Daniel and Ioan Boje Trading as WP contractors v Chinese Community Social Services Centre Inc
[2016] VCC 44
•11 February 2016
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
CIVIL DIVISION
BUILDING CASES LIST
Case No. CI-15-04443
| DANIEL BOJE AND IOAN BOJE trading as WP CONTRACTORS | Plaintiff |
| v | |
| CHINESE COMMUNITY SOCIAL SERVICES CENTRE INC | Defendant |
---
JUDGE: | LEWITAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 January and 3 February 2016 | |
DATE OF JUDGMENT: | 11 February 2016 | |
CASE MAY BE CITED AS: | Daniel and Ioan Boje Trading as WP contractors v Chinese Community Social Services Centre Inc | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 44 | |
REASONS FOR JUDGMENT
---
Subject: Plaintiff’s application for summary judgment
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms M O’Sullivan | Gadens |
| For the Defendant | Mr H Foxcroft QC with Mr P.J. Marzella | Jasper Lawyers |
HER HONOUR:
1 On 7 December 2011 the plaintiffs Daniel Boje and Ioan Boje trading as WP Contractors (WP) signed a building contract (contract) in the form of Australian Standard AS2124-1992 General Conditions of Contract. WP agreed to carry out the construction of an extension to the On Luck Chinese Nursing Home operated by the Chinese Community Social Services Centre (the centre) on land owned by it at 177-179 Tindals Road Donvale (the site). The contract sum was $7,380,000.
Provision of security
2 It was a term of the contract that the plaintiffs were to provide the defendant with security in the form of a bank guarantee to the value of 5% of the contract sum. (Clause 5.2). The plaintiffs provided to the defendant two bank guarantees each for the sum of $202,950.
3 The plaintiffs commenced work in December 2011.
4 The time for practical completion under the Contract was stated to be 265 working days after the date for the possession of the site. The plaintiffs admit that the date for Practical Completion of the Works was extended by agreement to 10 July 2013.[1]
[1] Paragraph 30 of amended defence and paragraph 30 of the reply.
5 The defendant alleges that practical completion of the works was certified by the Architect as having occurred on 7 February 2014 and the defects liability period under the contract expired on 6 or 7 February 2015.
6 The Centre returned the first bank guarantee to the plaintiffs on 14 February 2014 following certification of the works as having reached practical completion.[2] The Centre currently retains the second bank guarantee.
On 5 June 2015 Jacob Kelly, the superintendent nominated in the contract, issued a Certificate of Final Completion stating that the defects liability period expired on 13 April 2015 and that all applicable defects had been rectified.[3]
The plaintiff’s summons
[2] See paragraphs 27 -30 of Kimba’s affidavit.
[3] Exhibit WP 3.
7 On 22 December 2015 the plaintiffs issued a summons for summary judgment pursuant to sections 61 and 63 of the Civil Procedure Act 2010 (Vic) and Order 22 of the County Court Civil Procedure Rules 2008 (Vic) (Civil Procedure Rules) for the payment by the Centre to the plaintiffs of the sum of $38,500 and that the Centre deliver to the plaintiffs’ solicitor the original bank guarantee issued by the Commonwealth Bank of Australia for the sum of $202,950.
8 Order 22.04 of the Civil Procedure Rules provides that an application by a plaintiff in a civil proceeding for summary judgment shall be made by summons supported by an affidavit –
(a)verifying the facts on which the claim or the part of the claim to which the application relates is based; and
(b)stating that in the belief of the deponent the defence to the claim or the defence to the relevant part of the claim –
(i)has no real prospect of success; or
(ii)has no real prospect of success except as to the amount of the claim or as to the amount of the relevant part of the claim.
…
9 The Civil Procedure Act 2010 relevantly provides that a plaintiff in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a defendant’s defence or part of that defence has no real prospect of success (s61).
10 The summons was listed for hearing on 29 January 2016. On that day the plaintiffs sought to rely on an affidavit of Ioan Boje sworn on 21 December 2015, a further affidavit by Ioan Boje affirmed 27 January 2016 and an affidavit affirmed on 29 January 2016 and handed up to the Court after lunch on 29 January 2016. The affidavits contained various deficiencies.
