Leach v Dynac

[2000] QSC 300

SUPREME COURT OF QUEENSLAND

CITATION:	Leach & Anor v. Dynac & Ors [2000] QSC 300
PARTIES:	R & R LEACH PTY LTD (ACN 081 599 813) (applicant – first plaintiff) AND CHELDON PTY LTD (ACN 071 477 891) (respondent/second plaintiff) v. DYNAC PTY LTD (ACN 068 888 862) (first defendant) AND SIEMENS LTD (ACN 004 437 880) (second defendant) AND OAKEY POWER CONSTRUCTIONS PTY LTD (ACN 077 186 362) (third defendant)
FILE NO:	10484 of 1999
COURT:	Supreme
DELIVERED ON:	23 August 2000
DELIVERED AT:	Brisbane
HEARING DATE:	28 July 2000
JUDGE:	Helman J.
ORDER:	Application dismissed.

CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – SUBCONTRACTORS’ CHARGES ACT (Q) – whether works carried out by the first plaintiff were arguably not ‘work’ as defined.

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – QUEENSLAND BUILDING SERVICES AUTHORITY ACT 1991 – whether work carried out by the first plaintiff was arguably ‘building work’ as defined.

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – PLEADING – whether parts of the second defendant’s amended defence should be struck out on the grounds that they disclose no reasonable defence or have a tendency to prejudice the fair trial of the proceeding.

COUNSEL:	Mr T. Matthews for applicant – first plaintiff Mr. S. L. Doyle S.C. and Ms. K. Buxton for respondent – second defendant
SOLICITORS:	Barwicks Wisewoulds for applicant – first plaintiff Deacons Graham & James for respondent – second defendant
Acts Interpretation Act 1954 Electricity Act 1976 Electricity Act 1994 Queensland Building Services Authority Act 1991 Queensland Building Services Authority Regulation 1992 Subcontractors Charges Act 1974 Uniform Civil Procedure Rules
ACR Trading Pty Ltd v. Fat-See Pty Ltd (1987) 11 N.S.W.L.R. Caldow Properties v. Low Ltd [1971] N.Z.L.R. 311 Dowstress Pty Ltd v. Holy Spirit [1987] 1 Qd. R. 150 Re Gradeline Contracting Pty Ltd [1998] 1 Qd. R. 251 Morton Engineering Co Pty Ltd v. Stork Wescon Australia Ltd [2000] 2 Qd. R. 148 Multiplex Constructions Pty Ltd v. Rapid Contracting Pty Ltd (in liquidation) & Anor (unreported, no. 10856 of 1998, Qld C.A. 6 August 1999) Sun Engineering (Qld) Pty Ltd v. Dynac Pty Ltd (in liquidation) and Anor, (unreported, no. 510105 of 1999, Holmes J., 9 May 2000) Sutton v. Zullo Enterprises Pty Ltd [2000] 2 Qd. R. 196 Re D.A. Story Pty Ltd [1993] 2 Qd. R. 355

1. HELMAN J: This proceeding has its origin in disputes arising from the construction of the Oakey gas turbine electricity generating plant. There are five parties: the third defendant was the employer which engaged the second defendant in November 1997 to design and build the plant, the second defendant engaged the first defendant, and the first defendant then engaged the first plaintiff, which in turn engaged the second plaintiff.

2. In this application, under the Uniform Civil Procedure Rules 1999, the first plaintiff seeks the following orders concerning the second defendant’s amended defence:

   2. That paragraphs 5 and 7(a) of the amended defence be struck out pursuant to Rule 171(2) of the UCPR on the grounds that they disclose no reasonable defence or have a tendency to prejudice the fair trial of the proceeding;

   3. That paragraphs 7(d)(i) to (iv) inclusive of the amended defence be struck out pursuant to Rule 171(2) of the UCPR on the grounds that they disclose no reasonable defence or have a tendency to delay the fair trial of the proceeding;

   The first plaintiff did not proceed with its application for the orders numbered 1 and
   4.

