SUPREME COURT OF QUEENSLAND CITATION: PARTIES: Wirkus v The Body Corporate for Goldieslie Park Community Titles Scheme No 20924 [2010] QSC 397 MICHELLE WIRKUS (Plaintiff) FILE NO: BS 7976 of 2008 DIVISION: PROCEEDING: ORIGINATING COURT: v THE BODY CORPORATE FOR GOLDIESLIE PARK COMMUNITY TITLES SCHEME NO 20924 (Defendant) Trial Division Application Supreme Court at Brisbane DELIVERED ON: 22 October 2010 DELIVERED AT: Brisbane HEARING DATE: 7 October 2010 JUDGE: ORDER: McMurdo J 1. The plaintiff s applications for the joinder of Mr Wirkus and of Mr Noble will be dismissed. 2. The third amended statement of claim will be struck out. CATCHWORDS: PROCEDURE SUPREME COURT PROCEDURE QUEENSLAND PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS PLEADING STATEMENT OF CLAIM where the plaintiff and defendant were involved in previous proceedings which were resolved by way of compromise where the plaintiff now claims damages against the defendant, alleging that her compromise in the previous proceedings was the result of a misrepresentation by the defendant where the defendant argues that the plaintiff s statement of claim discloses no reasonable cause of action whether the statement of claim should be struck out. PROCEDURE SUPREME COURT PROCEDURE QUEENSLAND PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS PARTIES OTHER MATTERS where the defendant is the body corporate under a community title scheme known as Goldieslie Park where the developer of Goldieslie Park
2 COUNSEL: SOLICITORS: was controlled by Mr Noble where the plaintiff argues that the developer and Mr Noble had certain duties which they failed to fulfil and which led to the alleged misrepresentation by the defendant whether the plaintiff should be allowed to join Mr Noble as a party. Building Units and Group Titles Act 1980 (Qld) s 29(4) Property Law Act 1974 (Qld) s 180 Udall v Capri Lighting Ltd (in liquidation) [1988] 1 QB 907 Wade v Licardy (1993) 33 NSWLR 1 T C Somers for the plaintiff K E Downes SC and B Le Plastrier for the defendant S R Cooper for Mr Noble Kathleen Dare & Associates for the plaintiff McCullough Robertson Lawyers for the defendant DLA Phillips Fox for Mr Noble [1] The plaintiff, Mrs Wirkus, was once the owner of land at 45 Goldieslie Road, Indooroopilly. She purchased that land in 2004 and subdivided it into two parcels, which she sold in August and December 2008. [2] Next door to her land was a group of houses which was the subject of a community title scheme known as Goldieslie Park. The body corporate under that scheme is the present defendant. [3] Not long after she purchased her land, Mrs Wirkus became involved in a dispute with the body corporate about access to their respective properties from Goldieslie Road. In 2005 the body corporate brought proceedings in this Court against Mrs Wirkus and she counterclaimed seeking the imposition of a right of way over some of the common property of Goldieslie Park, pursuant to s 180 of the Property Law Act 1974 (Qld). After some interlocutory steps, including disclosure, those proceedings were settled. The body corporate agreed to grant an easement over its land in favour of her land. That easement was registered and the access which was thereby provided to her land facilitated its subdivision into those two parcels. [4] In the present proceedings, which were commenced in 2008, she complains that she settled the previous case and subdivided her land as she did, in ignorance of the existence of an unregistered easement which had been granted in 1988 over what is now the Goldieslie Park land in favour of the land which she purchased. That easement was granted by the developer of Goldieslie Park, which was a company called Ibenbah Pty Ltd. It was controlled by Mr Noble, who was also a practising solicitor. [5] According to her pleaded case, this easement would have been more favourable to the development of her land than the easement which resulted from the compromise of her claim under s 180. Her land would have been worth more with the benefit of that easement. And she claims that had she known of it, the earlier litigation with the body corporate would have been unnecessary and she would have avoided the expense of those proceedings as well as other costs associated with her development being delayed. All up she claims to have suffered losses of $773,592.45, which she
