Eddy Lau Constructions P/L v Transdevelopment Enterprise P/L

[1999] NSWSC 455

CITATION:	Eddy Lau Constructions P/L v. Transdevelopment Enterprise P/L & Anor. [1999] NSWSC 455
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	2277/99
HEARING DATE(S):	13/05/99
JUDGMENT DATE:	13 May 1999
PARTIES :	Eddy Lau Constructions Pty. Limited - Plaintiff Transdevelopment Enterprise Pty. Ltd. - 1st Defendant FAI General Insurance Co. Ltd. - 2nd Defendant
JUDGMENT OF:	Brownie AJ

COUNSEL :	Mr. I. Tonking with Mrs. C. Champion for plaintiff Mr. Pesman for 1st defendant
SOLICITORS:	John Burrell, Solicitors, Kogarah for plaintiff Allen Allen & Hemsley, Solicitors, Sydeny for 1st defendant
CATCHWORDS:	Law Reform - Home Building Act 1989 - persons to be protected
ACTS CITED:	Home Building Act 1989
DECISION:	See judgment

7

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: BROWNIE, A.J.

Thursday 13 May 1999

NO. 2277 OF 1999
EDDY LAU CONSTRUCTIONS PTY. LTD. V. TRANSDEVELOPMENT ENTERPRISE PTY. LTD & ANOR.

