Geotech Pty Ltd v Drakk Constructions Pty Ltd
[2010] VCC 484
•20 April 2010
| IN THE COUNTY COURT OF VICTORIA | Unrevised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
BUILDING CASES DIVISION
Case No. CI-10-00973
| GEOTECH PTY LTD | Plaintiff |
| (ABN 114 336 515) | |
| v | |
| DRAKK CONSTRUCTIONS PTY LTD | Defendant |
| (ABN 124 703 457) |
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| JUDGE: | HIS HONOUR JUDGE SHELTON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 14 April 2010 |
| DATE OF JUDGMENT: | 20 April 2010 |
| CASE MAY BE CITED AS: | Geotech Pty Ltd v Drakk Constructions Pty Ltd |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0484 |
REASONS FOR JUDGMENT
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Catchwords: Summary judgment application – Building and Construction Industry Security of Payment Act 2002, S.16 – effect of misleading or deceptive conduct in breach of the Trade Practices Act (Cth) 1974 – Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 – Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 – Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] 67 NSWLR 9 – Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC – Winslow Constructions Pty Ltd v John Holland Rail Pty Ltd & Anor [2008] VCC 1491.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Shaw | Lander & Rogers |
| For the Defendant | Mr R Andrew | Slidders Lawyers Pty Ltd |
| HIS HONOUR: |
1 This is an application for summary judgment pursuant to Order 22 of the Count Court Rules of Civil Procedure 2008. The application is based upon s.16(2)(a)(i) of the Building & Construction Industry Security of Payment Act 2002 (“the Act”).
2 The approach to be taken to an application such as this is as stated by the High Court in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, at 89, as follows:
“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”
3 To similar effect is the statement of Herring CJ and Lowe J, in Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332, at 334, that:
“Where there is a real case to be investigated either in fact or law, leave
to defend should be given.”
4 By a Sub-Contract dated 30 October 2009, the plaintiff undertook to carry out bulk excavation and related works for the defendant at 29-35 Lynch Street, Hawthorn for the sum of $192,352.00 (plus GST) (“the sub-contract”). The defendant was constructing there a four-storey, 72-apartment student accommodation complex with basement car park. The sub-contract stated, in Recital (a):
“The sub-contractor is experienced in the performance of works of a
nature similar to the sub-contract works.”
5 On 23 December 2009, the plaintiff forwarded to the defendant a progress claim for the sum of $222,101.00. It is not in issue that this was a payment claim which complied with s.14 of the Act. No payment schedule was provided in accordance with s.15 of the Act.
6 On 1 December 2009, the wall of a neighbouring property to 29-35 Lynch Street, Hawthorn had collapsed (“the incident”). The incident resulted in personal injury to a worker on site and WorkSafe Victoria issued notices prohibiting entry and works on the site. Works were delayed on account of this. The defendant alleges that the incident occurred as a result of unsatisfactory work on the part of the plaintiff.
7 Kosta Drakopoulos, managing director of the defendant, deposes that the incident has caused the defendant losses which he is not yet able to quantify but which he believes to be approximately $105,000. This estimate covers rectification costs, delay and prolongation costs and head office costs.
8 On 1 April 2010, the defendant forwarded to the plaintiff the sum of $117,101.00, being the sum of $222,101.00 less the sum of $105,000.00 referred to above.
9 It is this sum of $105,000.00 for which the plaintiff now seeks summary judgment.
10 The defendant resists the summary judgment application on the basis that the plaintiff, by Recital (a) referred to above, orally by Nicholas Morgan, Manager, Civil Engineering, of the plaintiff, to Kosta Drakopolous, and impliedly made representations that the plaintiff was skilled, experienced and competent with respect to the works it was to perform and that these representations were misleading or deceptive and in breach of s.52 of the Trade Practices Act (Cth) 1974 (“TPA”).
11 Argument before me focussed upon whether s.16(4)(b) of the Act precluded the defendant from relying upon this alleged misleading and deceptive conduct.
12 s.16(4)(b) of the Act provides:
“the respondent is not, in those proceedings, entitled –
(i) to bring any cross-claim against the claimant; or
(ii) to raise any defence in relation to matters arising under the construction contract.”
13 The interaction of the TPA and the identical New South Wales legislation contained in s.15(4)(b) of its Act, was considered in some detail in Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9.
14 There, a payment claim was served under the similar New South Wales legislation and a payment schedule was not provided in response. Previous payment claims had been forwarded to the architect for the project in question, who had responded with payment schedules and had then provided copies of the claims and payment schedules to a company which administered the contract for the proprietor and which arranged payments. With the particular payment claim in issue, it was forwarded directly to the administrator of the contract, with an indication that it had been copied to the architect. An issue arose as to whether this was misleading or deceptive conduct and if so, whether this could be raised by way of a defence.