3 claims as damages against the body corporate. She proposes to join Mr Noble to claim the same sum as damages against him. And she also applies to join as a co-plaintiff her husband, Mr Wirkus, on the basis that he was also a beneficial owner of the land which she developed and that the alleged losses were suffered by both of them. [6] What must now be determined are the applications by Mrs Wirkus for the joinder of her husband and Mr Noble and an application by the body corporate to strike out her statement of claim. It argues that her pleading discloses no reasonable cause of action. Mr Noble opposes his joinder upon the basis that the proposed pleading discloses no reasonable cause of action against him, and also because the proceedings are inevitably out of time. [7] The events pleaded by Mrs Wirkus began in 1985, when her land was owned by a Mr Berndt. In 1985, Mr Berndt granted an easement (pleaded as Easement A ) over a strip of his land to provide a right of way to what is now the defendant s land. In 1987, Mr Berndt agreed with another company controlled by Mr Noble, which was then the proposed purchaser of the defendant s land, that the strip the subject of Easement A should be landscaped and become part of the proposed development of the defendant s land, in return for which there would be an easement in favour of Mr Berndt s land to facilitate access to Goldieslie Road. At about the same time the Brisbane City Council approved the subdivision of the defendant s land upon conditions which included a requirement that the developer was to provide a single common access way to both Mr Berndt s land and the developer s land, as depicted upon a certain drawing. Pursuant to that 1987 agreement and consistently with that condition, the company which became the purchaser of the defendant s land, Ibenbah Pty Ltd, executed a grant of easement dated 17 February 1988 in favour of the plaintiff s land (which the pleading describes as Easement B). [8] In June 1988, the defendant s land was subdivided by Ibenbah by the registration of a group title plan and Mr Noble became the chairman of that body corporate. Unfortunately, the instrument by which Easement B had been granted was not lodged for registration. For Easement B to have been registered, it should have been registered prior to the plan of subdivision. [9] After lodging the plan and before its registration, Mr Noble wrote to Mr Berndt in terms which showed that Ibenbah was intending to register Easement B. He told Mr Berndt that this would require the production of the certificate of title to Mr Berndt s land. Mr Berndt s solicitors then corresponded with Mr Noble about that matter. But Mr Berndt s certificate of title was not produced, apparently because of a dispute over Mr Berndt s legal costs of the exercise. In consequence, Easement B was never registered. [10] In 1993, the Goldieslie Park Community Title Scheme was created in lieu of the previous group title scheme. Ibenbah Pty Ltd had apparently sold its interest by then. Just what access was available, or apparently available, when she purchased this land in May 2004 is not apparent. But by September of that year a dispute concerning access to the respective properties had commenced. [11] Mrs Wirkus pleads that in the resultant proceedings, commenced in 2005, the body corporate was bound to disclose the fact of the Council s subdivisional approval
4 granted in 1987 and the fact of the conditions of that approval, including the requirement for what became Easement B. She pleads that the body corporate should also have disclosed the existence of Easement B. No documents on these subjects were in fact disclosed and Mrs Wirkus remained unaware of the conditions of that 1987 approval and the unregistered Easement B. [12] She pleads that she settled those proceedings upon the assumption that everything which was relevant had been disclosed to her. As noted already, under that settlement the body corporate granted a right of way in favour of her land. By that easement, granted in 2007, access to what became the two parcels of her land could be gained only by excising an area from her land which, she claims, diminished its value by $100,000. [13] Subsequently, in December 2007, she learnt of the 1987 approval, when her land had not yet been subdivided, but her proposed subdivision was at an advanced stage. She pleads that in her then circumstances, having incurred the cost of that litigation and the costs of rates, land tax and other charges from 2005, she had no choice but to proceed with the proposed subdivision and the more limited access afforded by the 2007 easement, rather than litigating further with the body corporate to obtain registration of an easement on terms corresponding with Easement B. [14] What then is her cause of action? She alleges that her compromise of the easement proceedings and the limited access resulting therefrom were the result of a misrepresentation of a material fact made by the body corporate. In essence, her case is that the body