Cirocco Constructions Pty Ltd v Clarke - [2015] SADC 98

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CIROCCO CONSTRUCTIONS PTY LTD v CLARKE
[2015] SADC 98
Judgment of His Honour Judge Tilmouth
15 June 2015
MAGISTRATES - JURISDICTION AND PROCEDURE GENERALLY - JURISDICTION, POWERS AND DUTIES
Held: Sections 37 and 40 of the Building Work Contractors Act 1995 (SA) read in conjunction with s 7(1)(b) and s 10(1)(1a)(b) of the Magistrates Court Act 1991 (SA), vests exclusive jurisdiction in the Magistrates Court in its Consumer and Business Division, in proceedings under the former Act arising from disputes under domestic building work contracts for the performance of domestic building work to which statutory warranties apply subject to referral to the District Court under s 40(1) of the Magistrates Court Act in cases involving claims exceeding $100,000.
Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355; Magistrates Court (Civil) Rules 2013 (SA) s 74(3); Building Work Contractors Act 1995 (SA) s 32, s 37, s 40; Magistrates Court Act 1991 (SA) s 3, s 7(1)(b), s 8(1) and (2), s 10(1), s 10(1a), s 10(1b), s 10A(b), s 19(1)(b); Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387; Leunig v Henley Arch Pty Ltd and Anor (2000) 207 LSJS 394, referred to.
Tarasenko v Boylen (1992) 58 SASR 587, applied.

CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION
Held: An action for a pure monetary claim for work done pursuant to a domestic building work contract is cognizable by the District Court. It is however appropriate to manage the proceedings in such a way as to promote disposal in one hearing, as required by s 10(1b) of the Magistrates Court Act 1991 (SA).

CIROCCO CONSTRUCTIONS PTY LTD v CLARKE
[2015] SADC 98
The Issue

An intricate point of jurisdiction has arisen during the course of this application for summary judgment. The issue came to the fore following an application by the defendant to stay these proceedings, on the basis that the Magistrates Court was the appropriate forum for hearing the within action.
The Context
The underlying action is articulated in a Statement of Claim filed on 10 April 2015. The plaintiff seeks payment of two discrete sums of money said to have become due and payable, following progress payment certificates issued by an architect, certifying practical completion of domestic building work, in December 2014. Both relate to construction work carried out by the plaintiff, a builder, for the defendant, the home owner of premises in Alexandria Avenue, Rose Park. The contract price was $2.11m. The defendant’s application for a stay of these proceedings was since abandoned.
There is no need for the present purpose to go into any great detail as to the precise terms of the building contract itself, which was expressed in the conventional terms of a ‘Simple Works Contract for Housing in South Australia’ developed in conjunction with the Australian Institute of Architects and Masters Builders Australia. It is sufficient to observe that the architect was required to assess claims for progress payments submitted by the builder, to then issue certificates stating which payments became due, following which the certified amount fell due for payment within a stated period. The total sum claimed here is just over $150,000. In the event of a dispute, the contract provided for a resolution procedure, invoked by giving notice of a dispute with respect to certified payments. No such notice was given in this instance. The validity of the two certificates are in question. The parties have argued the jurisdiction question as a preliminary issue for determination in advance of the application for summary judgment.
The statutory framework
The jurisdictional question that arises is whether the District Court has jurisdiction to try monetary disputes for claims involving domestic building work contracts, within the meaning of the Building Work Contractors Act 1991 (SA). Section 37 thereof provides various powers to a Court in relation to domestic building work undertaken pursuant to domestic building work contracts. There is no dispute that such a contract is involved in this instance, or that the Building Work Contractors Act applies to it. The ‘Court’ nominated for the purposes of exercising these powers, is the Magistrates Court, as specified in each of ss 37(2),(4)-(6),(7)(b) and (8)-(9). The reference to the ‘District Court’ in the definition section, s 3, relates to the appellate jurisdiction of the District Court in disciplinary proceedings against builders. Those provisions are not relevant for the present purposes.
The powers of the Magistrates Court in relation to domestic building work are extensive:
Division 5 – Powers of the Court in relation to domestic building work
37—Powers of court in relation to domestic building work
(1)     This section applies to—
(a)     a domestic building work contract or subcontract for the performance of domestic building work (whether entered into before or after the commencement of this section); and
(b)     domestic building work (whether commenced before or after the commencement of this section).
