Bost Civil Pty Ltd v Cornerstone Building Developments Australia Pty Ltd
[2022] ACTMC 27
•21 December 2022
MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Bost Civil Pty Ltd v Cornerstone Building Developments Australia Pty Ltd |
Citation: | [2022] ACTMC 27 |
Hearing Date: | 21 December 2022 |
Decision Date: | 21 December 2022 |
Before: | Magistrate Theakston |
Decision: | See [23] |
Catchwords: | BUILDING AND CONSTRUCTION – Application for summary judgment for defendant – contractual bar to make final payment claim – estoppel |
Legislation Cited: | Court Procedures Rules 2006 (ACT), r 1147 |
Cases Cited: | AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140 Bartier v Kounza Investments Pty Ltd [2003] QSC 390 Carlisle v Filara Pty Ltd [2002] ACTSC 33 John Goss Projects Pty Ltd v Leighton Contractors & Anor [2006] NSWSC 798 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37 Spencer v Commonwealth [2010] HCA 28 Webster v Lampard [1993] HCA 57 Wilkie v Gordian Runoff Ltd [2005] HCA 17 |
Parties: | Bost Civil Pty Ltd (Plaintiff) Cornerstone Building Developments Australia Pty Ltd (Defendant) |
Representation: | Counsel B Buckland (Plaintiff) J Hastie (Defendant) |
| Solicitors Mills Oakley (Plaintiff) Shand Taylor Lawyers (Defendant) | |
File Number: | CS 150 of 2022 |
MAGISTRATE THEAKSTON:
Introduction
The plaintiff claims a debt of approximately $240,000 from the defendant for civil works done in accordance with a construction contract. The defendant subsequently applied for summary judgment or, in the alternative, to have the pleadings in the statement of claim struck out.
Yesterday I refused the application, other than striking out paragraph [10] of the statement of claim – as the plaintiff abandoned its alternative claim of quantum meruit. These are my reasons.
Background
The defendant was the head contractor for the construction of a commercial building in Canberra. The plaintiff was contracted by the defendant to conduct civil earth works as part of that build. The defendant says the claim is doomed to fail because the contract requires any claim for payment to be made within a certain time, and the plaintiff made that claim two years after the relevant date.
The plaintiff says the contract is not clear about any such deadline and, in any event, the defendant should be estopped from relying on that provision due to an arrangement agreed between the parties and relied upon by the plaintiff.
Deadline to make final payment claim
Practical completion of the works was certified on 25 February 2019. The plaintiff pleads the final payment claim was subsequently provided to the defendant on 31 May 2022.
Clause 37.4 of the contract provided the mechanism for making payment of a final claim. It is informed by Item 31. Both provisions are reproduced below, with my emphasis added. The plaintiff is the Subcontractor, and the defendant is both the Main Contractor and the Subcontract Superintendent.
37.4 Final payment claim and certificate
In accordance with Item 31 the Subcontractor shall give the Subcontract Superintendent:
(a) a written final payment claim endorsed ‘Final Payment Claim’ being a progress claim together with all other claims whatsoever in connection with the subject matter of the Subcontract: and
(b) an executed Deed of Release in the form found in Annexure Part I.
The completion, execution and delivery to the Subcontract Superintendent and the Main Contractor of the Deed of Release shall be a precondition to payment of the final payment claim. The Main Contractor is entitled to withhold payment in full until the Deed of Release is completed, executed and delivered.
After the time for submission of the final payment claim, the Subcontractor releases the Main Contractor from, and shall indemnify the Main Contractor against, any claim not included in the final payment claim.
Within 49 days after the expiry of the last defects liability period or within 10 business days of receipt of the final payment claim, whichever is the earlier, the Subcontract Superintendent shall issue to both the Subcontractor and the Main Contractor a final certificate evidencing the moneys finally due and payable between the Subcontractor and the Main Contractor on any account whatsoever in connection with the subject matter of the Subcontract.
Those moneys certified as due and payable shall, provided that the Subcontractor has completed, executed and delivered the Deed of Release, be paid by the Main Contractor or the Subcontractor, within 25 business days after the Subcontractor Superintendent receives the final payment claim.
The final certificate shall be conclusive evidence of accord and satisfaction, and in discharge of each party’s obligations in connection with the subject matter of the Subcontract except for:
(c) fraud or dishonesty relating to WUS or any part thereof or to any matter dealt with in the final certificate;
(d) any defect or omission in the Subcontract Works or any part thereof which was not apparent at the end of the last defects liability period;
(e) any accidental or erroneous inclusion or exclusion of any work or figures in any computation or an arithmetical error in any computation; and
(f) unresolved issues the subject of any notice of dispute pursuant to clause 42, served before the 7th day after the issue of the final certificate.
(Item) 31 Progress claims
(subclause 37.1)
(a) Times for progress claims
…
(c) With respect to the final payment claim, the final payment claim may be made 2 business days after the Claim Documentation has been received. The Claim Documentation is to be submitted within 5 business days after the expiration of the last defects liability period.
The defendant says the proper construction of those provisions means that plaintiff had 12 months and seven days after practical completion to submit the final payment claim (and related documents) or then be barred from making any further claim. The plaintiff says the interaction between the two provisions makes the deadline unclear and, in any event, there was no deadline - as Item 31 uses permissive, rather than mandatory language, and the reference to 2 business days is a ‘not before’ date rather than a deadline.
I accept the language used in Item 31 complicates matters unnecessarily and, to a degree, creates ambiguity. However, the contract needs to be construed in a businesslike and commercial way, with the assumption that the parties intended to achieve a commercial result. Accordingly, I should avoid any interpretation that would be a commercial nonsense or cause commercial inconvenience: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37 at [51]. I should also prefer a construction supplying a congruent operation to the various components of the whole of the contract: Wilkie v Gordian Runoff Ltd [2005] HCA 17 at [16].