corporate represented that there was no undisclosed document which was material to her case, whereas in truth, there was the Council s 1987 approval and Easement B. The relief claimed against the body corporate is for damages of $773,592.45 for misrepresentation. [15] There is no case of deceit pleaded against the body corporate. Nor does Mrs Wirkus rely upon any statute such as the Trade Practices Act 1974 (Cth). And there is no case of negligent misstatement. Accordingly, there is no case pleaded by which the alleged misrepresentation could entitle Mrs Wirkus (or Mr Wirkus if he is joined) to an award of damages. [16] Counsel for Mrs Wirkus relied upon a passage from Foskett, The Law and Practice of Compromise (6th edition) at [4-37]: A false representation of a material fact, made prior to a compromise and which induces it, may, at the instance of the party misled, operate to vitiate the compromise. The misrepresentation may be set up as a defence to a claim for specific performance of the agreement or as the basis of a claim to have it set aside. If any loss has been occasioned by the misrepresentation it may give rise to a claim for damages (for fraudulent or negligent misrepresentation) or an indemnity (in the case of innocent misrepresentation). (Emphasis added) It was argued that the claim here is effectively one for an indemnity as referred to in that passage. However, the argument misunderstands the nature of such an indemnity. That indemnity might be ordered only in the context of a rescission of a compromise agreement, in order for the parties to be restored to their pre-contractual
5 positions. If, by a term of a compromise agreement, a plaintiff has incurred an obligation to a third party, the Court may give effect to a rescission of the compromise (which had been induced by an innocent misrepresentation) by ordering the defendant to indemnify the plaintiff for that obligation. But where this is ordered, it does not involve an award of damages. The distinction is discussed in Chitty on Contracts: General Principles (30th ed, 2008) at [6-121]: One problem arises: how is the rule requiring the defendant to indemnify the claimant for obligations assumed by him reconciled with the rule that damages cannot be recovered for an innocent misrepresentation which has not become a term of the contract? The traditional answer has been that the defendant must indemnify the claimant against obligations necessarily created by the contract, ie against liabilities to third parties which the contract required the claimant to incur or payments to third parties which it required him to make, but against these only. Thus the court is enabled to stop short of making an award which could be classified as damages. None of the components of this damages claim represents a liability or a payment which the terms of the compromise agreement required Mrs Wirkus to incur or make. And in any case she is not seeking rescission of the compromise. Therefore, her claim is not sustainable upon this indemnity basis. [17] There are many other complaints made by the body corporate about the statement of claim. It is unnecessary to deal with them because the pleading reveals no cause of action against it. The joinder of Mr Wirkus would make no difference. The third amended statement of claim, which was filed on 14 September 2010, will be struck out. [18] I turn to the application to join Mr Noble. The proposed claim against him is for damages in the same amount. The proposed case, according to the third amended statement of claim which pleaded a case against Mr Noble although he was yet to be joined, is as follows. Pursuant to the conditions of the Council s approval in 1987, Ibenbah Pty Ltd had a duty to create Easement B and to register it. That duty derived from the fact that it was the practice of the Council that it would only release approved easement documents upon an undertaking by or on behalf of the registered proprietor to have the easement document lodged for registration. Mr Noble s obligation, as distinct from that of his company Ibenbah Pty Ltd, is pleaded as follows: 5I In his role as a Solicitor of the Supreme Court of Queensland and as a director of Ibenbah Pty Ltd, [Mr Noble] impliedly undertook to the said Council and to the then and any subsequent owners of [the Wirkus land], to register easement B at the Titles Office. 5J Pursuant to the said undertaking [Mr Noble] had an obligation to register Easement B in favour of [the Wirkus land] prior to the lodgement of [the group titles plan of subdivision] for registration at the Titles Office, as once [the group titles plan] had been registered, Easement B... was not capable of registration.