(2)A party to a domestic building work contract or a person entitled to the benefit of a statutory warranty may apply to the Magistrates Court for the determination of a dispute arising out of the contract or the performance of the building work to which the warranty relates.
(3)An application may not be made under subsection (2) in respect of a dispute arising out of a domestic building work contract unless the dispute involves some question of whether building work has been performed in accordance with the contract.
(4)If an application is made under subsection (2) in respect of a dispute arising out of a domestic building work contract, application may be made to the Magistrates Court for the determination of a dispute arising out of a subcontract for the performance of any of the building work, but only if it involves some question of whether building work has been performed in accordance with the subcontract.
(5)If the Magistrates Court joins proceedings on an application under subsection (4) with proceedings relating to the domestic building work contract, it must ensure that the hearing and determination of any question as to the performance of work under the domestic building work contract is not unduly delayed.
(6)If, on an application under this section, the Magistrates Court is satisfied that there has been any breach of, or failure to perform or fulfil, a contract or warranty to which the proceedings relate, the Court may, subject to this section, make one or more of the following orders:
(a)     to the extent to which it is satisfied that it is practicable for the breach or failure to be remedied by the performance of building work—an order requiring the performance of remedial work;
(b)     an order requiring the payment of an amount due under the contract or an order requiring the payment of an amount by way of compensation for the breach.
(7)     An order made against a person under subsection (6)(a) may—
(a)     require the person to perform remedial work specified in the order within the time specified; or
(b)     if the Magistrates Court is of the opinion that the person is not likely to perform the remedial work properly—require the person to employ at the person's own expense a licensed building work contractor to perform remedial work specified in the order within the time specified.
(8)If the Magistrates Court orders a person to perform remedial work, or to cause remedial work to be performed, it may further order the person to provide to the Court, within a specified time after completion of the work, a certificate of a person holding qualifications specified in the order certifying that the remedial work has been performed properly in accordance with the order.
Section 37(9) proceeds to make it an offence to fail to perform remedial work in accordance with an order of the Magistrates Court, punishable by a substantial fine. Sub-section 37(10) defines a statutory warranty as ‘a warranty arising under this Act’, that is to say those warranties specified in s 32 of the Building Work Contractors Act. Such statutory warranties ‘are implied in every domestic building work contract’: s 32(2).
The District Court is mentioned again in a different guise, in s 40 of the Building Work Contractors Act. This provides:
Division 8—Magistrates Court and substantial monetary claims
40—Magistrates Court and substantial monetary claims
(1)If proceedings before the Magistrates Court involve—
(a)a monetary claim for an amount exceeding $100 000; or
(b)a claim for relief in the nature of an order to carry out work where the value of the work exceeds $100 000,
the Court must on the application of a party to the proceedings refer the proceedings into the Civil Division of the District Court.
(2)If proceedings are referred to the Civil Division of the District Court, this Part (including Division 7) applies in relation to the proceedings and parties to the proceedings as if a reference to the Magistrates Court were a reference to the Civil Division of the District Court.
The $100,000 monetary sum referred to in s 40(1), was increased from $40,000 by the Statutes Amendment (Court Efficiency Reforms) Act 2012 (SA), effective from 1 July 2013. Those changes were made at the same time as the minor civil and minor statutory proceeding limits of the Magistrates Court were increased to $25,000 by the same amending Act, now incorporated in s 3(4) of the Magistrates Court Act. The general jurisdictional limit of the Magistrates Court Civil Division was also increased to $100,000 by the amendments, now incorporated in s 8(1) thereof. Such limits are capable of waiver when all parties agree, under s 8(2).
Section 40(1)(a) can only be read as a reference to monetary claims made pursuant to domestic building work contracts, as apposed to monetary claims at large, given the structure and context of Part 5 of the Building Work Contractors Act, and given that general monetary limits are imposed with respect to all other actions by ss 3(4), and (8(1) of the Magistrates Court Act.
Section 10(1) of the Magistrates Court Act provides that the Court has jurisdiction on any matter ‘conferred on it by statute’. Section 10(1a) vests jurisdiction to hear and determine applications in the Magistrates Civil (Consumer and Business) Division, under Part 4 or Schedule 3 of the Second-hand Vehicle Dealers Act 1995 (SA), the Retail and Commercial Leases Act 1995 (SA), and applications under Part 5 of the Building Work Contractors Act 1995 (SA). Sections 27-40 of the Building Work Contractors Act fall within Part 5 thereof. These several statutory causes of action are collectively defined in s 3 of the Magistrates Court Act as constituting ‘minor statutory proceedings’, and as such constitute specialist jurisdictions of that Court.
