EPH Enterprises Pty Ltd v Longboat Holdings Group2 Pty Ltd
[2019] VCC 944
•28 June 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-18-004475
| EPH ENTERPRISES PTY LTD | Plaintiff |
| v | |
| LONGBOAT HOLDINGS GROUP2 PTY LTD | Defendant |
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JUDGE: | Lewitan | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 May 2019 | |
DATE OF RULING: | 28 June 2019 | |
CASE MAY BE CITED AS: | EPH Enterprises Pty Ltd v Longboat Holdings Group2 Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 944 | |
REASONS FOR RULING
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Subject:Application for stay pursuant to s57 of the Domestic Building Contracts Act 1995.
Cases Cited:Burbank Australia Pty Ltd v Owners Corporation [2015] VSC 160; Winslow Constructions Pty Ltd v MT Holden Estates Pty Ltd (2004) 10 VR 435; Radojevic v JDA Design Group Pty Ltd & Anor (No 2) [2017] VSC 796.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Ribbands | Doherty & Colleagues |
| For the Defendant | Mr D Deller | Saxbys Lawyers |
HER HONOUR:
1 On 9 October 2018 the plaintiff, EPH Enterprises Pty Ltd (EPH), commenced proceedings in the County Court against Longboat Holdings Group2 Pty Ltd (Longboat Holdings) by writ and statement of claim.
2 Longboat Holdings owns the land known as 110 Roberts Street, West Footscray in the state of Victoria (the property). Longboat Holdings is constructing a residential apartment building comprising 61 units and a two level basement carpark on the property (the development). The property is zoned “general residential zone” under the Planning and Environmental Act 1987.[1]
[1] Paragraphs 5 and 6 in affidavit made by Theodore Abel Kerlidis on 29 March 2019 (Kerlidis first affidavit).
3 Longboat Holdings obtained a building permit to undertake excavation work at the basement of the development and the installation of footings, basement walls and the floor slab including retaining wall.[2] Longboat Holdings engaged contractors, through EPH, to undertake excavation work at the property. The work involved the excavation of the ground in order to allow the construction of the basement car park of the residential building. The excavation of the basement encompassed the hire of machinery and operators to dig and/or drill into the earth and the removal and disposition of the fill dug up from the property (excavation works). In this proceeding EPH seeks payment for that work.
[2] Paragraph 10 Kerlidis first affidavit.
4 Longboat Holdings engaged contractors, through EPH, to undertake the excavation work at the property. The contractors supplied earthmoving equipment (trucks, excavators, rippers, breakers) which were used to excavate the two-level basement carpark. The contractors also supplied operators who operated the equipment and disposed of the material dug up from the land.
5 On 11 February 2018 EPH filed an amended statement of claim (the ASOC) seeking damages of $171,125.59 for breach of contract. On 29 March 2019 the defendant issued a summons seeking an order that the proceeding be stayed pursuant to s57 of the Domestic Building Contracts Act 1995 (the Act). The plaintiff opposes the defendant’s application for a stay.
6 Section 57 of the Act relevantly provides:
VCAT to be chiefly responsible for resolving domestic building disputes
(1)This section applies if a person starts any action arising wholly or predominantly from a domestic building dispute in the Supreme Court, the County Court or the Magistrates’ Court.
(2)The Court must stay any such action on the application of a party to the action if -
(a)the action could be heard by VCAT under this Subdivision; and
(b) the Court has not heard any oral evidence concerning the dispute itself. (emphasis added).
7 It is common ground that the Court has not heard any oral evidence concerning the dispute itself.
What is a domestic building dispute?
8 Section 54 relevantly sets out that a “domestic building dispute” is a dispute or claim arising :
(a) between a building owner (defined under s54(3) of the Act to mean any person who is the owner for the time being of the building or land in respect of which a domestic building contract was made or domestic building work was carried out) and -
(i) a builder; or
(ii) a building practitioner (as defined in the Building Act 1993); or
(iii) a sub-contractor; or
(iv) an architect
in relation to a domestic building contract or the carrying out of domestic building work; or
(b) between a builder and –
(i) another builder; or
(ii) a building practitioner (as defined in the Building Act 1993) or
(iii) a sub-contractor; or
(iv) an insurer
In relation to a domestic building contract or the carrying out of domestic building work. (emphasis added)
9 Longboat Holdings, being the owner of the property, is a building owner for the purposes of s54 of the Act.
10 “Builder” is defined in s5 of the Act to mean a person who:
(a) carries out domestic building work; or
(b) manages or arranges the carrying out of domestic building work.[3]
[3] Section 3 of the Act.
