Collective Crane Hire Pty Ltd v ICR Steel Pty Ltd
[2021] VCC 132
•22 February 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-20-04542
| Collective Crane Hire Pty Ltd | Plaintiff |
| v | |
| ICR Steel Pty Ltd | Defendant |
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JUDGE: | His Honour Judge Woodward | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 22 February 2021 | |
CASE MAY BE CITED AS: | Collective Crane Hire Pty Ltd v ICR Steel Pty Ltd | |
MEDIUM NEUTRAL CITATION: | 2021 VCC 132 | |
REASONS FOR JUDGMENT
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Subject: CONTRACTS
Catchwords: Building contract – payment claim – whether defendant a party to the contract – whether defendant a “person who is liable to make payment” under the contract
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic) ss 4, 9, 10A, 10B, 12, 14(2), 15, 16(2) and 48; Civil Procedure Act 2010 (Vic) s61
Cases Cited:3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674; SJ Higgins Ltd v The Bays Healthcare Group Inc [2018] VCC 805; Grave v Blazevic Holdings [2010] NSWCA 324.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C Jones | Level Playing Field Lawyers |
| For the Defendant | Mr C Hender | KCL Law |
HIS HONOUR:
Summary and outcome
1 In this proceeding, the plaintiff (“CCH”) applies for judgment against the defendant (“ICR”) pursuant to s 16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic) (“SOP Act”). CCH makes the application by summons on originating motion dated 12 October 2020. The application arises out of cranage works which CCH performed at 6 Hi Tech Place, Seaford; 135 Manningham Road, Bulleen; and 58 Produce Drive, Dandenong (“Dandenong project”).
2 CCH submits that it is entitled to judgment because ICR failed to make payment in response to its payment claims. ICR does not oppose judgment in relation to the Seaford or Bulleen projects. The amount admitted as owing on those two projects is $14,960.10 (plus interest). On the Dandenong project, ICR asserts that:
(a) it was not a party to the contract insofar as it related to panel cranage services; and
(b) it was not liable under that contract.
3 In my judgment, neither ground is made out. My reasons are set out below.
4 The balance owing on the Dandenong contract is $47,259.85. Accordingly, there will be judgment for CCH in the sum of $62,219.95 (including GST), plus interest as claimed by CCH. I will order that ICR pay CCH’s costs of and incidental to the proceeding on the standard basis, in default of agreement (unless either party has a basis for a different order as to costs). I invite the parties to prepare draft orders to give effect to these reasons. I will determine any issue concerning costs on the papers.
The relevant facts
5 CCH relies upon two affidavits of William Wardley, director of CCH, affirmed 9 October 2020 and 11 December 2020, and an affidavit of Paige Rookes, the operations administrator of CCH, affirmed 11 December 2020. In opposition, ICR relies upon two affidavits of Domenico Madafferi, the director and secretary of ICR, affirmed 27 November 2020 and 23 December 2020, and an affidavit of Pasquale Grella, the general manager of ICR, affirmed 27 November 2020.
6 ICR first entered into an agreement with CCH in early September 2019 in relation to the provision of cranage services at a project at Airport West. On 28 August 2019 CCH emailed to ICR a copy of its credit application form, budget estimate for the Airport West project and CCH’s terms and conditions (“credit application”). ICR emailed CCH the completed and signed credit application (incorporating a personal guarantee from Mr Madaferri) on 4 September 2019. The terms and conditions forming part of the credit application included provisions dealing with CCH’s charge rates and the making of payment claims.
7 Although it seems to be accepted on both sides that the cranage works at Airport West related to the installation of structural steel, there is nothing in the credit application (and notably the terms and conditions relating to pricing and payment claims) that suggests those terms were expressly limited to the cranage of structural steel.
8 After this initial engagement by ICR of CCH, a pattern developed for later contracts where a representative of ICR would email to Mr Wardley copies of drawings for those projects. There would usually be some further exchanges by email about aspects of the project (sometimes including rates) and then Mr Grella of ICR would verbally direct Mr Wardley of CCH to commence work on the project. CCH later served payment claims on ICR under the SOP Act in accordance with the terms and conditions in respect of the project works, and these were later paid or accepted as owing (except for the part of final payment claim for the Dandenong project, which is now in dispute).
9 None of the projects after the Airport West project involved the provision by CCH of written budget estimates or quotes or the signing of a further credit application. The parties proceeded on the basis that the credit application and the terms and conditions signed in relation to the Airport West project continued to apply to all of the later projects. There is a dispute on the material about whether Mr Madafferi asked Mr Wardley to provide a quote for the panel cranage works to be undertaken as part of the Dandenong project (Mr Madafferi says he did so and Mr Wardely denies this). But there is no dispute that none was provided.
