Atalanta Investments Pty Ltd v Doric Contractors Pty Ltd
[2019] WASC 100
•1 APRIL 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ATALANTA INVESTMENTS PTY LTD -v- DORIC CONTRACTORS PTY LTD [2019] WASC 100
CORAM: ACTING MASTER WHITBY
HEARD: 15 MARCH 2019
DELIVERED : 1 APRIL 2019
FILE NO/S: CIV 2976 of 2018
BETWEEN: SEAFOCUS HOLDINGS PTY LTD
First Plaintiff
ATALANTA INVESTMENTS PTY LTD
Second Plaintiff
AND
DORIC CONTRACTORS PTY LTD
Defendant
Catchwords:
Plaintiffs' application for summary judgment - Order 14 rule 2 Rules of the Supreme Court 1971 (WA) - Australian Standard General Conditions of Contract AS2124-1992 cl 35.6; cl 42; cl 47 - Date of Practical Completion - Time for Practical Completion - Extension of time - Liquidated damages for delay - Defendant's indebtedness to plaintiff under cl 35.6
Legislation:
Rules of the Supreme Court 1971 (WA), O 14 r 2
Result:
Plaintiff's application for summary judgment dismissed
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr T J Carmady |
| Second Plaintiff | : | Mr T J Carmady |
| Defendant | : | Mr T J Porter |
Solicitors:
| First Plaintiff | : | Williams & Hughes |
| Second Plaintiff | : | Williams & Hughes |
| Defendant | : | Lavan |
Case(s) referred to in decision(s):
Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184
Australian Can Co Pty Ltd v Levin & Co Pty Ltd (1947) VLR 333
Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27
Moscow Nardony Bank Ltd v Mosbert Finance (Aust) Pty Ltd (1976) WAR 109
Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd (1998) VSC 205
Re Concrete Construction Group Pty Ltd (1997) 1 QdR 6
Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd [1990] 3WAR 71
ACTING MASTER WHITBY:
This is the plaintiffs' application for summary judgment in relation to part of their claims for liquidated damages against the defendant. By chamber summons dated 27 November 2018, the plaintiffs seek an order that summary judgment be entered against the defendant in the amount of $596,400.
At the hearing of the plaintiffs' application, counsel for the plaintiffs sought to amend the order for summary judgment to $489,900. The amended amount sought is calculated by reference to 23 days delay (6 November 2017 to 29 November 2017), being the delay from the Date for Practical Completion to the Date of Practical Completion, at $21,300 per day.
In support of the application for summary judgment, the plaintiffs rely upon the following material:
1.Affidavit of Gregory John Pearce sworn 26 November 2018 (First Pearce Affidavit);
2.Further Affidavit of Gregory John Pearce sworn 19 December 2018 (Second Pearce Affidavit);
3.Further Affidavit of Gregory John Pearce sworn 14 February 2019 (Third Pearce Affidavit);
4.Affidavit of David O'Brien sworn 18 February 2019 (O'Brien Affidavit);
5.Affidavit of Matthew Ian Lenhoff sworn 18 February 2019 (Lenhoff Affidavit); and
6.Written submissions dated 21 February 2019.
In opposition to the application for summary judgment, the defendant relies upon the following material;
1.Affidavit of Lance Albert Van Drunick sworn 30 January 2019 (Van Drunik Affidavit);
2.Affidavit of Mick O'Dea sworn 30 January 2019 (O'Dea Affidavit); and
3.Outline of Submissions dated 1 March 2019.
Background
On or about 31 May 2016, the plaintiffs entered into a written agreement with the defendant for the construction of the Subiaco Station Street Retail Development situated at Lot 44 Station Street, Subiaco, Western Australia (the Development) (the Construction Contract).[1]
[1] Pearce November Affidavit par 6.
The Construction Contract consisted of the following written parts:
1.Australian Standard Form of Formal Instrument of Agreement AS2127‑1992;
2.Australian Standard General Conditions of Contract AS2124‑1992 (General Conditions);
3.Australian Standard General Conditions of Tendering and Form of Tender AS2125‑1992;
4.Schedule of Contract Documents and Drawings.