11 In Hausman v Abigroup Contractors[4] the Court of Appeal stated:
An affidavit in support of summary judgment may contain a statement of fact based on information and belief, subject to the court being prepared to act upon it. Such an affidavit must be in proper form and comply with the Rules. What must be verified are the facts necessary to establish a good cause of action. If the affidavit material in support of the application is held to be defective, leave may be granted to file a supplementary affidavit.
…
The annotation to this rule in Williams, Civil Procedure Victoria, suggests that a defendant, who attends on the hearing of an application for summary judgment, may defeat that application by showing that the plaintiff’s proceedings are irregular. Normally, however, if the defect can be corrected, for example by amending the statement of claim or by making another affidavit, the plaintiff will be given the opportunity to cure the defect……
[4] (2009) 29 VR 213.
12 The plaintiffs were granted leave to file a supplementary affidavit and the hearing of the summons was adjourned to 3 February 2016. The plaintiffs filed a supplementary affidavit dated 1 February 2016 (Ioan Boje’s fourth affidavit).
13 The defendant submitted that each of the affidavits filed by the plaintiffs failed to satisfy the minimum requirements for an “affidavit in support” for the purposes of Rule 22.04(1)(b). The defendant objected to the use of Ioan Boje’s fourth affidavit as it failed to explain how the prior affidavits came to be partly sworn and partly affirmed.
14 The defendant submitted that the jurat in Ioan Boje’s fourth affidavit had been altered by handwritten insertion from “sworn” to “affirmed” without being initialled by the person taking the affidavit, contrary to Rule 43.05 of the Civil Procedure Rules. The defendant submitted that the deponent does not affirm the exhibits to the affidavit, but rather each exhibit is expressed to be “produced and shown to Ioan Boje at the time of swearing”. The defendant submitted that because it is uncertain whether the affidavit was either affirmed or sworn, the Court cannot be satisfied that it is in truth an affidavit verifying the facts on which the plaintiffs’ claim is based. The defendant referred to Fastlink Calling Pty Ltd v Macquarie Telecom Pty Ltd[5] and Spinoccia v Challenger.[6]
[5] [2008] NSWSC 299.
[6] [2010] NSWSC 1310.
15 The defendant further submitted that Boje’s fourth affidavit makes no reference to the defences raised by the amended defence and counterclaim and the affidavit made by Kimba Kung Yee Au on 20 January 2016 (Kimba’s affidavit) in opposition to the plaintiffs’ application. Order 22.04 requires the deponent to state that the defence to the claim has no real prospect of success. Boje’s fourth affidavit is deficient because the deponent does not advert to or address the matters raised in the amended defence and counterclaim filed in these proceedings and dated 2 November 2015 (the amended defence).
16 The plaintiffs seek dispensation with compliance with the requirements of the Civil Procedure Rules rules pursuant to Order 2.04. The plaintiffs also seek leave to rely on Ioan Boje’s fourth affidavit pursuant to Order 43.05 of the Civil Procedure Rules.
The construction of the contract
17 The plaintiffs submitted that this proceeding will be determined on the basis of the construction of the contract and that the only question is the effect of the certificates contained in exhibits WP1 (the contract), WP3 (the Certificate of Final Completion), WP4 (Progress Payment Certification Final Certificate) and WP5 (the third Notice of Dispute) of Boje’s fourth affidavit. The plaintiffs submitted that each of those documents has been admitted and is referred to and exhibited to Kimba’s affidavit.
18 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[7] Warren CJ and Nettle JA stated:
…the test for summary judgment under s63 of the Civil Procedure Act should be construed as one of whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success; that the real chance of success” test is to some degree a more liberal test than the “hopeless” or “bound to fail” test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent’s case is not “hopeless” or bound to fail”, it does not have a real prospect of succeeding.
[7] [2013] VSCA 148, [29].
19 The plaintiffs referred to Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd[8] and Skilled Group Ltd v CSR Viridian Pty Ltd & Anor[9] (Skilled Group Ltd) and submitted that the provisions of clause 42.1 of the contract make it clear that once a final certificate is issued it must be paid without deduction.
[8] [1998] VSC 205.