10 In the case of the Dandenong project, Mr Wardley received the initial emails attaching plans for both structural steel installation and precast concrete panel installation on 11 May 2020. On 15 and 28 May 2020, Mr Wardley received a further email attaching plans in relation to panel cranage works. In late May 2020, Mr Grella of ICR verbally instructed Mr Wardley that CCH should commence work on site. On 4 June 2020, CCH’s subcontractor Absolute Surveying Pty Ltd (“Absolute Surveying”) commenced surveying works on site. None of this is disputed in the affidavits filed on behalf of ICR. Further, ICR accepts that it was liable to CCH for the steel cranage works undertaken by CCH for the Dandenong project.
11 On 10 June 2020, there was a site meeting in relation to the Dandenong project attended by Mr Wardley and Ms Rookes of CCH and Mr Madafferi and Mr Grella of ICR (“10 June site meeting”). Mr Madafferi is the sole director of both ICR and a related company, Trans (Aust) Pty Ltd (“TCB”). The effect of the discussion at the 10 June site meeting is not materially in dispute, and is as follows:
(a) Mr Madafferi said that TCB would source precast concrete panels and arrange to transport them to the site; and
(b) Mr Madafferi requested that CCH invoice ICR for the steel cranage and TCB for the panel cranage, and Mr Wardley agreed to do so.
12 On 22 July 2020, CCH and TCB completed the works. On 7 September 2020, CCH issued to ICR a final payment claim (INV-0413) in the sum of $87,912.00 (including GST). ICR failed to issue a payment schedule in response. On 7 October 2020, TCB made part-payment on that claim of $40,652.15.
The legal context
13 The SOP Act seeks to ensure that people who undertake to carry out construction work can recover progress payments for the performance of that work.[1] Section 4 defines construction contract as a “contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services for another party”. The SOP Act applies to any construction contract whether written or oral, or partly written and partly oral.[2] “Construction work” is defined by s5. There is no dispute that the works the subject of this proceeding is “construction work” within the meaning of s5.
[1]s3
[2]s7
14 Section 16(2)(a) of the SOP Act provides that a claimant may recover from a respondent any unpaid portion of an amount claimed in a payment claim where the respondent fails to submit a payment schedule within time (or at all) in response to the payment claim. Section 17(2)(a) provides that where a respondent provides a payment schedule within time, a claimant may recover from the respondent any unpaid portion of the amount which the payment schedule states the respondent proposes to pay to the claimant.
23 Section 14 of the SOP Act concerns the form and content of payment claims. Another important provision informing the formal requirements for payment claims under the Act is s9. Section 9(1) provides that “on and from each reference date under a construction contract” a claimant is “entitled to a progress payment under this Act calculated by reference to that date”. These provisions do not arise for consideration in this proceeding, except to the extent that ICR alleges that the payment claim names a person who is not a party to the construction contract.
24 Generally speaking, the available defences concern either the nature of the underlying contract or the form and service of the purported payment claim, and thus whether the payment claim is effective to trigger the procedures established by Part 3 of the SOP Act. It is clear that a payment claim will not be valid if the person on whom it is served is not liable under the construction contract. Having said that, as discussed further below, a person may be liable under a construction contract even if they are not, in the strict or formal sense, the “other party” to the construction contract.
25 This court has endorsed the hearing of applications under the SOP Act on a summary basis by summons on originating motion with affidavit evidence.[3] Such claims are properly assessed on the balance of probabilities,[4] with the quality of the evidence weighed having regard to the fact that the legislation seeks to facilitate a swift but temporary remedy.[5] Occasionally, a plaintiff nevertheless applies for relief under s16 by bringing a proceeding commenced by writ and statement of claim, then issuing a summons seeking summary judgment pursuant to s61 of the Civil Procedure Act 2010 (Vic) (“CPA”).[6] This can add an additional layer of complexity in determining the test to be applied to any defences raised.[7] However, the present proceeding was commenced by summons on originating motion, so questions of the application of the test under CPA ss61 and 63 do not arise.
