Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd - [2002] NSWCA 238

NEW SOUTH WALES COURT OF APPEAL

CITATION: Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic Services Pty Ltd [2002] NSWCA 238

FILE NUMBER(S):
41077/01

HEARING DATE(S): 20 June 2002

JUDGMENT DATE: 26/07/2002

PARTIES:
Fyntray Constructions Pty Ltd (Claimant)
Macind Drainage & Hydraulic Services Pty Ltd (Opponent)

JUDGMENT OF: Heydon JA Hodgson JA Ipp AJA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC 7013/01

LOWER COURT JUDICIAL OFFICER: Gibson DCJ

COUNSEL:
Mr G J McVay (Claimant)
Mr G O Blake (Opponent)

SOLICITORS:
James A Moustacas & Co (Claimant)
Toomey Pegg Drevikovsky (Opponent)

CATCHWORDS:

LEGISLATION CITED:
Building and Construction Industry Security of Payment Act 1999
Interpretation Act 1987

DECISION:
The Summons is dismissed; the claimant is to pay the opponent's costs.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES
COURT OF APPEAL

CA 41077/01
DC 7013/01
HEYDON JA
HODGSON JA
IPP AJA
26 July 2002

FYNTRAY CONSTRUCTIONS PTY LTD v
MACIND DRAINAGE & HYDRAULIC SERVICES PTY LTD

Held (Heydon JA, Hodgson JA and Ipp AJA agreeing), refusing leave to appeal:
On the true construction of the Building and Construction Security of Payment Act 1999 (NSW) it is permissible for a person entitled to a progress payment under a construction contract to serve a payment claim on the person who under the contract is liable to make the payment even though the claim relates to work done in periods prior to the month in which the payment claim is served. Hence the defendant’s claim was not invalid: [53].

O R D E R S

The Summons is dismissed.

The claimant is to pay the opponent’s costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 41077/01
DC 7013/01
HEYDON JA
HODGSON JA
IPP AJA
26 July 2002

FYNTRAY CONSTRUCTIONS PTY LTD v
MACIND DRAINAGE & HYDRAULIC SERVICES PTY LTD

Judgment

HEYDON JA: This is an application for leave to appeal against orders made by Gibson DCJ on 14 December 2001. She gave judgment for the plaintiff in the sum of $77,376.05 and ordered the defendant to pay the plaintiff’s costs. The court has ordered that the leave application be heard concurrently with the appeal, to the intent that if leave is granted no further hearing need take place. The oral argument was presented by counsel on both sides with great capacity – a capacity not matched by those in the defendant’s camp responsible for compiling the White Book, which was in a quite unsatisfactory condition: see MacDonald v Martin [2002] NSWCA 178 at [38].
The grounds of appeal
The grounds of appeal set out in the defendant’s proposed Amended Notice of Appeal fall into three groups. First, it is said that the trial judge erred in her construction of the Building and Construction Industry Security of Payment Act 1999. It may be accepted at the outset that, as the defendant submitted, the points raised have not been determined before, or even raised before, and are important in view of the widespread use of the legislation…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Fyntray Constructions Pty Ltd v Macind Drainage & Hydraulic... and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2002] NSWCA 238
Decision Date: 26 July 2002

CaseChat Overview and Summary

The case involved Fyntray Constructions Pty Ltd (the defendant) appealing a decision concerning a payment claim made by Macind Drainage & Hydraulic Services Pty Ltd (the plaintiff). The dispute arose from a subcontract for plumbing, drainage, and hydraulic works at the Mount Annan Leisure Centre. The plaintiff had issued a payment claim for $74,423.58, which included several tax invoices described as progress claims. The defendant's grounds of appeal focused on alleged errors by the trial judge in interpreting the *Building and Construction Industry Security of Payment Act 1999*, the refusal of a stay, and the sufficiency of the trial judge's reasons.

The court was required to determine whether the plaintiff's payment claim was valid under the *Building and Construction Industry Security of Payment Act 1999*, particularly in relation to the timing of the work covered by the claim relative to its service. Additionally, the court considered whether the trial judge erred in refusing to grant a stay of proceedings and whether her reasons for judgment were adequate. The defendant also raised arguments concerning the plaintiff's contractual entitlement to payment and the defendant's own cross-claim.

The court held that the *Building and Construction Industry Security of Payment Act 1999* permits a payment claim to include work done in periods prior to the month in which the claim is served, meaning the defendant's payment claim was not invalid on this ground. The court found that the defendant's arguments were highly technical and could have been raised against earlier, already paid, progress claims. Furthermore, the defendant had not provided evidence of formal complaints or explanations for withholding payment for the claims in question. The court noted that the defendant had filed a cross-claim and that the appropriate venue for litigating such claims and any associated stay applications was the District Court, not the appellate court. The court concluded that the trial judge's orders did not finally prejudice the defendant, as its cross-claim could still be pursued.

