IN THE COUNTY COURT OF VICTORIA
AT Melbourne
COMMERCIAL DIVISION	Revised
(Not) Restricted
Suitable for Publication	
Building Cases List

Case No. CI-24-04632

Mark Bata	Plaintiff	
		
v		
		
Building Surveyors Code Pty Ltd & Anor	Defendants	

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JUDGE:	His Honour Judge Anderson	
WHERE HELD:	Melbourne	
DATE OF HEARING:	25 September 2024	
DATE OF RULING:	2 October 2024	
CASE MAY BE CITED AS:	Bata v Building Surveyors Code Pty Ltd (Ruling)	
MEDIUM NEUTRAL CITATION:	[2024] VCC 1506		

RULING
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Subject:	
Catchwords: 	Practice and procedure – claim by builder against building surveyors in negligence for economic loss – damages claimed were builder’s potential liability to owner in earlier action – building surveyors had been parties in first action until they settled with owner – application of principles of Anshun estoppel – alternatively whether commencement of second action an abuse of process – pleading of negligence claim defective – second action dismissed. 
Legislation Cited:	Wrongs Act 1958 (Vic)
Cases Cited:	Port Melbourne Authority v Anshun (1981) 147 CLR 589; Moorabool Shire Council & Anor v Taitapanui & Ors [2006] VSCA 30; The United Church in Australia Property Trust (Vic) v Ian Hartley Architects Pty Ltd & Ors [2022] VSC 233
Ruling:	

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr A Bartzis	Starnet Legal	
			
For the Defendant	Dr K Weston-Scheuber	Wotton & Kearney	

For Amitabh Pathik (by leave)       	
Ms J Anthony-Shaw	
Francke Lawyers	

HIS HONOUR:

