Isis Group Australia Pty Ltd v 370 Degrees Group Ltd
[2011] VCC 1215
•27 July 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
BUILDING CASES DIVISION
Case No. CI-11-02838
| ISIS GROUP AUSTRALIA PTY LTD | Plaintiff |
| (ABN 70 003 861 765) | |
| v | |
| 370 DEGREES GROUP LTD | Defendant |
| (ABN 53 054 944 366) |
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| JUDGE: | HIS HONOUR JUDGE SHELTON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 13 July 2011 |
| DATE OF JUDGMENT: | 27 July 2011 |
| CASE MAY BE CITED AS: | Isis Group Australia Pty Ltd v 370 Degrees Group Ltd |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 1215 |
REASONS FOR JUDGMENT
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Catchwords: Summary judgment application – s.14 and 16 of the Building and Construction Industry Security of Payment Act 2002 – s.61, 63 and 64 of the Civil Procedure Act 2010 – Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd [2011] VSCA 99 – Wheelahan v City of Casey (No 3) [2011] VSC 15 – Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd & Nodco Pty Ltd [2011] VSC 222 – Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd t/as Novatec Construction System [2009] NSWSC 416 – Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425 – Doolan v Rubikcon (Qld) Pty Ltd [2007] QSC 168 – Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 – A & M Wilson Building Contractors Pty Ltd v Lavander Pty Ltd [2009] VCC 1504
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Guthrie | Molino Cahill Lawyers Pty Ltd |
| For the Defendant | Mr B Reid | Moores Legal |
| HIS HONOUR: |
1 This is an application for summary judgment brought by way of Originating Motion and Summons. The application is based upon s.16(2)(a)(i) of the Building and Construction Industry Security of Payment Act 2002 (“the Act”).
The Law
2 The Civil Procedure Act 2010 (”the CPA”) provides:
“61 Plaintiff may apply for summary judgment in proceeding A plaintiff in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a defendant's defence or part of that defence has no real prospect of success. … 63 Summary judgment if no real prospect of success
(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success. (2) … . 64 Court may allow a matter to proceed to trial Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because—
(a) it is not in the interests of justice to do so; or (b) the dispute is of such a nature that only a full hearing on the merits is appropriate.”
3 In Pearl Hill Pty Ltd v Concorp Construction Group (Vic) Pty Ltd [2011] VSCA 99, Hargrave AJA, with whom Tate JA agreed, stated, at paragraph 8, that since the CPA came into force on 1 January 2011:
“… the test to be applied as to whether a plaintiff is entitled to summary judgment is that a defendant’s defence has ‘no real prospect of success’.”
4 The Court of Appeal there, as here, was concerned with an application by the plaintiff for summary judgment under s.16(2)(a)(i) of the Act.
5 In Wheelahan v City of Casey (No 3) [2011] VSC 15, Osborn J stated, at paragraph 8:
“I accept that the test of ‘no real prospect of success’ may in some circumstances extend to cases not regarded as sufficiently hopeless to warrant striking out under the Rules.”
6 Osborn J continued:
“The appropriate enquiry is in terms of the section itself. In Swain v Hillman the Court of Appeal had to consider an English rule of court in similar terms. Lord Woolf MR said at p 92:
‘The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or … they direct the Court to the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.’
The power should be exercised in accordance with the overarching purpose of the Civil Procedure Act 2010.
The High Court has recently addressed the background to, and differing nature of, broadly analogous provisions in Spencer v Commonwealth (2010) 241 CLR 118.
French CJ and Gummow J emphasised that powers of this kind must be exercised with caution:
‘The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process.’”
7 In Ottedin Investments Pty Ltd v Portbury Developments Co Pty Ltd & Nodco Pty Ltd [2011] VSC 222, Dixon J stated, at paragraph 8:
“By civil procedure reform introduced by the Act [the CPA], the operative effect of the principles governing applications for summary dismissal is now less stringent. … The reform is part of a wider trend towards relaxation of summary dismissal rules in the interests of the proper administration of justice. … .”