Section 10(1b) of the Magistrates Court Act provides:
Nothing prevents the Court, in its Civil (Consumer and Business) Division from exercising civil jurisdiction other than that referred to in subsection (1a) in order to promote the convenient disposal of proceedings by the hearing together of different causes of action or claims.
These sections working in combination, envisage that disputes under Part 5 of the Building Work Contractors Act as minor statutory proceedings, are to be determined in the consumer and business division of the Magistrates Court.
A question of construction
The question of construction that arises may alternatively be expressed as whether the Building Work Contractors Act confers exclusive jurisdiction over disputes arising under Part 5 of the Building Work Contractors Act, on the Magistrates Court. In the former situation the within action filed by the plaintiff in the District Court is incompetent. If not, it is validly instituted.
A number of observations may be made as to the structure and powers conferred on the Magistrates Court by the Building Work Contractors Act. Sub-sections 37(1)-(4), denote the nature and content of the jurisdiction conferred. The limits of the court’s powers are contained in ss 37(5)-(9). These furnish additional wide remedial powers for the correction and enforcement of deficient building work. Section 37(8) provides for a measure of supervision by the court in the performance of remedial work. Section 42 ensures that there can be no ‘contracting out’ of the operation of these provisions: Forlyle Pty Ltd v Tiver.[1]
[1] (2007) 247 LSJS 349 and on appeal (2007) 252 LSJS 387.
As a general consideration therefore, the Building Work Contractors Act plainly furnishes a substantial degree of protection to home owners entering into contracts with builders for domestic building work. It was described by Martin J in Leunig v Henley Arch Pty Ltd and Anor, as ‘remedial legislation’.[2]
[2] (2000) 207 LSJS 394.
A closer examination of the subject provisions, expose a degree of ambiguity in divining the legislative intent. Parliament has not said in so many words that the jurisdiction conferred on the Magistrates Court by s 37 of the Building Work Contractors Act is exclusive. On the contrary, the use of the expression ‘may apply’ in s 37(2) suggests a permissive or facultative construction: Acts Interpretation Act 1995 (SA) s 34.
At first sight the jurisdiction so conferred by s 37(2), covers any dispute arising out of domestic building contracts. In the case at hand the claim for progress payments is said to give rise to an action in ‘pure debt’, outside the ambit of the Building Work Contractors Act. Such a description is however capable of falling within the ambit of a ‘monetary claim for an amount exceeding $100,000’, within the meaning of s 40(1)(a) thereof. There is no escaping the fact that whether such debts have fallen due and payable in the instant case, depends on the outcome of a dispute between the parties as to the proper interpretation of the subject contract. As a matter of plain English, it is clearly ‘a dispute arising out of the contract’, described in s 37(2).
Even so, s 37(3) of the Building Work Contractors Act prohibits in so many words, applications under s 37(2), other than those involving ‘… some question of whether building work has been performed in accordance with the contract’. The claim by the builder (plaintiff) in the present action does not fit that description. The effect of s 37(3) therefore, is to significantly qualify the ambit of s 37(2) so that it must be read down to conform with it.
Hence, it may be deduced that Parliament intended questions of performance and statutory warranty enforcement ‘for relief in the nature of an order to carry out work’, to fall within the initial jurisdiction of the Magistrates Court when invoked, whereas questions of the pure construction of building contracts, or the enforcement of monetary claims thereunder unconnected to statutory relief claims, remain with the ordinary civil courts, according to their jurisdictional limits. The same considerations apply with respect to sub contractors pursuant to s 37(4).
Expressed in another way, s 37(3) ‘prescribes an act or the occurrence of an event as a condition on the power’ conferred by s 37(2), namely that an application thereunder ‘involves some question of whether building work has been performed in accordance with the contract’: Project Blue Sky Inc v Australian Broadcasting Authority.[3] Such a construction best serves to harmonise the application of ss 37(2) and (40) of the Building Work Contractors Act, within the statutory structure of the Magistrates Court. That construction is also consistent with the principle that a ‘legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals’, and according to ‘that result which will best give effect to the purpose and language of these provisions while maintaining the unity of all the statutory provisions’: Project Blue Sky v Australian Broadcasting Commission.[4]
[3] (1988) 194 CLR 355, [37].
