Michael Creedon | Elissa Morecombe | Claudia Lizzio
A court must exercise great care when exercising a discretion to end proceedings early. Courts will not be inclined to grant an application for summary judgment on a case involving the interpretation of a construction contract, where the facts of a matter are not entirely settled and where the determination of those facts could impact how the legal principles are to be applied.
The first and second defendants, Jonathan Dudzik and Lisa Dudzik (owners) brought an application for summary judgment against Gold Property Partners Pty Ltd (GPP) based on the survival and effect of a non-assignment clause in a construction contract. Homes by CMA (Homes) (a third party not involved in the proceedings) prepared plans for the owners for the construction of a residence. The plans were subsequently amended. The plans and the amended plans contained a notation that the drawings were subject to copyright and that all rights were reserved to Homes. The owners entered into a written contract with Homes for the construction of the residence. The contract contained a clause which provided that neither party could assign the contract or any right, benefit or interest under the contract without written consent of the other party. After signing the contract with Homes the owners were notified by their lender that their application for finance had been declined. The contract between the owners and Homes was purportedly terminated.
The owners subsequently engaged the third defendant, D J Roberts (Construction) Pty Ltd (Roberts) to construct the residence. By a deed of assignment, Homes assigned to GPP any property right title and interest in and to the plans and any accrued claims or causes of action that Homes had in relation to copyright in the plans or the contract.
GPP brought a claim against the owners for breach of contract, alleging that the owners were required to pay a deposit on signing of the contract and that they had infringed copyright by reproducing amended plans and giving a copy to Roberts. The owners denied they were in breach of the contract or that copyright had been infringed and argued that the contract was validly terminated. GPP pleaded that the termination of the contract was invalid because the owners had not provided notice that their finance had not been approved within the timeframe required under the contract.
The owners applied for summary judgment and submitted that the purported assignment of Home’s rights under the contract and the copyright in the plans to GPP was ineffective and that GPP’s claim ought to be dismissed.
The court rejected the application as the questions of whether the contract was validly terminated and whether it had been breached remained in contention. On that basis, the matter was not appropriate to be determined via summary judgment.
Prskalo J considered that summary judgment is appropriate in cases where the facts are settled and the rights of the parties can turn on construction of contract. However, in this case findings of fact were required before the terms of the contract could be properly construed and the rights and liabilities of the parties determined. Her Honour was not satisfied that all of the facts in this matter were settled and it remained a possibility that facts could be uncovered during a trial, which could have an impact upon the legal principles to be applied.
Prskalo J was not satisfied that GPP had no real prospect of succeeding, nor was she satisfied that there was no need for a trial of the matters relating to the alleged breach of contract. As to the question concerning the assignment of contractual rights, Prskalo J found that the law on the effect of prohibitions on the assignment of contractual rights were complex and it would be premature to determine those legal issues without submissions from the parties.