(Collectively the Contract Documents).[2]
[2] The Contract Documents are at annexure GJP4 of the First Pearce Affidavit.
The General Conditions include the following provisions:
2.Interpretation
…
'Date for Practical Completion' means ‑
(a)where the Annexure provides a date for Practical Completion, the date;
(b)where the Annexure provides a period of time for Practical Completion, the last day of the period,
but if any extension of time for Practical Completion is granted by the Superintendent or allowed in any arbitration or litigation, it means the date resulting therefrom;
'Date of Practical Completion' means ‑
(a)the date certified by the Superintendent in a Certificate of Practical Completion issued pursuant to Clause 42.5, to be the date upon which Practical Completion was reached; or
(b)where another date is determined in any arbitration or litigation as the date upon which Practical Completion was reached, that other date;
'day' means calendar day;
…
35.2Time for Practical Completion
The Contractor shall execute the work under the Contract to Practical Completion by the Date for Practical Completion.
Upon the Date of Practical Completion the Contractor shall give possession of the Site and the Works to the Principal.
…
35.6Liquidated Damages for Delay in Reaching Practical Completion
If the Contractor fails to reach Practical Completion by the Date for Practical Completion, the Contractor shall be indebted to the Principal for liquidated damages at the rate stated in the Annexure for every day after the Date for Practical Completion to and including the Date of Practical Completion or the date that the Contract is terminated under Clause 44, whichever first occurs.
If after the Contractor has paid or the Principal has deducted liquidated damages, the time for Practical Completion is extended, the Principal shall forthwith repay to the Contractor any liquidated damages paid or deducted in respect of the period up to and including the new Date for Practical Completion.
42.1Payment Claims, Certificates, Calculations and Time for Payment
… the contractor shall deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require. Claims for payment shall include the value of work carried out by the Contractor in the performance of the Contract to that time together with all amounts then due to the Contractor arising out of or in connection with the Contract or for any alleged breach thereof. Within 14 days after receipt of a claim for payment, the Superintendent shall issue to the Principal and to the Contractor a payment certificate stating the amount of the payment which, in the opinion of the Superintendent, is to be made by the Principal to the Contractor or by the Contractor to the Principal. The Superintendent shall set out in the certificate the calculations employed to arrive at the amount and, if the amount is more or less than the amount claimed by the Contractor, the reasons for the difference. The Superintendent shall allow in any payment certificate issued pursuant to this Clause 42.1 or any Final Certificate issued pursuant to Clause 42.8 or a Certificate issued pursuant to Clause 44.6, amounts paid under the Contract and amounts otherwise due from the Principal to the Contractor and/or due from the Contractor to the Principal arising out of or in connection with the Contract including but not limited to any amount due or to be credited under any provision of the Contract.
If the Contractor fails to make a claim for payment under Clause 42.1, the Superintendent may nevertheless issue a payment certificate.
Subject to the provisions of the Contract, within 28 days after receipt by the Superintendent of a claim for payment or within 14 days of issue by the Superintendent of the Superintendent's payment certificate, whichever is the earlier, the Principal shall pay to the Contractor or the Contractor shall pay to the Principal, as the case may be, an amount not less than the amount shown in the Certificate as due to the Contractor or to the Principal as the case may be, or if no payment certificate has been issued, the Principal shall pay the amount of the Contractor's claim. A payment made pursuant to this Clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under Clause 47 or as otherwise agreed) of the amount so properly due and payable, the Principal or Contractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.
The Annexure to the General Conditions provides:
1.the Superintendent is Taylor Robinson Architects (now known as Taylor Robinson Chaney Broderick);
2.the Date for Practical Completion is 28 September 2017; and
3.the Liquidated Damages per day is AUD$21,300.