[4] Ibid, [70].
The proceedings issued by the plaintiff in this action strictly raise no question of building work performance, although it was known at the time of filing that due performance was in issue, and even though the question of effecting remedial work was actively under discussion between the parties. The current cause of action as a pure money or monetary claim, is therefore properly brought within the jurisdiction of the District Court.
Disposition
A further aspect of the matter is that a defence, counter-claim and third party action against the architect were recently filed in this court. These relate to the alleged defective performance of the building work, for which substantial remedial action is sought. It is unclear what the value or cost of due performance or remediation might be. As matters presently stand, the additional statutory remedies that might otherwise be available to the defendant under Part 5 of the Building Work Contractors Act, cannot be invoked by her in this court, since they are powers reposed exclusively in the Magistrates Court and are contingent on an application being made to that Court in the first place.
In light of this conclusion, the question arises as to the appropriate disposition of the proceedings and the postponed application for summary judgment. No problem arises if the defendant declines to institute her counter-measures in the Magistrates Court. In that event she would not invoke the benefit of the wider ameliorative powers of disposition and supervision provided for in ss 37(5)-(8), enjoyed by the Magistrates Court. If she does, there will be two concurrent proceedings, before two different courts, arising out of the same subject matter.
It is here that the wider objectives of the legislation and the practicalities involved must be engaged. It may be accepted that Parliament could not have contemplated parallel proceedings in different courts with respect to the same subject matter relating to domestic building work contracts. So much is evident in the words of s 10(1b) of the Magistrates Court Act.
Since a basic tenant of the Building Work Contractors Act prevents contracting out, a court should not countenance a situation which effectively prevents a home owner from access to the remedial powers provided for therein. Hence, just because a builder happens to initiate proceedings in other than a Magistrates Court, that cannot be permitted to prevent the owner’s access to the Magistrates Court and its extended remedial powers. That course would run contrary to the evident policy of the Building Work Contractors Act.
The general civil claims division jurisdiction of the Magistrates Court, created by s 8(1) of the Magistrates Court Act, is limited to claims of not more than $100,000, subject to waiver of all parties under s 8(2). Section 40(1)(a) of the Building Work Contractors Act is, exclusively, not so limited. This section clearly contemplates that actions for monetary claims pursuant to domestic building work contracts for over $100,000 can be instituted in the Magistrates Court. It therefore serves to vest jurisdiction in respect to monetary claims arising from disputes arising out of a domestic building works contract, on the very premise that claims exceeding $100,000 may be initiated and determined in the Magistrates Court, despite the general jurisdictional cap of $100,000 imposed when sitting in its general civil jurisdiction. No such limit pertains in the exercise of its Consumer and Business jurisdiction over Part 5 of the Building Work Contractors Act.

Nevertheless, the Magistrates Court is obliged to refer proceedings brought under s 40(1) or s 40(2) to the Civil Division of the District Court, when claims exceed $100,000 on the application of any party. Accordingly, when a home owner seeks to invoke the remedial powers available under Part 5 of the Building Work Contractors Act, the home owner can only do so by initiating proceedings in the Magistrates Court. When a monetary claim in relation to a domestic building work contract or a claim for remedial work involving more than $100,000, is made in the Magistrates Court, any party is unilaterally entitled to apply for referral of their claim to the District Court, and the court is then obliged to make that order.
The significance of an order of referral to the Civil Division of the District Court pursuant to s 40(2) of the Building Work Contractors Act, lies in the fact that such orders pick up and transfers to the District Court, the additional powers of disposition available under s 32, that would not otherwise be available to it. This is because upon referral, Part 5 of the Building Work Contractors Act ‘applies in relation to the proceedings’: s 40(2). In contrast, that situation is not brought about when a ‘bare’ order is made by the District Court pursuant to s 19(1)(a) of the Magistrates Court Act, transferring proceedings commenced in the Magistrates Court to the District Court. The same applies in the case of an order made by a Magistrate transferring proceedings from the Magistrate Court into the District Court, pursuant to s 19(2) of the Magistrates Court Act.
