COOLBROOK Enterprises Pty Ltd as Trustee for Hughes Building Company Trust trading as BJ & LH Hughes Building Company v Exmouth Marina Holdings Pty Ltd
[2010] WADC 44
•7 APRIL 2010
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: COOLBROOK ENTERPRISES PTY LTD as Trustee for HUGHES BUILDING COMPANY TRUST trading as BJ & LH HUGHES BUILDING COMPANY -v- EXMOUTH MARINA HOLDINGS PTY LTD [2010] WADC 44
CORAM: STAUDE DCJ
HEARD: 17 MARCH 2010
DELIVERED : 7 APRIL 2010
FILE NO/S: CIV 2631 of 2009
BETWEEN: COOLBROOK ENTERPRISES PTY LTD as Trustee for HUGHES BUILDING COMPANY TRUST trading as BJ & LH HUGHES BUILDING COMPANY (079 322 464)
Plaintiff
AND
EXMOUTH MARINA HOLDINGS PTY LTD (097 074 532)
Defendant
Catchwords:
Appeal from summary judgment - Building contract - Equitable set-off excluded by agreement - General conditions of contract AS21241992 - Suspension order refused
Legislation:
Civil Judgments Enforcement Act 2005
Result:
Appeal disallowed
Application for suspension order refused
Representation:
Counsel:
Plaintiff: Mr D F Beere
Defendant: Mr P G McGowan
Solicitors:
Plaintiff: D F Beere
Defendant: Haydn Robinson
Case(s) referred to in judgment(s):
Blue Chip Pty Ltd v Concrete Constructions Group Pty Ltd [1997] 1 Qd R 6
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Devaugh Pty Ltd v Lamac Developments Pty Ltd [1999] WASCA 280
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Hazcor Pty Ltd v Kirwanon Pty Ltd (1995) 12 WAR 62
LU Simon Builders Pty Ltd v Fowles [1992] 2 VR 189
Main Roads Construction Pty Ltd v Samary Enterprises Pty Ltd [2005] VSC 388
Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd [1995] 2 Qd R 521
Morgan v Pallister [2004] WASC 188
Rawson v Samuel (1841) 41 ER 451
State Bank of Victoria v Parry [1989] WAR 240
Thiess Constructions Pty Ltd v Pavements & Excavations Pty Ltd (2000) 16(1) BCL 42
Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71
STAUDE DCJ: This is an appeal by the defendant from the decision of Deputy Registrar Hewitt dated 17 December 2009 whereby he allowed the plaintiff's application for summary judgment in the amount of $352,500.77 plus interest.
The defendant's notice of appeal seeks orders in the following terms:
(a)The application by the plaintiff dated 27 October 2009 be dismissed;
(b)The plaintiff pay the defendant's costs of the application to be taxed; and
(c)Pending the hearing of the appeal the judgment be stayed.
Two procedural aspects of the notice of appeal warrant comment. The first is that the notice sets out a number of errors on the part of the learned Deputy Registrar. It is clear from r 15 of the District Court Rules 2005 that an appeal from a Registrar is a new hearing, in traditional language a hearing de novo. Although the party appealing goes first, no grounds need to be pleaded as the matter is to be decided afresh: Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at [14]. Second, for the purposes of an appeal pursuant to r 15, there is no need to alter the heading of the action.
Facts
The material facts on which the application for summary judgment is based are set out in the statement of claim as follows:
"1.The Plaintiff is a company incorporated in the State of Western Australia carrying on business as trustee for the Hughes Building Company Trust trading as B. J. & L. H. Hughes Building Company in the building industry.
2.The Defendant is a company incorporated in the State of Western Australia carrying on business as a property developer.
3.On or about the 15th day of May 2006 the Plaintiff and the Defendant entered into a Contract pursuant to which the Plaintiff agreed to carry out certain building works for the Defendant at Exmouth ("the Contract").