[3]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 (“3D Flow”) [39]-[54]. See also SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [26]
[4]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449-450 (Mason CJ, Brennan, Deane and Gaudron JJ)
[5]3D Flow Solutions Pty Ltd v LTP Armstrong Creek Pty Ltd [2018] VCC 674 [51]-[54]
[6]John Beever v Roads Corporation [2018] VSC 635; see also Best Fab Pty Ltd v Australian High Bay Installations Pty Ltd [2018] VCC 1053
[7]SJ Higgins v The Bays Healthcare Group Inc [2018] VCC 805 [31]
The parties’ submissions
15 ICR submits that ICR was not a party to the contract with CCH for the cranage of the precast concrete panels undertaken as part of the Dandenong project. ICR contends that this was a separate contract between CCH and TCB. ICR relies principally upon the following matters:
(a)Mr Madafferi deposes that Mr Wardley and Mr Madafferi agreed to a separate contract during the 10 June site meeting;
(b)none of the previous six projects between ICR and CCH involved the provision of panel cranage (they concerned only steel cranage);
(c)TCB specialised in the transport of precast panels, whereas ICR specialised in steel manufacturing;
(d)the quotes from other entities for the panel cranage services from April 2020 were procured by, and addressed to, TCB;
(e)TCB would supply the trucks to transfer the panels and source or supply the panels;
(f)TCB would be invoiced for (and would pay for) the panel cranage;
(g)as to the emails of ICR in May providing plans and instructions, Mr Madafferi explains that the project was for ICR’s new factory, and that the design for it had been prepared by consultants engaged by ICR, so it made sense for ICR to provide full copies of the plans and designs to CCH comprising both the structural steel and precast concrete panel works;
(h)the correspondence of August 2020concerning the payment of invoices was directed solely to TCB; and
(i)the correspondence of August 2020 contemplates separate agreements with TCB and ICR.
16 In reply, CCH submits that ICR was a party to the Dandenong contract for the provision of panel cranage works. CCH relies upon what it describes as the undisputed evidence of Mr Wardley to the effect that:
(a) in late May 2020, CCH and ICR entered into a contract for the cranage works to be undertaken by CCH as part of the Dandenong project, being a project for the construction of ICR’s new factory at 58 Produce Drive, Dandenong South;
(b)as with their earlier projects, the contract was initiated by ICR sending CCH emails on 11 May 2020, attaching copies of the plans for both the steel cranage works and the concrete precast panel cranage works;
(c)in late May 2020 (well before the 10 June site meeting), Mr Grella of ICR verbally instructed Mr Wardley that CCH should commence work on site; and
(d)on 4 June 2020, CCH’s subcontractor Absolute Surveying commenced surveying works on site.
17 CCH submits that the evidence of Mr Madafferi does not establish a separate agreement between TCB and CCH for the cranage panel works. Rather, Mr Madafferi’s evidence establishes an agreement that CCH would invoice ICR for the steel cranage works, and TCB for the panel cranage works. CCH also notes that:
(a)despite CCH’s primary submissions drawing attention to this deficiency in Mr Madafferi’s evidence, Mr Madafferi’s second affidavit is silent as to the elements of the alleged further contract or its terms; and
(b)there is no evidence of any agreement to the effect that ICR was not liable under the Dandenong contract or that TCB was exclusively liable.
18 Applying the law to these facts, ICR submits that, since it is not a party to the Dandenong contract for the panel cranage services, it is not a “person liable to make payment under the construction contract” (s14). It refers to the remarks of McDougall J (at [33]) in Grave v Blazevic Holdings[8] (“Grave”):
“In this case, however, the words ‘arising under the construction contract’ must be construed having regard to their statutory context and the object of the legislation in which they appear. That statutory object does not extend to imposing obligations on those who are not parties to construction contracts. The context of s 13 makes it clear that the liability that is enforced through the mechanism of judgment, is one of which the starting point is, again, “arising under a construction contract”.
[8] [2010] NSWCA 324.
19 ICR notes that in 3D Flow, I outlined circumstances in which a non-party may be liable under a construction contract. ICR says none of those circumstances are present here because:
(a) ICR did not agree to guarantee any obligations of TCB;
(b) TCB did not enter the contract as an agent for, and on behalf of, ICR; and
(c) there was no instruction that ICR be invoiced directly.
20 ICR submits that even if it were a party to the contract, it would not be liable. It reinforces (with reference to the post-agreement correspondence and events) that TCB was to pay for the panel cranage works.
21 In reply, CCH submits that ICR’s submissions on the principles to be applied are misconceived. As to Grave, CCH submits that the decision does not establish that only a party to the contract may be liable under that contract. It summarises my approach to this issue in 3D Flow, as follows:
(a) the decision in Grave is not authority for the proposition that a claimant can engage the provisions of the Act “only by serving a payment claim on the person who, is in the strict or formal sense, the ‘other party’ to the construction contract”;
(b) the gravamen of Graves is that the person on whom a payment claim is served must be someone who is not a stranger to the contract.