It is not in dispute that:
1.the Date for Practical Completion at the commencement of the Construction Contract was 28 September 2017;[3]
2.the Superintendent had issued certificates which had the effect of extending the Date for Practical Completion by 34 days, that is to 1 November 2018;[4]
3.the Superintendent issued a further certificate that had the effect of extending the Date for Practical Completion by a further five days, that is to 6 November 2018;[5]
4.the Superintendent issued a certificate of partial practical completion on 29 November 2017;[6]
5.the Superintendent issued a final certificate of Practical Completion on 19 January 2018;[7]
6.the defendant sought a further extension of time (EOT 10) to the Date for Practical Completion, which was rejected by the Superintendent in its entirety;[8]
7.the defendant has engaged the dispute resolution provisions of the Construction Contract in respect of EOT 10;[9]
8.if EOT 10 is ultimately accepted in full, then the Date for Practical Completion will be a date after the Date of Practical Completion.[10]
[3] Annexure to General Conditions.
[4] First Pearce Affidavit at [10] and GJP5; O'Brien Affidavit at [10].
[5] First Pearce Affidavit at [10] and GJP5; O'Brien Affidavit at [11].
[6] First Pearce Affidavit at GJP6.
[7] : First Pearce Affidavit at GJP7.
[8] O'Brien Affidavit at [7]; see also O'Dea Affidavit at [16].
[9] Van Drunick Affidavit [12] ‑ [18] and O'Dea Affidavit [19] ‑ [23].
[10] Plaintiffs' submissions [26]; ts 7.
Legal principles – Summary judgment
The plaintiffs' application must be supported by an affidavit verifying the facts on which the claim is based pursuant to Rules of the Supreme Court1971 (WA) O 14 r 2(1) (RSC). The affidavit must state that, inter alia, in the deponent's belief there is no defence to the claim: RSC O 14 r 2(1).
As a general principle, an applicant for summary judgment who complies with the requirement of O 14 r 2 RSC establishes a prima facie right to summary judgment.[11]
[11] Westwind Air Charter Pty Ltd v Hawker de Havilland Ltd [1990] 3WAR 71, 74 (Murray J).
If the plaintiff establishes a prima facie right to summary judgment, the burden shifts to the defendant to satisfy the court as to why summary judgment should not be entered against it.[12]
[12] Westwind [74]; Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27 [4] (Reasons of the court).
If, after argument, there remains real uncertainty as to the plaintiffs' right to summary judgment without further investigation of the facts, summary judgment must be refused.[13]
[13] Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 [28] (Newnes M).
The conditions precedent for the court's exercise of jurisdiction to grant summary judgment to the plaintiffs have been satisfied, namely:
1.the plaintiffs have filed and served a statement of claim which discloses a prima facie cause of action against the defendant;
2.the defendant has entered an appearance in the proceedings; and
3.affidavits in support of the application have been filed as required by O 14 r 2 RSC, which comply with all other requirements of O 14 r 2 RSC.
Therefore, it is for the defendant to show that it has an arguably good defence or establish circumstances which displace the prima facie effect of the statement of belief in the First Pearce Affidavit that there is no defence to that part of the plaintiffs' claim in respect of which summary judgment is sought.[14] The defendant has the onus of showing that it is entitled to defend the action.[15]
[14] Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122 [133].
[15] Australian Can Co Pty Ltd v Levin & Co Pty Ltd (1947) VLR 333; Moscow Nardony Bank Ltd v Mosbert Finance (Aust) Pty Ltd (1976) WAR 109, 113
Issue to be determined
The plaintiffs' claim is for summary judgment for $489,900 owed by the defendant to the plaintiffs pursuant to General Condition cl 35.6 (Clause 35.6) (being Liquidated Damages for the period 6 November 2017 to 29 November 2017 – 23 days at $21,300 per day).
The issue to be determined in this application is whether the defendant has any arguable defence/s to the Plaintiffs' claim for $489,900.
In considering this issue, Counsel for both parties focused on the proper construction of Clause 35.6.
