Cladding & Roofing Contractors P/L v Candetti Constructions P/L - [2013] SADC 43

District Court of South Australia
(Civil: Appeal Against a Master's Decision)
CLADDING & ROOFING CONTRACTORS P/L v CANDETTI CONSTRUCTIONS P/L & ANOR
[2013] SADC 43
Judgment of His Honour Judge Chivell (ex tempore)
27 March 2013
CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF WINDING UP - EFFECT OF WINDING UP ON OTHER TRANSACTIONS - PREFERENCES - LIENS AND CHARGES
Appeal from a decision of a Master. Appellant a subcontractor of Respondent. Respondent contracted with Second Defendant to build shopping centre. Appellant placed worker’s lien on land owned by Second Defendant. Respondent failed to pay Appellant's charges for work done and materials supplied. Respondent became insolvent – Deed of Company Arrangement entered into. Second Defendant paid amount of debt into Court. Whether, by virtue of lien, Appellant is secured creditor of Respondent – whether, by payment into Court, lien extinguished.
Held: lien extinguished – Appellant not a secured creditor of Respondent. Appeal dismissed.
Worker's Lien Act 1893 s 10(5), referred to.
In re RGP Constructions Pty Ltd (in liquidation); Ewing v Hallett Brick Industries Ltd (1982) 31 SASR 170; ADX Building Systems Pty Ltd & Anor v Adelaide Fibrous Plasterboard Linings Pty Ltd (in liquidation) and Anor (2009) 260 LSJS 419; Re Trademark Homes (Aust) Pty Ltd (1996) 67 SASR 107; In the matter of Stockport (NQ) Pty Ltd, Carter & Lewis Applicants [2003] FCA 31, considered.

