Bloomer & Bloomer t/a Bloomer Constructions v Todbury Pty Ltd [1999] QSC 312

. . .JUSTICE-~.-...:...- ~ :37H7 State Reporting 8c 19/31 ~r\ Ie Bureau TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. \ SUPREME COURT OF QUEENSLAND CHAMBERS DERRINGTON J Writ No 11653 of 1998 No 12007 of 1998 WAYNE NORMAN BLOOMER and PAULINE BLOOMER TRADING AS "BLOOMER CONSTRUCTIONS" and TODBURY PTY LTD ACN 010 478 038 BRISBANE .. DATE 10/06/99 JUDGMENT 1 REVISED COPIES ISSUED State Reporting Bureau Date r(/ / plaintiffs Defendant II FI 1111 r, The Law COllrl.~, GelJrge Street, Brishallc, Q. 41l()() TclcphlJlll': (07) J2.t7 4J()0 F:.:.:: (1l7) .12.t7 55.12 -- 1 of 9 -- L--______ .. _._. ___ 100699 T4/ST5 M/T 4943/99 (Derrington J) HIS HONOUR: This is an application by a plaintiff under order 45 rule 1 of the Rules of the Supreme Court for a review of an order made on 4 February 1999 by Williams J. That hearing was in respect of an application by the defendant for the setting aside of judgment obtained summarily and the granting of leave to defend, both of which were granted subject to a condition that the defendant provide security, ultimately amounting to $500,000, to answer the claim. HIS HONOUR: The history of the matter is this. The plaintiff's writ for $1.1 million was issued on 16 December 1998 and apparently served on that date. On 24 December 1998 the plaintiff obtained judgment in default of entry of appearance. On the same date, 24 December 1998, the plaintiff issued a second writ for $590,883 and on 5 January 1999 obtained judgment by default again. Upon the defendant's applicatiQn on 8 January His Honour Justice Williams set aside both default judgments on the basis that there was a reasonable basis for defence. The reason for the defendant's default in failing to enter an appearance seems to have been that the defendant solicitor was on vacation at that time. On 18 January 1999 the plaintiff brought an application for summary judgment and a Mareva injunction, again before 2 JUDGMENT 10 c 30 40 c 50 60 -- 2 of 9 -- 100699 T4/ST5 M/T 4943/99 (Derrington J) Williams J. That motion for the mareva injunction was dismissed but the defendant was given conditional leave to defend, conditional upon one half of the net proceeds of the sale of the units that were the subject of the building contract that formed the basis of the claim be held in a trust account up to a sum of $500,000. The defendant now seeks to have that order relating to security which forms the basis of the condition of leave to defend set aside on the basis of the appearance of new facts which, it is said, were not reasonably available at the time. The order made by His Honour for security to the extent indicated was no doubt based upon the fact that the defendant was a proprietary company and Hi$ Honour formed the view at the time that the plaintiff's case had a strong chance of success. One of the pieces of evidence before His Honour at that time was an affidavit by a Mr Dawes, who deposed in clear terms and, indeed, purported to quote the exact words used, to the effect that Mr Romano, the principal agent of the defendant, stated in his presence that the contract between the defendant and the plaintiff was on a cost plus basis completely. The basis of the plaintiff's claim is that it was a cost plus contract whereas the basis of the defence is that it 3 JUDGMENT 10 20 30 40 50 60 -- 3 of 9 -- 100699 T05/AW16 M/T 4943/99 (Derrington J) was a fixed price contract. As such Mr Dawes' evidence at that time appeared strongly to support the plaintiff but contradicted the defendant's case. Mr Dawes was an independent person representing a building authority. 10 Mr Dawes was called at the hearing under subpoena to produce certain material but was not cross-examined by learned counsel, who appeared at that time for the defendant, in respect to the statement contained in his affidavit. The defendant has now produced an affidavit by Mr Dawes saying that he did not know at the time, nor does he know now, whether the reference to a cost plus contract by c Mr Romano was in relation to the whole of the contract or only to extras. That is a considerable resiling from the 30 clear evidence that was before His Honour and which no doubt must have had a serious impact upon his opinion as to the strength of the plaintiff's case. There is one difficulty in that respect so far as the 40 evidenc~ that now appears before the Court is concerned and cthat is that presumably it would have been available at the time, if learned counsel then appearing for the defendant had chosen to cross-examine ~lr Dawes upon the point. There is no" good reason why that should not have been done sinc~ 50 the allegation was that the words were spoken by Mr Romano and there was no suggestion whatever that Mr Romano was not available at the time to give evidence to the contrary. 60 4 JUDGMENT -- 4 of 9 -- 100699 T05/AW16 M/T 4943/99 (DerringtonJ) Consequently the evidence cannot be said to be fresh evidence within the technical meaning of that expression as is used in respect of appeals; However it is not a necessary feature of evidence that might be taken into account in these proceedings for obvious reasons and yet on the other hand it must be taken into account in respect of the exercise of theCourt's discretion. Much more serious material has been advanced by the defendant relating to the plaintiff's claim and it is important to note that it has not been contradicted in any way by any evidence from the plaintiff's side. Perhaps the most important evidence in that respect is that now that the defendant's accountants have had the opportunity of having 10 20 discovery of and checking the documentary material 30 supporting the plaintiff's claim, they are able to