3. In the second paragraph numbered 1(a) in the first plaintiff’s statement of claim it alleges that it was, at all material times to the proceeding, a subcontractor within the meaning of that term as defined in the Subcontractors’ Charges Act 1974. In paragraph 11 the first plaintiff alleges that the ‘works’ carried out by it for the first defendant were ‘work’ as defined in that Act, and were completed on or about a specified day. In paragraph 21 the first plaintiff alleges that it is entitled to a charge on the moneys payable to the second defendant by the third defendant under the head contract, and in paragraph 22 that it is entitled to a charge on the moneys payable to the first defendant by the second defendant under the first subcontract.

4. The second defendant responded to those paragraphs of the statement of claim in paragraphs 5 and 7(a) of its amended defence:

   5. The Second Defendant denies paragraph 1(b) of the Statement of Claim on the grounds that, at all material times to this action, the First Plaintiff was not a person who contracted with a contractor for the performance of work within the meaning of the Subcontractors’ Charges Act 1974 (“the Act”).

. . . . . . .
7.	As to paragraphs 11, 21 and 22 of the Statement of Claim, the Second Defendant denies that the Plaintiff is entitled to a charge on the monies payable to the Second Defendant by the Third Defendant or on the monies payable to the First Defendant by the Second Defendant on the following grounds:
(a) each of the subcontracts amounted to an indivisible contract for the performance of work, a substantial part of which was not work within the meaning of the Act;

The reference in paragraph 5 to paragraph 1(b) is clearly enough to the second paragraph numbered 1(a).

1. On behalf of the first plaintiff on 28 June 2000 its solicitors requested particulars of the assertion in paragraph 5 that ‘the First Plaintiff was not a person who contracted with a contractor for the performance of work within the meaning of the Subcontractors’ Charges Act 1974 . . .’ In a letter in reply dated 18 July 2000 from the solicitors for the second defendant it was objected that the request was not a proper one for particulars, but this was added:

   However, to avoid any confusion, it is our client’s case that the first plaintiff is not a subcontractor within the meaning of the Act, because the subcontracts were indivisible contracts the substantial parts of which related to work which was not work within the meaning of the Act.

   The first plaintiff’s solicitors also sought particulars of the denial in paragraph 7(a), to which the response of the solicitors for the second defendant was:

   . . . the work that is said not to be work within the meaning of the Act at least includes all of the work identified in paragraph 5 of your client’s statement of claim, and the fabrication and manufacturing works performed off-site and referred to in paragraphs 6 and 7 of the statement of claim.

   Further particulars of the work that is said not to be work within the meaning of the Act will be provided after disclosure. Our client does not presently admit that any part of the subcontract works was work within the meaning of the Act, and until it has had the benefit of disclosure remains uncertain as to whether any part of the subcontract work was work within the meaning of the Act.

   The work identified in paragraph 5 of the statement of claim was the provision by the first plaintiff to the first defendant of the services of a site manager for the Oakey project. In paragraph 6 the first plaintiff alleges an agreement between it and the first defendant under which the first plaintiff was to perform services comprising the fabrication and installation of ‘air-take’ systems and ‘exhaust’ systems at the construction site. In paragraph 7 the first plaintiff alleges an agreement between it and the first defendant pursuant to which the first plaintiff was to manufacture and install on the site vertical louvre frames for the filter house; and so far as that agreement was written the first plaintiff relies on a purchase order dated 12 April 1999, requiring it to ‘manufacture, trial assemble and deliver to site’ two aluminium vertical louvre frame assemblies: see Mr Leslie Leach’s affidavit filed on 20 July 2000, exhibit RL7. Although Mr Leach has sworn in paragraph 14 of that affidavit that the sum referred to in the purchase order of 12 April 1999 has been paid in full, the services provided pursuant to the agreement alleged in paragraph 7 of the statement of claim remain as part of the ‘works’ carried out by the first plaintiff which are referred to and relied on in paragraph 11 of the statement of claim. Work described as ‘painting’ and ‘cladding’ is referred to in a purchase order dated 16 September 1999 from the first defendant to the first plaintiff: exhibit RL8 to Mr Leach’s affidavit.