The Summons was dismissed, and the claimant was ordered to pay the opponent's costs.

Orders

Orders of the court

The Summons is dismissed; the claimant is to pay the opponent's costs.

Background

Background to the litigation

The grounds of appeal set out in the defendant’s proposed Amended Notice of Appeal fall into three groups. First, it is said that the trial judge erred in her construction of the Building and Construction Industry Security of Payment Act 1999. It may be accepted at the outset that, as the defendant submitted, the points raised have not been determined before, or even raised before, and are important in view of the widespread use of the legislation and of the contract used by the parties and interlinked with it, Australian Standard Subcontract AS 2545-1987. Secondly, it is said that the trial judge erred in refusing a stay. Thirdly, it is said that she gave insufficient reasons.The background On 18 July 2000 the defendant, described as the Main Contractor, entered a subcontract agreement, called the Subcontract, with the plaintiff, described as the Subcontractor, for the carrying out of plumbing, drainage and hydraulic works at Mount Annan Leisure Centre. The defendant was Main Contractor under a contract with the Principal, Camden Council. On 2 May 2001 the plaintiff made a demand for $74,423.58 for a payment period described as “February 2001, March 2001 and April 2001”. The document opened with the words: “This is a Payment Claim under the Building and Construction Industry Security of Payment Act 1999”. It concluded with the words: “The construction work or related goods and services in respect of which this Payment Claim is made and the method of calculation of the total amount of the claim are set out in the Schedule to this Payment Claim.” The document was signed by Mr Alan McLennan and directed to Mr Theo Penglis. The Schedule comprised tax invoices dated 28 February 2001, 27 March 2001, 29 April 2001 and 2 May 2001. They respectively described themselves as Progress Claims Nos 9, 10, 11 and 12. The last one, which was only for $231.93, said that the sum of $74,423.58 was outstanding. The first three had already been sent to the defendant on or about the dates they bear. Though they did not then bear any notation that they were Progress Claims under the Act, the defendant accepted that they were claims complying with clause 42.1 of the Subcontract. Clause 42.1 of the Subcontract provided:“Payment Claims, Payment Statements and Time for Payment.At the times for payment claims stated in the Annexure and upon issue of a Certificate of Substantial Completion and within the time prescribed by Clause 42.7, the Subcontractor shall deliver to the Main Contractor’s Representative claims for payment supported by evidence of the amount due to the Subcontractor and such information as the Main Contractor’s Representative may reasonably require. Claims for payment shall include all amounts then due to the Subcontractor under the Subcontract or for breach thereof.Within 28 days after receipt by the Main Contractor’s Representative of a claim for payment, the Main Contractor shall pay to the Subcontractor the amount due to the Subcontractor and shall with the payment provide written particulars of how the payment was calculated and if the amount is more or less than the amount claimed by the Subcontractor, shall state the reasons for the difference.Payment of moneys shall not be evidence of the value of work or an admission of liability or that work has been executed satisfactorily but shall be a payment on account only.”The Main Contractor’s Representative was defined by the Annexure of Mr T Penglis. For the purposes of clause 42.1, the Annexure stated the following times for payment claims: “CLAIMS FOR PAYMENT MADE ON THE 25TH OF THE MONTH WITH PAYMENT BEING MADE AT THE END OF THE FOLLOWING MONTH”. The defendant’s breaches of contract