depose to the fact that there is a considerable shortage of documentary material supporting the claim that has been made. Moreover there is evidence that was plainly not available at the time, prima facie, demonstrating, ( i ) that material was claimed for by the 40 plaintiff that was, in fact, not delivered to 50 the job; (i i) that workmen \t/hose hours were claimed for in respect of the job were, in fact, not working 5 JUDGMENT 60 -- 5 of 9 -- 100699 (iii) T05/AW16 M/T 4943/99 . (Derrington J) there all the time or at times for which some of the claim has been made; and that materials that are alleged to have been used were just not used on this job but were either used in the plaintiff's private affairs or not provided at all for other purposes. These are very significant matters of course which, had they been before His Honour at the time, might well have had a considerable bearing upon his view of the strength of the plaintiff's case. There is also strong evidence advanced prima facie showing that there are very substantial defects in the building which might amount to a very serious deduction from the plaintiff's claim. It might be added parenthetically that the plaintiff ceased to continue the work and that it was completed by the defendant at its own cost in the sum of about $700,000. This has to be taken into account to the extent that even if it were a cost plus job the amount to which the plaintiff would have been entitled would not include the additional work done. In respect of many of these nlatters the· absence of the defendant's opportunity of adducing the evidence at the 6 JUDGMENT 10 30 40 50 60 -- 6 of 9 -- 100699 T05/AW16 M/T 4943/99 (D~rrington J) hearing before Williams J was no doubt substantially due to a number of factors. In particular, the exigencies of the situation led to this, namely that the matter was being heard as a summary judgment application not long after the issue of the writ when the matter was very new and the opportunity for making more serious and detailed observations was not possible. However, it must be observed contrary to that, so far as the defects were concerned, for example, Mr Romano himself was a builder and should have had an ample opportunity to have at least presented to the Court some prima facie evidence of serious defects that would have amounted to a significant feature attending against the plaintiff's claim. Although one must take this into account, overall the general picture is that much of the material that is now produced showing very seriouS questions indeed as to the strength of the plaintiff's claim, cannot be said to have been reasonably available to the defendant at the time of that hearing, having regard to the situation that existed at that time. That is not the end of the matter. There still remains the issue of the desirability of the security to the plaintiff in respect of its claim because of the status of the defendant. It seems to have substantial property still available to it. In so far as it has now reached the position, in respect of sales of the various units comprising the relevant property, that it has sold 7 JUDGMENT 10 20 30 40 :;0 6{) -- 7 of 9 -- 100699 T6/MLM14 M/T 4943/99 (Derrington J) sufficient units to have paid off the financier. The remaining sales will now be available to it without the need to repay any security in that reSpect,so the defendant is probably in a reasonably good financial position, providing moneys are not in some way siphoned off for ulterior 10 purposes. Having regard to the desirability of providing some security to the plaintiff in these circumstances but also having regard to the very serious alteration of the Court's view as to the strength of the plaintiff's case, I am of the view that if an undertaking were to be given by the defendant, C ~ that it will not use moneys or other assets of the company, _' other than in the ordinary course of the company'sbusiness, I would set aside the condit~on of His Honour, on a 30 temporary basis. The parties will have liberty to reapply in the near future when the report comes out of the independent expert appointed by the Court to make an cassessment of the value of the work that has been done. 40 The Court then will be in a better position to see from an c= independent person what the true position of the plaintiff's claim might be expected to be. In the meantime, having regard to what appears to be the reasonable strength of the defendant'~ case, it is probably desirable to avoid imposing 50 any fetter upon its ordinary use of its funds in its business if the security for the plaintiff can be preserved by the provision of an undertaking as I have described. 60 8 JUDGMENT -- 8 of 9 -- 100699 T6/MLM14 M/T 4943/99 (Derrington J) The proposal which I present would also avoid the necessity of expenditure of further moneys upon the provision of a bank guarantee, which can be quite expensive and which might entail the defendant in further loss through having to provide security to support that and the provision of that security might cause it some loss in the conduct of its business. That loss might be difficult to prove, but if it were capable of proof, and if the defendant were to succeed, that might fall upon the plaintiff very heavily in that respect. In summary, the proposal that I make is designed to try to reduce the possibility of loss to both sides so far as may be reasonably open, at this E:tage, on a temporary basis 10 20 until such time as the Court is placed in a somewhat better 30 position to see from the report of the expert what. the prospects are in respect of the plaintiff's claim. HIS HONOUR: The order will be, in accordance with the terms of the order which I have initialled. 9 JUDGMENT 40 50 60 -- 9 of 9 --