2. Paragraph 7(d) of the second defendant’s amended defence is as follows:

7.

(d)

further:

(i)	the work the subject of each of the subcontracts amounted to building work within the meaning of that term as it is defined in s. 4 of the Queensland Building Services Authority Act 1991 (“the QBSA Act”);
(ii)	at all times material to this action, the First Plaintiff did not hold a contractor’s licence under the QBSA Act;
(iii)	in the premises of subparagraphs (i) and (ii), the First Plaintiff was not entitled to any monetary or other consideration for carrying out the work the subject of each of the subcontracts;
(iv)	in the premises of subparagraphs (i), (ii) and (iii), there are no monies payable to the First Plaintiff under the subcontracts which might be secured by a charge under the Act.

1. On 28 June 2000 the solicitors for the first plaintiff requested particulars of the specific type of contractor’s licence it was alleged the first plaintiff was required to hold under the Queensland Building Services Authority Act 1991, and the solicitors for the second defendant responded in the letter of 18 July 2000 by saying that the first plaintiff was required to hold ‘a general building licence and/or a steel fixing licence and/or a painting licence and/or a plumbing and draining licence and/or a carpentry (formwork) licence and/or a carpentry and joinery licence and/or a concreting licence and/or a metal fabricating licence and/or an insulating licence and/or a refrigeration, air-conditioning and mechanical services licence’.

2. Paragraphs 2 and 3 of the first plaintiff’s reply to the second defendant’s amended defence are:

   2. As to paragraph 7(a) the First Plaintiff denies that:

(a)	the subcontract amounted to an indivisible contract for the performance of work;
(b)	denies that a substantial part of the work was not work within the meaning of the Act;
(c)	says that these allegations are untrue or cannot be admitted because of the facts pleaded at paragraph 6 and 7 of the Statement of Claim.

3.           As to paragraph 7(d) the First Plaintiff:

(a)	denies that the work carried out by the First Plaintiff was building work within the meaning of that term as defined in section 4 of the Queensland Building Services Authority Act (“QBSA Act”);
(b)	denies that, as a result, it is not entitled to any monetary or other consideration for carrying out the work;
(c)	believes the allegations are untrue because of the facts pleaded at paragraphs 5 to 7 of the Statement of Claim;
(d)	says, that as a result, it was not required to hold a contractors license under the QBSA Act for the carrying out of the work;
(e)	alternatively, says that the work was excluded from the definition of “building work” pursuant to section 3A(1)(p) and/or 3A(1)(t) of the Regulations to the QBSA Act.

1. I shall deal first with the order numbered 2 sought by the first plaintiff.

[10] The definition of ‘work’ in s. 3(1), the interpretation section, of the

Subcontractors’ Charges Act 1974, so far as it is relevant, is:

‘work’ includes work or labour, whether skilled or unskilled, done or commenced upon the land where the contract or subcontract is being performed by a person of any occupation in connection with –

(a)	the construction, . . . of a building or other structure upon land;
. . .
(c)	the placement, fixation or erection of materials, plant or machinery used or intended to be used for a purpose specified in paragraph (a) . .
. . .

and includes also the supply of materials used or brought on premises to be used by a subcontractor in connection with other work the subject of a contract or subcontract . . .

1. Paragraph 8(e) of an affidavit of the solicitor employed by the second defendant’s solicitors having the conduct of its case, Ms Bronwyn Jury, filed by leave on 28 July 2000 and sworn on the previous day, provides evidence that the first plaintiff fabricated the intake and exhaust system components at its workshop at Dalby. The allegations in paragraph 7 of the statement of claim are to the effect that the louvre frames were to be made and assembled away from the construction site.