CLADDING & ROOFING CONTRACTORS P/L v CANDETTI CONSTRUCTIONS P/L & ANOR
[2013] SADC 43

This is an appeal from the decision of Master Norman made on 3 January 2013, giving summary judgment in favour of the first defendant, ‘Candetti’, against the plaintiff, ‘Cladding & Roofing’.
The litigation arises out of the construction of a shopping centre by the second defendant, ‘Fabcot’. Fabcot contracted with Candetti to build the centre and Candetti subcontracted with Cladding & Roofing to build the roof. Candetti failed to pay Cladding & Roofing the contract price of $305,800. Cladding & Roofing placed a lien over the land owned by Fabcot pursuant to the Worker’s Liens Act 1893, ‘the Act’.
On 9 December 2011 Candetti was placed in administration. On 24 August 2012 it became subject to a Deed of Company Arrangement. On 14 August 2012 Fabcot paid the sum I have mentioned, $305,800, into court. Section 10(5) of the Act provides as follows:
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.
Cladding & Roofing has sought judgment in the sum of $305,800 against Candetti, enforcement of the lien against Fabcot, and, originally, enforcement of a statutory charge pursuant to the same Act. Mr Ross-Smith, counsel for Cladding & Roofing before Master Norman, and before me, abandoned the claim in relation to the statutory charge and the relevant parts of the Statement of Claim were struck out. Master Norman referred to that in his reasons at page 2.
Master Norman held that he was bound by a decision of the Full Supreme Court in In re RGP Constructions Pty Ltd (in liquidation); Ewing v Hallett Brick Industries Ltd,[1], a decision of King CJ, Zelling and Wells JJ. Their Honours were considering an appeal from the decision of Walters J, whose decision was on an appeal from a master. The Full Court held that Walters J was correct in holding that the holder of a lien under the Act did not become a secured creditor of the contractor, in this case Candetti, in the same way as a charge holder would have done. That is at page 174 of the judgment.
[1] (1982) 31 SASR 170
Walters J said in that case:
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 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.
The Full Court unanimously held that Walters J was correct in that, and did not see the need to add to his Honour’s reasons. Clearly, I am bound by the decision of the Full Court.
In ADX Building Systems Pty Ltd and Anor v Adelaide Fibrous Plasterboard Linings Pty Ltd (in liquidation) and Anor,[2] Judge Millsteed was considering a claim arising from similar facts and his Honour held that he was bound to follow RGP Constructions, and that a judgment of Lander J to the contrary in Re Trademark Homes (Aust) Pty Ltd[3] was per incuriam. His Honour noted that RGP Constructions was not drawn to Lander J’s attention.
[2] (2009) 260 LSJS 419
[3] (1996) 67 SASR 107
Mr Ross-Smith argued that the decision of Lander J in Trademark Homes was not per incuriam; indeed, he argued that it was correctly decided. That was one of the grounds upon which he submitted that I should refer this matter to the Full Supreme Court for determination of the issues which he has identified.
Mr Roberts, counsel for Candetti, submitted that in fact Trademark Homes was not wrongly decided, but that it was distinguishable from the present case, in that the security sought to be enforced there was against the owner and not against the subcontractor. He argued that it was not inconsistent with RGP Constructions. Similarly, the decision of Mansfield J in In the matter of Stockport (NQ) Pty Ltd, Carter & Lewis Applicants,[4] a decision on 31 January 2003, was referred to. Mr Roberts argued that this decision was not inconsistent with RGP Constructions on similar grounds. He referred to the distinction between whether a worker’s lien gives a security as against the owner of the property, as well as against the contractor. He argued that it did not.
[4] [2003] FCA 31
So, as I have said, Mr Ross-Smith makes an application for me to refer the matter to the Full Supreme Court for the determination of the questions which he has identified.
In my opinion, there are no relevant distinctions between the present case and RGP Constructions. I say that with respect to the submissions Mr Ross-Smith has just made in reply. He pointed out that in that case there was a payment by the contractor as distinct from the owner. The owner then became insolvent, and the argument was whether that payment constituted a preference. But it seems to me that it does not make a relevant difference. The issue in both cases, that is, the present one and RGP Constructions, is whether, by virtue of the worker’s lien, there is a secured debt between Cladding & Roofing and Candetti.
The affidavit of Mr Parr, the appellant’s solicitor, which has accompanied the interlocutory application, correctly states that there is a prospect that only the Full Court could revisit the question of the correctness of the decision in RGP Constructions. Indeed, I think it is more than a prospect, I think that is the inevitable situation.
The appellant seeks an adjournment of these proceedings to await the determination of the Full Court.
The application for referral to the Full Court was opposed by the respondent Candetti and Mr Roberts has made submissions in relation to that.
It seems to me that, having found that there is no relevant distinction between RGP Constructions and the present case, there is no utility in stating a case to the Full Court. It is clear that I am bound by RGP Constructions. It would be in my view presumptuous of me to suggest that the unanimous decision of the Full Court in such clear and unambiguous terms was wrongly decided.
In my view, the correct course is to hold, as Judge Millsteed did, that I am bound by RGP Constructions, that the Master’s decision, based as it was upon that authority, was therefore correct, and that the appeal from his decision should be dismissed.
As has been indicated by Mr Ross-Smith, Cladding & Roofing is free to appeal to the Supreme Court from this decision should it be so advised and to invite the Full Court to reconsider RGP Constructions. If that invitation is declined, the litigation will be finalised. If it is accepted, then no time will have been lost unnecessarily.
So, for those reasons, I decline the application to refer, and I think from my discussion earlier with Mr Ross-Smith, the inevitable consequence of that is that I should dismiss the appeal. Orders accordingly.
So I’ll hear counsel as to any consequential orders.
MR ROBERTS: I seek costs of the application and of the appeal.
MR ROSS-SMITH: Can’t oppose.
HIS HONOUR: Yes, very well. And the respondent will have the costs of the application and of the appeal generally. Is there anything further, gentlemen?
MR ROBERTS: No, thank you.
MR ROSS-SMITH: No.