EFI Construction Pty Ltd v Gee Ha Pty Ltd

Local Court of New South Wales

CITATION:	EFI Construction Pty Ltd v Gee Ha Pty Ltd [2007] NSWLC 17
JURISDICTION:	Civil
PARTIES:	EFI Construction Pty Ltd Gee Ha Pty Ltd
FILE NUMBER:	5611/06
PLACE OF HEARING:	Downing Centre Local Court
DATE OF DECISION:	06/15/2007
MAGISTRATE:	Magistrate H Dillon
CATCHWORDS:	Building & engineering Contracts -- Progress claims & payments – Whether defendant liable for “unpaid portion” of progress claim – Whether moneys set aside as “deposit” or appropriated by plaintiff – Whether credit note extinguishes original debt ab initio
LEGISLATION CITED:	Building and Construction Industry Security of Payment Act 1999 ss. 3, 4, 5, 7, 8, 9, 11, 12, 13, 14 & 15.
CASES CITED:	Airservices Australia v Ferrier (1996) 137 ALR 609 Conlan (Liquidator of Oakleigh Acquisitions Pty Ltd) v Registrar of Titles [2001] WASC 201 Re Global Finance Group Pty Ltd; ex p. Read [2002] WASC 63 Healey v Commonwealth Bank of Australia (1998) NSWSC 678
REPRESENTATION:	Mr T.J. Davie (Counsel for Plaintiff) The Law Partnership (Solicitors for Plaintiff) Mr S. Jacobs (Counsel for Defendant) Gadens (Solicitors for Defendant)
ORDERS:	1. Verdict for defendant and judgment accordingly.; 2. Costs reserved. Parties to have liberty to apply.

Judgment

1. The plaintiff, EFI Constructions Pty Ltd, is a construction company that undertook work for the defendant company, Gee Ha Pty Ltd, on a project at Callala Beach. The parties signed a written contract in May 2004. That contract was a “construction contract” for the purposes of the Building and Construction Industry Security of Payment Act 1999. The Act therefore applied to the contract. Section 7. The plaintiff claims a sum of $54,447.27 in respect of a progress claim made under the Act. The primary issue in the case is whether there remains an unpaid portion of the claim.

The statutory scheme

2. Before considering the facts in the matter, it is important to understand the statutory framework within which this litigation is brought.

3. The object of the Act is “to ensure that any person who undertakes to carry out construction work... under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services”. Section 3(1). Put another way, the purpose of the Act is to ensure that contractors and sub-contractors are given a cash flow during the course of a construction project.

4. The Act provides that the contractor is granted “a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments”. Section 3(2).

5. Section 8 of the Act provides that on certain dates specified either in the contract or otherwise set by the statute itself, a person who has undertaken to carry out construction work under the contract is entitled to a progress payment. The amount to which the contractor is entitled is determined in accordance with the contract or, if the contract makes no express provision for the amount,…