11 EPH is a builder for the purposes of s3 of the Act.
12 “Domestic building work” is defined to mean any work referred to in s5. Section 5 of the Act relevantly provides:
Building work to which this Act applies
(1) This Act applies to the following work-
(a) the erection or construction of a home, including –
(i)any associated work including, but not limited to, landscaping, paving and the erection or construction of any building or fixture associated with the home (such as retaining structures, driveways, fencing, garages, carports, workshops, swimming pools or spas);
…
13 “Home” means any residential premises. In Burbank Australia Pty Ltd v Owners Corporation[4] McDonald J held that the reference to ‘home’ in s5 of the Act includes a multi-apartment development.
[4] [2015] VSC 160, [11] and [13].
14 Section 5(2) of the Act provides that a reference to a home in subsection (1) includes a reference to any part of a home which, in this case would make the basement component of this home itself a home for the purposes of s5(1). The excavation work is part of the construction of the “home”.
15 Section 5(1)(a)(i) expands the definition of domestic building work to also include any associated work. The excavation work is also work associated with the construction of the home within s5(1)(a)(i).
16 The excavation work undertaken in 2018 was “domestic building work’ because it falls within s5(1)(a) of the Act.
17 The excavation work also falls within s5(1)(e) of the Act because it was work associated with the construction of a building on the property which is zoned for residential purposes under the Planning and Environment Act 1987.
18 The dispute between the plaintiff and the defendant is whether the County Court proceeding issued by EPH arises wholly or predominantly from a “domestic building dispute”.
The excavation work did not fall within the definition of domestic building contract[5]
[5] Section 3 of the Act.
19 The plaintiff submitted that the plaintiff’s action did not arise wholly or predominantly from a domestic building dispute because the contract between the plaintiff and the defendant was not a “domestic building contract”. The plaintiff referred to s3 of the Act which defines “domestic building contract” to mean “a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor.”
20 The plaintiff referred to the amended building permit exhibited as part of exhibit TAK1 to Kerlidis’ first affidavit. The amended building permit refers to Longboat Holdings as the builder. The plaintiff referred to the definition of subcontractor in s3 of the Act as “a person who enters into a contract with a builder to carry out part of the work that is to be carried out under a domestic building contract.” The plaintiff submitted that the contract between EPH and Longboat Holdings was not a domestic building contract because it was a contract between Longboat Holdings as builder and EPH as subcontractor.
21 I do not accept the plaintiff’s submission. Section 54 of the Act is not limited to domestic building contracts. It is expressly extended to include a claim arising in relation to the carrying out of domestic building work. Even if the contract between EPH and Longboat Holdings does not fall within the definition of “domestic building contract”, the plaintiff’s claim arises in relation to the carrying out of domestic building work and accordingly falls within the definition of “domestic building dispute” in the Act. As stated in the above paragraph 16, the building work carried out by EPH in this case falls within the meaning of domestic building work.
22 In Burbank Australia Pty Ltd v Owners Corporation[6] Justice McDonald held:
Burbank’s submission that the DBC Act [the Act] has no application to developers must be rejected. It is misconceived to frame a question concerning the application of the DBC Act by reference to the identity of a contracting party (save for a contract between a builder and sub-contractor), whether that party be a developer, builder, vendor or purchaser. Section 5 of the DBC Act, which prescribes the work covered by the Act, directs attention to the nature of the work undertaken rather than the parties to the contract governing the work in question. (emphasis added)
The plaintiff’s claim involved a construction of the terms of the contract and did not involve the manner or quality of performance of the work that was done
[6] [2015] VSC 160, [32].
23 The plaintiff submitted that the dispute between the parties involved a contractual dispute that the charge out rates were excessive, that there was no contract between the plaintiff and the defendant and that there were errors in the invoices. The plaintiff submitted that no issue is taken in relation to the quality of the work. The plaintiff characterised this case as a straightforward claim in debt that did not raise issues requiring a determination by a specialist tribunal.