1	There are two summonses before the Court for decision. The plaintiff (“Mr Bata”) seeks to have this proceeding (“the second action”) consolidated with proceeding CI-22-01834 (“the first action”). The defendants (“the building surveyor parties”) seek summary judgment in the second action against Mr Bata, or alternatively to have the second action stayed or Mr Bata’s statement of claim struck out.
2	The building surveyor parties’ primary submission is that the second action is subject to an Anshun estoppel (Port Melbourne Authority v Anshun (1981) 147 CLR 589) and that it was unreasonable for Mr Bata not to have brought the claim, the subject of the second action, within the first action. Alternatively, the building surveyor parties submit that it would be an abuse of process for Mr Bata to proceed with the second action and that, further and in any event, Mr Bata’s statement of claim in the second action does not effectively plead a cause of action.
3	The issues for determination on the applications are:
(a)	whether Mr Bata unreasonably failed, in the first action, to make a claim against the building surveyor parties of the nature made in the second action, and whether that failure gives rise to an Anshun estoppel;
(b)	whether there are special circumstances which should entitle Mr Bata to proceed with the second action;
(c)	alternatively, whether the pursuit of the claim by Mr Bata in the second action is an abuse of process;
(d)	whether the pleading of the cause of action in negligence in the second action by Mr Bata against the building surveyor parties is inadequate; and
(e)	whether the second action should be consolidated with the first action. 
4	It is necessary, therefore, to examine the nature and history of the first action. The first action is fixed for hearing on 9 October 2024, so that there is some urgency for a decision on the present applications. I have been very much assisted by the comprehensive written and oral submissions by the parties’ counsel, Mr Bartzis and Dr Weston-Scheuber, both in their articulation of legal principles and how those principles should apply to the circumstances of the two cases.
5	Although Mr Bata’s summons sought to consolidate the second action with the first action, it was not served on the solicitors in the first action, Mr Pathik. Fortunately, the solicitors became aware of the application and Mr Pathik was able to be represented by Ms Anthony-Shaw of counsel at the hearing. 
6	The first action commenced by writ issued on 13 May 2022. It is a building case arising out of the demolition of an existing dwelling in Seaford and the construction of two new dwellings (“the Seaford project”). The plaintiff is the owner (“Mr Pathik”). Mr Bata is the first defendant. He was contractually the builder for the project. In fact, much of the building work was performed by the second and third defendants, Chris Dimitriou and a company formerly known as Rethink Pty Ltd (“the further builders”). The fourth and fifth defendants were the building surveyor parties. The sixth defendant was Mr Pathik’s solicitor, Michael Gaffney.
7	During the interlocutory steps in the first action:
(a)	Mr Bata issued a third party notice against the further builders. Mr Bata did not, however, plead proportionate liability in his defence;
(b)	the building surveyor parties pleaded proportionate liability in their defence;
(c)	Mr Pathik entered judgment in default of appearance against Mr Dimitriou with damages to be assessed; and
(d)	Mr Pathik withdrew his claim against Rethink Pty Ltd.
8	The trial of the first action had been originally fixed for hearing on 16 April 2024. A mediation preceded this trial date on 20 March 2024, at which all parties (apart from the further builders) participated. On 19 March 2024, Mr Bata had foreshadowed a proposed amended defence in which he raised the issue of apportioning liability for Mr Pathik’s damages between all of the defendants. 
9	The first action did not settle at the mediation. However, following the mediation, Mr Pathik, the building surveyor parties, and Mr Gaffney, executed written terms of settlement. The terms of settlement, with certain details including the settlement sums redacted, have been exhibited as part of the evidence on the applications.
10	On 27 March 2024, Judge Kirton made orders which gave effect to the settlement between these parties and which also dealt with the future course of the first action. The orders included:
(a)	Mr Pathik’s claim against the building surveyor parties and against Mr Gaffney “is dismissed without adjudication on the merits” (paragraph 9) with “no order as to costs” (paragraph 10);
(b)	Mr Pathik was granted “leave to file and serve an amended statement of claim striking out the claims against” the building surveyor parties and Mr Gaffney (paragraph 11);
(c)	Mr Bata’s application “to file and serve an amended defence” [to plead that Mr Pathik’s claim was apportionable] was refused (paragraph 12);
(d)	Mr Bata was given until 26 April 2024 “to make any further application/s” (paragraph 15);
(e)	“The trial listed for 16 April 2024 is vacated and the proceeding is refixed for trial on 9 October 2024” with an estimate of “3 sitting days” (paragraph 1); and
(f)	The assessment of damages against Mr Dimitriou was also refixed for 9 October 2024 (paragraph 2).
11	Dr Weston-Scheuber, counsel for the building surveyor parties, submitted that Mr Bata’s failure, prior to the settlement of the dispute between Mr Pathik and the building surveyor parties, to bring a claim in the nature of the claim later brought by Mr Bata against her clients in the second action was barred by an Anshun estoppel.
