Hall (As Liquidator of Symtec Products P/L) v Kayon P/L

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
KYREN P/L v CHARY & ANOR (T/A CEILINGS 2000)
[2007] SADC 106
Judgment of His Honour Chief Judge Worthington
16 October 2007
PROCEDURE - JUDGMENTS AND ORDERS
Trade contract - appeal against Master's decision dismissing an application by the defendant that the plaintiffs' claim be summarily dismissed because of a clause in the contract - appeal dismissed.
District Court Rules 1992 R25.04, referred to.
Wicklow Enterprises v Doysal (1985) 124 LSJS 225, applied.

KYREN P/L v CHARY & ANOR (T/A CEILINGS 2000)
[2007] SADC 106

This is an appeal by the defendant, Kyren Pty Ltd (“Kyren”), against the decision of a Master dismissing its application for an order dismissing and/or striking out the claim by the respondents/plaintiffs, Peter Chary and Paul Vodopianoff (trading in partnership as “Ceilings 2000”).
The relevant history is as follows.
Kyren contracted with various trades for the construction of a carpark and apartments in Vaughan Place, Adelaide, and on 14 May 2003 Ceilings 2000 entered into a contract to undertake wall and ceiling works. Kyren’s agent for that purpose was the construction manager, Hansen Yuncken Pty Ltd (“Hansen Yuncken”). The contract is comprehensive in its reach but for present purposes it is necessary to refer only to a few clauses. Kyren is described in the contract as the proprietor and Ceilings 2000 as the trade contractor.
The contract was for a fixed price, but subject to variations. Clause 5 provides the mechanism for progress payments which are to be handled by Hansen Yuncken. There is also provision for Kyren to retain a percentage of monies due for progress payments, as security for performance, subject to a maximum of 5% of the total amount payable to Ceilings 2000.
Some progress payments were made to Ceilings 2000 and in this action it claims payment of the balance said to be owing by Kyren. Ceilings 2000 says that after adjustments the contract price (inclusive of GST) is $2,384,493.00, that $1,660,695.00 has been paid and that there is a balance of $723,798.00 payable. Kyren says that the claim should be summarily dismissed because of Clause 24 in the contract.
Clause 24 is as follows:
24. FINAL ACCOUNTING
At Practical Completion or not later than 14 days after Practical Completion, the Trade Contractor will submit to the Construction Manager a “Final Statement” of all the Trade Contractor’s claims whatsoever against the Principal for or in relation to the execution of the Works.
The Trade Contractor will not after submission of the statement or (if a statement is not submitted) at the expiry of 28 days after Practical Completion of the Project Works, make or prosecute any claim whatsoever against the Proprietor, whether under this Trade Contract or otherwise, for or in relation to the execution of the Project Works including the Works, except for release of the retention/security fund which is entitled to be held for due performance during the remainder of the Defects Liability Period.
As soon as practicable after receiving the Trade Contractor’s Final Statement, the Construction Manager shall reconcile and agree or disagree with the items incorporated in the Final Statement as to the amount due to the Trade Contractor or the Proprietor as the case may be. Such determination shall be a reasonable assessment of the work involved.
Practical Completion is defined in Clause 1.1.8 as follows:
1.1.8 “Practical Completion”
means that stage in the execution of all the separate trade contracts when all of the following conditions have been met:
(1)Completion of the Project Works in accordance with the relevant drawings and specifications to the complete satisfaction of the Construction Manager, except for minor omissions and minor defects which in the opinion of the Construction Manager do not prevent the Project Works from being reasonably capable of being used or occupied by the Proprietor and will not delay or prevent the issue of the Notice of Practical Completion;
(2) Commissioning of all services has occurred;
(3)All rubbish, surplus materials, equipment has been removed from the Site except such items as the Construction Manager may agree to remain for use during the Defects Liability Period or as required for testing, balancing etc;
(4)All guarantees, warranties, “as built” drawings, operating and maintenance manuals and other documents relating to the Project Works that are required to be delivered to the Construction Manager have been delivered to the Construction Manager;
(5)All necessary approvals from each Statutory Authority for the construction and use of the Project have been obtained and the originals of each such approval has [sic] been forwarded to the Construction Manager;
(6) All temporary works and protections have been removed;
(7)The Project Works and the Site have been cleared to the satisfaction of the Construction Manager.
(8)All required test results in connection with the Project Works have been lodged with the Construction Manager and the Construction Manager has acknowledged to each relevant trade or other contractor that the results are acceptable; and
