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ACA v Sullivan; Austruc v ACA

ACA v Sullivan; Austruc v ACA

Case [2004] NSWSC 304 21 April 2004

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CITATION: ACA v Sullivan & Anor; Austruc v ACA [2004] NSWSC 304 revised - 21/09/2004

HEARING DATE(S): 8 April 2004

JUDGMENT DATE:
21 April 2004

JUDGMENT OF: McDougall J at 1

DECISION: See paras [35] and [36] of judgment

CATCHWORDS: BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 - s 7(2)(a) - construction of "forms part of" - whether construction contract formed part of loan agreement

LEGISLATION CITED: Building and Construction Industry Security of Payment Act 1999

CASES CITED: Austruc v ACA; ACA v Sarlos & Anor [2004] NSWSC 131
Brodyn Pty Ltd v Davenport & Anor [2004] NSWSC 254
Musico & Ors v Davenport & Ors [2003] NSWSC 977
Abacus v Davenport & Ors [2003] NSWSC 1027
TransGrid v Walter Construction Group [2004] NSWSC 21
TransGrid v Siemens & Anor [2004] NSWSC 87
Consolidated Constructions Pty Ltd v Ettamogah Pub [2004] NSWSC 110

PARTIES :
ACA Developments Pty Ltd as Trustee for the Bellagio Unit Trust v William Timothy Sullivan & Austruc Constructions Ltd
Austruc Constructions Ltd v ACA Developments Pty Ltd
Austruc Constructions Ltd v ACA Developments Pty Ltd

FILE NUMBER(S): SC 55021/04; 55022/04; 10787/04

COUNSEL: S G Finch SC/S A Kerr (for Austruc)
F C Corsaro SC/S Goldstein (for ACA)

SOLICITORS: Clayton Utz (Austruc)
Henry Davis York (for ACA)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

21 April 2004

WILLIAM TIMOTHY SULLIVAN & ANOR

ACA DEVELOPMENTS PTY LTD

JUDGMENT

Introduction

1 HIS HONOUR: Austruc Constructions Limited (“Austruc”) has recovered two judgments against ACA Developments Pty Ltd (“ACA”). Each judgment was recovered pursuant to s 25 of the Building and Construction Industry Security of Payment Act 1999 (“the Act”). The relevant background is set out in my judgment in earlier proceedings between the parties, Austruc v ACA; ACA v Sarlos & Anor [2004] NSWSC 131.

2 One judgment, in the sum of $1,379,546.47, was recovered in proceedings No. 10787 of 2004, in respect of a claim known as progress claim 10. (Progress claim 10 was the subject of my earlier judgment.) The other judgment, in the sum of $336,931.54, was recovered in proceedings now numbered 55022 of 2004 (formerly numbered 10726 of 2004), in respect of a claim known as progress claim 11. ACA has moved, in each proceedings, to set the judgment aside.

3 Further, in proceedings 55021 of 2004, ACA seeks declaratory relief, an order setting aside the relevant determinations of adjudicators made under the Act consequent upon which the judgments were entered and an order setting aside the judgments.

4 ACA’s principal contention is that the Act does not apply to the construction contract between it and Austruc because, ACA says, that contract “forms part of a loan agreement” made between ACA and Westpac Banking Corporation (“Westpac”): see s 7(2)(a) of the Act.

Preliminary matters

5 I drew the attention of the parties to the decision of Gzell J in Brodyn Pty Ltd v Davenport…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading ACA v Sullivan; Austruc v ACA

Details

AGLC: ACA v Sullivan; Austruc v ACA [2004] NSWSC 304
Case: [2004] NSWSC 304
Decision Date: 21 April 2004

CaseChat Overview and Summary

The appeal before the Full Court of the Federal Court concerned the interpretation of the Building and Construction Industry Security of Payment Act 1999. The first respondent, Austruc, sought to enforce a payment claim made by the second respondent, Sullivan, against the appellant, ACA. The dispute hinged on whether the construction contract between Austruc and Sullivan constituted a part of the loan agreement between Austruc and ACA. The Full Court's decision was appealed to the High Court, which granted special leave to appeal. The central issue for the High Court was to determine the correct interpretation of the phrase "forms part of" in section 7(2)(a) of the Act.

The court considered whether the construction contract was part of the loan agreement by virtue of the contract being referenced in the loan agreement or by the contract being physically attached to the loan agreement. The court held that the phrase "forms part of" should be interpreted as meaning that the construction contract must be physically attached to the loan agreement. The court also considered the purpose of the Act and the need for clarity in the construction industry. The court held that the construction contract was not part of the loan agreement as it was not physically attached, and therefore, the payment claim was not enforceable.

The High Court found that the Full Court erred in its interpretation of the phrase "forms part of" and that the construction contract did not form part of the loan agreement. The court held that the correct interpretation of the phrase was that the construction contract must be physically attached to the loan agreement. The court also held that the purpose of the Act was to provide a quick and efficient mechanism for resolving payment disputes in the construction industry, and that clarity was essential to achieve this purpose. The High Court remitted the case to the Full Court for reconsideration in light of its decision.

The High Court did not make any orders as the case was remitted to the Full Court for reconsideration. The Full Court is required to reconsider the case in light of the High Court's decision and determine whether the construction contract formed part of the loan agreement. The Full Court may also need to consider whether the payment claim is enforceable under the Act. The outcome of the reconsideration is not known, and the parties will need to wait for the Full Court's decision.

Orders