12	I shall later refer in more detail to Mr Bata’s claim in the second action. Mr Bata claims damages for negligence arising from a duty of care alleged to be owed by the building surveyor parties to him as the builder on the Seaford project. The damages claimed by Mr Bata in paragraph 35 of the statement of claim in the second action are expressed to be any liability by Mr Bata for the damages sought by Mr Pathik against Mr Bata in the first action. 
13	This claim was not made by Mr Bata against the building surveyor parties until he brought the second action on 12 August 2024. It was the failure by Mr Bata to make this claim before the first action was settled as between Mr Pathik and the building surveyor parties which was said to give rise to an estoppel by the application of the Anshun principles.
14	It is inherent in this submission that:
(a)	the building surveyor parties would suffer significant unfairness if, having resolved their disputes with the plaintiff in the first action, Mr Bata were later able to pursue a claim he had the opportunity to bring against them in the first action; and
(b)	this prejudice would outweigh any injustice to Mr Bata of denying him the opportunity to proceed with his claim in the second action.
15	In the first action, Mr Bata, in addition to defending the action, had served a third party notice on the further builders on the basis of what he alleged was a contractual arrangement with them. Before Mr Pathik and the building surveyor parties had settled their disputes, Mr Bata had also foreshadowed that he wished to amend his defence to plead the apportionment provisions of the Wrongs Act 1958 (Vic).
16	The second action arises squarely from the same facts and circumstances raised by the first action. Mr Pathik’s claim arises from the Seaford project. His claim against Mr Bata alleged breaches of the building contract between them, and claimed the cost of rectifying defective work. A similar claim was made against the further builders who had carried out the building work, including for defective works. The claim against the building surveyor parties was based on a breach of the duty of care they owed the owner to carry out statutory inspections and grant occupation certificates.
17	In the second action, Mr Bata claimed that the building surveying parties owed him a duty of care arising from their performance of their statutory functions. It is alleged that, if the building surveyor parties had carried out those functions appropriately, that any defective work of Mr Bata’s would have been made known to him and he might have quickly and inexpensively rectified any defective work for which he was responsible. Mr Bata seeks, as damages, any recovery by Mr Pathik against him in the first action.
18	Although the first action was resolved by a settlement between the parties rather than a judgment of the court, it was submitted that this made no difference in the circumstances of this case. In response, Mr Bata’s counsel Mr Bartzis submitted that:
(a)	the claim in the second action was similar to a cross claim and, ordinarily, it would not be regarded as “unreasonable” if that type of proceeding were not brought within the confines of the first action;
(b)	the settlement between Mr Pathik and the building surveyor parties did not involve Mr Bata. It occurred after the mediation involving Mr Bata had concluded. The settlement came as a “surprise” to Mr Bata; and
(c)	in any event, the terms of settlement between Mr Pathik and the building surveyor parties foreshadowed that there may be further proceedings between the settling parties and other parties to the first action.
19	The terms of settlement dated 25 March 2024 between Mr Pathik and the building surveyor parties included the following provision:
 “Indemnity
 On and from the date of the exchange of executed copies of this deed, Mr Pathik will indemnify and hold harmless Building Surveyors Code, Mr Demirel and Mr Gaffney against any liability of Building Surveyors Code, Mr Demirel and/or Mr Gaffney arising from or in any way connected with a New Claim by any of the Other Parties or any other person or entity.“
20	I consider that in the circumstances before me that, if Mr Bata had wished to pursue a claim in the nature of the one he made in the second action, it was unreasonable of him not to have done so before the claim in the first action between Mr Pathik and the building surveyor parties settled. I rely upon the following matters:
(a)	Mr Bata was a party to the first action; and
(b)	the nature of the claim Mr Bata seeks to pursue in the second action, being based on almost precisely the same facts as the first action against the building surveyor parties, and seeks the same relief against the building surveyor parties as Mr Pathik claimed against Mr Bata in the first action.
21	It is not, in my view, an answer to refer to provisions of the terms of settlement between Mr Pathik and the building surveyor parties, although possibly, there might be a right of recovery by the building surveyor parties against Mr Pathik under the terms of settlement, if Mr Bata were to succeed in the second action against the building surveyor parties. 
22	However, parties settling a proceeding involving multiple defendants (unless they are related or otherwise friendly to each other) always face challenges when seeking to settle separately with a plaintiff. It would therefore be sensible to do, as the building surveyor parties have done in this case, to include provision for an indemnity in the terms of settlement. However, it is likely, although it is not apparent from the material on these applications, that the inclusion of those provisions may have come at a cost in terms of the overall monetary settlement.
