Long-Airdox (Aust) P/L v Aust Coal Technology P/L

[1997] QSC 27

IN THE SUPREME COURT

OF QUEENSLAND
  No. 9384 of 1996

Brisbane

Before Mr Justice Ambrose

[Long-Airdox (Aust) P/L v. Aust. Coal Technology P/L & Anor]

BETWEEN:
  LONG-AIRDOX (AUSTRALIA) PTY LTD
  A.C.N. 000 133 595
  Plaintiff
AND:
  AUSTRALIAN COAL TECHNOLOGY PTY LIMITED
  A.C.N. 064 080 039
  First Defendant
AND:
  THIESS CONTRACTORS PTY  LIMITED
  ACN 010 221 486
  Second Defendant

- AND -
  OS No 1013 of 1997

IN THE MATTER  of the Rules of the Supreme Court of Queensland 0.64 r.1B

- and -

IN THE MATTER  of the Subcontractors' Charges Act 1974 (as amended)

- and -

IN THE MATTER  of an application by Radair Pty Ltd for an Order pursuant to the Subcontractors' Charges Act cancelling a claim of charge claimed on or about 4 December 1996 and addressed to BHP AUSTRALIA COAL PTY LTD by LONG-AIRDOX (AUSTRALIA) PTY LTD

- and -

TO a question of construction of the Subcontractors' Charges Act arising between LONG-AIRDOX (AUSTRALIA) PTY LTD and the applicant and other interest parties.

REASONS FOR JUDGMENT - B.W. AMBROSE J.

Judgment delivered 20/02/1997

CATCHWORDS: RULES OF THE SUPREME COURT O. 64 R.1B - SUBCONTRACTORS' CHARGES ACT 1974 SS. 8, 11, 13 - whether payment into court under s.11(5) by an employer is sufficient to justify a claimant subcontractor obtaining a judgment where the defendant consents and the amount is less than that paid into court - orders for consolidation.

Counsel:Mr M. Daubney for the plaintiff/second respondent

Mr P. Major for the first defendant
  Mr W.G. Morrissey (Sol) for the second defendant
  Mr M. Williams for the applicant
  Mr R. Whiteford for the respondent/subcontractors

Solicitors:Russell & Company for the plaintiff/second respondent

Graeme R. Gibson t/a Duells for the first defendant
  McCullough Robertson for the second defendant
  Macrossan & Amiet for the applicant

Heiser Bayly & Mortensen for the respondent/subcontractors

Hearing Date:              12 February 1997

IN THE SUPREME COURT

OF QUEENSLAND
  No. 9384 of 1996

Brisbane

Before Mr Justice Ambrose

[Long-Airdox (Aust) P/L v. Aust. Coal Technology P/L & Anor]

BETWEEN:
  LONG-AIRDOX (AUSTRALIA) PTY LTD
  A.C.N. 000 133 595
  Plaintiff
AND:
  AUSTRALIAN COAL TECHNOLOGY PTY LIMITED
  A.C.N. 064 080 039
  First Defendant
AND:
  THIESS CONTRACTORS PTY  LIMITED
  ACN 010 221 486
  Second Defendant

- AND -
  OS No 1013 of 1997

IN THE MATTER  of the Rules of the Supreme Court of Queensland 0.64 r.1B

- and -

IN THE MATTER  of the Subcontractors' Charges Act 1974 (as amended)

- and -

IN THE MATTER  of an application by Radair Pty Ltd for an Order pursuant to the Subcontractors' Charges Act cancelling a claim of charge claimed on or about 4 December 1996 and addressed to BHP AUSTRALIA COAL PTY LTD by LONG-AIRDOX (AUSTRALIA) PTY LTD

- and -

TO a question of construction of the Subcontractors' Charges Act arising between LONG-AIRDOX (AUSTRALIA) PTY LTD and the applicant and other interest parties.

REASONS FOR JUDGMENT - B.W. AMBROSE J.

Judgment delivered 20/02/1997

These are applications for relief by two claimants for charges under the Subcontractors' Charges Act 1974. The work giving rise to the charges involved the construction of coal mining facilities for BHP Australia Coal Pty Ltd ("BHP Coal") near Mackay in 1996.
           The head contract was between BHP Coal and Thiess Contractors Pty Ltd ("Thiess").
           Next down the line was a subcontract between Thiess and Australian Coal Technology Pty Ltd ("ACT").
           There were a number of subcontractors with ACT including Radair Pty Ltd ("Radair"), Resource Reclamation Pty Ltd ("Resource Reclamation"), Long-Airdox (Australia) Pty Ltd ("Long-Airdox"), and KCE Excavators Ltd ("KCE").
Those subcontractors including Radair and Resource Reclamation claimed charges under s.10 of the Subcontractors' Charges Act 1974.
           For these applications it is necessary to consider only five of those claims.  In respect of two, actions have been commenced in this Court.  In respect of the other three, actions have been commenced in the District Court at Mackay.
It is convenient to tabulate and indicate the amounts claimed in those actions (allegedly secured by charges under s.10 of the Act) and amounts of money paid into court in respect of them -