24 The defendant referred to paragraph 17 of the defence (which is not a defence to the amended statement of claim) and submitted that paragraphs 17 and 19 of the defence make it clear that there is a substantial issue about overcharging by the plaintiff in relation to the services that were performed. The particulars to paragraph 19 contain an extensive table which sets out the basis of the defendant’s claim.
25 I accept the defendant’s submission that the plaintiff’s claim does not involve a simple dispute about the interpretation of a contract; there is a dispute about the excavation work that was undertaken, whether it was in fact undertaken and whether it had been properly invoiced.
26 The plaintiff further submitted that whether the “work” involved in a building dispute comes within the literal meaning of s5 of the Act should be determined after considering the wider objects and purposes of the Act. The plaintiff referred to Winslow Constructions Pty Ltd v MT Holden Estates Pty Ltd[7] and submitted that the intention of the Act is to protect “individual home owners rather than commercial developers.”
[7] (2004) 10 VR 435, [94], [104] and [110].
27 Mr Ribbands referred to the objects of the Act set out in s4. Mr Ribbands submitted that the Act is intended to ensure the maintenance of proper standards for the carrying out of domestic building work. For a dispute to arise between a builder and a sub-contractor in relation to the carrying out of domestic building work, it must be referable to the manner or quality of performance of the work that was done.
28 The defendant referred to Krongold Constructions (Australia) Pty Ltd v Freeman[8] and submitted that the facts in that case are analogous to the facts in this case. In that case the plaintiff alleged that it suffered loss and damage in the sum of $340,256.85 plus GST and it then particularised the types of loss and damage that it suffered. One of the heads of loss and damage was a claim for $4,581 for extra work being a claim for payment by a builder against the building owner. There was an alternative claim in that proceeding on a quantum meruit basis for work carried out under the agreement at the property as well as for additional works. The argument in that case was that the alternative claim did not give rise to a domestic building dispute. Judge Shelton made clear that the action “arises predominantly from a domestic building dispute.” In this case there is also a quantum meruit claim in paragraphs 8-11 of the ASOC. The defendant submitted that the quantum meruit claim is sufficient to make this a domestic building dispute.
[8] [2007] VCC 716.
29 Counsel for the defendant, Mr Deller, also referred to the decision of Deputy President C Aird in Warren’s Plumbing & Drainage Services Pty Ltd v Sharma (Building and Property).[9]In that case the applicant was an excavator and claimed payment of $31,317 plus interest and costs for excavation, soil removal and other related services carried out at the request of the respondent. Mr Deller submitted that this was a case clearly in the jurisdiction of the tribunal. No issue was taken by Deputy President Aird about the jurisdiction of the tribunal in a case which was very similar to this case. It involved excavation work and a claim for payment in relation to the excavation work and related services. In paragraph 10 Deputy President Aird concluded that she was satisfied that the applicant’s claim was a domestic building work dispute. Mr Deller submitted that that case makes it clear that claims for payment on an invoice sent by a builder to the owner arise predominantly from a domestic building dispute which can be heard by VCAT.
[9] [2018] VCAT 883.
30 Mr Ribbands submitted that there was a dispute about the carrying out of the work in each of the cases referred to by the defendant. Mr Ribbands submitted that every one of those disputes encompassed complaints about the manner in which the work was carried out.
31 I do not accept the plaintiff’s submission. Section 57 involves no ambiguity.Section 57 itself makes it very clear that VCAT is the judicial body that is “to be chiefly responsible for resolving domestic building disputes”.The powers of the tribunal in s53(2)(b) of the Act include a power to order payment. There is no doubt that VCAT has jurisdiction.
32 Section 57 provides that the Court must stay any action if the action could be heard by VCAT under s57(2) of the Act. In Radojevic v JDA Design Group Pty Ltd & Anor (No 2)[10] the Supreme Court held that “must” in s57 must be read as imperative.
[10] [2017] VSC 796, [68].
Orders
33 For the reasons stated above, I order that the proceeding is stayed pursuant to s57 of the Domestic Building Contracts Act 1995. I will hear counsel on the form of the order and the question of costs.
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