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

These circumstances constitute grounds for the refusal of leave to appeal. All the points which the defendant wishes to agitate are highly technical points. To some extent they could have been deployed against earlier Progress Claims which have been paid, namely Progress Claims Nos 7 and 8. They were not deployed against Progress Claim No 9 until the proceedings began. There is no evidence that the defendant ever put forward a document or a formal complaint to the plaintiff explaining why Progress Claims Nos 9-11 should not be paid in whole or in part. The defendant has filed affidavits in this Court in support of its stay application which include a “Notice of Cross Claim” in the Registry of the Court of Appeal claiming $188,226.52 and which include material purporting to justify that claim. It is open to the defendant to seek a stay in the District Court in support of that claim. The place in which to agitate such a claim was the District Court, and the time for doing so was before Gibson DCJ. There is nothing in her reasons for judgment which suggests that that subject was ever mentioned to her. The defendant’s contention that the plaintiff should have served separate Payment Claims immediately after each contractual Progress Claim contained in a tax invoice is hollow in view of its record of late payment or non payment. One view of the conduct of the defendant overall is that it is desperately attempting to avoid having to make payments the legitimacy of which it never questioned when the initial demands for them were made or when the 2 May 2001 Payment Claim was sent. Indeed, as to one of them, Mr McLennan records explicit admissions that the demand was justifiable. No point was taken that either statutory enforcement or contractual enforcement was unavailable. Another view of the conduct of both parties is that there were arguable faults on both sides in the performance of the Subcontract. If so, the venue for debates on those subjects is the District Court. Leaving aside questions of stays in order to permit arbitration, and any good defence or ground of cross claim which the defendant might have, the plaintiff’s contractual entitlement corresponds substantially with its statutory entitlement. The defendant wishes this Court to consider the merits of the trial judge’s reasoning in relation to the plaintiff’s statutory entitlement. It has, though there was little point in doing so, since the condition of the materials before her was such that the contractual entitlement would have produced substantially the same result. Nothing in the papers before this Court reveals precisely what claim was made before the trial judge and what defences the defendant was proposing to advance to that claim. The numerous formal deficiencies of the White Book are merely external signs of the substantive fact that this case has been a far from satisfactory vehicle for determining the correct construction of the Act. It cannot be said that the papers throw up any material showing that there is a clamant demand for the righting of an injustice. The trial judge’s orders do not finally prejudice the defendant, since the defendant can bring its cross-claim, however belatedly. If it is said that payment of the judgment sum to the plaintiff might be irrecoverable in the event of the defendant succeeding under the cross-claim, the question of any stay is a matter to be debated before the District court. Conclusions in relation to the first group of grounds

Ratio Decidendi

Legal Principle Established

Accordingly, on the true construction of the Building and Construction Industry Security of Payment Act 1999 it is permissible for a person entitled to a progress payment under a construction contract to serve a payment claim on the person who under the contract is liable to make the payment even though the claim relates to work done in periods prior to the month in which the payment claim is served. Hence the defendant’s payment claim was not invalid. Discretionary considerations The defendant’s submissions need to be evaluated in the light of the following circumstances. The 28 February 2001 Tax Invoice, Progress Claim No 9, was served on or about that day. By that day two earlier Tax Invoices had not been paid: one dated 28 December 2000 and one dated 25 January 2001. Mr A T McLennan, who signed the Subcontract on behalf of the plaintiff and who is said by Mr Penglis in an affidavit to have been the plaintiff’s representative for six years and to have been one of the two plumbers who with two apprentices carried out the work, swore an affidavit dated 1 February 2002. It was filed by the plaintiff in resistance to the defendant’s application to this Court for a stay of the trial judge’s orders pending the application for leave to appeal. Mr McLennan described the Tax Invoices dated 28 December 2000, 25 January 2001 and 28 February 2001 as being respectively Progress Claims Nos 7, 8 and 9. So to speak was to speak the language of clause 42.1 of the Subcontract, and each document so described itself. He said that each document was delivered to the plaintiff on or about the date it bears. He said that none of the money claimed had been paid by 6 April (so that the payments required by clause 42.1 were respectively at least two months six days, one month six days and six days overdue). According to Mr Penglis’ affidavit of 24 December 2001, when he told Mr McLennan that all the areas that Mr McLennan needed to work on were now ready for him, Mr McLennan said “I am not going to do any more work until I’ve been paid”. On that date Progress Claim No 7 was about six weeks overdue. On 6 April 2001 Mr McLennan sent the following letter to Mr Penglis:“Please be advised that we put Fyntray Constructions Pty Ltd on notice under Clause 44 of the subcontract conditions for failure to make payments in breach of Clause 42.1We require Fyntray Constructions Pty Ltd to show cause, in writing within 7 days of this notice, why Macind Drainage & Hydraulic Services Pty Ltd should not exercise it’s rights as stated in Clause 44.9 and request notice of cause be sent to our postal address.It is with deep regret that we take this action but feel contractual process should be followed.”Clause 44.7 provided in part: “If the Main Contractor commits a substantial breach of contract and the Subcontractor considers that damages may not be an adequate remedy, the Subcontractor may give the Main Contractor a written notice to show cause.” One substantial breach indicated was “failing to make a payment, in breach of Clause 42.1”. Clause 44.9 provided in part: “If by the time specified in a notice under Clause 44.7 the Main Contractor fails to show reasonable cause why the Subcontractor should not exercise a right referred to in Clause 44.9, the Subcontractor may by notice in writing to the Main Contractor suspend the whole or any part of the work under the Subcontract.”