Plaintiffs' position
Counsel for the Plaintiffs submits that:
1.Clause 35.6 operates where the defendant fails to reach Practical Completion by the Date for Practical Completion.
2.Given that extensions of time totalling 40 days had been allowed by the Superintendent, the undisputed Date for Practical Completion is 6 November 2017.[16]
3.Clause 35.6 creates a debt owing by the defendant to the plaintiffs as at the Date of Practical Completion for an amount equal to $21,300 for every day after the Date for Practical Completion up to and including the Date of Practical Completion. This debt is due and payable immediately and there is no clause in the General Conditions that defers the plaintiffs' entitlement to payment.
[16] O'Brien Affidavit at [10].
Accordingly, there is no requirement of certification by the superintendent as a pre‑condition to the debt accruing under Clause 35.6.
Given the Date for Practical Completion was 6 November 2017 and the defendant did not achieve Practical Completion until 29 November 2017 (the date the certificate of partial practical completion was issued), the defendant was indebted to the plaintiffs for an amount equal to 23 days multiplied by the daily rate of $21,300. That is, the defendant was indebted to the plaintiff for $489,900.
Given that, upon the proper construction of Clause 35.6, the amount of Liquidated Damages is immediately due and payable, any dispute about the Date for Practical Completion and accordingly, the amount of Liquidated Damages is to be adjusted later as specifically provided for by the second paragraph of Clause 35.6.
Counsel for the Plaintiff submits that this dispute is effectively limited to the question of 'who holds the money pending the resolution of EOT 10?'[17]
[17] ts 29.
Defendant's position
It is the defendant's position that it has a complete (alternatively an arguable) defence to the plaintiffs' claim because:
1.Clause 35.6, along with a number of other clauses in the contract, stipulates when an amount may become owing between the parties, but it does not create any obligation on the part of either party to pay any amount at a particular time. The question of how and when an amount is to be paid is addressed by Clause 42 of the General Conditions (Clause 42). The plaintiffs have no entitlement to recover liquidated damages other than pursuant to a payment certificate under Clause 42 or the dispute resolution mechanism in Clause 47 of the General Conditions (Clause 47).
2.Under Clause 35.6, the plaintiffs have to establish that the defendant 'has fail[ed] to reach Practical Completion by the Date for Practical Completion…' before the defendant is 'indebted' to the plaintiffs (emphasis added). Accordingly, the plaintiffs' case depends upon actual proof of what is the Date for Practical Completion. The defendant, by EOT 10, says that the Date for Practical Completion is 14 February 2018 – a date after the Date of Practical Completion.
The proper construction of Clause 35.6
I accept that the principles relevant to the construction of contractual terms are well established and accurately summarised in the plaintiffs' written submissions.[18]
[18] At par 8 to 14.
Both parties rely upon the case of Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd,[19] in support of their contended construction of Clause 35.6.
[19] Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd (1998) VSC 205.
In Novawest the contractor applied for summary judgment against the principal for amounts due under two payment certificates issued by the superintendent. The relevant contract in Novawest incorporated the same General Conditions that fall for consideration in this case. As a defence, the principal claimed that it was entitled to liquidated damages under Clause 35.6 and sought to set off that amount against the amount claimed by the contractor pursuant to the payment certificates.
In considering the effect of Clause 35.6, Gillard J said:
[111]I accept that cl 35.6 establishes a debt for each day after the date for practical completion which of course can be extended. The debt is established upon the happening of that fact and would become immediately due and payable. There is no provision in the contract which would defer the entitlement.
[112]Mr Phipps, Q.C. submits that that gives the power to the defendant to deduct the amount of liquidated damages from any payment due under a payment certificate.
[113]I do not accept that argument. Cl 42.1 is dealing with a particular subject. Namely, the calculation of a claim leading to a certificate which must be paid as “an amount not less than the amount shown in the certificate”.
[114]One could not find a clearer manifestation of the intention of the parties.
[115]The regime found in cl 42.1 allows for an adjustment but once the calculation is made and the certificate is issued then payment must be made. Whilst cl 35.6 creates a debt and also appears to recognise that the defendant may have deducted liquidated damages the fact is that the purpose of cl 42.1 is clear.