2. In my view two propositions are arguable, as was submitted on behalf of the second defendant. The first is that work done by a subcontractor off the land on which the structure in question is being constructed is not ‘work’ within the meaning of that term in the Subcontractors’ Charges Act; and the second is that when a substantial part of the work to be performed is not ‘work’ within the meaning of that term in the Subcontractors’ Charges Act none of the work is then within the scheme of the Act. Support for the first proposition may be found in dicta in Dowstress Pty Ltd v. Holy Spirit [1987] 1 Qd. R. 150 at p. 157 per Moynihan J., with whom Kelly A.C.J. agreed, and in the decision in Re Gradeline Contracting Pty Ltd [1998] 2 Qd. R. 251. Although there is authority to the contrary in dicta of Derrington J. in Dowstress Pty Ltd v. Holy Spirit at p. 152, Re D. A. Story Pty Ltd [1993] 2 Qd. R. 355 and Sun Engineering (Qld) Pty Ltd v. Dynac Pty Ltd (in liquidation) and Anor, (unreported, no. S10105 of 1999, Holmes J., 9 May 2000), the weight of authority arguably supports the first proposition. Caldow Properties v. Low Ltd [1971] N.Z.L.R. 311 at pp. 313 and 323 is support for the second proposition; and see Pyman and Brown, Annotated Subcontractors’ Charges Act 1974 (Lawyers Books, Brisbane) para. 5.2.5, p. 22. It follows that paragraphs 5 and 7(a) of the first defendant’s amended defence should not be struck out on the grounds contended for on behalf of the first plaintiff.

3. I now turn to the order numbered 3 sought by the first plaintiff.

4. Section 42(1) of the Queensland Building Services Authority Act 1991 provides that a person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under the Act. Section 4 of the Act provides that in the Act ‘building’ includes any fixed structure, and ‘building work’ means

(a)	the erection or construction of a building; or
(b)	the renovation, alteration, extension, improvement or repair of a building; or
(c)	the provision of lighting, heating, ventilation, airconditioning, water supply, sewerage or drainage in connection with a building; or
. . . .
(e)	any site work (including the construction of retaining structures) related to work of a kind referred to above;

but does not include work of a kind excluded by regulation from the
ambit of this definition.

A person who contravenes s.42 commits an offence: s. 42(9); and, subject to subsection (4), a person who carries out building work in contravention of s. 42 is not entitled to any monetary or other consideration for doing so: s. 42(3). No reliance on this application was placed by the first plaintiff on s. 42(4) which provides for a claim to ‘reasonable remuneration for carrying out building work’. In any event a restitutionary claim based on that subsection is not one which can support a charge under the Subcontractors’ Charges Act: Multiplex Constructions Pty Ltd v. Rapid Contracting Pty Ltd (in liquidation) & Anor (unreported, appeal no. 10856 of 1998, Queensland Court of Appeal, 6 August 1999), paras 12-14 per de Jersey C.J. and Davies J.A. A builder’s claim founded on the formation and performance of a subcontract for carrying out building work by a builder not appropriately licensed cannot support a charge under the Subcontractors’ Charges Act because such a contract is illegal and unenforceable by the builder: ibid; and see Sutton v. Zullo Enterprises Pty Ltd [2000] 2 Qd. R. 196.

1. Section 30(2) of the Queensland Building Services Authority Act provides that licences are to be divided into classes by regulation, and under the Queensland Building Services Authority Regulation 1992 the classes of licences include those for general building, steel fixing, painting, metal fabricating, and insulating: Schedule 2. It is common ground that the first plaintiff did not hold any licences at the relevant time. The work the first plaintiff was engaged to do was – apart from the provision of supervisory services – to erect or construct part at least of a fixed structure. The pleadings show that that work could require one or more of the classes of licences I have mentioned: fabrication and installation of air intake and exhaust systems, fabrication and installation of louvre frames, painting, and cladding. Furthermore, s. 42(2) provides that for the purposes of s. 42 a person is taken to carry out building work if that person provides supervisory services in relation to building work. Part of the first plaintiff’s claim relates to site management. It follows that an issue of fact at the trial will be whether any of the work carried out by the first defendant and supervised by the first plaintiff was building work within the meaning of that term in the Queensland Building Services Authority Act.

