| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : BUNBURY CITATION : DANELLO PTY LTD -v- WALSEC PTY LTD [2012] WADC 111 CORAM : DEPUTY REGISTRAR HEWITT HEARD : 5 JULY 2012 DELIVERED : 16 JULY 2012 FILE NO/S : BUN CIV 4 of 2011 BETWEEN : DANELLO PTY LTD Plaintiff
AND
WALSEC PTY LTD
Defendant
Catchwords: Practice and procedure - Summary judgment - Construction of contractual terms Legislation: Nil Result: Application fails in respect of action 4 of 2011 and succeeds in respect of action 3 of 2012
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Representation: Counsel:
Plaintiff : Mr D F Beere
Defendant : Mr I A Morrison
Solicitors:
Plaintiff : D F Beere
Defendant : Talbot Olivier
Case(s) referred to in judgment(s):
Fancourt v Mercantile Credits Limited (1983) 154 CLR
Southern Region Pty Ltd v State of Victoria (No 3) [2001] VSC 436 (23 November 2001)
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1 DEPUTY REGISTRAR HEWITT: These actions were commenced on 8 March 2011 and 23 January 2012 and in each the plaintiff has brought a summary judgment application. Those applications require consideration of a contractual arrangement which existed between the parties which is common to both actions, making it convenient to deal with both matters in the one judgment.
2 On 30 March 2009 the plaintiff and the defendant entered into a building contract under the terms of which the plaintiff agreed to build a number of units at Margaret River in the state of Western Australia. The contract was in the form of the general conditions of contract (AS2124-1992) published by Standards Australia. Each claim concerns an unsatisfied claim made by the plaintiff for payment for works carried out pursuant to that contract. Clause 42 of the contract concerns the regime established for the payment of progress claims and final payment claims. In essence the regime requires the builder to lodge a claim, and for that claim to be assessed by an appointed superintendent who then issues a certificate specifying the amount due to be paid for the work carried out the subject of the claim. In the event that such a certificate is issued, the amount specified within it is payable by the principal to the contractor, in the present circumstances by the defendant to the plaintiff. The clause contains provisions within par 42.1 as follows: Subject to the provisions of the contract, within 28 days after receipt by the superintendent of a claim for payment or within 14 days of issue by the superintendent of the superintendent's payment certificate, whichever is the earlier, the principal shall pay to the contractor or the contractor shall pay to the principal, as the case may be, an amount not less than the amount shown in the certificate as due to the contractor or to the principal as the case may be, or if no payment certificate has been issued, the principal shall pay the amount of the contractor's claim. A payment made pursuant to this clause shall not prejudice the right of either party to dispute under cl 47 whether the amount so paid is the amount properly due and payable and on determination (whether under cl 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. 3 Two claims were made by the plaintiff and in respect of neither of them was a certificate issued within the time contemplated by the contract. In action number 4 of 2011, the claim was contained in a progress claim during the continuance of the building project and in action 3 of 2012, the claim made was a final claim within the meaning of the contract. (Page 4)
4 These being summary judgment applications, it is necessary to have regard to the principles upon which such applications are to be determined. In my view the appropriate standard is that it should be shown that there is no doubt on the materials which are presented that there is no issue to be tried: Fancourt v Mercantile Credits Limited (1983) 154 CLR. 5 I shall first analyse the position in regard to the claim which is brought in action 4 of 2011. That is a progress claim in the sum of $154,943.19. In respect of that claim, no progress certificate was issued within the time stipulated by cl 42 and the plaintiff relies upon the provisions which I have earlier quoted as conferring upon it an entitlement to sue for the full amount of that claim. That brings me to an analysis of what is required to be specified within a claim. Section 42.1 prescribes that the claim should be supported by such evidence as the superintendent might reasonably require. Included within the claim were two amounts for delays. It is common ground between the parties that those claims related to periods when it was alleged by the plaintiff that inclement weather prevented the work from proceeding. Again, it is common ground between the parties that such a claim was required to be supported by particulars identifying the days upon which weather prevented the work proceeding, and by information from a local meteorological office confirming that at least a specified amount of rain had fallen in the relevant period. The claim did not contain that information. 6 It is argued by the plaintiff that that omission is of no consequence because, later, when the claim was assessed by the assessor, it was rejected on the basis, as I understand it, that the contractual completion date had already based and the builder was not entitled to avail itself of the relevant provisions in those circumstances. I therefore have the unusual situation where it is argued before me that a patently defective claim was in fact regularised by the issue of a certificate at a later stage which it is contended before me is invalid. 7 In my view, before the plaintiff is entitled to rely on the provisions of c 42 concerning the failure to issue a certificate, it must have first filed a claim in proper form. The claim under consideration was not in proper form, there was something in the vicinity of $42,000 claimed for delays, said to be due to inclement weather, which were unidentified and unsupported by evidence. Whatever the status of the certificate which was issued in relation to this claim, it is incapable of overcoming what I regard as patent defects in the claim. (Page 5)
