Niclin No 1 Pty Ltd v Lambert 66 Pty Ltd  [2022] QDC 45

Andrew Orford  |  Allie Flack  |  Eva Squire

Key takeout

Parties to a building contract should take care to ensure that any claims or contentions made in the course of a litigated claim are consistent with issues that have been raised or resolved in earlier proceedings. 

A court will not allow a party to make any claims or contentions that have previously been raised and resolved in litigation, even where those issues are resolved by consent order rather than judgment.  However, if the earlier proceeding does not settle all issues in relation to the contract, the parties will not be prevented from making further consistent claims.

Facts

This case concerned a contract for the construction of an apartment building entered into by Niclin No 1 Pty Ltd (Niclin) and Lambert 66 Pty Ltd (Lambert) (contract).  Niclin, the builder, claimed it was owed $143,000 under the contract, an amount that was withheld by Lambert on account of liquidated damages and a rejected variation claim. 

Under the contract, Niclin was only entitled to claim amounts owing to it as part of its final payment claim, which was required to be made within a certain period following the completion of the contract (defects correction period).  Claims made outside this period were forever barred. 

Relevantly, the parties had been involved in earlier litigation in the Supreme Court which resulted in a settlement by consent order.  The earlier proceeding involved issues concerning the validity and effect of a direction to rectify certain defects, which in turn affected the defects correction period and the time within which Niclin was entitled to make a claim.

It was Lambert’s position that Niclin’s claim ought to be dismissed as an abuse of process, or permanently stayed on the basis of res judicata or issue estoppel, as it brought up issues that were raised and resolved in the earlier proceeding.  As an alternative, Lambert sought to have most of the statement of claim struck out on the basis that Niclin had not properly pleaded its causes of action.

Decision

The court found that the proceeding should not be dismissed or stayed, but that certain parts of Niclin’s statement of claim should be struck out as an abuse of process.  Niclin was given leave to replead its statement of claim.

The settlement agreement in relation to the earlier proceeding did not settle all issues that may arise concerning the contract or the parties’ actions relating to it.  In particular, the validity of the amount of liquidated damages withheld from Niclin was not raised in the earlier proceeding.  As such, Niclin was not prevented from making a claim to recover these amounts.

However, the earlier proceeding did result in the resolution of a number of issues, and Niclin was prevented from raising those issues and from making any contentions of fact or law inconsistent with the contentions made in that proceeding.  In particular, Niclin was bound by its assertion in the earlier proceeding that the defects correction period ended no later than 29 June 2019.  This statement was inconsistent with parts of Niclin’s claim, and the court ordered these allegations and claims to be struck out.

The court concluded that the appropriate course was to permit both parties to reformulate draft orders consistent with its reasons.