The Facts
8 In or about December 2008, the parties entered into a contract pursuant to which the plaintiff was to carry out building works for the defendant at 107 Brunswick Road, Brunswick (“the contract”). The contract sum was $2,671,053. On 16 April 2010, the plaintiff served progress claim 14 in the sum of $25,533.70. It contained the endorsement required by s.14(2)(e) of the Act. It was not in dispute that this progress claim constituted a payment claim pursuant to s.14 of the Act and that a payment schedule was not provided in accordance with s.15 of the Act. It is this progress claim on which the summary judgment application is based.
9 It appears that works required under the contract were completed in December 2009.
Discussion and Conclusions
10 Mr Reid, who appeared for the defendant, relied upon s.14(4)(b) of the Act and submitted that payment claim 14 was served outside the three-month period after the “reference date” which he submitted, on the basis of the contract, expired on 25 March 2010.
11 He further submitted that progress claims 12, 13 and 14 all relate to the same work and are made in respect of the same period in which work was performed. He relied upon s.14(8) of the Act. Progress claim 13 dated 8 February 2010 was made under the Act and was for variations totalling $7,359.50.
12 Progress claim 14, the subject of the present application, is for this sum plus $18,174.20, being $16,522.00 plus GST. This sum of $16,522.00 is for VO 029 for “data changes”. The claim for this sum is the only difference between progress claim 13 and progress claim 14. Section 14(9) of the Act allows the inclusion of the sum claimed in progress claim 13 in progress claim 14.
13 Mr Reid relied on three authorities:
(i) Perform (NSW) Pty Ltd v Mev-Aus Pty Ltd t/as Novatec Construction System [2009] NSWSC 416 where Rein J stated, at paragraph 42, that:
“… the Act permits only one payment claim to be made in respect
of the same work, services or goods supplied.”
That comment needs to be looked at in the context that there had previously been a determination by an adjudicator and a further payment claim was served and there was some overlap between items the subject of the second claim and those that were the subject of the adjudication. Here, by contrast, the claim for VO 029 had not been previously made;
(ii) Abigroup Contractors Pty Ltd v River Street Developments Pty Ltd [2006] VSC 425. There, Habersberger J considered, at paragraphs 79-81, whether an earlier progress claim had been superseded and was therefore no longer relevant. There is no such issue here, in that progress claim 13 was included in progress claim 14 as allowed by s.14(8) of the Act;
(iii) Doolan v Rubikcon (Qld) Pty Ltd [2007] QSC 168. This case concerned judicial review of an adjudicator’s determination. Fryberg J stated, with respect to the judgment of Hodgson J in Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421:
“… it is in my judgment reasonably clear that his Honour in saying that successive payment claims do not necessarily have to be in respect of additional work was not saying that successive payment claims may be identical. … .”
Here, as is evident, progress claims 13 and 14 are not identical.
14 In any event, the matters raised by Mr Reid in opposing the summary judgment application could have been the subject of a payment schedule.
15 On several occasions, I have set out my views on this situation. In A & M Wilson Building Contractors Pty Ltd v Lavander Pty Ltd [2009] VCC 1504, I stated:
“The principal submission of Mr Lucas in opposing the summary judgment application was that the plaintiff had no contractual entitlement to serve the payment claim dated 27 February 2009. In my view, this is no defence. I have set out my views upon this in Age Old Builders Pty Ltd v John Arvanitis and George Arvanitis [2006] VCC 1827 where I stated:
‘17
In any event, I am of the view that there was no obligation upon the plaintiff to show compliance with the provisions of the Contract for making progress claims prior to making a Payment Claim. I have set out my reasons for so concluding in Blueview Constructions Pty Ltd (trading as WRS Constructions) v Vain Lodge Holdings Pty Ltd (2005) VCC 1325, a judgment delivered on 15 November 2005. In brief, section 4 defines ‘progress payment’ as a ‘payment to which a person is entitled under section 9’. Section 9 then provides that:
‘(1) On and from each reference date under a
construction contract, a person –
(a) who has undertaken to carry out
construction work under the contract;
...
is entitled to a progress payment under this Act,
calculated by reference to that date.’