Action  Plaintiff  Defendants                 Amount Amount Paid
                   (Claimant for Charge)      (Recipient of Claim                  Claimed          into Court
  for Charge)                 $                 $

9384/96              Long-Airdox  ACT
  Thiess  546404.57       

140/96 Radair          ACT
  Thiess
  BHP Coal         
  Resource Reclamation    77646.58        77646.58
  by BHP Coal
145/96 Radair          ACT
  Thiess
  BHP Coal  115828.59      115828.59
  by BHP Coal
W8625/96          Resource  Thiess
  Reclamation  ACT  327686.54

Plaint 191/96       KCE           ACT
  Thiess  31392.26

It is unnecessary to specify the actions in respect of which Thiess has paid various sums into court in respect of the various claims. It suffices to say that in respect of all actions to which Thiess is a party which includes action 9384/96 in which a claim for $546404.57 is made, a total sum of $295617.04 has been paid in by Thiess.
           Stated shortly then there are total charges and claims made by the four sub‑contractors with ACT for work performed upon the construction of the coal mining facilities for the sum of $1,098,958.40.
           There has been a total amount of $489092.21 paid into court in five actions by the employer, BHP Coal and the head contractor, Thiess.
           On 5 December 1996, Radair obtained, without opposition, judgment against Resource Reclamation in plaint 140 of 1996 for the sum of $59225.82.
           In action 9384 of 1996 Long-Airdox seeks the following orders:

1. Consolidation of Writ 9384 of 1996 (Long-Airdox is the plaintiff/claimant) with District Court Plaint 140 of 1996 (Radair is the plaintiff/claimant) and

   District Court Plaint 145 of 1996 (Radair is the plaintiff/claimant) and
              District Court Plaint 191 of 1996 (KCE is the plaintiff/claimant) and
              Writ 8625 of 1996 (Resource Reclamation is the plaintiff/claimant).

2. That all the monies paid into Court in the various actions be paid into the Registry of the Supreme Court at Brisbane.

3. That each claimant subcontractor verify its claim.

4. That directions be given for the determination of the claims which presumably will lead to a determination of the entitlement of each of the plaintiff/claimants with respect to work performed to develop and construct the coal mining facilities in question.

   In application OS 1013 of 1997, Radair seeks the following relief.

(a)A declaration that upon the proper construction of s.8 of the Subcontractors' Charges Act, subcontractors with competing claims of charge only share in the fund which they have specifically charged.

(b)A declaration that being the only subcontractor to claim a charge upon monies due under the head contract between BHP Coal and Thiess, Radair is entitled to payment to it of $59225.82, being part of the monies which were paid into court in plaint 140 of 1996 by BHP Coal and to an order pursuant to s.11 of the Subcontractors' Charges Act that those monies be paid forthwith.