[9] [2012] VSC 290
20 I do not accept the plaintiffs’ submissions. The facts in Skilled Group Ltd are different from the facts in this case. Unlike this case, Skilled Group Ltd did not seek to impugn the validity of the Final Certificates.[10] In this case the defendant disputes the validity of the final certificate.
[10] [2012] VSC 290 , [208].
21 Clause 42 of the contract provides:
42. CERTIFICATES AND PAYMENTS
42.1 Payment Claims, Certificates, Calculations and Time for Payment
At the times for payment claims stated in the Annexure [28 days after receipt of progress claims] and upon issue of a Certificate of Practical Completion and within the time prescribed by Clause 42.7, the Contractor shall deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require. Claims for payment shall include the value of work carried out by the Contractor in the performance of the Contract to that time together with all amounts then due to the Contractor arising out of or in connection with the Contract or for any alleged breach thereof.
Within 14 days after receipt of a claim for payment, the Superintendent shall issue to the Principal and to the Contractor a payment certificate stating the amount of the payment which, in the opinion of the Superintendent, is to be made by the Principal to the Contractor or by the Contractor to the Principal. The Superintendent shall set out in the certificate the calculations employed to arrive at the amount and, if the amount is more or less than the amount claimed by the Contractor, the reasons for the difference. …
If the Contractor fails to make a claim for payment under Clause 42.1, the Superintendent may nevertheless issue a payment certificate.
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, an amount not less than 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 Clause 47 whether the amount 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 moneys 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.
…
42.6 Effect of Certificates
The issue of a payment certificate or a Certificate of Practical Completion shall not constitute approval of any work or other matter nor shall it prejudice any claim by the Principal or the Contractor.
42.7 Final Payment Claim
Within 28 days after the expiration of the Defects Liability Period, or where there is more than one, the last to expire, the Contractor shall lodge with the Superintendent a final payment claim and endorse it ‘Final Payment Claim’.
The Contractor shall include in that claim all moneys which the Contractor considers to be due from the Principal under or arising out of the Contract or any alleged breach thereof.
After the expiration of the period for lodging a Final Payment Claim, any claim which the Contractor could have made against the Principal and has not been made shall be barred.
42.8 Final Certificate
Within 14 days after receipt of the Contractor’s Final Payment Claim or, where the Contractor fails to lodge such claim, the expiration of the period specified in Clause 42.7 for the lodgement of the Final Payment Claim by the Contractor, the Superintendent shall issue to the Contractor and to the Principal a final payment certificate endorsed “Final Certificate.”In the certificate the Superintendent shall certify 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 alleged breach thereof.
Unless either party, either before the Final Certificate has been issued or not later than 15 days after the issue thereof, serves a notice of dispute under clause 47, the Final Certificate shall be evidence in any proceedings of whatsoever nature and whether under the Contract or otherwise between the parties arising out of the Contract, that the Works have been completed in accordance with the terms of the Contract and that any necessary effect has been given to all the terms of the Contract which require additions or deductions to be made to the Contract Sum, except in the case of –
(a)fraud, dishonesty or fraudulent concealment relating to the Works or any part thereof or to any matter dealt within the said Certificate;
(b)any defect (including omission) in the Works or any part thereof which was not apparent at the end of the Defects Liability Period, or which would not have been disclosed upon reasonable inspection at the time of the issue of the Final Certificate;
(c)any accidental or erroneous inclusion of any work, plant, materials or figures in any computation or any arithmetical error in any computation.
Within 14 days after the issue of a Final Certificate which certifies a balance owing by the Principal to the Contractor, the Principal shall release to the Contractor any retention moneys or security then held by the Principal.
22 In Southern Region Pty Ltd v the State of Victoria (No 3)[11] Byrne J stated:
…the procedures for certification, both progressive and final, in clause 42.1 carry with them serious consequences for the parties. This leads to the conclusion that a strict approach should be taken to their construction. These considerations have even more force where the procedure is leading to a Final Certificate for, as will be seen, the consequences of this are more significant for the parties than those flowing from progress payment certificates.
…
The first paragraph [of clause 42.1] requires that the amount of [the] payment claim be supported by evidence. Where it is not, the payment claim is ineffective.
[11] [2001] VSC 436.