22 CCH then refers to my dicta in 3D Flow and relevantly, my proposition that:
“[A]ccordingly, the better view is that LTP was a party to the construction contract, but even if it was not a party in the formal sense, it was nevertheless a person who, under the construction contract, was at least arguably liable to make the payments under the Payment Claims, and thus a person who “may be liable” within the meaning of s14(1) of the SOP Act;”
Analysis
23 In my view, CCH’s submissions should be accepted. I agree that the contract between CCH and ICR for all of the cranage works to be undertaken as part of the Dandenong project was concluded on 4 June 2020. The relevant acts of performance creating the contract (as with the earlier projects) were the provision of plans commencing on 11 May 2020, Mr Grella instructing Mr Wardley to commence the cranage works at the Dandenong site and CCH’s sub-contractor Absolute Surveying commencing its surveying work that same day.
24 There is no evidence that Mr Grella’s instruction to commence work was expressly limited to the steel cranage works. Rather, I am satisfied that (as with previous projects) the instruction was (in substance) to commence the works covered by the plans previously provided by ICR to CCH. In the case of the Dandenong project, this included plans relating to both the steel and panel cranage works. To my mind, that fact that the previous projects all related to cranage of structural steel only does not assist ICR. Fundamentally, the service being provided by CCH for those earlier projects and for the Dandenong project was still cranage services, as identified in plans supplied by ICR.
25 Perhaps more importantly, there is clear evidence that the works that commenced shortly after that instruction (and before the 10 June site meeting) covered both the steel and panel cranage works. In particular, Absolute Surveying’s invoice for that work (exhibit WW-23 to Mr Wardley’s affidavit affirmed 9 October 2020) expressly refers to surveying work including: “Setout all precast panels and offsets as required” undertaken on 9 June 2020.
26 Thus, I am satisfied that by the time of the 10 June site meeting, the contract for both the steel cranage works and panel cranage works was objectively already on foot. In particular, work had been done by Absolute Surveying relating to the set-out of the precast panels, for which CCH was entitled to charge ICR. The matters discussed and agreed at the 10 June site meeting must be construed against that background.
27 Taken at its highest, the evidence of the 10 June site meeting is that Mr Madafferi (presumably speaking in his capacity as sole director of TCB) confirmed that TCB would deliver the precast concrete panels to the site and requested that CCH invoice TCB for the panel cranage, which Mr Wardley agreed to do. There was no evidence of Mr Madafferi asking for ICR to be discharged from the pre-existing contract to the extent that it related to the panel cranage works, or Mr Wardley agreeing to this.
28 In my view, such a result would have required a much clearer statement from Mr Madafferi to the effect that ICR would no longer be bound under the existing contract and a response from Mr Wardley that clearly evinced a willingness to discharge ICR. This is particularly so when regard is had to the fact only ICR had signed the credit application and accepted the terms as to rates and payment claims as required by CCH. And the personal guarantee given by Mr Madafferi as part of the credit application was a guarantee of the liabilities of ICR, not TCB.
29 I also agree with CCH’s submission that invoicing TCB for the panel cranage works as requested by Mr Madafferi, did not absolve ICR from ongoing liability under the contract for the Dandenong project. Rather, that probably created a liability for TCB which might also have been the subject of the service of a payment claim, had CCH chosen to take that course. I agree with CCH that, in that sense, the facts here are similar to those discussed by me in 3D Flow.
30 In in that case, the plaintiff (“3D Flow”) sought judgment against the defendant (“LTP Armstrong”) under the SOP Act. The construction contract was between 3D Flow Solutions and MOC Developments Pty Ltd, a related entity of LTP Armstrong. The contract stipulated that MOC Developments Pty Ltd would make payment of the payment claims. The issue was whether LTP Armstrong was a person liable under the contract (s14).
31 At [70], I held that:
“(a)the ‘construction contract’ for the purposes of s4 of the SOP Act was a multi-lateral arrangement under which 3D was performing work as directed by MOC for the benefit of LTP, where (to use Mr O’Connor’s words) LTP ‘had agreed to make payments to various subcontractors’, including 3D.
(b)accordingly, the better view is that LTP was a party to the construction contract…
(c)it was part of the arrangement that 3D’s invoices would be sent to an MOC email address, and this does not detract from the conclusions I have reached in (a) and (b) above.”
32 That analysis is apposite to the likelihood that there was here a multi-lateral arrangement between CCH, ICR and TCB. However, the case here is simpler than in 3D Flow because CCH’s claim is against ICR, not TCB. For the reasons above, I am satisfied that ICR is the other party to the relevant contract in the strict formal sense, and therefore liable under the relevant construction contract (and thus the payment claim) even absent the analysis in 3D Flow.
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Certificate
I certify that these 10 pages are a true copy of the judgment of His Honour Judge Woodward delivered on 22 February 2021.
Dated: 22 February 2021
Sean Bricknell
Associate to His Honour Judge Woodward
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