4.The Contract included the General Conditions of Contract (AS 2124‑1992) ("the General Conditions").
5.The General Conditions envisaged that a superintendent be appointed in relation to the administration of the works the subject of the Contract and such a superintendent was appointed by the parties pursuant to the Contract being Tabec Pty. Ltd. (ACN 090 796 204) ("the Superintendent").
6.Clause 42 of the General Conditions deals with payments to be made by the Defendant to the Plaintiff pursuant to the Contract and provides (inter alia) as follows:-
(a)On each occasion that the Plaintiff sought payment of an amount under the Contract the Plaintiff was required to deliver to the Superintendent a claim for payment supported by evidence of the amount due to the Plaintiff and such further information as the Superintendent may reasonably require.
(b)Within fourteen (14) days after receipt of a claim for payment from the Plaintiff the Superintendent shall issue to the Defendant and to the Plaintiff a payment certificate stating the amount of the payment which, in the opinion of the Superintendent, is to be made by the Defendant to the Plaintiff.
(c)Within twenty eight (28) days after receipt by the Superintendent of a claim for payment from the Plaintiff or within fourteen (14) days of issue by the Superintendent of the Superintendent's payment certificate, whichever is the earlier, the Defendant shall pay to the Plaintiff an amount not less than the amount shown in the certificate as due to the Plaintiff, or if no payment certificate has been issued, the Defendant shall pay the amount of the Plaintiff's claim.
7.In or about July 2008 the Plaintiff submitted to the Superintendent a claim for payment and on the 31st July 2008 the Superintendent by certificate number 24 certified that the Defendant was required to pay to the Plaintiff the sum of THIRTY ONE THOUSAND EIGHT HUNDRED AND FIFTY EIGHT DOLLARS AND FORTY NINE CENTS ($31,858.49).
8.In or about July 2009 the Plaintiff submitted a claim for payment to the Superintendent and on the 23rd July 2009 under certificate number 25 the Superintendent certified that the Defendant was required to pay to the Plaintiff the sum of THREE HUNDRED AND TWENTY THOUSAND SIX HUNDRED AND FORTY TWO DOLLARS AND TWENTY EIGHT CENTS ($320,642.28).
9.Notwithstanding the receipt of certificate 24 and certificate 25 the Defendant failed, neglected and refused to pay to the Plaintiff the amounts due thereunder in breach of its obligations set out in clause 42 of the General Conditions.
10.Clause 42.9 of the General Conditions stipulates that if any monies due to either party remain unpaid after the date upon which or the expiration of the period within which they should have paid then interest shall be payable thereon from within which they should have paid then interest shall be payable thereon from but excluding the date upon which or the expiration of the period within which they should have been paid to and including the date upon which the monies are paid. The rate of interest shall be the rate stated in the Annexure and if no rate is stated the rate shall be eighteen per cent (18%) per annum. Interest shall be compounded in six (6) monthly intervals.
11.The Annexure to the Contract stated that the rate of interest was the Business Reference Rate of the Commonwealth Bank of Australia.
12.Pursuant to clause 42.9 of the General Conditions the Defendant is indebted to the Plaintiff in respect to the payment of interest on the amounts set out in certificates 24 and 25 in an amount to be particularised."
These facts were verified by Barry John Hughes the sole director of the plaintiff in an affidavit sworn 6 October 2009 to which was attached, inter alia, copies of the contract and the standard form general conditions of contract referred to in par 4 of the statement of claim, as well as the copies of certificates 24 and 25 issued by the contract superintendent Tabec Pty Ltd and the plaintiff's subject invoices 728 and 732. It should be noted that special condition B28 of the contract substitutes a slightly different wording for cl 42 of the standard form general conditions. As I read the variation, it differs from the standard form clause only with respect to the periods prescribed for payment. No issue arises in this respect.