JUDGMENT

1 HIS HONOUR: The plaintiff seeks an interlocutory injunction against the first defendant. It is inappropriate to make any finding of fact or to inquire into anything more than whether the plaintiff has demonstrated a serious question to be determined. However for today's purposes, the facts are mostly not in dispute.
2 The plaintiff entered into a contract with the first defendant pursuant to which the plaintiff carried out certain building work for the first defendant. That work was residential building work within the meaning of the Home Building Act 1989 (as amended). Accordingly s.92(1) prohibited the plaintiff from contracting to do that work unless a contract of insurance complying with the Act was in force; s.92(2) prohibited the plaintiff from contracting to do that work unless a certificate of insurance evidencing that contract of insurance was attached to the building contract; and s.94(1) provided that if there was a breach of the provisions of s.92(1), the plaintiff could not enforce the contract or recover any money in respect of the work carried out under the contract, although the plaintiff remains liable to the first defendant for any breach of contract.
3 The contract was written. It comprised some sixty pages of printing and typewriting in total. On its face it was prepared by the solicitors for the first defendant. It is established sufficiently for present purposes that it was proffered to the plaintiff by the first defendant, and that the parties had a meeting in the office of the solicitors for the first defendant, held on 4 August 1998. It was then executed by the first defendant after the parties agreed orally to contract upon the terms recorded. However, it was not formally executed on behalf of the plaintiff until sometime shortly after that meeting. The exact date is not demonstrated at this stage.
4 At the meeting of 4 August, the solicitors acting for the first defendant spoke to Mr Lau, a director of the plaintiff, of the necessity of the plaintiff obtaining the relevant contract of insurance. According to Mr Lau, the solicitor said that it had to be procured before the building started. This particular statement is disputed. Mr Lau had not entered into any building contract since the legislation introducing s.92 had been enacted, and he was unaware of its provisions. He took steps to obtain a contract of insurance and obtained one no later than 24 August.
5 The building work did not start until 27 August. On 24 August, Mr Lau and Mr Tran, a director of the first defendant, went together to the offices of the Local Council, and on this occasion Mr Tran was shown a certificate of insurance which the plaintiff had by then procured.
6 In its Statement of Claim, the plaintiff advanced a number of propositions calculated to enable it to avoid a defence which the first defendant had foreshadowed, namely that by the force of s 92 and s 94, the plaintiff cannot enforce the contract.
7 The plaintiff invokes s.51AC of the Trade Practices Act. The first defendant resists this claim, in the first instance by reference to s.51AC(10) which relates to contracts exceeding one million dollars. Secondly the plaintiff advances a claim of unconscionable conduct by reference to general equitable principles. Thirdly there is a claim in estoppel, and fourthly there is a claim of unjust enrichment.
8 In my view the plaintiff has demonstrated sufficiently for today's purposes a claim in estoppel. Remembering that there is a dispute as to what was said on the 4 August, on the plaintiff's case there was a representation made to the plaintiff to the effect that the plaintiff only needed a contract of insurance before starting the work, rather than before making the building contract. The plaintiff relied upon that representation and the plaintiff would now be disadvantaged if the first defendant was permitted to retreat from that representation.
9 On the plaintiff's case, there was a misrepresentation made on 4 August. Additionally, the first defendant, represented as it was by solicitors, knew of the provisions of s.92 as at 4 August when the plaintiff did not, and it might be that the appropriate inference on the trial will be that the first defendant knew of the provisions of s.92(2) as well as s.92(1).
10 Additionally, after the plaintiff obtained a certificate of insurance, the first defendant objected to its form in that it did not mention the particular building site in question individually, and the plaintiff took steps to obtain a second certificate of insurance which did mention that building site individually.
11 Thereafter the first defendant permitted the plaintiff to do a good deal of work or at least stood by whilst the plaintiff did that work. The plaintiff submitted various progress claims, various certificates were given, and various progress claims were made. After a time the plaintiff made another progress claim for some $250,000 which was not met. Then the first defendant terminated or purported to terminate the plaintiff's employment under the contract by reference solely to the breach of s.92.
12 I repeat, I do not find these as facts. Rather I find that the plaintiff has demonstrated that there are serious questions to be determined to this effect. On the basis of this finding, I need not go on to consider however the other bases upon which the plaintiff's claim has been advanced.
13 The parties then argued the question of the balance of convenience by reference to the four injunctions now sought, recorded in the document titled "Short Minutes of Order" which I have marked "Draft", dated and initialled, and which I will leave with the court papers.
14 I will proceed by summarising the effect of the four orders sought, by way of verbal shorthand only.
15 Order 1 seeks to restrain the first defendant from calling upon certain bank guarantees procured by the plaintiff pursuant to the terms of the contract. The first defendant says, in brief, that there is no occasion for the injunction now sought because the occasions upon which the guarantees might be called up have not yet arisen, pointing out that the first defendant has made no threat to call upon them.
16 That is true, but the first defendant has made a claim upon the plaintiff, which the plaintiff disputes, and which might lead to a call upon the guarantees later on. The balance of convenience seems to me to lie in favour of granting the injunction sought, unless the parties can agree upon some satisfactory intermediate course, perhaps an undertaking by the first defendant not to call upon the guarantees without adequate prior notice. For the moment, if the order sought was made, there seems to be no significant disadvantage to the first defendant except that it might need to move to have that order vacated. On the other hand if the order was not made, it is easy to foresee the possibility that the plaintiff might suffer significant detriment.
17 Order 2 relates to preventing the first defendant doing work on the building site. I understand the real purpose of the order to be to enable the plaintiff to collect evidence which might be useful to the plaintiff if and when there is a hearing relating to a dispute about the quality of the building work. On balance it seems to me that whilst it might be appropriate to grant an injunction for a short time, that is for a matter of a few days or thereabouts, a better solution would be to make an order under Pt.25, r.8 for the inspection of the property by appropriately qualified people. I will invite the parties to make further submissions as to this at the conclusion of my giving these reasons for judgment.
18 Orders 3 and 4 relate to goods on the building site, owned either by the plaintiff or by strangers to the contract, placed on the site by or on behalf of the plaintiff whilst the plaintiff was engaged in the building work, generally in the nature of tools, equipment and building materials.
19 The first defendant does not oppose the making of some order enabling strangers to the contract to remove their property provided appropriate arrangements can be worked out, but it does assert a contractual right to retain the plaintiff's equipment now that the plaintiff's employment under the contract has been terminated pursuant to the terms of the contract.
20 Proceeding on the basis that the plaintiff has demonstrated a serious question to be determined, I do not understand the plaintiff to say that there is any great problem involved if the plaintiff's property is retained for the time being on this basis. Subject to whatever submissions might be made in a minute or two, I am minded to make an order generally as sought in paragraph 4 of the short minutes, which seems preferable to order 3, but limited to the property of strangers to the contract. It might be that the parties will be able to agree upon the precise terms.
21 Before passing from the case, I observe that on the occasion of the second reading speech of the Building Services Corporation Legislation Amending Bill, the Minister for Fair Trading and the Minister for Women, the Honourable Mrs Lo Po' said that the purpose of the legislation, the effect of which was to introduce s.92 and s.94 of the Home Building Act, was to protect consumers.
22 She was of course speaking in the context of contracts relating to residential building work. I venture to say no reasonable person could quarrel with that objective, but the present case demonstrates that the words of Act may go far beyond the legislative intention, as demonstrated by the Minister's speech, and may do so in a way that some people would regard as quite unjust. I do not for one moment criticise the first defendant in this case, which is not seeking to do any more than assert rights which the first defendant says the Act gives it.
23 However it is to be observed if the first defendant is correct, the effect would be that the first defendant, a corporation adequately advised by professional people of different disciplines including solicitors, entered into a contract with a builder at a contract price which was in excess of $2.5 million; and that contract related to the construction, it seems, of twenty seven home units, which the first defendant hopes to sell for $7 million. That is, it hardly qualifies as needing protection as a consumer. It seems to me fair to say that the legislative intention, as measured by reference to the Minister's speech, can be achieved fairly readily by an amendment to the legislation which would go a great way to preventing what many people would regard as an injustice.
24 I will ask the Registrar to forward a copy of these reasons for judgment to the relevant Minister.

(Discussion ensued)

25 I will stand the matter into tomorrow's list in order that short minutes can be brought in.

************

I certify that this and the six preceding
pages is a true copy of the judgement
of Acting Justice Brownie
Dated 14/5/99
26 Associate

Last Modified: 05/17/1999