23	In my view, the settlement of the first action as between Mr Pathik and the building surveyor parties was as effective as a Court judgment in activating the Anshun principles. That a settlement of a proceeding should generally be as effective a basis as a court judgment for the operation of the Anshun principles is obvious. It is of critical importance for cases before the Court to be resolved by the parties themselves, as much as by court processes (such as by a default or summary judgment) or a judgment delivered following a trial of an action.
24	I consider that this analysis of the relevant circumstances would also justify a conclusion that it would be an abuse of process to permit Mr Bata to proceed with the second action. Mr Bartzis described Mr Bata’s claim in the second action as “novel”. I shall examine the claim shortly. The novelty of the claim, and the way it is inextricably bound up with the matters raised in the first action (that I have already referred to) make the future conduct of the first action problematic, if the second action were permitted to proceed.
25	I am satisfied also that there are no “special circumstances” that would justify the unreasonable failure by Mr Bata to bring his third party claim as part of the first action. For reasons I shall outline shortly, I consider that it is very unlikely that Mr Bata would have been able to successfully pursue the claim he now makes in the second action, even if he had sought to do so in a timely manner within the first action.
26	The special circumstances relied upon are serious health issues suffered by Mr Bata that affect his ability to provide instructions to his lawyers. There is affidavit material, including medical reports, before the Court concerning Mr Bata’s conditions. This material was considered by Judge Kirton on 27 March 2024, when she adjourned the trial from 16 April 2024 to 9 October 2024. Judge Pillay also considered Mr Bata’s medical condition on 23 August 2024 when he confirmed the trial date of 9 October 2024, although he extended the estimated hearing time to 5 sitting days to ensure that adequate time would be allowed for Mr Bata to provide instructions to his lawyers during the trial.
27	Mr Bata’s health has apparently been deteriorating for some time. It does appear, however, that Mr Bata was able to adequately instruct his lawyers during the first action up to and including March 2024 when Mr Pathik and the building surveyor parties settled. Decisions were made which resulted in Mr Bata filing, in the first action, a defence and counterclaim, a third party claim against the further builders and proposing, and then making, an application to amend his defence to rely upon the apportionment provisions. 
28	At the hearing before Judge Kirton on 27 March 2024, the possibility of Mr Bata bringing “a claim later for contribution and indemnity” was raised in the context of Judge Kirton refusing Mr Bata leave to amend his defence to raise the issue of apportionment.
29	At the hearing before Judge Kirton on 27 March 2024, Mr Pathik (through Ms Anthony-Shaw) had opposed the adjournment of the trial of the first action. When Judge Kirton indicated that because an early trial date was available, she would refix the trial in October 2024, Ms Anthony-Shaw sought a direction that any “proceeding that [Mr Bata] may wish to make, whether or not that is by way of a third party notice or otherwise … needs to be put fairly and squarely and it needs to be put very soon” (Transcript page 76). Further discussion followed including between the judge and Mr Bartzis.
30	Judge Kirton ordered that Mr Bata had until 26 April 2024 “to make any further application/s” (paragraph 15). Mr Bartzis submitted in the hearing before me that the failure by Mr Bata to issue the second action until 12 August 2024 was not a failure to follow Judge Kirton’s order in paragraph 15, but rather because the second action did not involve the making of an “application”. After reviewing pages 76 and 76 of the transcript, I cannot rule out the possibility of a misunderstanding.
31	I asked Dr Weston-Scheuber, if I were to find against her clients on the matters raised in her clients’ summons, what their attitude was to the consolidation of the two actions. She informed me that they would not oppose consolidation (of some sort) in those circumstances. Ms Anthony-Shaw indicated that her instructions were that Mr Pathik wished the trial to proceed on 9 October 2024 and any form of consolidation would inevitably lead to the trial being again vacated. From the information I have received from the Commercial List Listings in the last week sitting as a Duty Judge, I know that the earliest date a trial can be relisted is in the latter part of July 2025.
32	Mr Pathik issued the first action on 13 May 2022. The trial date of 16 April 2024 was vacated. The refixed trial date of 9 October 2024 was confirmed by Judge Pillay on 23 August 2024 at a hearing at which Mr Bata had sought to adjourn the trial. Mr Bata is defending Mr Pathik’s claim and has a counterclaim against Mr Pathik on the basis that Mr Pathik wrongfully paid monies to Mr Demetriou which were due to be paid to Mr Bata under the building contract between Mr Pathik and Mr Bata.
33	Mr Pathik is seeking to have damages assessed against Mr Dimitriou, although he has withdrawn any claim against Rethink Pty Ltd. Mr Bata has a third party claim against Mr Dimitriou and Rethink Pty Ltd. Mr Bata has apparently not challenged the decision of Judge Kirton refusing him leave to file an amended defence to raise the apportionment issue. Mr Gaffney has died since the settlement of the claim against him by Mr Pathik.
34	At present, the Court does not know the amount of the monetary settlements between Mr Pathik and the building surveyor parties and Mr Gaffney. Presumably, the unredacted terms of settlement will be put in evidence at the trial of the first action. I assume that any money sum required to be paid under the terms of settlement has been paid. Any amount paid to Mr Pathik would need to be taken into account in assessing any damages, if he were successfully in the first action against Mr Bata, and in respect of Mr Bata’s counterclaim. There would, however, be no basis to apportion any liability to pay damages to Mr Pathik on the basis of the Wrongs Act provisions as no such issue is presently raised on the pleadings.