15 Basten JA delivered the lead judgment. He stated, at page 36:
“[96]
The next question is whether the Building Payment Act sought to preclude such a defence. Section 15(4)(b)(ii) precludes a respondent from raising ‘any defence in relation to matters arising under the construction contract’. But in truth, the defence raised did not arise under the contract, nor was it in relation to a matter arising under the contract: rather it was in relation to misleading or deceptive conduct on the part of the claimant which could lead to injunctive relief under s 87 of the Trade Practices Act. While it is true that the phrase ‘in relation to’ may identify any rational connection between the prohibited defence and a matter arising under the construction contract, and while the entitlement to a progress payment depends in part upon the construction contract and conduct in execution thereof, this language should not be construed so broadly as to prohibit a defence based upon conduct undertaken in service of a payment claim for the purpose of creating a statutory right.”
[my emphasis].
16 Further, at page 42:
“[119] …assuming the complaint under the Trade Practices Act cannot be raised by way of defence, there is, in my view, inconsistency between the State law and the Trade Practices Act in the manner for which the Appellants contend. Accordingly, the State law will be ‘inoperative’ to the extent of the inconsistency. …”
and at page 44:
“[124] The result is that s.15(4)(b)(ii) does not preclude the Appellants raising, by way of a defence to a claim based on a failure to provide a payment schedule, a contention that the service was not effective because it involved misleading or deceptive conduct.
[125] Alternatively, if that contention can only be raised by cross-claim, s.15(4)(b)(i), to the extent that it prevents the taking of that course in reliance on a complaint of misleading and deceptive conduct in breach of s.52 of the Trade Practices Act, is invalid.”
[my emphasis].
17 Hodgson and Tobias JJA, agreed with Basten J.
18 Hodgson JA stated, at page 16:
“[12] I agree with Basten JA that a defence relying on misleading conduct is not prohibited by s.15(4)(b)(ii) of the Building Payment Act.
[13] I agree with Basten JA that to place significant procedural obstacles in the way of obtaining relief provided by the Trade Practices Act would make s.15(4)(b) inconsistent with that Act; but on my analysis there are no such obstacles relevant to this case. However, the primary judge decided the case in a way that precluded the appellants relying on arguable Trade Practices Act remedies; and although the appellants did not put the case before her precisely in accordance with my analysis, in my opinion the primary judge was in error in the way she decided the case, in holding in effect that the appellants’ attempt to rely on the Trade Practices Act was hopeless. Accordingly, the appeal should be allowed.
[14] I should stress that this is a case where the alleged misleading conduct was relevant to the claimant’s entitlement to a judgment pursuant to s.15. In a case where the alleged misleading conduct is not relevant to that entitlement, but only to the final entitlements of the parties, s.15(4)(b) would not in my opinion place obstacles in the way of obtaining Trade Practices Act relief, and there would be no constitutional reason why it could not operate in accordance with its terms.”
19 Tobias JA stated, at page 17:
“[17] I have had the benefit of reading in draft the judgments of Hodgson JA and Basten JA. I agree with their Honours for the reasons each has given, that s.15(4)(b) of the Building Payment Act does not prevent the appellants from raising by way of defence to the respondent’s proceedings in the District Court to recover the amount of its payment claim pursuant to s.15(2)(a)(i) of that Act, the contention that their failure to provide a payment schedule with respect to that claim was induced by the respondent’s misleading or deceptive conduct in breach of s.52 of the Trade Practices Act.”
20 Unlike Bitannia, here, there is not a nexus between the failure to provide a payment schedule and the alleged misleading or deceptive conduct. The three Judges of Appeal are at pains to limit the decision to misleading or deceptive conduct leading to the failure to provide a payment schedule. Here, the alleged misleading or deceptive conduct is, in my view, more correctly categorized as being “under the construction contract”.
21 The defendant could have protected itself by providing a payment schedule in response to the plaintiff’s payment claim of 23 December 2009. It chose not to do so.
22 In Walter Construction Group Ltd v CPL (Surry Hills) Pty Ltd [2003] NSWSC 266, Nicholas J considered a defence based upon misleading or deceptive conduct in contravention of s.52 of the TPA. The alleged misleading or deceptive conduct related to the form of the payment claim. In the end, he found as a matter of fact that there was no such conduct. The point is that the alleged misleading or deceptive conduct related to the form of the payment claim. Again, in a decision of mine, Winslow Constructions Pty Ltd v John Holland Rail Pty Ltd & Anor [2008] VCC 1491, the alleged misleading or deceptive conduct related to the payment schedules which were issued.
23 In my view, there is no real question to be tried. There will be judgment for the plaintiff in the sum of $105,000.00.
24 I will hear from the parties on the question of interest, costs and the further conduct of this proceeding.
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