Averill v Usmani's Australia Pty Ltd

[2017] VCC 1430

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
(Not) Restricted
Suitable for Publication

BUILDING LIST

No. CI-17-04318

KEVIN AVERILL	Plaintiff
v
USMANI’S AUSTRALIA PTY LTD	Defendant

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	6 October 2017
DATE OF JUDGMENT:	6 October 2017
CASE MAY BE CITED AS:	Averill v Usmani’s Australia Pty Ltd
MEDIUM NEUTRAL CITATION:	[2017] VCC 1430

REASONS FOR DECISION

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Catchwords:   Building contract – Payment claim unpaid – Application for judgment – Adjournment sought by defendant’s director – No defence shown – Adjournment refused and

judgment entered – Building and Construction Industry Security of Payments Act 2002 (Vic).  

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N. Phillpott	K.O. Construction Law Pty Ltd
For the Defendant	No appearance

HIS HONOUR:

1        Kevin Averill is a builder who carries out shop fit-outs. Khalid Usmani is the sole director and shareholder of Usmani’s Australia Pty Ltd (“Usmani’s”), a company which conducted a business under the name “Spice @ Home” at the Stockland Highlands Shopping Centre in Craigieburn.

2        On about 26 April 2016, Mr Averill and Usmani’s signed a contract for shop fitting works for a second Spice @ Home shop Usmani’s was developing at the Craigieburn Central Shopping Centre (“the building contract”).

3 The building contract provided for three progress payments. The first two were paid; the third for $64,527.65 (including GST) was not paid. Mr Averill seeks an order pursuant to section 16 of the Building and Construction Industry Security of Payment Act 2002 (“the Act”) for payment of that sum.

4        The proceeding, commenced by originating motion, and documents relating to the present application were served on Mr Usmani on 27 September 2017 at 6:45PM at his home (which is also the registered office of Usmani’s) in Craigieburn.

5        Mr Usmani appeared before the Court this morning together with Ms Shadia Sharmin, a paralegal employed by Usmani’s lawyers, Joshi Lawyers. Mr Usmani informed the court of the following matters:

a.    he had spoken with Mr Dinesh Joshi, the principal of Joshi Lawyers by phone on 28 September 2017. Mr Joshi informed him that he was overseas and would not be returning to his office until 22 October 2017;

b.    from Monday 2 October 2017, he had tried to speak to someone at the County Court to arrange an adjournment of the plaintiff’s application until after his lawyer returned;

c.    he was only able to speak to a person in the Court Registry on Thursday 5 October 2017. He was advised to send a written request to the plaintiff seeking an adjournment of the application. This was done by Mr Usmani at 1:17pm that day. The plaintiff’s lawyers responded at 1:53pm, “We do not have instructions to consent to your request”.

6        At the hearing this morning, Mr Phillpott of counsel for the plaintiff told the Court that the adjournment application by Mr Usmani was opposed and that Mr Averill wished to proceed with his application.

7        Mr Usmani informed the Court of the following matters which he said gave rise to defences to the plaintiff’s application:

a.    Mr Usmani had obtained an expert report dated 15 January 2017 from an architect and building consultant, Salvatore Mamone which stated that the designers of the shop fit-out and Mr Averill, as the building contractor, had not completed a fit out of the shop which was of a standard of design or finish acceptable to Usmani’s, and to the lessor and shopping centre owner (“Lend Lease”);

b.    the final payment was not intended to be payable to Mr Averill until Usmani’s had received a fit-out contribution from Lend Lease, “one week after the commencement of trade” (apparently by Usmani’s) and the receipt of a certificate of occupancy by Lend Lease;

c.    certain variations, not agreed by Usmani’s, had been included in the third progress claim.

8         After hearing submissions from Mr Usmani and the plaintiff’s counsel Mr Phillpott, I made an order for judgement. I considered that an adjournment of the plaintiff’s application would be futile because Mr Usmani had not indicated any matters which would give rise to a defence which would have only real prospect of succeeding.

9        In summary, the reasons for that conclusion were as follows:

a. The expert report of Mr Mamone raised matters which would arise under the builder contract and/or would involve the bringing of a cross-claim. This is not permitted on an application for judgment (section 16(4)(b) of the Act);

b.    the term as to the timing of the third payment alleged by Mr Usmani was said to have been agreed in an email between the parties on 10 April 2016. However, this email was prior to the execution of the building contract and there is no evidence that Mr Averill had agreed to Mr Usmani’s proposal.

The schedule to the building contract provided that the third (final payment) was due “within 10 working days of the handover”. This is inconsistent with the term asserted by Mr Usmani as having been agreed.

The High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at para 47 stated:

“Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.”

The term proposed by Mr Usmani would appear to be unenforceable by reason of section 13 of the Act which provides that, “A pay when paid provision of a construction contract has no effect in relation to any payment for…construction works…”(section 13(1)(a)). A requirement that Mr Averill would only be entitled to the third payment from Usmani’s after the company had been paid by Lend Lease would come within the definition of a “pay when paid provision” in section 13(2);

c.    the third payment claim included 8 matters described as “variations to contract price”. Two of these were adjustments to “provisional sums” in the building contract. In an attachment to an email from Usmani’s to Mr Averill dated 7 October 2016, in response to the third payment claim dated 4 July 2016, Mr Usmani accepted some of the “variations” claimed and appeared to dispute only 4 items, including one of the provisional sums.  

I have examined each of the disputed items. I do not consider that any of these items should be disallowed as part of the judgment sum, for the following reasons:

i. they are not excluded amounts under s. 10B of the Act;

ii. they are probably of the first class of variations pursuant to s.10A of the Act. Even if there were of the second class of variations, there is no bar to their recovery;

iii. Usmani’s did not file a payment schedule pursuant to the Act.

10       In the circumstances where no basis to defend the claim has been shown, it would not be appropriate to adjourn the application. Although no formal application was made by Mr Usmani or Ms Sharmin to represent the company before the Court today, I have not in any event given such leave. I considered that it was appropriate to record that, despite proper service of the court documents on Usmani’s, the company had not appeared upon the hearing of the plaintiff’s application.

11       Accordingly, an application pursuant to Rule 46.08 would appear to be available to Usmani’s, if appropriate grounds for such an application were considered to exist.

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Certificate

I certify that the preceding 6 pages are a true copy of the reasons for decision of his Honour Judge Anderson delivered on 6 October 2017.

Dated: 6 October 2017

Havovi Panthaki

Acting Associate to his Honour Judge Anderson