Illawarra Retirement Trust v Denham Constructions Pty Ltd - [2015] NSWSC 823

Supreme Court

New South Wales

Medium Neutral Citation: Illawarra Retirement Trust v Denham Constructions Pty Ltd [2015] NSWSC 823
Hearing dates: 23 June 2015
Date of orders: 25 June 2015
Decision date: 25 June 2015
Before: Darke J
Decision:
Summons dismissed. Costs reserved.

Catchwords: BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) – validity of payment claim – whether reference date available for claim – reference date arises on last business day of month – whether contract terminated before last business day of month – construction of notice of termination – whether subsequent agreement as to when termination would take effect – whether inclusion of item concerning amount of security called upon by principal invalidates payment claim
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW) ss 8, 13(3)(b), 22
Cases Cited: Associated Beauty Aids Pty Ltd v Federal Commissioner of Taxation (1965) 113 CLR 662
Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd [1999] NSWCA 471; (1999) 48 NSWLR 299
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 42
Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653
Category: Principal judgment
Parties: Illawarra Retirement Trust (plaintiff)
Denham Constructions Pty Ltd (defendant)
Representation:
Counsel: M Christie SC, B Michael (plaintiff)
M Dempsey SC, D Macfarlane (defendant)
Solicitors: K&L Gates (plaintiff)
Crisp Legal (defendant)

File Number(s): 2015/176053
Publication restriction: Nil.

Judgment

The plaintiff as Principal entered into a Construction Contract with the defendant as Contractor on 27 March 2013 for the construction of a residential aged care facility. The contract took the form of an amended version of Australian Standard AS4000-1997 General Conditions of Contract.
On 12 May 2015, the plaintiff called upon the security that had been provided by the defendant pursuant to clause 5 and item 13 of the contract. The security had been provided in the form of two unconditional bonds issued by an insurer, each in the sum of $438,040. The defendant thereafter paid the amount of $876,080 to the insurer.
On 15 May 2015, the plaintiff issued a notice of termination of the contract, pursuant to the right to terminate for convenience given by clause 40A.1 of the contract. The notice provided, inter alia, that the Principal was terminating the contract “with effect from Friday 29 May 2015”.
On 27 May 2015, the defendant submitted Progress Claim No. 25. It claimed an amount of $2,892,763.13 in respect of work done up to 27 May 2015. On 29 May 2015, the defendant submitted Progress Claim No. 26. It claimed an amount of $3,783,899.71 in respect of work done up to 29 May 2015. It included an item described as “cash held” in the sum of $876,080. Both progress claims were stated to be payment claims made under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”).
The plaintiff made various complaints about the validity of the payment claims, including that the pursuit of them amounted to an abuse…

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: [2015] NSWSC 823
Decision Date: 25 June 2015

CaseChat Overview and Summary

Illawarra Retirement Trust, the appellant, initiated proceedings against Denham Constructions Pty Ltd, the respondent, over a dispute regarding a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW). The matter was heard in the Supreme Court of New South Wales, with the Court of Appeal hearing the appeal from the primary judgment. The primary dispute centred on the validity of a payment claim made by the appellant and whether certain provisions of the Act applied to invalidate the claim.

The legal issues before the court included whether a reference date was available for the payment claim, given the contract's termination. The reference date, as per the Act, arises on the last business day of the month unless the contract is terminated before that date. The court had to determine the construction of the notice of termination and whether a subsequent agreement regarding the effective date of termination was valid. Additionally, the court examined whether the inclusion of an item concerning the amount of security called upon by the principal invalidated the payment claim.

The court found that the reference date was indeed available for the payment claim despite the contract's termination. The notice of termination was deemed to have been effective on the date it was sent, and the subsequent agreement as to when the termination would take effect was considered valid. The inclusion of an item concerning the amount of security called upon by the principal did not invalidate the payment claim. Consequently, the court ruled in favour of the appellant, Illawarra Retirement Trust. The appeal was dismissed, and the decision from the primary judgment was upheld.

Orders