The plaintiff's application was also supported by an affidavit by Christopher Philip Humphry sworn 20 October 2009 verifying the relevant certificates. Mr Humphry was at all material times a director of Tabec Pty Ltd, the superintendent.
In opposition to the plaintiff's application the defendant filed an affidavit by Jonathon Ross Warren sworn 24 November 2009. Mr Warren admitted the contract and the incorporation of the standard form general conditions and otherwise deposed to the following facts:
1.The contract included a variation dated 15 May 2007 which provided the means by which variations would be assessed, authorised and paid.
2.The contract was for the construction of waterways and infrastructure for a canal development at Exmouth.
3.The general conditions provided by cl 16.1 that the plaintiff would be responsible for the care of the work and by cl 18 that the plaintiff would insure the works, alternative 1 applying.
4.In accordance with cl 18 the plaintiff obtained a policy of insurance from HSB Engineering Insurance Australia ("the insurer").
5.The contract required the plaintiff to build a bridge which, by late March 2008, was partially constructed.
6.On or about 27 and 28 March 2008 significant rainfall occurred which eroded the foundations of levelling pads which were constructed at each approach to the bridge and which supported pre‑cast concrete facing panels on each face of the bridge as depicted in the drawings attached to the affidavit.
7.Subsidence of the levelling pads caused all of the facing panels to drop.
8.The bridge required repairs at a cost of $1,125,594.30 and a claim was made for this amount by the defendant upon the insurer.
9.The insurer had declined the claim because liability to indemnify was excluded by cl 4.6 of the policy.
10.The defendant then commenced proceedings against the insurer in the Supreme Court (CIV 1753 of 2009).
11.The defendant considered that the site could have been protected by the plaintiff constructing earth bunds at either end of the bridge to divert rainwater.
12.The defendant therefore had a claim for damages against the plaintiff for the cost of the repairs, the plaintiff having breached the contract by failing to protect the bridge works and failing to take out adequate insurance.
13.Pursuant to an agreement dated 16 April 2008 at a cost of $388,842.57 the defendant engaged the plaintiff to carry out some of the repairs to the bridge .
14.LG Craven & Sons ("Craven") was also engaged to carry out remediation work at a cost of $161,251.25.
15.Mr Warren agreed orally with Mr Barry Hughes for the plaintiff in or about early June 2008 that the work agreed to be done by Craven by way of remediation would result in certain work included in the original contract costing $67,007.87 being deleted. Certificate 25 overstated the amount payable by the plaintiff to the defendant by this amount.
16.Certificate 25 included $13,831.76 which had been previously invoiced and paid and also included claims based on variation numbers 69, 91, 92, 93, 94 and 95, totalling $45,972.10, which were not approved by the defendant pursuant to the variation of the agreement dated 15 May 2007 (referred to above).
17.The plaintiff was not entitled to interest of $53,318.85 allowed in certificate 25.
18.The defendant incurred survey costs of $77,623.50 which the plaintiff was required to pay pursuant to cl B8 and C1.16.01 of the contract.
19.The defendant was still investigating a claim against the plaintiff based on delayed completion of the project.
In a further affidavit made in support of the appeal and sworn on 12 January 2010 Rachel Lee Kadir, the defendant's secretary and the alternative director to Mr Warren, deposed somewhat repetitively, to the following facts:
1.The original contract sum was $11,402,263.40 which included $511,588 for the bridge.
2.Agreed variations to the bridge work added $38,087.49 to the contract price making the total amount payable for the bridge $549,967.50, of which $535,842.73 was paid pursuant to certificates 1 to 23.
3.The balance of $13,831.76 was included in the amounts set out in certificates 24 and 25 ($3,457.94 and $10,373.85 respectively), but had been paid to the plaintiff as part of the repair costs.
4.The damaged bridge was rebuilt by City and Suburban Projects Pty Ltd at a cost of $803,630.96.
5.The total repair cost invoiced by the plaintiff was $372,701.10, all of which had been paid except for a retention amount of $9,317.53.