6 5R By failing to register the said Easement B at the Titles Office [Mr Noble] was in breach of his implied undertaking to the Council, and to the then and subsequent owners of [the Wirkus land]. Accordingly, one pleaded basis for the proposed claim against Mr Noble would come from the Court s jurisdiction to control the conduct of its own officers by requiring compliance with a solicitor s undertaking, or where compliance has become impossible, by requiring the solicitor to pay compensation for its breach: see Udall v Capri Lighting Ltd; 1 Wade v Licardy. 2 [19] The undertaking by Mr Noble is alleged to have been an implied one. The facts and circumstances from which it was to be implied are that Mr Noble was a solicitor and that he was a director of Ibenbah Pty Ltd. His directorship could not have contributed to an implication that Mr Noble gave an undertaking in his capacity as a solicitor. The fact that he was a director of Ibenbah indicates the capacity in which he was likely to have been acting vis-à-vis the Brisbane City Council. Otherwise the implication of a solicitor s undertaking here is attributed only to the fact that Mr Noble was, at the time, a practising solicitor. It is not pleaded that in his dealings with the Council on behalf of Ibenbah Pty Ltd, he was acting as its solicitor. In his correspondence with Mr Berndt s solicitors, he did write in terms that his firm was acting on behalf of Ibenbah Pty Ltd. But that is not to say that he acted in that capacity in Ibenbah s dealings with the Council. [20] As noted already, it is alleged that according to the practice of the Brisbane City Council at the time, easement documents would be released by the Council only upon receipt of an undertaking by or on behalf of the registered proprietor to have the easement document lodged for registration. There is no specific allegation that such an undertaking was actually given by the registered proprietor, Ibenbah Pty Ltd, in this case. But the pleading implies that such an undertaking was given. Ultimately, the case in this respect is simply that an express undertaking having been given by Ibenbah, and Mr Noble having been also a practising solicitor, by implication he personally gave the same undertaking as a solicitor. That case has no apparent prospect of success. [21] Mrs Wirkus has also pleaded that in his correspondence with Mr Berndt s solicitors in 1988, Mr Noble acted other than as a reasonably competent, prudent, ethical and honest solicitor. However, the correspondence with Mr Berndt s solicitors has no rational connection with the losses for which she seeks compensation. On the face of what is alleged about that correspondence, any misstatement in the correspondence was not the cause of the failure to lodge Easement B for registration. She makes a charge in the same terms against Mr Noble for his lodging for registration the group title plan of subdivision without having lodged Easement B. But absent the alleged undertaking by Mr Noble, given in his capacity as a solicitor, there would be no basis for his being liable to pay damages to Mrs Wirkus for that conduct. [22] There is also a complaint that Mr Noble did not deliver, or did not advise Ibenbah Pty Ltd to deliver, documents to the first annual general meeting of the new body 1 2 [1988] 1 QB 907. (1993) 33 NSWLR 1.
7 corporate (which was held in 1988), which documents would have revealed Easement B. In that respect, Mrs Wirkus pleads that Ibenbah Pty Ltd was required by s 29(4) of the then Building Units and Group Titles Act 1980 (Qld) to deliver those documents. The proposed case here seems to be that had Easement B been disclosed at that stage to the then body corporate, then some 19 years later it would have been in the hands of the present body corporate and which would have been disclosed in the previous proceedings. However, as this was not an obligation of Mr Noble, as distinct from his company, he could not be liable upon this basis. [23] There is no pleading that Mr Noble owed a duty of care to Mrs Wirkus or a class of persons of which she became a member. Nor is there a claim for damages for deceit against him. Overall the proposed case against Mr Noble could not succeed, at least according to the terms of the present pleading. That conclusion alone would put paid to the proposed joinder of Mr Noble. But quite apart from that matter, there is the likelihood that Mrs Wirkus will be unable to plead a cause of action against the existing defendant, the body corporate. In that circumstance, Mr Noble should not be joined to these proceedings. [24] The applications made by Mrs Wirkus for the joinder of her husband and of Mr Noble will be dismissed. The third amended statement of claim will be struck out. I will hear the parties as to costs and other orders.