(9)All inspections and certifications of the Project works as required by or under the Development Act, 1993 and the Building Code of Australia have been carried out and passed;
Kyren asserts that the date of practical completion was 9 March 2005. This appears to be based on two documents. The first is headed “Superintendent Representative Advice - Practical Completion” and it is addressed to Hansen Yuncken and signed by Sam Paddick, described as the superintendent representative. It states that except for certain items, the works reached the stage of practical completion on 9 March 2005. That document bears the date 9 March 2005 but it refers to statements issued by Cheesman Architects as late as 22 March 2005. The date of its preparation is therefore unknown. The second is a fax from Hansen Yuncken to various contractors, including Ceilings 2000, dated 4 April 2005 advising that practical completion was achieved on 9 March 2005. It is to be noted that this fax states: “We also require submission of your Final Statement in accordance with the Trade Contract”. I shall return to that.
Kyren says that Ceilings 2000 did not submit a final statement to the Construction Manager at any time and that as this action was commenced on 5 May 2005, which is more than 28 days after the date of practical completion, the plaintiff is precluded from bringing it by virtue of Clause 24.
Although other arguments were put to the Master in support of the application, the issue on appeal is limited. Kyren submits that the Master erred in not granting it summary judgment under Rule 25.04 of the District Court Rules 1992 because there is no real question to be tried. As relevant to Clause 24, the Master held that there is a dispute between the parties about whether or not a final statement was ever submitted and, as that is a matter that needs to be determined by evidence, it cannot be said that there is no question to be tried.
It is settled law that to succeed in this application Kyren must show that the claim by Ceilings 2000 cannot succeed on any possible view of the facts or the law, i.e., that there is no real question to be tried. Relevant authorities are conveniently summarized in the annotations to Rule 25.04 in Lunn: Civil Procedure South Australia – 1987 Rules. The right to summary judgment under Rule 25.04 is similar to the relief that was available under Order 10 of the 1947 Supreme Court Rules on a Summons for Immediate Relief. The circumstances in which it was appropriate for the court to entertain an application under Order 10 are set out in Wicklow Enterprises v Doysal (1985) 124 LSJS 225 per King CJ at 226:
I pause to observe that this case illustrates how unsatisfactory a vehicle the Summons for Immediate Relief is for the resolution of substantial disputes as to the facts and even as to issues of law requiring extensive argument and consideration. The Summons for Immediate Relief is a convenient vehicle for disposing expeditiously of cases in which there is not substantial dispute or in which the nature of the dispute is such that it can be resolved readily and speedily in Chambers. An attempt to determine by means of the Summons for Immediate Relief issues of fact and law requiring substantial hearing time produces mischiefs which are well illustrated by the course which the present case took.
In my opinion the Master was correct in dismissing Kyren’s application for summary judgment. As some fresh evidence was put before me by consent during the appeal I shall refer to some of the areas of dispute which, in my opinion, confirm that this matter does not qualify for summary disposal.
Ceilings 2000 denies that Clause 24 plays any part in its claim against Kyren. It says that an invoice dated 27 January 2005 for $107,800.00 is the last in a series of invoices since 27 April 2004 that make up the total amount payable by Kyren for works performed under the contract, and that when amounts paid are deducted this leaves the balance claimed. Thus, it is submitted, if the date of practical completion was 9 March 2005, then as “at Practical Completion” Kyren had already received a final statement, i.e., the last in the series of invoices, and Clause 24 has no further application.
“Final Statement” is not defined in the contract but it is submitted for Kyren that in the context of Clause 24, it means a final accounting showing the balance payable which must be given to the construction manager on the actual date of practical completion or within 14 days thereafter. It was submitted that the effect of Clause 24 is that, even if a contractor had given such a statement on the day before practical completion, it would be necessary for another one to be given either on the next day, the day of practical completion, or within 14 days thereafter.