6.The defendant's claimed loss of $1,125,594.30 included the cost of repairs to other parts of the canal development also damaged by rainfall.
7.The defendant did not dispute the amount claimed pursuant to certificate 24 to the extent that it comprised a claim for variation expenses of $20,112.77 as this variation had subsequently been approved but it disputed liability to pay for variation requests 69, 91, 92, 93, 94 and 95.
8.The defendant disputed $69,007.88 with respect to certificate 25 for the reasons set out in Mr Warren's affidavit, i.e. that Craven had invoiced the defendant separately for repairs due to rain damage.
9.There was a dispute with respect to the allowance in certificate 25 for $53,318.85 by way of interest.
10.The defendant considered that the plaintiff was insolvent.
11.The defendant had issued a Writ of Summons out of the Supreme Court (CIV 1041 of 2010) against the plaintiff claiming damages for breach of contract.
In a responsive affidavit sworn on 22 January 2010 Mr Hughes deposed to the following facts:
1.The agreement by which the defendant engaged the plaintiff to carry out repairs to the bridge was made without there being any suggestion by the defendant that the plaintiff was responsible for the damage.
2.The plaintiff had not been named as a defendant in the defendant's Supreme Court action against the insurer for an indemnity with respect to the cost of the repairs.
3.The plaintiff had obtained a copy of the draft defence of the insurer in the Supreme Court action which denied the defendant's claim because of the failure of another contractor Wayne Roberts Civil Pty Ltd to carry out its part of the works in accordance with the contract specifications.
4.The invoices in question were issued pursuant to certificates duly issued by the defendant's superintendent to which no challenge had been made pursuant to the contract.
5.The plaintiff was not insolvent. It had given a bank guarantee for $257,400 and was due to be paid retention monies of $282,011.25.
The draft defence of the insurer attached to Mr Hughes' affidavit alleges that liability with respect to the cost of rectification works is excluded pursuant to cl 4.6 of the policy in question because preliminary ground preparations by Wayne Roberts Civil Pty Ltd were deficient in a number of respects particularised in par 22.
The draft defence also alleged that liability was excluded by the schedule to the policy which incorporated exclusion endorsement E121 and by reason of breach of a condition in cl 7.14 of the policy which required the insurer to take reasonable precautions to prevent loss, with specific reference to the alleged failure of Wayne Roberts Civil Pty Ltd to carry out sound preliminary ground preparations. It is not apparent from the draft defence that the insurer attributes the damage caused by rainfall to any failure on the part of the plaintiff. Indeed, none of the insurer's allegations in support of its refusal to indemnify suggests any reliance at all on the plaintiff's alleged failure to construct earth bunds. The draft defence refers to expert reports by Worley Parsons, Jeffery & Katauskas and Western Geotechnics. The defendant has proffered no expert evidence.
The only evidence before the court as to the merits of the defendant's claim for damages for breach of cl 16 is the affidavit of Mr Warren which expresses his inexpert opinion that the plaintiff ought to have constructed earth bunds and that had the plaintiff done so the rain water which caused the subsidence of the levelling pads would have been diverted. There is no expert or other independent evidence put before the Court to support the alleged breach even though it is now two years since the event.
Similarly, with respect to the claim that the plaintiff secured inadequate insurance the evidence does not demonstrate that the insurer's refusal to indemnify under the policy was due to any default of the plaintiff or that the scope of the policy was narrower than that required by the contract (cl 18 of the standard form general conditions, alternative 1) which, in any event, provided that the terms be approved in writing by the principal.
Issues
The issues appear to be as follows:
1.Is the defendant entitled to raise, by way of a defence to the plaintiff's claim, a claim for damages for breach of contract relating to the plaintiff's alleged failure to comply with the obligation in cl 16.1 of the standard form general conditions to be responsible for the care of the work and to ensure adequately the works in accordance with cl 18?