2. In paragraph 3(e) of the first plaintiff’s reply it relies on regulation 3A(1)(p) and (t) of the Queensland Building Services Authority Regulation for the proposition that any work it did was not ‘building work’ as defined in the Queensland Building Services Authority Act. Regulation 3A(1) provides that certain work is excluded from the ambit of the definition of ‘building work’: by paragraph (p) until 30 June 2000 ‘electrical work under the Electricity Act 1976’; and by paragraph (t) ‘the installation of manufacturing equipment or equipment for hoisting, conveying or transporting materials or products (including primary produce), but excluding the installation of fixed structures providing shelter for the equipment’.

3. Section 285A of the Electricity Act 1994 provides that in an Act . . . a reference to the Electricity Act 1976 may, if the context permits, be taken to be a reference to the 1994 Act. In an Act a reference to a law includes a reference to the statutory instruments made under the law: Acts Interpretation Act 1954, s. 7(1). The reference to an Act in s. 285A of the Electricity Act can then be taken as a reference to a regulation made under an Act. Clearly the context permits the reference to the Electricity Act 1976 in regulation 3A(1)(p) of the Queensland Building Services Authority Regulation to be taken to be to the Electricity Act 1994. (Regulation 3A(1)(p) of the Queensland Building Services Authority Regulation was amended by the Queensland Building Services Authority Amendment Regulation (No. 2) 2000 SL No. 159, which provided for the omission of the words ‘Electricity Act 1976’ and the insertion of the words ‘Electricity Act 1994’. That amendment came into force on 1 July 2000.) Section 16(1) of the Electricity Act 1994, so far as it is relevant, provides that ‘electrical work’ is ‘the work of installing . . an . . electrical article used for generating [or] supplying . . electricity’, and s.14(1), so far as it is relevant, provides that an ‘electrical article’ includes ‘an apparatus, appliance, article, . . [or] insulator . . used for generating . . or supplying electricity . .’ It is arguable that none of the things on which the first plaintiff performed work was an electrical article, with the possible exception of the cladding. The cladding could perhaps be described as an insulator although that question would require further investigation, and it is not appropriate that it be determined on this application. Any other work was, it could be argued and putting to one side the provision of supervisory services by the first plaintiff, work done to enable an electrical article to function, but not the installation of an electrical article used for generating or supplying electricity.

1. It is also arguable in my view that the work done by the first plaintiff was not the installation of manufacturing equipment because in ordinary usage a distinction is drawn between the generation of electricity and the manufacture of goods. The verb ‘manufacture’ is not confined to meaning to ‘make by hand’, as its derivation suggests. It now has wider meanings. ‘Since the first Industrial Revolution, “manufacture” has tended to mean the making of goods by machinery, especially on a large scale . . .’: ACR Trading Pty Ltd v. Fat-Sel Pty Ltd (1987) 11 N.S.W.L.R. 67 at p. 77 per Kirby P. It may also be used figuratively in a disparaging sense to mean to ‘fabricate’, to ‘invent fictitiously’: see the Oxford English Dictionary, (2nd ed. 1989) vol. IX, p. 341. But in the context of Regulation 3A(1) it is certainly arguable that it is not used so widely as to encompass the generation of electricity rather than the making of goods.

2. In Morton Engineering Co Pty Ltd v. Stork Wescon Australia Ltd [2000] 2 Qd. R. 148 the work of fabricating steel structures to support pipeline equipment and tanks for a natural gas plant and fixing those things on the site was held to come within the exception provided for by Regulation 3A(1)(t) as the installation of conveying equipment. There are dicta in that case that may assist the first plaintiff, particularly those to the effect that ‘highly technical work outside the building industry’ (p. 149) may be outside the ambit of the Queensland Building Services Authority Act, but the application of such a proposition to the facts of this case is not something that should be determined summarily. It will be a matter for evidence as to how highly technical the work done by the first plaintiff was. Furthermore, nothing in the decision touched upon the issue what is, or is not, manufacturing equipment. The principal issue in that case was whether there had been an ‘installation’ of conveying equipment.

3. I therefore conclude that there is no proper basis for striking out paragraphs 7(d)(i) to (iv) inclusive of the second defendant’s amended defence.

4. The application will be dismissed. I shall invite submissions on costs.