[116]The deduction which is envisaged by cl 35.6 is given effect to by any adjustment made by the superintendent, and the final certificate…
[117]Cl 42.1 and 35.6 are dealing with different subjects and objects and have different work to do.
…
[125]In my opinion the defendant is not entitled to set-off the amount owing for liquidated damages against the amounts certified for payment. The contract itself provides avenues open to the defendant to recover the amounts whether it be via later certificates adjusting the amount or a final certificate or the dispute resolution clause.
[126]But to permit the defendant to raise a set-off by way of defence to the payment of the certificates would clearly defeat the common intention of the parties which is expressed in cl 42.1 that the amount of the certificate was to be paid "not less than the amount shown in the certificate as due to the contractor".
[127]The parties have put in place a mechanism which protected their respective interests and required the defendant to pay the plaintiff on any certificate once issued but also enabled the defendant to protect its interest by pursuing a number of avenues to recover the liquidated damages.
[128]To permit the defendant in the court proceeding to raise a defence of set-off would be to defeat the common intention of the parties.
Counsel for the plaintiffs submits that the Novawest case is authority for the plaintiffs' contended construction of Clause 35.6 – that liquidated damages are a debt which is immediately due and payable and that there is no requirement for certification pursuant to Clause 42.1.
Counsel for the plaintiffs also submits that the second paragraph of Clause 35.6 demonstrates that the parties have expressly turned their minds to the circumstance where a debt under the first paragraph of Clause 35.6 accrues, the debt is satisfied (by payment or by deduction) and there is a subsequent extension of time for the Date for Practical Completion. In those circumstances, the plaintiffs have to repay to the defendant the amount of any liquidated damages paid in relation to the relevant period. To allow the defendant to raise a defence that the Date for Practical Completion should be extended, or to set‑off a delay claim would be to defeat the common intention of the parties.
Counsel for the plaintiffs submits that the proper construction question in relation to Clause 35.6 is 'who holds the money pending the resolution of that dispute [about EOT 10]'.[20]
[20] ts 29.
In response, Counsel for the defendant rejects the submission that the second paragraph of Clause 35.6 would not be rendered obsolete if its construction of Clause 35.6, that is that certification of liquidated damages pursuant to Clause 42 is required before there is an obligation to pay, is accepted. Counsel for the defendant says that the necessity of the second paragraph of Clause 35.6 is that an EOT claim might be made after a superintendent has already considered a claim for liquidated damages within the regime of Clause 42.1 and it allows for the appropriate adjustment. Upon the defendant's construction of Clause 35.6, there is nothing inconsistent as between Clause 35.6 and Clause 42.1.
The Defendant's position is the case of Novawest is, in fact, about the integrity of the payment regime in Clause 42.
The operation of Clause 35.6 together with Clause 42.1 was also considered by the Queensland Court of Appeal in Re Concrete Construction Group Pty Ltd.[21] In this case, the Superintendent had issued a payment certificate in favour of the contractor. The principal claimed that it was entitled to deduct a debt for liquidated damages arising under Clause 35.6 from the amount certified in the payment certificate. In rejecting the principal's claim, McPherson JA and Helman J stated:
The principal's response is to stress the qualifying words 'Subject to the provisions of the Contract …' by which the fourth paragraph of cl. 42.1 is introduced. Armed with that qualification, the principal then resorts to cl. 35.6. As has been observed, it is the clause which provides that the contractor is to be indebted to the principal for liquidated damages at the daily rate specified in the annexure. The second paragraph of cl. 35.6 proceeds to add that 'if after the Contractor has paid or the Principal has deducted liquidated damages, the time for Practical Completion is extended', then the principal must forthwith repay to the Contractor any liquidated damages paid or deducted in the period up to the new date for practical completion.
