Kay Associates Pty Ltd v Lockyer Valley Regional Council

[2014] QDC 71

[2014] QDC 71

DISTRICT COURT OF QUEENSLAND

CIVIL JURISDICTION

JUDGE R S JONES

No 710 of 2014

KAY ASSOCIATES PTY LTD  Applicant

and

LOCKYER VALLEY REGIONAL COUNCIL  Respondent

BRISBANE

3.45 PM, TUESDAY, 1 APRIL 2014

EX TEMPORE JUDGMENT

HIS HONOUR:   I am concerned with an application regarding the construction of certain design and construct documents and consequential relief.  The applicant’s outline of argument sets out a number of facts, none of which were challenged by the respondent.  The applicant in this case is a contractor and the respondent the principal and superintendant under the contract.  The relevant facts are as follows.

On 27 October 2011, the applicant and the respondent entered into four contracts for the design and construction of four bridges, with a separate contract entered into for each bridge.  The terms of each of the contracts, I’ve been advised, are, apart from some minor details, in identical terms, at least insofar as the relevant provisions that are required to be considered here are concerned.  Under the terms of the contract, the applicant was required to provide the respondent with security totalling $82,150, being five per cent of the total value of the four contracts.  This application is only concerned with one of those forms of security being guarantee G405519 in the amount of $41,071.

In respect of what was described as the McGarrigal Bridge, work commenced in early 2011.  Practical completion was achieved by the applicant on 31 May 2012 and a certificate of practical completion was issued on 31 May 2012.  Pursuant to clause 37 of the general conditions of the contract, the defects liability period commenced at 4 pm on 31 May 2012, and the defect liability period expired at 4 pm on 31 May 2012.  For reasons that it’s not necessary to go into, the notice of defective works was not received within that timeframe, although nothing really turns on that. 

Similar circumstances exist in respect of two of the other bridges, being the Kirsop Bridge and the Sheep Station Bridge.  For the other bridge, referred to as the Peters Bridge, work commenced in early 2011.  Practical completion was achieved on 22 June 2013 and the certificate of practical completion was issued on 22 June 2013.  Again, as was the case with the other three bridges, there were difficulties with respect to the respondent’s notice of defects period.  To date, the respondent has not released the retention moneys in the amount of $41,071 and that is why these proceedings are now before me. 

The applicant in particular, relies on terms of the contract contained in what is identified as the Australian Standard General Conditions of Contract for Design and Construct.  Clause 42.5 under the heading Final Payment Claim relevantly provides:

Within 28 days of the expiry of the defects liability period or where there is more than one, the last to expire, the contractor shall provide the superintendant with the final payment claim and endorse it Final Payment Claim.

In addition to claims for payment required to be included in a payment claim under clause 42.1, the contractor shall include in the final payment claim all claims for moneys which the contractor considers to be due from the principal arising out of any alleged breach of the contract.  All such claims, whether

under clause 42.1 or this clause 42.5, which had not already been barred, shall be barred after the expiration of the period for lodging a final payment claim.

Under the heading Final Certificate, clause 42.6 of the standard contract provides:

Within 14 days of receipt of the contractor’s final payment claim, or where the contractor fails to provide such claim, the expiration of the period specified in clause 42.5 for the lodgment of the final payment claim by the contractor, the superintendant shall issue to the contractor and to the principal a final payment certificate endorsed Final Certificate.  In the certificate, the superintendant shall certify the amount which in the superintendant’s opinion is finally due from the principal to the contractor or from the contractor to the principal arising out of the contract or any alleged breach thereof.  In such final certificate, the superintendant shall also set out such of the allowances, etcetera, etcetera.

Clause 42.6 concludes with the following words:

Within 14 days after the issue of a final certificate, the principal shall release to the contractor any security retention monies then held by the principal.