To construe Clause 24 in that way would produce a commercially absurd result but it is unnecessary for me to deal with that submission further. There is a dispute about what is meant by the expression “Final Statement” and evidence of industry practice in construction management may be sought to be called to assist in determining the meaning to be given to it. In any event, Ceilings 2000 would be entitled to lead evidence of its commercial dealings with Kyren between 14 May 2003, the date of the contract, and 27 January 2005 as part of its case to resist the defendant’s attempt to rely on Clause 24. These are not matters that are capable of resolution without a substantial hearing.
On 11 April 2005 Hansen Yuncken wrote to Ceilings 2000 advising that because of issues that had arisen between it and Kyren, Hansen Yuncken had ceased to be construction manager on and from that day. In a letter dated 19 April 2005 and faxed to Ceilings 2000, Kyren stated that for many months there had been problems between it and Hansen Yuncken, that Hansen Yuncken had refused to provide Kyren with the information it needed to assess trade contract claims and that because of its inaction Hansen Yuncken was in breach of its construction management agreement. The letter requested Ceilings 2000, and all trade contractors, to submit copies of their final claims direct to Kyren. This correspondence gives rise to issues of fact and law that are not, on the face of it, suited to speedy resolution at a chamber hearing. For example:
·The notice of practical completion given by Hansen Yuncken to Ceilings 2000 and other trade contractors was the fax dated 4 April 2005. As referred to earlier, that notice requested “submission of your Final Statement in accordance with the Trade Contract”. If, as Kyren contends, Clause 24 is to be construed strictly and the date of practical completion was 9 March 2005, compliance was impossible because the 14 day period for submission of final statements had already expired. What then does the request mean in the circumstances?
·Alternatively, it may be argued that the letter is to be understood as requiring submission of final statements to the construction manager within 14 days of that notice. But that would be misleading because to comply, a trade contractor would have had to submit a final statement within 7 days, i.e. before 11 April, the day on which Hansen Yuncken ceased to be construction manager. That argument would carry the added difficulty that the contractors were not informed of what had happened to Hansen Yuncken until after it had ceased to be construction manager. However, it is arguable that Kyren, either because of its own conduct or that of its agent, Hansen Yuncken, is estopped from relying on Clause 24. That raises issues that are beyond the evidence before the court to date.
·On the face of it, the letter from Kyren dated 19 April 2005 over-rides the provisions of Clause 24. However, it was submitted for Kyren that this is of no avail to Ceilings 2000 because by then both the 14 day period after practical completion and the 28 day limit for making a claim had expired and, therefore, by operation of Clause 24 Ceilings 2000 had already lost its right to sue. That may be arguable but, given the history of problems referred to in the letter, once again the question of whether Kyren is estopped from relying on Clause 24 is open.
Kyren asserts that the date of practical completion was 9 March 2005 but Ceilings 2000 denies that and pleads that it was on or about 4 April 2005. Much of Kyren’s argument about the applicability of Clause 24 depends on when practical completion occurred and to assess the merit of that argument the Court will probably need to make a finding about that date.
Kyren submits that the position is clear in that it is the date that was fixed by the construction manager, Hansen Yuncken: 9 March 2005. But it is not necessarily as simple as that. As can be seen from the definition of “Practical Completion” nine conditions must be met. Some of them are matters that are within the construction manager’s power to declare as having been met, but there are others that are independent of the construction manager, viz. conditions (2), (5), (6), and (9). Whether those conditions were fulfilled by 9 March 2005 will be a matter for evidence.
Moreover, as has already been mentioned, the advice of practical completion from Mr Paddick to Hansen Yuncken refers to the exception of some items that are not listed but can be identified by reference to other documents. The material put before the court so far does not disclose whether any of those items may be relevant to the determination of whether practical completion, as defined, was in fact achieved on 9 March 2005. That would be a matter for evidence, and what occurred during the breakdown in the relationship between Kyren and Hansen Yuncken in the months leading up to April 2005 could well have a bearing on it.
This outline of matters in dispute that may be relevant to whether Clause 24 applies, and if it does whether its operation has been modified, is not meant to be exhaustive but it is enough to show that it cannot be said that there is no real question to be tried in relation to Clause 24.
For these reasons the appeal is dismissed.

[2007] SADC 106

12 July 2007