The principal next seizes on the words 'the Principal has deducted liquidated damages' in cl. 35.6 in order to found the following argument. There is no express provision in the General Conditions authorising the principal to deduct liquidated damages. On the contrary, the only provision authorising such a deduction is that which appears in the second paragraph of cl. 42.1. What it does is to require the superintendent (not the principal) to allow in any certificate issued pursuant to cl. 42.1, or in any final certificate, amounts due from the contractor to the principal. Because of this, there is, it is said, nothing in the contract on which the quoted words can operate. It follows, so the principal contends, that the appropriate words are to be supplied by implying into the contract a power on the part of the principal to make a deduction for liquidated damages from the amount certified to be due under a progress payment certificate, which, it is to be assumed, is exercisable at any time before it pays the amount of that certificate.
A series of considerations, six in all, was advanced by Mr Gore Q.C. for making the implication contended for. The first was that, without it, the power to deduct liquidated damages would be restricted to a deduction by the superintendent under the authority conferred by cl. 42.1, which it was contended was quite 'inapposite' to the power which by cl. 35.6 the principal is assumed to have. In consequence, the quoted words in the second paragraph of cl. 35.6 would be deprived of all meaning or effect. The second consideration focused on the case where the superintendent failed to issue a certificate within the time specified, in which event the principal is required by cl. 42.1 to pay the amount of the contractor's claim. The third matter relied 12 on was that, under the first paragraph of cl. 35.6, the amount of liquidated damages constitutes a debt owing by contractor to principal. The fourth that by cl. 42.10 the principal is expressly authorised, from money due to the contractor, to deduct any money due from the contractor to the principal 'otherwise than under the contract'. The fifth was that liquidated damages accrue on a daily basis, so that more will or may have accrued and be owing 28 days after receipt of the progress claim than at the date of the superintendent's certificate, thus leaving some days of delay unaccounted for. Finally, it was said that the contractor was in any event adequately protected under the contract: it has a contractual right to apply for an extension of time, as well as to insist on repayment of any sum overpaid; and a right to refer any dispute for resolution under the provisions of cl. 47.
The principal's submissions are not without a degree of cogency. It is possible, however, to discover an answer, or at least a partial answer, to most of them in the fact that the process involved is one of making, certifying and paying progress claims. Such claims and payments are, in building contracts in the common form, always intended to be provisional only. See Hudson's Building and Engineering Contracts (11th ed., 1995), at paras 6.186–6.189. That is to say, they await the day when a final certificate issues, in which the ultimate indebtedness by one party to the other is ascertained and fixed. Before that stage is reached, it is generally correct to say that no payment is capable of finally determining the rights of the parties with respect to matters in dispute between them. So much is expressly recognised in this instance by cl. 42.1, providing as it does at the end of the fourth paragraph of that clause that a payment made pursuant to it does not prejudice the right of either party under cl. 47 to dispute whether the amount so paid is the amount properly due and payable. If the dispute is determined under cl. 47, a liability then attaches to one party or the other to pay the difference between the amount already paid and the amount that was properly due and payable.
Most of the considerations relied on by the appellant are capable of being accommodated by keeping firmly in mind that the character of the payments with respect to which problems are said to arise are only provisional. That is so in the case of the second, third, fifth and sixth of those considerations. The fourth, which concerns the principal's power under cl. 42.10 to deduct from what is owing to the contractor money that is due to the principal 'otherwise than under the contract' appears, with respect, to reinforce the contractor's argument in this case. It is a specific provision catering expressly for a liability arising beyond or outside the contract, about which the superintendent may fairly be assumed to know nothing, and concerning which he is given no power of determination under the contract. If cl. 42.10 is properly to be regarded as conferring authority to deduct such a sum from the amount of a certified claim, then it is understandable that an express provision to that effect should have been inserted in the contract. It says nothing about the right claimed by the principal to make a deduction which the second paragraph of cl. 42.1 expressly requires to be allowed for by the superintendent in calculating the amount of a progress payment.