23 Byrne J held that there was a triable issue that the contractor’s payment claim failed to satisfy the requirements of the first paragraph of clause of 42.1 of the contract and was therefore ineffective. There is an evidentiary gap in Boje’s fourth affidavit. Ioan Boje does not state whether the plaintiffs lodged a claim for payment under clause 42.1 of the contract.
24 The defendant asserts that in a letter dated 16 December 2014 from the solicitors for the plaintiffs (Gadens) to the superintendent, the plaintiffs made a claim payment of the amount of $79,850 for outstanding variations directed by the defendant[12]. The defendant submits that the superintendent, Jakob Kelly, did not state in the “Progress Payment Certification Final Certificate” dated 10 August 2015 the “reasons for the difference” between the amount claimed and the amount of $38,500. The plaintiffs did not refer to the claim for $79,850 in Boje’s fourth affidavit.
[12] Kimba’s affidavit para 70.
25 The plaintiffs referred to the judgment of Byrne J in Southern Region Pty Ltd v the State of Victoria(No 3)[13] and submitted that it was not necessary for the superintendent to comply with the requirements set out in the first or second paragraph of clause 42.1 of the contract because the document headed “Progress Payment Certification Final Certificate” was a final certificate and Byrne J stated that that the requirements contained in the first paragraph of clause 42 .1 of the Contract do not apply to final certificates. The defendant submitted that the passages relied upon by the plaintiff in Byrne J’s judgment were by way of obiter.
[13] [2001] VSC 436.
26 Southern Region Pty Ltd appealed Byrne J’s judgment. The Court of Appeal upheld Byrne J’s decision that the question whether the final payment claim made by the contractor was in form ineffective was a triable issue.
The answer to the question depended, in his view, upon whether the claim made had been “supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require” and that, it was held, needed further investigation. [14]
[14] Southern Region Pty Ltd v The Minister for Police and Emergency Services, for and on behalf of the State of Victoria {2003} VSCA 105, [6].
27 However the Court of Appeal was of the view that Byrne J went beyond what was open to him on the plaintiff’s application for summary judgment because his finding of a triable issue over the effectiveness of the final payment claim made it unnecessary for him to express any opinion on the other issues identified by the Judge in the plaintiff’s application. In the course of his judgment Phillips JA stated:
If, whether the argument is brief or long, the judge apprehends that there is, at least arguably, a weakness in the plaintiff’s case which may mean that the plaintiff will not in the end succeed, the appropriate course is to allow the matter to go to trial on the basis that there is a triable issue of law or (as here) of fact or both.[15]
[15] [2003] VSCA 105, [14].
28 The plaintiffs contend that the certificate endorsed “Progress Payment Certification Final Certificate” (exhibit WP3) is a Final Certificate within the meaning of clause 42.8 of the contract. [16] There is a dispute as to whether the certificate is a final certificate.
[16] See paragraph 10, Ioan Boje’s fourth affidavit.
29 The defendant refers to clause 42.8 of the contract and submits that even if the “Progress Certification Final Certificate" is a final certificate, it is not obliged to release the plaintiff’s security because the defendant the defendant served a Notice of Dispute under Clause 47 not later than 14 days after the issue of the alleged Final Certificate. The date of the alleged Final Certificate (exhibit WP4) is 10 August 2015. Both sides agree that the date of Third Notice of Dispute (exhibit WP5) is 18 August 2015. Accordingly there is a dispute about the construction of clause 42.8 in circumstances where the defendant has served a Notice of Dispute.
30 The submissions made by the plaintiff and defendant demonstrate that the construction of clause 42 of the contract is not straightforward. As stated by McHugh J in News Limited v South Sydney District Rugby League Football Club Ltd[17] :
Questions of construction are notorious for generating opposing answers, none of which can be said to be either clearly right or clearly wrong.
[17] (2003) 215 CLR 563, [42].
31 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd[18] Warren CJ and Nettle JA stated:
…the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried”.
[18] [2013] VSCA 158, [35]
32 In this case there are real issues of law and fact to be tried in relation to the construction of the contract and the meaning and effect of the “Progress Payment Certification Final Certificate” dated 10 August 2013 (exhibit WP4). The questions of contsruction raised by the defendant are not ‘fanciful’.
33 I dismiss the plaintiff’s summons dated 22 December 2015.
34 I will hear counsel on the question of costs.
0
10
0