Hewatt Pty Ltd v Orange City Council

[2020] NSWSC 1662

Supreme Court

New South Wales

Medium Neutral Citation:

Hewatt Pty Ltd v Orange City Council [2020] NSWSC 1662

Hearing dates:

20 November 2020

Date of orders:

23 November 2020

Decision date:

23 November 2020

Jurisdiction:

Equity - Commercial List

Before:

Stevenson J

Decision:

Defendant’s notice of motion of 9 October 2020 is dismissed

Catchwords:

CIVIL PROCEDURE – separate question – whether there should be a separate determination of the merits of the plaintiff’s claim under the Building and Construction Industry Security of Payment Act

BUILDING AND CONSTRUCTION – whether by reason of s 16(4) of the Building and Construction Industry Security of Payment Act the defendant would not be able to bring a cross claim against the plaintiff

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Category:

Procedural and other rulings

Parties:

Hewatt Pty Ltd (Plaintiff)
Orange City Council (Defendant)

Representation:

Counsel:
J P Knackstredt (Plaintiff)
M Orlov (Defendant)

Solicitors:
Stanton & Stanton (Plaintiff)
Pikes & Verekers Lawyers (Defendant)

File Number(s):

2020/126866

Judgment

1. On 17 December 2013, the plaintiff, Hewatt Pty Ltd, and the defendant, Orange City Council, entered into an agreement that Hewatt carry out certain works in relation to the Orange City Council’s expansion of the Orange City Airport.

2. The Council terminated that agreement on 14 May 2014 following Hewatt’s entry into voluntary administration a few days earlier.

3. In these proceedings, Hewatt, evidently now out of administration, seeks judgment for a nominated sum on the basis of service by it of what it contends to be a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”) and alternatively damages for breach of the contract, or on quantum meruit.

4. The latter claim will now be introduced into Hewatt’s claim as a result of leave I granted to Hewatt on 20 November 2020.

5. On the same day, I heard argument in relation to the Council’s application for an order under Uniform Civil Procedure Rules 2005 (NSW) r 28.2 that, in substance, there be a separate determination of the merits of Hewatt’s claim under the Act.

6. The particular separate question sought is:

“Whether Tax Invoice No 7571 dated 30 April 2020 (referred to in paragraphs 14 and 15 of the List Statement dated 28 April 2020) is not a valid payment claim for the purposes s 13 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“SOP Act”) because:

(a)    there is no reference date for the claim; and/or

(b) the claim does not state that it was made under the SOP Act as section 13(2)(c) required at the time?”

7. Mr Orlov, who appeared for the Council, accepted that there was no answer to that separate question that would resolve all issues in the proceedings. However, Mr Orlov submitted that there was merit in determining the separate question prior to other questions because:

1. if the question were resolved favourably to Hewatt, Hewatt would be entitled to judgment under the Act, albeit one that the Council would then seek to have stayed pending the determination of other issues, and

2. if the question were answered unfavourably to Hewatt, that would dispose of its claim under the Act.

8. Mr Orlov also submitted that, were no separate question ordered, and were all issues determined at once, then by reason of s 16(4) of the Act, in the form it was at the relevant time, the Council would not be able to bring any cross claim against Hewatt.

9. Section 16(4) of the Act then provided:

(4)    If the claimant commenced proceedings under subsection (2)(a)(i) to recover the unpaid portion of the scheduled amount from the respondent as a debt:

(a)    judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and

(b)    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.

10. Although it is not necessary for me to make any final decision about this matter, as I read that section, it has the effect that Council could not bring any cross claim against Hewatt in relation to Hewatt’s claim against it under the Act, but that that would not prevent the Council from bringing a cross claim, premised on Hewatt’s lack of success on its claim under the Act, but propounding other claims.

11. Be that as it may, and accepting that the circumstances in this case are a little unusual, I am not persuaded that it is appropriate that there be a separate question; particularly because no answer to the proposed question will dispose of the proceedings.

12. Accordingly, I order that the defendant’s notice of motion of 9 October 2020 be dismissed.

13. My preliminary view is that the appropriate order for costs is that the costs of the defendant’s notice of motion of 9 October 2020 be the plaintiff’s costs in the cause. If either party contends for a different order they should send my Associate a short note by 5.00 pm on 24 November 2020.

14. The matter will be listed for further directions in the Technology and Construction List on 27 November 2020.

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Decision last updated: 23 November 2020