2.Is the defendant entitled to dispute the plaintiff's invoices on the grounds that certificates 24 and 25 are incorrect in that they allow amounts to which the plaintiff is not entitled, being:
(a)$13,831.76 for work on the bridge for which it had been paid;
(b)$69,007.88 for work which the defendant contends it paid Craven directly;
(c)$53,318.85 for interest on retention monies;
(d)$45,972.10 for unauthorised variations; and
(e)$77,623.50 for survey costs?
3.If the appeal fails, should enforcement be suspended?
First issue: is there an equitable set-off?
The relevant principles are as follows:
1.At law a cross-claim for unliquidated damages is no defence to a liquidated claim, but an equitable set-off may exist where the claim of the defendant is so closely connected with that of the plaintiff that it would be unjust to allow the plaintiff's claim without taking account of the cross-claim: Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71 at 84 - 86, Rawson v Samuel (1841) 41 ER 451 at 458, and Hazcor Pty Ltd v Kirwanon Pty Ltd (1995) 12 WAR 62 at 68;
2.The existence of an equitable set-off is subject to any express or implied agreement of the parties to modify or exclude it: Spry, Equitable Remedies (7th ed, 2007) at p 180, LU Simon Builders Pty Ltd v Fowles [1992] 2 VR 189 at 194 – 195, Main Roads Construction Pty Ltd v Samary Enterprises Pty Ltd [2005] VSC 388 and the authorities referred to therein at [21] ff.
I am not satisfied that the defendant has established the existence of an equitable set-off by reference to the claim that it would have against the plaintiff for breach of contract if its present claim against the insurer should fail.
In my view, this case is on all fours with Main Roads Construction Pty Ltd v Samary Enterprises Pty Ltd (supra) in that it involves standard form contractual conditions which provide for progress payments to be made upon certificates issued by a superintendant appointed by the principal. Clause 42.1 (as varied by cl B28 of the contract) provides the mechanism by which the defendant's contractual obligation to pay the plaintiff is to be discharged. The wording includes the following:
"A payment to be made pursuant to this clause shall not prejudice the right of either party to dispute under clause 47 whether the amounts so paid is the amount properly due and payable and on determination (whether under clause 47 or as otherwise agreed) of the amount so properly due and payable, the principal or contractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable. Payment of monies shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided by clause 42.8."
Clause 42.8 deals with the issue of a final certificate by the superintendant certifying the amount which in the superintendent's opinion is finally due from the principal to the contractor or from the contractor to the principal under or arising out of the contract or any breach thereof.
Clause 47.1 provides, in relation to a dispute:
"Notwithstanding the existence of a dispute, the principal and contractor shall continue to perform the contract, and subject to clause 44, the contractor shall continue with the work under the contract and the principal and the contractor shall continue to comply with clause 42.1."
As Habersberger J observed in the Main Roads Construction at [45]:
"It seems to me that, read as a whole, the contract makes it abundantly clear that apart from the procedure for set-off described in clause 37.2, the principal must pay to the contractor the amount of the progress certificates. As has been pointed out such payments are 'on account only'. In my opinion, the parties have worded their contract in this way, for the very good reason that progress payments are the 'life blood' of contractors in the building industry. Accordingly, set‑offs against the amounts otherwise payable to the contractor are not permitted except in accordance with the agreed comprehensive scheme for the working out of disputes between the parties concerning their rights and liabilities under the contract."
That case involved a claim for certified progress payments of $456,978.98 which was resisted by the defendant on the basis that it suffered loss and damage due to the plaintiff's failure to bring the works to practical completion within the stipulated contract period and as a result of delays caused by the plaintiff wrongfully lodging caveats which prevented the registration of a sub-division plan of the land which was the subject of the contract works. The standard form general conditions in that case were AS 4000 ‑ 1997.
