properly footnoted at the bottom of each page. Referencing and citations MUST accord with the style as set out in the Australian Guide to Legal Citation, 3rd edition.
Answer each of the 10 sub-questions arising from this problem situation. Briefly discuss relevant cases and principles in relation to each sub-question Each is worth 2 marks.
In June 2015 Darwin Taxi Trucks Pty Ltd (“DTT”) engaged Building Consultants Pty Ltd (“BC”) to design and construct additions to DTT’s premises at Winnellie. The additions included a new 2 level loading bay and extra warehouse space. Jim Joiner, managing director of DTT, consulted DTT’s lawyers in relation to the preparation of their contract with BC and in the course of this consultation discussed the specifications in the contract. The lawyer had experience with building warehouses and queried the drafting of the provisions in relation to the thickness of the concrete floor, particularly given the fact that trucks would be driving on it when loading and unloading deliveries. She offers to call her friend at Top End Engineering to obtain information on appropriate specifications to be included in the contract. The lawyer’s notes of the call record that her friend advised that specification of a 240 mm floor will be OK for weights up to 10 tonnes as long as the floor was given at least 15 days to cure properly. Jim Joiner accordingly insists that the contract specify a 240 mm floor, but the contract is silent as to the period for cure.
BC duly constructs the floor to the required thickness, but fails to allow the concrete to cure for 15 days. BC is anxious to receive its next contract progress payment, which is due on building certification of the floor slab. Accordingly it immediately (the day after the concrete pour) calls in a Building Inspector to undertake a progress certification. The Inspector refuses to certify the works, and informs the Principal DTT that in his opinion the only way of remedying the problem is to jackhammer the floor and start over again. BC refuses to do this unless DTT agrees to pay for the additional work as a contract variation, asserting that it has constructed the works in accordance with specifications inserted in the contractual documents at DTT’s insistence.
DTT commences legal proceedings against BC in the NT Supreme Court for damages for breach of contract and negligence, and a declaration that it is entitled to rescind the contract in reliance on BC’s refusal to remedy defective works.. BC counter-claims seeking payment from DTT for building works already completed. BC seeks discovery of the lawyer’s notes of the call to her friend at Top End Engineering.
(1) What is the relevance of the information in the notes? Would you describe the notes as directly relevant?
(2) Are the notes discoverable?
(3) Are the notes covered by legal professional privilege?
BC instructs its solicitors to find a way to preserve the floor of the premises in its current condition, and to arrange for detailed testing of the floor.
Three procedures BC’s solicitors could use to achieve their instructions are:
- order to inspect and test property
- order to preserve property
- interim and/or interlocutory injunction
- (4) Specify the Supreme Court Rules applicable to each of these possible procedural remedies.
- (5) ) Outline the arguments that BC would use to seek an interim or interlocutory injunction.
- (6) What do you think the court would decide, and why?
Now assume that the Court granted BC an interlocutory injunction restraining any remedial or removal work on the floor for a period of 8 weeks to enable BC’s engineering expert to undertake tests and inspections as to the structural strength/adequacy of the floor. Assume that you now act for BTT, which instructs you that it desperately needs to begin remedial work on the floor without delay, and cannot afford to wait 8 weeks. The uncompleted building works are seriously obstructing access to the existing loading bay and causing drastic delays in deliveries and therefore loss of customers and profits (taxi truck services being very time- sensitive), and DTT’s bank is threatening to implement default procedures in relation to the loan DTT took out to finance the building works.
(7) What procedures would you advise DTT to implement?
(8) What arguments would you advance to the Court?
(9) What arguments would you anticipate BC might advance? (10) What do you think the court would decide, and why?
Consider the fact scenario regarding freewheeling Darwin property investor Kylie Risk
Kylie Risk is a self-made woman, who became a wealthy Darwin property investor and landlord through hard work and an “innovative” approach to property renovation. Her most favoured technique is to buy an old elevated house, construct extra bedrooms underneath it, usually without obtaining any approvals under the Building Code and using cheap labour and materials. She then fills the property with as many overseas backpacker tenants as can be fitted in as short-term occupants (without any formal tenancy agreement).
One of Kylie’s properties is an old but spacious elevated house at 37 Swank Street in the up-market Darwin suburb of Fannie Bay. She is making upwards of $2000 per week in rental income from backpackers during the peak tourist season. However, a real estate agent crony Rick Ruby suggests to Kylie that there is a huge opportunity to make a “killing” by selling houses in areas like Fannie Bay for “executive” housing for contractors and subbies attracted to Darwin for work on the huge Inpex natural gas project currently under construction. Rick suggests to Kylie that her somewhat dilapidated Fannie Bay property, which in a normal market would probably sell for $1 million at most, could be sold for close to double that price if renovated cost-effectively to “executive” standard.
