Hamilton Australia Pty Ltd v Milson Projects Pty Ltd

[1996] QCA 416

IN THE COURT OF APPEAL	[1996] QCA 416
SUPREME COURT OF QUEENSLAND

Appeal No. 542 of 1996

Brisbane

[Milson Projects P/L v. Hamilton Australia P/L]

BETWEEN:

MILSON PROJECTS PTY. LTD.

(Second Defendant) Appellant

AND:

HAMILTON AUSTRALIA PTY. LTD.

(Plaintiff) Respondent

Pincus J.A. Davies J.A. Mackenzie J.

Judgment delivered 29/10/1996

Joint reasons for judgment of Davies J.A. and Mackenzie J.; separate reasons of Pincus J.A. concurring as to the order made.

APPEAL DISMISSED WITH COSTS

CATCHWORDS:	CIVIL - statutory interpretation - Subcontractors' Charges Act 1974 (Qld) s.5 - whether construction of that section in Hewitt Nominees Pty. Ltd. v. The Commissioner for Railways [1979] 2 Qd.R. 256 should be reconsidered.
Counsel:	Mr. D. Gore Q.C., with him Mr. M. Harris for the appellant Mr. G. Hiley Q.C. for the respondent
Solicitors:	McIntyre Cantwell for the appellant Minter Ellison for the respondent
Hearing Date:	18 October 1996

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 542 of 1996

Brisbane

Before Pincus J.A. Davies J.A. Mackenzie J.

[Milson Projects P/L v. Hamilton Australia P/L]

BETWEEN:

MILSON PROJECTS PTY. LTD.

(Second Defendant) Appellant

AND:

HAMILTON AUSTRALIA PTY. LTD.

(Plaintiff) Respondent

REASONS FOR JUDGMENT - PINCUS J.A.

Judgment delivered 29/10/1996

I have read and agree with the joint reasons of Davies J.A. and Mackenzie J. In essence, what the appellant asked us to do was to prefer the reasoning of the primary judge in Hewitt Nominees Pty Ltd v. The Commissioner for Railways [1979] Qd.R. 256 to that of the Full Court; the primary judge’s decision is reported in [1978] Qd.R. 256.

Consideration of the matter is rendered a little more difficult, in my view, if one uses the 1992 reprint of the Subcontractors Charges Act 1974; this made some changes in the language used which may possibly affect the meaning. But under s. 8 of the Reprints Act 1992 "updating" changes must be ignored if they would change the effect of the provision. In these circumstances it is desirable to have regard to the form which the statute had prior to updating. The most pertinent provisions for present purposes are ss. 5(1) and (6).

"5. (1) Where an employer contracts with a contractor for the performance of work upon or in respect of land or a building, or other structure or permanent improvement upon land or a chattel, every subcontractor of the contractor shall be entitled to a charge on the money payable to the contractor or a superior contractor under his contract or subcontract. "

"6. For the purposes of the charge of a subcontractor the amount of money payable to the contractor or subcontractor by whom the first-mentioned subcontractor is employed or to a superior contractor, under his contract or subcontract, shall be deemed to include all money paid in reduction of the contract price to a person other than the subcontractor claiming the charge unless that money is paid in good faith and not for the purpose of defeating or impairing a claim to a charge existing or arising under this Act and is paid otherwise than in contravention of section 11. "

According to the appellant’s argument the expression "superior contractor" in the provisions I have quoted means a contractor who is superior, in the sense of being at a higher level in the chain of contracts, to the contractor who has engaged the claimant subcontractor. In my opinion it is difficult to give any other sensible meaning to the expression "superior contractor". At first instance in the Hewitt Nominees case, it was held ([1978] Qd.R. at 267) that a "superior contractor" is "a person with whom a claimant subcontractor has contracted to perform work"; I cannot agree. The point is in my respectful opinion clear beyond serious argument, if not in the words used in s. 5 (". . . every subcontractor of the contractor shall be entitled to a charge on the money payable to the contractor or a superior contractor . . . ") then at least in s. 6. It does not seem to me possible to construe the expression "a superior contractor" as meaning simply the person with whom the claimant subcontractor has contracted, for that person is clearly covered by the words in s. 6 which precede "or to a superior contractor".