It is not in dispute that the applicant has not issued a final payment claim in respect of any of the works.  No explanation has been given as to why.  The applicant’s point, if I can put it simply, is that in reliance on the second limb, if I can call it that, of clause 42.6, as the relevant time period has expired, which is not in dispute, the respondent as the superintendant is required to issue the requisite final certificate and, as a consequence of that, within 14 days of the issuing of that certificate, the principal, who is also the respondent, would then be required to release the relevant retention money.  As I’ve said, clauses 42.5 and 42.6 are contained in the Australian Standards General Conditions of Contract for Design and Construct. 

In my view, in the scheme of the relevant design and construct documents, this is a subordinate document.  In this regard, the contract between the parties, under the heading General Conditions of Contract it is relevantly stated:

General conditions of contract:  the Australian Standard General Conditions of Contract for Design and Construct AS4300-1995 shall accept insofar as they are qualified or amended by the provisions of annexures parts A, B, C and D to the Australian Standard General Conditions of Contract for Design and Construct annexured hereto and by the tender documents apply to and form part of this contract.  Copies of AS4300-1995 can be purchased from Standards Australia.

The aforesaid Australian Standard General Conditions to which I was referring is identified as document AS4300-1995. 

Clause 3 of the general specifications under the heading Precedence of Documentation provides as follows:

Where inconsistencies occur between any documents comprising the tender and contract, they are to be construed in the following order of precedence:  (a) drawings, (b) technical specifications, (c) specification, (d) general conditions of design and construct contract.

Under clause 36 of the specifications, it is further provided:

Statutory declaration:  the following statutory declarations are to be submitted by the contractor to the principal at the following designated stages of the contract.

Statutory declaration – final payment.  The statutory declaration – final payment is to be submitted by the contractor prior to the issue of the final certificate.  The superintendant shall not issue a final certificate until the council has received the statutory declaration.  Each statutory declaration is to be made by the contractor before a justice of the peace and shall be current at the time of its submission.(emphasis added)

A generic statutory declaration concerned with progress payments is contained in the material put before me.  In my view, nothing turns on the fact that this document is identified as being a progress payment document.  In my view, what’s clearly envisaged is that in respect of the final payment claim, a similar statutory declaration would be required.  This statutory declaration is by no means a document dealing with merely procedural or formal matters.  It deals with a number of important matters, including declaring to the effect that all payments due to subcontractors have been met, all labour employed in or about the works has been engaged strictly in accordance with the provisions of the contract of works, and all relevant insurance policies are up to date and current at the time.

It is submitted on behalf the applicant that no conflict arises between clause 42.6 of the standard terms and conditions and clause 36 of the specifications.  That is, according to the applicant, because they are concerned with two entirely different sets of circumstances or procedures.  Clause 36 only has a role, if I understand the applicant’s submissions correctly, in the event that the contractor takes the course of producing a final payment claim.  If, for whatever reason, the contractor elects not to take that course of action, then by virtue of the second limb of clause 42.6, it is entitled to the relevant final certificate at the expiration of the stated time and accordingly, therefore, there is no conflict between the two clauses.  I cannot agree with that submission. 

On its face, clause 36 of the specification prohibits the superintendant from issuing a final certificate until such time as the principal has received the relevant statutory declaration.  It is not in contest that no such declaration has been provided by the

applicant.  In my view, the scheme envisaged under the specification is that progress payments and final payment demands must be lodged or claimed together with the requisite statutory declarations before payment and, in this case, the final payment is made.  That is, both progress payment claims and final claims must be accompanied by the requisite statutory declaration. 

In my view, to put it another way, clause 36 of the specification overrides and leave no scope for the operation of the second limb of clause 42.6 of the general terms of contract relied on by the applicant.  For these reasons, the application must be dismissed.  It’s not in dispute that in such circumstances the applicant must pay the respondent’s cost of the application. 

Accordingly, the orders of the court are that the application is dismissed and the applicant is to pay the respondent’s cost of the application.