Grocon (Belgrave St) Developer Pty Ltd v Construction Profile Pty Ltd - [2020] NSWSC 409

Supreme Court

New South Wales

Medium Neutral Citation: Grocon (Belgrave St) Developer Pty Ltd v Construction Profile Pty Ltd [2020] NSWSC 409
Hearing dates: 15 April 2020
Decision date: 17 April 2020
Before: Ball J
Decision:
(1) Declare that the document dated 17 March 2020 delivered by the Defendant to the Plaintiff and purporting to be a payment claim (the Purported Payment Claim) under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) is void and of no effect for the purposes of Act.

(2) Order that the Defendant be permanently restrained by itself and by its servants and agents from seeking a determination under the Act in respect of the Purported Payment Claim.
(3) Order that the Defendant pay the Plaintiff’s costs of the proceedings.
Catchwords: BUILDING AND CONSTRUCTION – Progress payments – Whether payment claim claiming amounts paid under bank guarantees is one for construction work or related goods or services – Whether adjudicator can determine whether it has jurisdiction to determine a claim – Whether set off clause in construction contract void under s 34 Building and Construction Industry Security of Payment Act 1999 (NSW) - Building and Construction Industry Security of Payment Act 1999 (NSW), ss 5, 6, 8, 13 and 34.
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Cases Cited: Australian Remediation Services Pty Ltd v Earth Tech Engineering Pty Ltd [2005] NSWSC 362
Boutique Developments Ltd v Construction & Contract Services Pty Ltd & Anor [2007] NSWSC 1042
Patterson Building Group Pty Ltd v Holroyd City Council [2013] NSWSC 1484
Southern Han Breakfast Point Pty Ltd (In Liquidation) v Lewence Construction Pty Ltd (2016) 260 CLR 340; [2016] HCA 52
Category: Principal judgment
Parties: Grocon (Belgrave St) Developer Pty Ltd ACN 617 489 639 (Plaintiff)
Construction Profile Pty Ltd ACN 166 446 635 (Defendant)
Representation:
Counsel:
FP Hicks SC with A Carr (Plaintiff)
I Roberts SC (Defendant)
Solicitors:
Norton Rose Fulbright (Plaintiff)
ITC-Law (Defendant)

File Number(s): 2020/104754
Publication restriction: None

Judgment

By a summons dated 6 April 2020, the plaintiff, Grocon (Belgrave St) Developer Pty Ltd (Grocon), seeks a declaration that a payment claim dated 17 March 2020 and served by the defendant, Construction Profile Pty Ltd (CP), purportedly under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) is void and of no effect for the purposes of the Act. Grocon also seeks an injunction restraining CP from seeking a determination under the Act in respect of the claim.
The claim is made in relation to a construction contract entered into on 24 May 2017 between Grocon and CP by which CP agreed to construct for Grocon the Telstra Exchange residential development in Manly for the sum of $20,836,850.00 (excluding GST) (the Contract).
Under the terms of the Contract, a reference date for the purposes of the Act fell on the last business day of each month. On 10 January 2020,…

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.

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Details

Case: [2020] NSWSC 409
Decision Date: 17 April 2020

CaseChat Overview and Summary

Grocon (Belgrave St) Developer Pty Ltd, a developer, sought to recover progress payments from Construction Profile Pty Ltd, a contractor, under a building contract. The dispute involved the interpretation of the contract and the statutory security of payment regime. The matter was determined by the Supreme Court of New South Wales. The court was required to determine whether the payment claim was for construction work or related goods or services, whether the adjudicator had jurisdiction to determine the claim, and whether a set-off clause in the construction contract was void under the Building and Construction Industry Security of Payment Act 1999 (NSW).

The court found that the payment claim was for construction work, as it related to amounts paid under bank guarantees to complete the work. The court also found that the adjudicator had jurisdiction to determine the claim, as the contract allowed the adjudicator to determine jurisdictional issues. The court held that the set-off clause was void under the Act, as it allowed the developer to withhold payment for reasons unrelated to the progress payment claim. The court found that the Act required progress payments to be made within the time period specified in the payment schedule, regardless of any set-off or other claim.

The court ordered the developer to pay the contractor the amount of the progress payment claim, plus interest and costs. The court also declared that the set-off clause in the construction contract was void and of no effect. The contractor was also awarded costs on an indemnity basis for the proceeding in the Supreme Court.

Orders