It follows from the evident objectives and purposes of the Building Work Contractors Act, coupled with the structure and jurisdictional constraints contained in the Magistrates Court Act, that the effect of s 37 of the Building Work Contractors Act is to vest concurrent jurisdiction in proceedings for monetary claims under domestic building work contracts in the general courts exercising civil jurisdiction, but that exclusive jurisdiction is conferred on the Magistrates Court with respect to claims for relief in disputes involving ‘some question of whether building work has been performed in accordance with the contract’. Should such claims exceed $100,000, that jurisdiction is referred in its entirety into the civil jurisdiction of the District Court, once an application by any one party is made for referral, as permitted by s 40(1) thereof.
The purpose of the referral power conferred by s 40(1), was to inject a measure of curial flexibility into proceedings for statutory warranty enforcement and to regularise disposal in the one court. This conclusion is entirely consistent with Parliamentary intent revealed in the second reading speech, preceding the enactment of the Building Work Contractors Act:[5]
The Bill proposes that the appropriate forum for the hearing of disputes is the Civil (Consumer and Business) Division of the Magistrates Court, and that where a dispute involves an amount greater than the Magistrates Court financial limit, the District Court be accessed as appropriate.
Hence, the courts are to be encouraged ‘to make use of such powers of referral and transfer whenever it is in the interests of justice to dispose of all matters pending … in the same court’: Tarasenko v Boylan.[6]
[5] Legislative Council, 25 October 1995, p 344.
[6] (1992) 58 SASR 587, 592.
Management of the proceedings
The further question then arises as to how the action should be managed from this point onwards. Mr Dal Cin for the defendant submitted that it was only necessary to determine whether there was a sufficient question to be tried on the question of jurisdiction in order to forestall the application for summary judgment. Whilst that may be so, it would not resolve his primary position that the District Court retains no jurisdiction over the present action. If the District Court is without jurisdiction in the matter at large, it has no power to dismiss the application for summary judgment. Given the procedural consequences that flow from the proper construction of the relevant statutory provisions and the general importance of the question, it is far more desirable in order to create certainty, that this issue should be resolved now.
Should the defendant fail to bring proceedings in the Magistrates Court, that would be an end to the matter. The defendant would then be confined to her remedies as presently available to the District Court in the exercise of its ordinary civil jurisdiction. These would not in that event, encompass access to the powers furnished by s 32 of the Building Work Contractors Act.
If, on the other hand, the defendant issues proceedings in the Magistrates Court, they would be referred by a Magistrate to the District Court, if s 40(1)(b) applies to them. If not, the appropriate course to take would then appear to be for the District Court to transfer the current monetary claim to the Magistrates Court pursuant to s 19(1)(b) of the Magistrates Court Act. This action lies within the jurisdiction of the Magistrates Court even though it exceeds $100,000, because of the operation of s 40(1)(a) of the Building Work Contractors Act, otherwise it would have no work to do. It stands to be construed ‘as speaking at all times’: Acts Interpretation Act 1915 (SA), s 21.
At the same time it would become entirely appropriate to consolidate both proceedings under the Magistrates Court (Civil) Rules 2013 (SA), 74(3). It would then be open to either party to apply for compulsory referral of both proceedings to the District Court pursuant to s 40(2). Although the proposed course is a trifle cumbersome, it is one that gives most effect to the objectives of the Building Work Contractors Act. The proposed procedure serves only to implement those objectives by:
·permitting home owners to take advantage of the remedied provisions of the legislation;
·ensuring the wider statutory powers of disposal are made available to the District Court in claims exceeding $100,000;
·avoiding unnecessary and unacceptable fracturing of proceedings over essentially the same subject matter between different courts in the one hierarchy; and by
·ensuring due compliance with the statutory mandate to ‘promote the convenient disposal of proceedings by the hearing together of different causes of action, or claims’.
Summary
In conclusion, these proceedings were validly issued within the jurisdiction of the District Court. If proceedings are issued by the defendant in the Magistrates Court by way of an application made under s 37(2) of the Building Work Contractors Act, and those proceedings are not referred to the District Court pursuant to s 40(1) thereof, this action ought be appropriately transferred to the Magistrates Court under s 19(1)(b) of the Magistrates Court Act to facilitate both actions being heard together. Should either party thereto so apply, the combined proceedings ought properly then be referred to the District Court under s 40(1) and (2) of the Building Work Contractors Act. That course ensures the remedial powers furnished by s 37 of the Building Work Contractors Act, become available to the District Court in its civil jurisdiction in the combined proceedings.
The parties should be heard as to the appropriate drafting of orders giving effect to these reasons, as to costs, the application for summary judgment, as well as the due management of the proceedings hereafter.