18 It will be noted that the wording ‘entitled to a progress payment’ is then picked up in section 14(1).
19 Section 9(2)(a)(1) defines ‘reference date’ for the purposes of sub-section (1) as ‘a date on which a claim for a progress payment may be made’. Under the terms of the Contract this is the 15th day of each month. In coming to the conclusion in Blueview Constructions that there was no obligation upon the plaintiff to show compliance with the terms of the Contract in relation to the making of a progress claim, I relied upon comments made in Beckhaus Civil Pty Ltd v Council of the Shire of Brewarrina (2002) NSWSC 960 at paragraphs 52 and 60–64 per Macready AJ, which were followed in Walter Construction Group Ltd v CPL (Surry Hills Pty Ltd) (2003) NSWSC 266, particularly at paragraphs 52 and 53 per Nicholas J., and Okaroo Pty Ltd v Vos Construction & Joinery Pty Ltd (2005) NSWSC 45 at paragraph 46, again per Nicholas J.
... 23 … I further note that in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (in liquidation) [2005] NSWCA 409, a decision of the New South Wales Court of Appeal delivered on 10 November 2005, Ipp JA stated, at paragraph 76: ‘Provided that a payment claim is made in good faith and purports to comply with s 13(2) of the Act, the merits of that claim, including the question whether the claim complies with s 13(2), is a matter for adjudication under s 17 and not a ground for resisting summary judgment in proceedings under s 15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication.’
24 Section 13(2) of the New South Wales Act broadly corresponds with section 14(3) of the Act.
25 Similarly, in Brookhollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1, Palmer J, stated, at paragraph 41:
‘... if the respondent does not serve a payment schedule within the time limited under the Act and the claimant ultimately seeks the entry of judgment under s 15(4), the respondent may not resist summary judgment on the ground that the payment claim was not a valid payment claim by reason of non-compliance with the requirements of s 13: the respondent has only one chance to take that objection, namely, in a timeously served payment schedule.’
I also note the comment of Finkelstein J in Protectavale Pty Ltd v K2K
Pty Ltd [2008] FCA 1248, at paragraph [5]:‘... if the principal does not provide a payment schedule within due time, whether intentionally (because he disputes the claim) or unintentionally, he becomes liable to pay the claimed amount.’
In T S Constructions Pty Ltd v Piecor Pty Ltd [2009] VCC 1045 I considered a submission “that the decisions in Nepean Engineering and Brookhollow should be confined to whether a plaintiff has an entitlement to payment and that [it] did not extend as to whether a party was entitled to serve a payment claim in the first place. I stated, ‘In my view, these judgments should not be read so narrowly’.
The defendant had an opportunity to raise the issue of whether the plaintiff was entitled to serve the payment claim in a timeously served payment schedule. It did not do so.”
16 Mr Reid further submitted that progress claim 14 included an “excluded amount” which is precluded by s.14(3)(b) of the Act. This submission was based upon VO 029 being in respect of work required by CitiPower to upgrade electrical infrastructure external to the building for the purposes of carrying out isolation works to enable construction to proceed. VO 021 however, which is for a somewhat similar sum of $16,768.00, relates to the CitiPower asset upgrade. Aiden Barnes, project manager for the plaintiff, of 107 Brunswick Road, deposes in an affidavit affirmed on 13 July 2011 that the works covered by VO 029 resulted from a project control group meeting held on 11 June 2009 as is referred to in VO 029 dated 13 July 2009.
17 I conclude that the defendant’s Defence has no real prospect of success. It was not submitted to me that should I so find, I should exercise my discretion pursuant to s.64 of the CPA not to dispose of the matter summarily.
18 Mr Reid submitted that should I determine that the plaintiff was entitled to summary judgment, I should grant a stay on the judgment pending determination of the defendant’s counterclaim, which included a claim for $151,500 liquidated damages, the subject of an architect’s notice under the contract, and allegedly defective works.
19 In my view, to grant such a stay would be contrary to the purposes of the Act and particularly s.16(4)(b) of the Act.
20 There will be judgment for the plaintiff in the sum of $25,533.70.
21 I will hear from the parties on the question of interest and costs and the appropriate form of orders to make, including those required by Rule 45.05 of the County Court Civil Procedure Rules 2008.
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