Keen to exploit this once-only opportunity but reluctant to depart too far from her finely-honed technique of dodgy renovations built as cheaply as possible, Kylie verbally engages two Peruvian backpacker tenants Julio Galvez and Jaime Iglesias from one of her other properties to undertake the renovation work. They had mentioned to Kylie that they possessed excellent building skills (though no formal qualifications recognised in Australia). Kylie observes that she is sure she can rely on their skill levels to do a good job and advise her appropriately about the work where necessary. She says she will pay them each $12 per hour for the work and supply all necessary materials and tools. The hourly rate is much less than the Australian minimum wage under the Fair Work Act but, being from Peru, Julio and Jaime don’t know this. Moreover, the wet season in Darwin is fast approaching and there isn’t much seasonal work available for backpackers.
Julio and Jaime proceed to build and install new kitchen and bathroom cabinetry and wardrobes using melamine-covered chipboard panelling that Kylie bought cheaply at a suburban lawn sale. Julio and Jaime do indeed prove to be neat and efficient workers and the joinery looks great, but is totally unsuitable for the tropics because chipboard absorbs water and typically swells up from the steamy humidity and begins crumbling and falling apart after two or three years (or much sooner if it gets wet).
Julio and Jaime also re-line all the internal walls and ceilings with brand new gyprock plaster panelling, and paint the house inside and out with a single coat of the cheapest available paint (again supplied by Kylie) in the most fashionable modern colours. The place looks a million dollars (well, two million dollars, or so Kylie hopes). One slight defect in the work, however, is that the gyprock panelling covered up the existing manhole cover to the roof cavity.
Another problem that Kylie decided she’d better fix (in her own inimitable fashion)is that her backpacker tenants had earlier complained about a few relatively minor water leaks into the premises during the previous wet season, evidenced by a handful of water stains on the ceilings. Up until now Kylie hadn’t regarded that as an urgent issue. The ceilings and walls had until now been lined with fibro, which isn’t damaged by water, and she didn’t see any need to pander to the carping complaints of backpackers who usually only stayed a few weeks anyway. If they didn’t like it they could just “f… off” and stay in a licensed backpacker hostel at more than twice the price. However, the installation of the new executive-standard gyprock plaster panelling was a whole new ballgame. It would swell up immediately and collapse if it got wet.
Consequently Kylie knew she had to get the corrugated iron roof fixed. She certainly didn’t intend getting the place reroofed with new corrugated iron because that would cost a relative fortune (at least by Kylie’s parsimonious standards). Accordingly she contacted “Top End Roof Seal”, a business operated by Terry Dodgy under that registered business name but owned by a small company structure (Hasty No. 27 Pty Ltd). It specialises in spray-painting old iron roofs, mostly for cooling purposes. However Terry also typically verbally represents to prospective customers that Top End Roof Seal’s products will help to waterproof old rusting roofing iron so that owners can get a few more years of useful life out of it, as long as it hasn’t deteriorated too badly. Terry attends at the property on 1 July 2016 and gives Kylie a quote of $2,500 for spray-painting the entire roof with his “premium” roof seal product. This is a fraction of the cost of re-roofing so Kylie is very happy.
Kylie asks Terry about the product’s waterproofing qualities. Terry says: “Look, we don’t give a written official warranty on waterproofing because it depends partly on the condition of the roof itself. But our products will certainly seal moderately deteriorated roofs against water leaks for at least 3-5 years, including sealing where there is a moderate amount of rusting. I can’t see the manhole to access your roof cavity, but there is only a small amount of visible rust on your roof. From my experience you should certainly get a few more good years from this roof if you go with our product.” Kylie remarks casually that she will certainly be relying on Terry’s advice and experience, particularly given her intention to put the house on the market as executive housing. She signs acceptance of the Top End Roof Seal quote and hands it back to Terry, without bothering to read the terms and conditions on the back.
Had Kylie read the terms and conditions she would probably have noticed clause 97(b)(ii) in the small print:
“The customer hereby acknowledges that the product is not intended for waterproofing purposes and may not be of any benefit in reducing leaks or water intrusions into your property or protecting against the development of further leaks. The customer further acknowledges that he/she has not relied on any representations to the contrary. All conditions or warranties as to any waterproofing qualities of the product are hereby excluded to the maximum extent permitted by law.”
Top End Roof Seal proceeds to do the job a few weeks later and, like all the rest of the work, it looks great. Kylie pays Terry’s bill (in cash for a $500 discount to which he readily agrees) and on 1 August 2013 makes an appointment to see Rick Ruby and list the property for sale. The entire renovation job had cost her less than $10,000 and she stands to gain a clear capital gain of close to a million bucks, or so she thinks.
