Cladding and Roofing Contractors Pty Ltd v Candetti Constructions Pty Ltd - [2013] SASC 102

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Permission to Appeal)
CLADDING AND ROOFING CONTRACTORS PTY LTD v CANDETTI CONSTRUCTIONS PTY LTD
[2013] SASC 102
Judgment of The Honourable Justice Vanstone
1 July 2013
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - BY LEAVE OF COURT
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - EFFECT OF WINDING UP ON OTHER TRANSACTIONS - PREFERENCES - LIENS AND CHARGES
Applicant registered a worker's lien over land on which it had worked as a subcontractor for third party - landowner paid the outstanding amount into court - applicant claimed a security interest in respect of the monies paid into court - District Court judge found against the applicant.
Held: permission to appeal refused - the lien attached only to the land and gave to lien holder no security interest in the monies paid into court.
Worker's Liens Act 1893 (SA) s 5, s 10(5), s 26(1); Corporations Act 2001 s 436A, referred to.
In Re RGP Constructions Pty Ltd (In Liquidation); Ewing v Hallett Brick Industries Ltd (1982) 31 SASR 170, considered.

CLADDING AND ROOFING CONTRACTORS PTY LTD v CANDETTI CONSTRUCTIONS PTY LTD
[2013] SASC 102
Civil

VANSTONE J: Cladding and Roofing Contractors Pty Ltd (Cladding) applies for permission to appeal against a decision of a District Court Judge. The judge dismissed Cladding’s appeal from a master’s decision to order summary judgment against it in its action for monies due under a contract and enforcement of a worker’s lien.
At the same time Cladding asks that I refer the application to the Full Court, contending that the Full Court authority relied upon by both the master and the judge does not address the facts of this matter, or, if it does, is wrongly decided.
In the event I have heard a full argument going to both applications. I have reached the conclusion that the Full Court authority mentioned is directly on point and should be applied, and that the decisions of the master and the judge are not attended by doubt. Therefore, there is no warrant to refer the applications for permission to appeal to the Full Court. Further, the application for permission to appeal falls to be refused.
Background
The facts may be briefly stated. Cladding is the plaintiff in the original action. Cladding was subcontracted by Candetti Constructions Pty Ltd (Candetti) to perform roofing work on a shopping centre development at Blakeview. Candetti had contracted with Fabcot Pty Ltd (Fabcot), the landholder, to build the centre. Candetti failed to pay Cladding the contract price of $305,800. Cladding then registered a lien over Fabcot’s land pursuant to the Worker’s Liens Act 1893 (SA) and took proceedings in the District Court seeking monetary judgment against Candetti and enforcement of the lien against Fabcot.
On 9 December 2011 Candetti was placed in administration pursuant to s 436A Corporations Act 2001. On 24 April 2012 the administration period ceased and Candetti became subject to a Deed of Company Arrangement.
On 14 August 2012 Fabcot paid into court the sum of $305,800. A Notice of Cessation of Lien was registered on about 24 August 2012. By such payment Fabcot relieved itself “and the property from liability with regard to the lien” and “in respect of the costs of further proceedings”: s 26(1) Worker’s Liens Act.
The contest between the parties is as follows. Cladding argues that registration of the lien created a security interest in its favour and that this interest was not extinguished by the payment into court by Fabcot. It argues that this security interest was not merely in relation to the land but, in the circumstances pertaining here, with respect to the debt owed by the contractor, Candetti, to the subcontractor, Cladding. Therefore, payment into court left untouched the claim against Candetti, now secured by the monies deposited in court.
Mr Ross-Smith, for Cladding, relied upon the scheme of the Worker’s Liens Act and in particular on s 5:
5—Lien of contractor or sub-contractor
A contractor or sub-contractor shall have a lien for the contract price, so far as accrued due, on the estate or interest in land of any owner or occupier in each of the following cases:
(a)Where the work is done, with the assent, express or implied, of the owner or occupier to the land or to any fixture thereon:
(b)Where the materials are, with the assent, express or implied, of the owner or occupier, used or intended to be used in or about work done, or intended to be done, to the land or to any fixture thereon.
He argued that the expression “lien for the contract price” should be read as “lien in respect of or over the contract price”. He then pointed to s 10(5) of the same Act, arguing that the use of the word “deemed” in the phrase “the lien shall be deemed to cease” indicated that after payment into court of the amount claimed the lien was not spent.
10—Lien to be registered
…
(5) Notices of lien under this Act shall state the court in which action will be brought to enforce the same, and any person to whom notice is given may deposit the amount claimed in such court to abide the event of such action, and thereupon the lien shall be deemed to cease.
Candetti argues that the result of the payment into court is that the lien is now discharged for all purposes. It contends that while Cladding was, by virtue of the lien, a secured creditor of Fabcot, it was never a secured creditor of Candetti.
Mr Roberts, for Candetti, relies on the decision in this Court In Re RGP Constructions Pty Ltd (In Liquidation); Ewing v Hallett Brick Industries Ltd (1982) 31 SASR 170. That matter was also concerned with the extent of rights of a lien holder under the Worker’s Liens Act. Mr Roberts argues that the case is directly relevant, whereas Mr Ross-Smith puts that it is distinguishable because, there, payments had been made by the contractor.
In RGP Constructions Hallett supplied bricks to a contractor, RGP, which was building on land owned by another. Hallett registered a lien over the bricks and took proceedings against RGP (now in liquidation) to enforce the lien. RGP made some payments to Hallett to reduce the debt. The liquidator sought a declaration that the payments amounted to undue preferences and an order for repayment. The parties then sought a determination on a preliminary point, namely whether Hallett was a secured creditor in the liquidation. That point was decided adversely to Hallett both by the master and on appeal by Walters J.
Walters J said (at 174):
In my view, the clear intention of the Act is to distinguish between liens and charges; each affords a different remedy and has its own method of enforcement. I am unable to see that a lien-holder can arrogate to himself the rights of a charge-holder, unless he also holds the statutory security of a charge given by s 7(2) of the Act. …
Having regard to the real intention of the legislature to create separate rights of lien and charge in the manner provided by the statute, I cannot accede to the argument for the appellant that as an ancillary part of the attaching of a lien to land, there is an effective charge, in favour of the lienor, upon the debt due by the lienee to the lienor.
Dismissing Hallett’s further appeal, the Full Court was content to adopt the reasons of Walters J.
Analysis
In my opinion the decision in RGP Constructions effectively dictates the result in the case at hand. The principle is that a worker’s lien attaches to the land on which work is done or materials furnished. It does not give the lien holder any charge or other security interest in respect of monies owed for the work or materials.
That principle is unaffected by the circumstance that some monies have been paid in satisfaction of the debt, or paid into Court by the landholder. The decisions in the District Court are not attended by doubt.
Conclusion
I would make the following orders:
1. dismiss the application that the appeal be referred to the Full Court;
2. refuse permission to appeal against the decision of the judge of the District Court.