreement settling proceedings between the respondents and the second defendant. 2 The background outlined in this judgment draws on the helpful and comprehensive outline contained in paragraphs 4-19 (Ex 1). -- 4 of 6 -- 5 Discussion [14] The proceedings by the respondents against the appellant arise out of an alleged breach of the statutory warranty contained in s. 47 of the QBSA Act. The proceedings against the second defendant arise out of alleged breaches of s. 61 of the Competition and Consumer Act 2010 (Cth) (guarantees as to fitness for a particular purpose etc.). In short, the cause of action against the first and the second defendant arises in contract, with the provision of the QBSA Act s. 47 rendering the second defendant liable to the appellant, through the first defendant, as a result of the statutory warranty imposed by QBSA Act s. 47. [15] It follows, in my view, that the respondents have a claim against the second defendant only through the first defendant. The second defendant’s settlement of the proceedings is therefore directly relevant to the appellant, who asserts that he is entitled to examine the document titled “Release, Discharge and Indemnity” to identify whether by its terms and/or effect, it operates effectively as a discharge and indemnity to the first defendant as well as the second defendant. [16] In Baxter v Obacelo Pty Ltd and Anor (2001) 205 CLR 635, Gleeson CJ and Callinan J quoted terms of a deed of release executed by the respondents and a Mr Whitehead, the employer of the appellant in a legal practice, Mr Whitehead having settled the respondents proceedings against him for the sum of $250,000 inclusive of costs. The judgment does not reveal the basis on which the deed of release with the terms of settlement became available to the parties. The substantive aspect of the judgment, addressing the issue of the liability of joint tortfeasors, is in my view of no assistance in this case where the action by the respondents against the second defendant is reliant upon the statutory warranty to which the appellant is subject. Clearly the sum of $25,000 paid by the second defendant is at least relevant to the quantum of damages (if any) which the respondent is now entitled to pursue against the appellant.3 [17] Similarly, in Carr & Purves v Thomas [2009] NSWCA 208 the terms of a settlement deed are contained in the judgment, without direct explanation as to the mechanism by which the terms of that settlement deed were placed before the Court 3 Baxter v Obacelo Pty Ltd (2001) 205 CLR 635, 655 (per Gleeson CJ and Callinan J). -- 5 of 6 -- 6 of Appeal in NSW. The issues on appeal relate entirely to the effect of the agreement contained in the settlement deed. Conclusion [18] The respondent’s cause of action against the second defendant arises only because of the statutory warranty to which the appellant is subject, which in turn connects with the appellant’s contractual relationship with the second defendant. It follows that any settlement between the respondents and the second defendant is directly relevant to the litigation between the respondents and the appellant. Accordingly, I consider that it will become necessary for the Magistrates Court to be appraised of the terms of the “Release, Discharge and Indemnity” and will need to consider whether its terms preclude the respondents proceeding further against the appellant. [19] It follows that the appellant has persuaded this court, in the exercise of its discretion, that he is entitled to disclosure of the terms of the “Release, Discharge and Indemnity”, currently contained in a sealed envelope on the District Court appeal file. [20] Accordingly I order as follows: 1. Appeal granted (in part) 2. That the appellant be provided with a copy of the document entitled “Release, Discharge and Indemnity” contained in a sealed envelope on District Court Appeal file 3863/15. Costs [21] I will hear the parties on costs. -- 6 of 6 --