8 In my view it is a necessary construction of par 42 of the contract that the claim upon which the plaintiff relies should have been prepared in accordance with the contract. This claim was not and I am of the opinion that the defendant has an arguable defence to this matter. Paragraph 42 of the contract permits the superintendent to issue certificates, notwithstanding the fact that a claim has not been made. Viewed in that light, the certificate which was issued, albeit out of time on 21 December 2010, is nonetheless capable of being regarded as a valid certificate which does not go to cure any defect in the manner in which the plaintiff's claim was presented. 9 I therefore hold insofar as I am concerned with claim 4 of 2011 that the defendant should be given unconditional leave to defend that matter. 10 I now turn to consider the application which has been brought in action 3 of 2012. That proceeding was commenced by way of a writ which was filed on 23 January 2012. It concerns a further claim which sought a final certificate and release of retention monies held pursuant to the contract. The superintendent did not issue a certificate in response to that claim and the plaintiff again argues, relying on the provisions of cl 42 of the contract, that in the absence of a certificate, the amount of the claim is payable by the defendant to the plaintiff. The claim was made by letter dated 29 November 2011, the writ was issued on 23 January 2012 and I am informed by an affidavit of A R Salsano sworn 3 May 2012 that the superintendent issued a final certificate on 11 April 2012. It is argued by the defendant that the effect of this certificate is to extinguish the claims which are brought by the plaintiff in the present proceeding and proceeding 3 of 2012 such that the only amount which is due to be recovered is that certified on the certificate, namely $18,917.56. 11 It is notable that this certificate was not only issued well outside the time contemplated by the contract, but subsequent to the commencement of the proceedings and subsequent to the filing of the present application for summary judgment. Notwithstanding those matters, it is argued by the defendant that the effect of the final certificate is to sweep away any entitlement which might have been possessed by the plaintiff for immediate payment and on that score, reliance is placed on the decision of his Honour Judge Byrne in: Bell A, Southern Region Pty Ltd v State of Victoria (No 3) [2001] VSC 436 (23 November 2001), a decision in the Commercial and Equity Division, building cases list in the Supreme Court of Victoria at Melbourne. It is to be noted that that judgment was the subject of an appeal but the appellant court declined to deal with the issue with which I am concerned on the basis that it was obiter and unnecessary (Page 6)
in the context of the appeal with which they were faced. The case concerned the interpretation of the relevant provisions of exactly the standard contract as applies in this case. Commencing at par 21 of his decision, his Honour analysed whether or not the default procedure for payment under cl 41.2 applied to a final payment claim. 12 After an exhaustive analysis, his Honour concluded that a late final payment certificate was nonetheless effective. 13 I have two comments to make concerning his Honour's reasoning. The first is that his reasoning is obiter and the second is that it appears to me to contradict the words of the contract. His Honour has in effect implied a term in the contract which, with respect to his Honour, directly contradicts the wording of the relevant portions of the contract entered. The contract clearly states that in the absence of a certificate within the time stipulated by the contract the amount claimed is payable. The contract also preserves the rights to the parties to conduct disputes as to what was or was not properly payable in the procedures which are set out in cl 47 of the contract. I find it distasteful to conclude that a plaintiff in the position of this builder is effectively hamstrung in any prospect of recovery against the principal because if he commences litigation at any stage, he may lose the prospect of success by the issue of a final payment certificate which would rob him of an entitlement to judgment. To amplify those comments, were this matter to have proceeded to trial and were the judge to have reserved his decision, on the argument advanced by the defendant, the issuance of a final payment certificate would (if the defendant is correct) nullify all that had proceeded and robbed the plaintiff of any prospect of success in the action. 14 It seems to me that the words of the contract are clear, they confer contractual certainty to the parties as to their positions, they do not preclude the parties from conducting their arguments in the manner provided by cl 47 of the contract, nor is any payment which may be made immune from the scrutiny of an arbitrator pursuant to those provisions. As a consequence of this line of reasoning, I conclude that the issuance of a final payment certificate many months after the claim was made, well beyond the time stipulated by cl 4.2, some months after the action was commenced, and after the present summary judgment application was launched, is ineffective to defeat the plaintiff's claim and I therefore conclude in respect of this action that the plaintiff is entitled to the judgment which it seeks.
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