To adopt the plaintiff’s construction would be to essentially render the waiver and indemnity provision ineffective. It would allow an indefinite opportunity for the plaintiff to make their final payment claim, notwithstanding the sophisticated scheme balancing the promotion of timeliness, certainty and the resolution of disputes. The waiver and indemnity provision are key components of the final payment claim scheme. They provide a critical deadline for making a complete and final claim. It is part of an overall scheme to bring finality to the question of what work has been completed and what payments are due. It makes commercial sense to insist upon timely attention to the making of claims and the consideration of disputes. It allows investigations to be conducted sooner, rather than later, and the expeditious determination of ultimate entitlements: Bartier v Kounza Investments Pty Ltd [2003] QSC 390 at [40].
For the purpose of this application, I found the construction of Item 3 to mean that in relation to a final payment claim, the plaintiff was required to submit the associated Claim Documentation before a date defined as five business days after the expiration of the last defect liability period. Further, the plaintiff was required to submit any final payment claim before the date defined as two business days after the deadline to submit the Claim Documentation. As the defect liability period is defined as 12 months following the completion date, that would mean the deadline to submit the final payment claim would fall 12 months and seven business days after the completion date – as indicated above, that was 25 February 2019. Therefore, that deadline would be on or about 4 March 2020.
According to clause 37.4, if the plaintiff did not provide the payment claim by that date, it then, by operation of the contract, releases the defendant from all further claims.
This scheme is not unique, and its consequences have been enforced elsewhere. See for example Bartier v Kounza, John Goss Projects Pty Ltd v Leighton Contractors & Anor [2006] NSWSC 798 and AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140. In the latter case, Allanson J at [774] acknowledged the significant consequences of missing the deadline:
The effect of [the defendant] relying on its strict contractual entitlements is, no doubt, harsh. That is not itself reason to deny to it the effect of the agreement.
For the above reasons and for the purpose of this application only, I found the contract operated to bar the plaintiff from making a final payment claim.
Estoppel
The plaintiff submitted that, while not yet pleaded, the parties had reached an understanding subsequent to the contract and before the deadline to submit a final payment claim. It went on to suggest that it relied upon that arrangement, and therefore there was a triable issue that the defendant should be estopped from relying on the provisions in the contract that amounted to a waiver by the plaintiff of the claim. It pointed to an email and a separate payment schedule from the defendant to the plaintiff, both of which were consistent with that assertion.
The defendant complained the estoppel argument had not been pleaded and the evidence was insufficient for the purpose of the application.
I note the evidence about the circumstances giving rise to the estoppel argument is modest. On its face, it suggests there was an arrangement between the parties of some type. It suggests a postponement of some step, in relation to payment claims, pending the recovery of funds from a third party. Additional information was provided by the plaintiff from the bar table, that provided some context – although the details were scant.
Principles applicable to applications for summary judgment
The Court Procedures Rules 2006, r 1147 provides:
Summary judgment—for defendant
(1) A defendant may apply to the court for summary judgment against a plaintiff at any time after filing a notice of intention to respond or defence.
Note Pt 6.2 (Applications in proceedings) applies to an application under this rule.
(2) The court may give judgment for the defendant against the plaintiff for the plaintiff's claim for relief (or part of it) if satisfied—
(a)the claim (or part of it) is frivolous or vexatious; or
(b)there is a good defence to the claim (or part of it) on the merits; or
(c)the proceeding should be finally disposed of summarily or without pleadings.
(3) court may make any other order it considers appropriate.
Example
stay the proceeding
This is a common provision found throughout Australian jurisdictions. The authorities, using various language, all insist that caution must be exercised before this step is taken. There needs to be a high degree of certainty before a plaintiff is summarily deprived of the opportunity to have its case properly tried. Examples of that language include, ‘the claim is unfounded’, ‘absolutely hopeless’, and ‘so obviously untenable that it cannot possibly succeed. See for example, Webster v Lampard [1993] HCA 57.
The authorities also draw a distinction between a summary judgment for the defendant and a need to improve the defendant’s pleadings. The focus is on substance and not form. See for example, Carlisle v Filara Pty Ltd [2002] ACTSC 33.
Further, the authorities confirm that within these applications, the court can determine questions or law, but questions of fact are not to be decided. In Spencer v Commonwealth [2010] HCA 28, French CJ and Gummow J explained at [25]:
Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue.
Ultimately, I was not persuaded, to the high degree of certainty required, that the plaintiff’s case was absolutely hopeless and there was no prospect of its success. Additionally, there appeared to be factual issues that remained to be resolved. Accordingly, I will not give judgment for the defendant on a summary basis.
It was agreed that the plaintiff’s pleadings needed to address the estoppel issue and that could be done within a reply. It was also agreed that as alternative claim of quantum meruit was abandoned, paragraph [10] of the statement of claim should be struck out.
Orders
The Court made the following orders:
1. Paragraph 10 of the statement of claim is struck out.
2. The application in proceeding filed by the defendant on 7 December 2022 is otherwise dismissed.
3. The plaintiff is to pay the defendant’s costs of the application in proceedings.
4. The plaintiff is to file and serve any reply by the end of January 2023.
5. The matter is listed on 21 February 2023 2.15 pm in the Registrar’s List.
6. The defendant has leave to appear by audio visual link.
| I certify that the preceding twenty-three [23] numbered paragraphs are a true copy of the Reasons for Decision of his Honour Magistrate Theakston Associate: Jack Watson Date: 22 December 2022 |
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