In my view, there is no relevant difference between the Australian Standard general conditions which applied in that case and those applicable in this case. Ample legal authority was provided by Habersberger J for the proposition that the terms of a contract may exclude the right to claim an equitable set-off. I find that to be the case here.
Even if I were not of the view that the contractual terms excluded the right of set-off, I would be nevertheless of the opinion that the circumstances of the contract do not create an equity capable of protecting the defendant from the plaintiff's claim. This is because the defendant contracted with the plaintiff to repair the damaged bridge and has paid all of the costs of the repairs: Warren affidavit par 52. The plaintiff's claim is not for the cost of those repairs but for other items which the superintendent has certified pursuant to the original contract.
The defendant has not established on the evidence that it possesses an equitable right to be protected from the plaintiff's claim.
Second issue: can the defendant challenge the certificates?
The primary contention of the defendant is that it is entitled to claim an equitable set-off. This involves no challenge to the correctness of certificates 24 and 25. The second limb of the defendant's argument in opposition to judgment is that the certificates are incorrect in a number of respects which I have detailed above.
None of the points taken by the defendant by way of challenge to the accuracy to the certificates has been addressed by the superintendent by way of a correction of the certificates or an adjustment of any subsequent certificate. The law is plain that a contractor is entitled to payment of progress claims duly certified under the contract: Blue Chip Pty Ltd v Concrete Constructions Group Pty Ltd [1997] 1 Qd R 6, Devaugh Pty Ltd v Lamac Developments Pty Ltd [1999] WASCA 280. In such a contract if an error is made in a certificate an adjustment can be made in a later certificate, but the amount of a progress certificate is otherwise payable in accordance with the terms of the contract. If it is later ascertained that there was an error or that the amount certified was not due and payable the matter can be rectified: Thiess Constructions Pty Ltd v Pavements & Excavations Pty Ltd (2000) 16(1) BCL 42, Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd [1995] 2 Qd R 521. In this case I am informed by counsel for both parties that no final certificate has been issued by the superintendent. Retention monies are still held by the defendant. There is no evidence that the superintendent has issued any correction of certificates 24 and 25 pursuant to cl 42.2.
It seems to me therefore that the issues taken by the defendant with respect to the correctness of the certificates afford no good reason for granting leave to defend. The dispute resolution procedure provided in cl 47 expressly provides that the contract will be performed by the parties notwithstanding the existence of a dispute. Clause 42.1 (as varied) provides that "payment of monies shall not be evidence of the value of work or admission of liability or evidence that work has been executed satisfactorily but shall be payment on account only as provided by cl 42.8".
Clause 42 also provides that a claim for payment shall be made within 7 days of the issue of the superintendent's certificate. No cause has been shown why this contractual obligation should be displaced.
Third issue: should there be a suspension order?
Although the notice of appeal seeks an order for a stay of execution pending the hearing of the appeal it was clear from the submissions of counsel for the defendant that the defence in fact sought, in the event that the appeal was unsuccessful, an order for suspension of enforcement of the judgment pursuant to s 15 of the Civil Judgments Enforcement Act 2005. As the plaintiff's submissions anticipated an application in these terms, I will deal with it on that basis.
Order 14 r 3(2) expressly provides that a court may stay execution of a judgment given against a defendant until after the trial of any counterclaim. This provision needs to be construed in the context of the Act which supplants previous procedures for execution of judgments: see s 16(3).
Section 15(3) provides that an order suspending the enforcement of all or part of a judgment can be made if there are special circumstances that justify doing so. The defendant contends that the plaintiff is insolvent and that its counterclaim may be nugatory if a suspension order is not granted.