However that night (1 October 2016) Darwin experiences its first big thunderstorm of the early wet season build-up. Torrential rain falls. The roof of the house at 37 Swank Street, Fannie Bay leaks like a sieve. The new gyprock ceilings and wall linings become totally soaked, sag and then collapse, narrowly missing the hordes of sleeping backpackers underneath. All the cupboards also get soaked, swollen and begin visibly falling apart within days. The property is uninhabitable. Kylie instantly lodges a property damage claim with her insurer Troppo Insurance Pty Ltd. It sends along an assessor, who notes all the unauthorised building work that had been done. The assessor discovers that someone (Kylie) had installed illegal insulation in the ceiling cavity of the house that did not comply with Australian Standards (mandated by the NT Building Code). It was made from Indonesian rain forest waste material and absorbed water like a sponge. Kylie had bought it for $100 a year or so previously and installed it in a token effort to appease tenants who had been complaining that living in her house was like being locked in a fan-forced oven. The insulation worked well in the short term, but it had created a roof cavity environment closely resembling a sauna bath. The roofing iron had as a result rusted from the inside. Although it was not visible from above, many parts of the roof consisted of little more than a thin skin of white paint covering a thick layer of rust. If either Kylie or Terry had bothered to access the roof cavity before respraying it, this would have been instantly apparent. The insurer advises Kylie in writing that it has refused her claim and voided her policy (which included cover for loss of rental income), relying on a covenant whereby the insured promised to keep the property in good and tenantable repair and ensure that all building and repair work on it were in full compliance with the Building Code and all other applicable regulatory requirements.
Kylie nevertheless gets repair quotes from a couple of licensed builders, having concluded that using Julio and Jaime again probably wouldn’t be a great idea. In fact she is actually contemplating suing them, having become aware that both of them have wealthy parents in Peru. Both builders quote in excess of $100,000 to repair the damage and reinstate the property to its former semblance of glory using proper materials complying with the Building Code. However both advise that they can’t start the work for at least 4 months, partly because the Christmas shutdown was imminent and partly because they were tied up with highly lucrative work on the Inpex gas project. No other builder could do the work any quicker. Rick Ruby tells Kylie that the opportunity to sell the property to Inpexcontractors at a premium price will probably be gone by the time the work is finished.
Assume that Kylie has heard that Peruvian backpacker handyperson (and defendant) Jaime Iglesias has returned to Darwin but is lying low to avoid service of a writ on him. She has been told, however, that he is a frequent user of Facebook and has his own page with lots of posts and photos of himself engaged in a range of activities. Kylie has also heard that he has been staying on an irregular basis at various Airbnb premises run by another Darwin property investor Bob Symes, with whom she is vaguely acquainted. However Bob won’t confirm this fact and Kylie suspects he may be protecting Jaime so he can also use him for dodgy cheap building work.
Kylie instructs you about these developments and seeks your advice as to how she can go about getting Jaime served with the writ.
- (1) Advise Kylie of how she may go about obtaining an interlocutory order for substituted service under the NT Supreme Court Rules. Cite relevant cases and principles and indicate what evidence would be needed to obtain an order for substituted service on Jaine:
- Via his Facebook page;
- By personal service on Bob Symes.
- (2) Draft the summons and affidavit/s necessary to obtain these orders for
substituted service. Omit formal parts but include the header.
Answer ALL of the following 5 sub-questions. Each sub-question carries 4 marks, for
a total of 20 marks.
- (a) Leaving aside interlocutory applications, list all court documents/forms that would be filed in the Court Registry in a typical Supreme Court proceeding in the Northern Territory seeking damages, from commencement of proceedings through to final judgment on liability and damages (but not including enforcement steps). Specify the relevant time limits for filing and/or serving each Form and the applicable Rule.
- (b) Outline the relevant Rule/s and principles governing claims for discovery before proceedings.
- (c) Discuss, with examples, the various types and sources of limitations upon jurisdiction (both time and amount) of the various courts dealing with civil litigation under Northern Territory (not federal) law. Outline the principles and cases governing extension of limitation periods in the Northern Territory.
- (d) Outline and briefly discuss the procedures available to a plaintiff who suspects that a defendant may be about to flee the jurisdiction of the Northern Territory or to hide assets, dispose them or remove them from the jurisdiction. Specify the Court Rule, statutory or other source of each such procedure and any applicable major constraints. You need deal only with the Supreme Court, not the Local or Federal Court.
- (e) In McCabe v British American Tobacco Australia Services Limited  VSC 73, it emerged that the defendants had managed, during a short period when there were no negligence claims on foot against British American Tobacco (BAT) by smokers who had contracted cancer and other (allegedly)
smoking-related illnesses, to destroy by shredding almost all copies of relevant documents they possessed, especially expert reports which may have shown the extent of BAT’s knowledge of the health effects of smoking. However, copies of most of these documents were forwarded to and retained by a tobacco industry body in the United States. Are those documents discoverable by BAT? Discuss the relevant principles and cases. What other interlocutory procedures might you utilise to pursue these documents? Note that the Victorian Supreme Court Rules are relevantly identical to the NT Supreme Court Rules.
END OF PAPER/ASSIGNMENT
properly footnoted at the bottom of each page. Referencing and citations MUST accord with the style as set out in the Australian Guide to Legal Citation, 3rd edition.