Allen & Anor v Contrast Constructions Pty Ltd [2025] QSC 18

Julie Whitehead | Alexandria Hammerton | Rose Dillon

Key takeouts

• Parties to a construction contract will not be permitted to commence multiple proceedings, in multiple forums, particularly where there is an overlap of issues and allegations between the proceedings.
  
  
• An abuse of process may arise when a party attempts to re-litigate an issue or commence a secondary proceeding, when there are already proceedings on foot.
  
  
• A court may exercise its discretion to stay proceedings, or strike out a pleading, when an abuse of process is found to exist.

Facts

Background

In February 2016,  Reece Allen and Chantell Taylor (owners) entered into a contract with Contrast Constructions Pty Ltd (builder) for the construction of a residential dwelling (contract). In November 2017, the owners served a show cause on the builder. Under the contract, the show cause notice was required to state the alleged substantial breach committed by the builder. In response, the builder was required to demonstrate why the owners were not entitled to exercise their right to terminate.

The builder responded to the show cause notice. On the same day, after receiving the builder’s response, the owners terminated the contract. The builder asserted that the owners’ purported termination was a repudiation of the contract, which the builder accepted and relied on in terminating the contract.

Preliminary proceedings

Prior to the decision, various proceedings were commenced by the owners and the builder in the Queensland Civil and Administrative Tribunal (QCAT), QCAT Appeal Tribunal, Court of Appeal and the Supreme Court.

In December 2017, the owners made a claim against the Queensland Building and Construction Commission (QBCC) under the insurance scheme established under the Queensland Building and Construction Commission Act 1991 (QLD) (QBCC Act).  The QBCC insurance scheme indemnifies owners for loss suffered as a result of builders not completing work, but only where the owner in question properly terminates the contract in circumstances of a builder’s default.  The QBCC rejected the owners’ claim on the basis that the contract had not been properly terminated.

In April 2018, the owners applied to QCAT for a review of the QBCC decision (QCAT review proceeding).  QCAT affirmed the QBCC’s decision and determined that the contract had not been validly terminated by the owners. The owners then sought to appeal the decision to QCAT’s Appeal Tribunal, contending failures to accord to natural justice, apprehended bias and errors of law and fact. The appeal was dismissed.  The owners sought leave to appeal the decision of the QCAT Appeal Tribunal to the Court of Appeal, however, this application was dismissed.

While the QCAT review proceeding was on foot, the builder filed an application in QCAT against the owners seeking, in addition to other claims, a declaration that the QBCC’s decision was correct in determining the owners’ termination was improper (builder’s proceeding).

The owners applied to dismiss the builder’s proceeding, or alternatively have it stayed on the grounds that the builder had not complied with the process under the QBCC Act for the resolution of disputes. QCAT determined that it had jurisdiction to determine the builder’s proceeding and refused to dismiss or stay the proceeding. The owners sought leave to appeal the decision relating to the builder’s proceeding and again sought a stay pending the hearing of the appeal. The QCAT Appeal Tribunal denied the owners’ stay application and dismissed their appeal.  

Supreme Court proceeding

In November 2023, the owners commenced proceedings against the builder in the Supreme Court of Queensland (Supreme Court proceeding), seeking damages for breach of contract, delay, interest and costs.  

In response, the builder filed a conditional notice of intention to defend and an application seeking orders which included setting aside or staying the Supreme Court proceeding, or striking out the statement of claim, as an abuse of process.

Decision

The primary question before the court was whether the Supreme Court proceeding constituted an abuse of process.  Kelly J ultimately decided to stay the Supreme Court proceeding pending the determination of the builder’s proceeding in QCAT. In doing so, His Honour considered two recognised categories of abuse of process – ‘re-litigation abuse’ and ‘multiplicity of proceedings abuse’.

Re-litigation abuse: relevant principles and decision

Re-litigation abuse may arise where an issue was raised and decided in an earlier proceeding and a party attempts to litigate it again in a later case.  This risks the principle favouring the finality and certainty of judgments for parties to a proceeding.

The court found that re-litigation abuse did not apply in this case. The fact that the parties were involved in the QCAT review proceeding, and were now seeking to litigate an issue decided against them in that proceeding did not create an abuse of process. The nature and basis of the claim in the Supreme Court proceeding concerned the owners’ claim for contractual remedies, based on the contractual rights and entitlements arising under the contract, whereas the QCAT review proceeding concerned a claim under the QBCC insurance scheme, and a review of the QBCC’s decision. The court found that there was no manifest unfairness to the builder and no abuse of process caused by the owners placing into issue the lawfulness of their termination of the contract in subsequent litigation involving the owners’ and builder’s respective rights under the contract.

Multiplicity of proceedings abuse

Multiplicity of proceedings abuse may arise when a party to a proceeding in one forum institutes a second proceeding in another forum in relation to the same subject matter as the first proceeding. Kelly J noted that as a general proposition it is vexatious and oppressive to commence second or subsequent proceedings when an action is already on foot with respect to the matter in issue.  The power to stay proceedings on the ground of abuse of process is one to be exercised with caution, after careful consideration of factors such as:

• which proceeding was commenced first;
•  whether the termination of one proceeding is likely to have a material effect on the other;
•  the public interest, the undesirability of two courts competing to see which of them determines common facts;
•  how far advanced each proceeding was, the impact on witnesses and the advantages; and
•  the disadvantages to each party. 

His Honour also held that an important consideration was the risk of inconsistent findings posed by multiple proceedings concerning the same subject matter.

The court was satisfied that it was appropriate and necessary to stay the Supreme Court proceeding to prevent an abuse of process involving multiplicity of proceedings. Kelly J found that the issues in the builder’s proceeding and the allegations made by the owners in the Supreme Court proceeding concerned the same general subject matter, namely rights and entitlements arising under the contract and they involved a significant overlap of issues and allegations.  The commencement of the Supreme Court proceeding was vexatious and oppressive and gave rise to the possibility of inconsistent findings.