In State Bank of Victoria v Parry [1989] WAR 240 at 244 – 247 Malcolm CJ discussed the principles applicable to the determination of an application for a stay of execution pending the determination of a counterclaim. His Honour stated at 246:
"The degree of connection between the claim and the counterclaim, the strength of the counterclaim and the ability of the plaintiff to satisfy any judgment on the counterclaim are some of the considerations which the court may take account of in the exercise of its discretion whether or not to order a stay. In general, therefore, a counterclaim which is in effect an unconnected cross-action will not provide the basis for a stay under O 14 r 3. Consistently with this position a stay of execution of a judgment will not ordinarily be granted simply because the defendants bring a cross-claim in another action against the plaintiff, in the absence of special circumstances, rendering it inexpedient to enforce the judgment: Wagner v Laubscher Bros & Co (1970) 2 QB 313."
The factors which the defendant contends are relevant are to the exercise of the court's discretion were set out in the defendant's outline of submissions at par 25 as follows:
"25.1The [plaintiff] has already had the benefit of monies paid for carrying out works which are themselves the subject of a claim for damages;
25.2The [plaintiff] was obliged to take out a relevant policy of insurance to provide against the very events which occurred on 27 and 28 March 2008;
25.3A claim has been brought against the [plaintiff]'s insurer who contends that the policy does not respond on the basis that there is an exclusion in the policy;
25.4This 'exclusion' is the very thing the [plaintiff] was supposed to have covered in the policy of insurance;
25.5The [defendant] is now forced at its expense to sue the insurer to compel an outcome which as a matter of contract the [plaintiff] was obliged to have fixed;
25.6The amount in issue for the cost of repairs to the bridge far exceeds the [plaintiff]'s claims; and
25.7There remains a question of the [plaintiff]'s solvency …"
For the plaintiff it is submitted that the stay should be refused as the balance of convenience does not lie in favour of the defendant. The plaintiff submits that the claim is based on invoices raised pursuant to two certificates issued by an independent superintendant, which certificates have never been challenged in accordance with the dispute resolution procedure set out in the contract. The plaintiff also points to the time it may take to determine the counterclaim. It concedes that non-payment of the invoices in question does cause financial difficulty and may prejudice its ability to continue trading, but at the same time submits that there is no evidence to establish that the plaintiff would not be able to repay the judgment in the event of the certificates being cancelled or amended pursuant to the dispute resolution process provided by the contract, or in the event that a counterclaim by the defendant were successful. In this regard reference was made to the remarks of Habersberger J in Main Roads Construction at [45].
Having considered these submissions I am of the view that this is not a case in which a stay should be granted, essentially for the reason that the parties have contracted on terms which require the defendant to pay the plaintiff's progress claims in accordance with the certificates issued by the superintendant and have agreed to a process of dispute resolution which expressly provides that notwithstanding the existence of a dispute, the principal and the contractor shall continue to perform the contract and specifically that the principal and contractor shall continue to comply with cl 42.1 relating to certificates and payments.
It is essentially, then, for the same reasons as I gave for not being satisfied that an equitable set-off was disclosed in the proposed counterclaim that I have come to the view that the stay should not be granted. The plaintiff is contractually entitled to be paid. It is also significant in my view that the contract has not been terminated and that a final certificate by the superintendant is yet to be issued.
I am not satisfied that the plaintiff is insolvent, that if a stay were not granted a successful trial of the counterclaim would be nugatory or that the refusal of a suspension order would substantially affect the defendant's recovery of a potential verdict on the counterclaim in future.
Conclusion
In determining this appeal I am mindful of the principle that the jurisdiction to order summary judgment should only be exercised where it is clear that there is no real issue to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99, Morgan v Pallister [2004] WASC 188 at [4]. I am satisfied that cl 47.4 of the general conditions entitles the plaintiff to bring proceedings to enforce payments due under cl 42. I am satisfied that the payments were duly certified and are due and payable. I am not satisfied that any of the matters raised by the defendant warrants leave to defend as the contract is extant and provides the means for correction of any errors in the certificates. In this contractual context, no special circumstances exist as would justify an order for suspension of enforcement of the judgment.
The orders will be that the appeal be disallowed and the application for a suspension order refused.
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