In the end, the real obstacle to implying the term contended for by the principal is that, judged by any objective standard, it is not necessary in order to give effect to the intention of the parties or to make the contract workable. It is true that, to return to the first consideration advanced, cl. 35.6 speaks of the principal deducting liquidated damages, whereas by cl. 42.1 it is the superintendent that is required to allow for an amount of liquidated damages in the certificate of payment. But it is by no means impossible to view such a deduction as made by the principal if it is made by the superintendent at the insistence of the principal. Despite the fact that cl. 35.6 describes the contractor as being "indebted" to the principal for liquidated damages for delays beyond the date of practical completion, it cannot be doubted that it is for the principal to decide if he wishes to assert a claim to any such damages and to insist they are deducted from the amount of each progress payment as calculated and certified by the superintendent. If he does not, liquidated damages will not be deducted, if at all, until a later progress claim, or the final claim, is made by the contractor. It does considerably less violence to the words of cl. 35.6 and cl. 42.1 to read the contract in this way than to make the implication contended for by the principal.
[21] Re Concrete Construction Group Pty Ltd (1997) 1 QdR 6.
Counsel for the Defendant submits that the case of Re Concrete Construction Group Pty Ltd, by analogy, is authority for the proposition that the plaintiff is not entitled to claim liquidated damages as a separate claim commenced prior to the issue of a final payment certificate pursuant to Clause 42.
Counsel for the plaintiffs distinguishes the case of Re Concrete Construction Group Pty Ltd on that basis that the Queensland Court of Appeal was only considering the ability of the principal to recover the debt by deduction. The Court was not required to expressly deal with the principal's ability to recover the debt by issuing legal proceedings to seek payment of the debt. The defendant is not, in this case, instituting a collateral attack on a payment certificate.
Given this is an application for summary judgment, I am not required to determine the proper construction of Clause 35.6 conclusively. If I am satisfied that the construction proposed by the defendant constitutes an arguably good defence to the plaintiffs' claim, then I must dismiss the plaintiffs' application for summary judgment.
In reviewing the authorities, it is, in my view, open to the defendant to argue that, by way of defence to the plaintiffs' application for summary judgment, Clause 35.6 does not entitle the plaintiffs to recover liquidated damages in the absence of certification under Clause 42.
Date for Practical Completion
Even if the defendant does not have an arguably good defence based upon its contended interpretation of Clause 35.6, it is the defendant's position that the plaintiffs' case depends upon actual proof of the Date for Practical Completion.
The plaintiffs plead that the Date for Practical Completion at the Date of Practical Completion was 6 November 2017.[22]
[22] Plaintiffs' Statement of Claim dated 14 November 2018 at [11].
Counsel for the defendant submits that, before the defendant's indebtedness under Clause 35.6 can arise, the plaintiffs must prove that the Date for Practical Completion is 6 November 2017. The defendant contends that the Date for Practical Completion is, in fact, 14 February 2018.[23] If summary judgment is granted, Counsel for the defendant submits the defendant will lose its right to make EOT 10.
[23] Van Drunick Affidavit at [19] ‑ [22].
Counsel for the plaintiffs submits that the defendant does not lose its right to make a claim, in EOT 10, that the Date for Practical Completion should be extended. Clause 35.6 doesn't preclude it from doing so, it simply operates to provide that the plaintiffs hold the amount of liquidated damages pending resolution of EOT 10 by litigation or arbitration.
I am of the view that the defendant is entitled to argue a defence that the Date for Practical Completion is a date that falls after the Date of Practical Completion.
Clause 47
Counsel for the parties also made submissions in relation to Clause 47 and the effect of an alleged failure by the plaintiffs to comply with that clause. Given that I am of the view that the defendant has a number of arguable defences, nothing turns on the issues raised in relation to Clause 47.
Summary
I am satisfied that there remains real uncertainty as to the plaintiffs' right to summary judgment and that the defendant has demonstrated that it has arguable defences. The plaintiffs' application for summary judgment is dismissed.
I will hear the parties in relation to the final orders and costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson2 APRIL 2019
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