35	If the second action were introduced into the analysis, the position becomes more complex. The two actions might be consolidated. More likely, the two actions would be managed together so that they might be heard by the same judge, probably concurrently. It is likely that there would be little opportunity for apportionment of the claims in either action, unless Mr Bata were able to persuade the Court to allow him to amend his defence in the first action to name the building surveyor parties as defendants and/or, perhaps, for the building surveyor parties to allege contributory negligence against Mt Bata in the second action. The building surveyor parties may wish to join Mr Pathik as a third party to the second action to pursue any rights of indemnity under the terms of settlement.
36	If either of these circumstances were permitted, the chances of Mr Pathik having a trial of the first action heard at any time in the foreseeable future would seem extremely doubtful. Would it be an alternative to allow the second action to proceed separately to the first action? Obviously, Dr Weston-Scheuber does not think that such a course would be in her client’s best interests. If the hearing of the two actions were not joined (or some special arrangements made), the building surveyor parties would not be able to participate in the trial of the first action. They would not be able to test the evidence presented by Mr Pathik as to liability or quantum, or indeed the evidence of Mr Bata, as the interests of Mr Bata and the building surveyor clients would not necessarily be aligned as against Mr Pathik. 
37	If the two proceedings were not consolidated and Mr Bata successfully defended the first action, it may be that there would be no need for the second action to proceed. However, if there were an order for damages made against Mr Bata in the first action at a trial in which the building surveyor parties were not able to fully participate, it is likely that at the trial of the second action Mr Bata would need to relitigate Mr Pathik’s claim (or at the least the quantum part of that claim) as part of the second action against the building surveyor parties.
38	Each of these scenarios demonstrate why to allow Mr Bata to proceed with the second action would be an abuse of process and one that could have been avoided if Mr Bata had not acted unreasonably in his conduct of the first action.
39	When one comes, finally, to examine the nature of the second action, it is clear that the present articulation of the claim is so devoid of substance that, even were Mr Bata’s right to pursue the second action to be preserved, it is very difficult to imagine Mr Bata satisfactorily pleading a coherent and viable cause of action based on the factual circumstances presently relied upon. 
40	Mr Bata wishes to assert that, as a builder of domestic dwellings, he was owed a duty of care by building surveyors who had undertaken the statutory and contractual obligations of that role in respect of the Seaford project and that the duty was breached in circumstances where the building surveyor had failed to detect and/or inform Mr Bata, as the builder, of defective workmanship for which Mr Bata was himself responsible.
41	This cause of action is indeed novel. It is pleaded without appropriate regard to the requirements necessary to found a claim in negligence for economic loss including vulnerability and knowledge of reliance, particularly where, if a duty were owed to a builder it would likely be inconsistent with a concurrent duty owed to an owner.. The statement of claim lacks any pleading of a factual basis necessary to establish causal connection between the pleaded breaches and the claimed loss.
42	It is not a claim with the evidentiary basis that would withstand the careful analysis which the Court of Appeal made in Moorabool Shire Council & Anor v Taitapanui & Ors [2006] VSCA 30  before deciding that a claim by a subsequent owner of a domestic dwelling was entitled to pursue an action against an errant building surveyor. It would not withstand the analysis of the kind undertaken by Delany J in The United Church in Australia Property Trust (Vic) v Ian Hartley Architects Pty Ltd & Ors [2022] VSC 233, in that case, of the necessary basis upon which a claim by a building owner against an engineer in negligence might be pleaded. 
43	In the second action, the present statement of claim is defective and it is unlikely that it could ever be rectified. This fact is central to each of the bases upon which the building surveyor parties challenge the voracity of the claim made against them in the second action. Even if the pleading issue was the only matter for decision, I would not be prepared to allow the second action to proceed unless and until Mr Bata had demonstrated that he had a viable pleaded cause of action. 
44	In the circumstances, the second action must be dismissed with costs. The defendants’ summons dated 20 September 2024 will be otherwise dismissed. The plaintiffs summons dated 11 September 2024 will be dismissed with costs. I will further order that Mr Pathik’s costs of and incidental to each summons and the hearing on 25 September 2024 shall be assessed on the standard basis by the Costs Court in default of agreement, and when agreed or assessed, paid by Mr Bata.

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Certificate
I certify that these 13 pages are a true copy of the ruling of His Honour Judge Anderson delivered on 2 October 2024.
Dated: 2 October 2024 
Alexandria Peck
Associate to His Honour Judge Anderson