The two objections which were made, at first instance in the Hewitt Nominees case, to the adoption of what seems to be the natural construction of ss. 5 and 6 were in essence, first, that the way the scheme appearing from these sections works is by no means clearly carried through in other parts of the Act and, secondly, that unless one confines the claimant subcontractor’s rights to a charge upon money due at the level immediately above the claimant, in the chain of contracts, inconvenient results will follow. As to the former point, it appears to me to be correct that the concept fairly clearly set out in ss. 5 and 6 necessitated more elaborate drafting in other sections of the Act than one finds in them. As to the second point, I note as do Davies J.A. and Mackenzie J. that the Act has operated since 1978 in accordance with the interpretation then given it and one may reasonably assume that, had that operation proved to be unworkable, the position would have been corrected by Parliament.

I would add only that if the Act is ever replaced by one to similar effect, it is desirable that great care be taken with the drafting, which seems to me to pose unusually difficult problems.

I agree that the appeal should be dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 542 of 1996

Brisbane

Before Pincus J.A. Davies J.A. Mackenzie J.

[Milson Projects P/L v. Hamilton Australia P/L]

BETWEEN:

MILSON PROJECTS PTY. LTD.

(Second Defendant) Appellant

AND:

HAMILTON AUSTRALIA PTY. LTD.

(Plaintiff) Respondent

JOINT REASONS FOR JUDGMENT - DAVIES J.A. AND MACKENZIE J.

Judgment delivered the 29th day of October 1996

The question in this appeal involves the construction of s.5 of the Subcontractors' Charges Act

1974. The appellant contracted with the University of Queensland for the performance by the appellant

of construction work. The appellant then subcontracted part of that work to M. & H. Industries Pty.

Ltd. ("MHI") which in turn subcontracted part of its work to the respondent. On 10 October 1994 the

respondent gave a notice of claim of charge pursuant to s.10 of the Act in respect of monies payable

to it by MHI, the claim being made on monies payable by the University of Queensland to the appellant.

On that date money was owing by the University of Queensland to the appellant but the appellant did not owe money to MHI. The learned primary Judge held the charge to be a good one and gave

judgment against the appellant for the amount owing to the respondent.

The appellant advanced alternative arguments as to why the judgment below was wrong. One,

which relied on a construction of s.5(1) would require this Court to overrule the decision of the Full

Court of Queensland in Hewitt Nominees Pty. Ltd. v. The Commissioner for Railways [1979] Qd.R.

256. It is that sub-s.(1) permits only one charge and that that is one over monies payable to the person

(in this case MHI) with whom the person claiming the charge (in this case the respondent) has a contract

as subcontractor. The second, which would require us at least to disapprove a unanimous dictum in

Hewitt, relies on a construction of s.5(3) which would limit the amount recoverable under the charge

to the amount payable to the person with whom the person claiming the charge has a contract (again

MHI).

The Court is very much indebted to both counsel for the clear and concise way in which they

advanced the competing constructions of each of these sub-sections. But what those submissions

demonstrated is that the meaning of neither sub-section is clear and that, in each case, the construction

which found favour with the Full Court in Hewitt is at least as reasonably open as that for which the

appellant contends.

In those circumstances this Court must have regard to the facts that the decision in Hewitt has

stood for nearly 18 years and that during that time the legislature has amended the Act on several

occasions, yet not chosen to amend s.5 as it could have done if it had thought that the construction

adopted by the Court in Hewitt did not reflect the legislative intent.

In those circumstances we would not be prepared to accept either of the appellant's contentions. It should now be accepted that sub-s.(1) permits a charge by a subcontractor upon money payable to a contractor superior to the contractor who owes the subcontractor money; and that sub-

s.(3), being aimed at the situation where several subcontractors claim against the same fund, limits the

total amount recoverable under charges upon that fund to the total amount of that fund.

The appeal should therefore be dismissed with costs.