It is the contention of Radair that because it was the only subcontractor which claimed a charge against BHP Coal on monies payable by it to Thiess - the various other subcontractors only having claimed charges against ACT and Thiess - there is no question of Radair being entitled only to a proportional part of the contract monies due from BHP Coal to Thiess should those monies be sufficient to meet its claim if established and that it has been sufficiently established by the fact that BHP Coal paid into court the full amount of its claim which was sufficiently proved by Radair obtaining without opposition judgment against Resource Reclamation in that action for the sum of $59225.82 on 5 December 1996. It is the contention of Radair that s.8 of the Act operates only with respect to the money payable under the contract between BHP Coal and Thiess and because Radair is the only subcontractor who has claimed a charge against that fund - all the other sub‑contractors having limited their claims to monies due to various other contractors and subcontractors "down the line", it is therefore entitled to recover the whole of the amount to which its entitlement has been established by the judgment it obtained in the action to which BHP Coal was one of the five defendants and in respect of which BHP Coal paid into court a sum in fact greater than Radair's entitlement established by obtaining judgment against Resource Reclamation.
           It follows inevitably from this contention that the failure of the various sub‑contractors and contractors "down the line" from Thiess to lodge a claim in respect of monies due from BHP Coal to Thiess under the head contract means that the only funds available for proportional distribution between them under the Sub‑Contractors' Charges Act will be those in respect of which effective notices have been given by each of them to contractors and subcontractors in the line above them.
           For Radair it is contended that in the circumstances outlined the application for an order for payment of $59225.82 out of the sum of $77646.58 paid into court by BHP Coal in the action in which it obtained judgment against Resource Reclamation is in essence a mere formality.
On the other hand, it is contended for Long-Airdox that BHP Coal's payment of money into court under s.11(5) of the Act simply discharged it from further liability (if any) to Radair and had no relevance to the liability of its head contractor Thiess, ACT or Resource Reclamation. It is unclear on the material just what relationship there is between the amount for which Radair recovered judgment against Resource Reclamation and the amount claimed to be charged under monies payable by BHP Coal to Thiess.
It is the contention of Long-Airdox that all monies paid into court by BHP Coal in the actions commenced by Radair (140 and 145 of 1996) against the various contractors and subcontractors should form part of the pool of monies available to all subcontractors in respect of the claims which they might establish in the five pending actions when consolidated where all contractors and subcontractors will have the opportunity to test the entitlement of Radair to the sum claimed for the work actually performed - irrespective of the views which might be taken either by BHP Coal or Resource Reclamation; all contractors and subcontractors might then share that pool of contract monies in proportion as contemplated by s.8 of the Act.
It is the contention of Long-Airdox that an interpretation of s.8 of the Act which resulted in Radair having its claim satisfied to the extent sought would deprive other subcontractors at the same level with competing charges of the opportunity to test its claim against theirs so that monies for which BHP Coal is liable under its contract with Thiess would not be shared in proportion by the various other subcontractors who had performed development work for the benefit of BHP Coal would be contrary to the manifest intention and philosophy of the Act affirmed in Hewitt Nominees Pty Ltd v. Commissioner of Railways [1979] Qd R. 256 and reaffirmed in Milson Projects Pty Ltd v. Hamilton Australia Pty Ltd - No. 542 of 1996 unreported Court of Appeal 29 October 1996.
It is clear on the material that each of the various contractors and subcontractors has lodged claims for charges with Thiess and ACT. If one ignores the claim made by Radair against BHP Coal then all sub-contractors would have to "compete" for monies payable by Thiess under its contract with ACT. Those monies of course would be received by Thiess from BHP Coal. In the ordinary course of events an order would be made under s.13 of the Subcontractors' Charges Act 1974 for consolidation of all the actions to enforce competing contractors' and subcontractors' charges. There would be one fund from which the claims of the competing subcontractors would be satisfied in proportion to their claims established under s.8. The "proportion" of course would depend upon an analysis of the contractual entitlement of the other party to the claimant's subcontract and that might well depend upon entitlements of other subcontractors. In that situation each of the various parties involved would have the opportunity to test the claims of all the others.
           The monies which Radair now seeks to have paid out are monies which BHP Coal would otherwise have paid to Thiess and which in the absence of the steps taken by Radair to claim against that sum would have been shared by all the subcontractors once their various claims had been verified and established.
           It is contended by Long-Airdox that Radair has not merely claimed a charge on monies payable by BHP Coal to Thiess; it has claimed a charge on monies payable "all the way down the line" because the fund to meet ACT's obligations to its subcontractors is dependent upon the monies ACT receives from Thiess which in turn depends upon the monies Thiess receives from BHP Coal.
Stated shortly, Long-Airdox contends that "the contract" in s.8 must extend to the head contract between BHP Coal and Thiess and as a consequence monies payable under that contract which otherwise would have "passed all the way down the line" should form part of the pool of funds from which each of the subcontractors is entitled to share in proportion when its claim is ultimately established in the one consolidated proceedings. All the subcontractors of ACT are at the same level and their entitlement is based on the work they performed for Thiess's subcontractor for the ultimate benefit of BHP Coal. Similarly the entitlement of Resource Development is dependent upon the work it performed for ACT for the ultimate benefit of BHP Coal.
Counsel were unable to refer to any authorities to assist in construing the relevant sections of the Act which to my mind are imprecisely drawn. In considering the contentions advanced by each of the applicants in this case I will have regard to some of the other statutory provisions in the Act which might cast light on the sense in which the words "the contract" are used in s.8.
           Under s.3(1) it is provided, inter alia:

"'contractor' as regards an employer, means a person who contracts directly with the employer to perform work ...

'employer' means a person who contracts with another person for the performance of work by that other person, or at whose request or on whose credit or behalf, with the person's privity and consent, work is done, ...".

'The contract price is defined:

"'contract price' includes the money payable for the performance of work under a contract or subcontract ...".

Under s.5(1) it is provided:

"5.(1) Where an employer contracts with a contractor for the performance of work ... every subcontractor of the contractor shall be entitled to a charge on the money payable to the contractor or a superior contractor under the subcontractor's contract or subcontract."

Section 5(3) provides:

"(3) The total amount recoverable under the charges of subcontractors shall not exceed the amount payable to the contractor or subcontractor under the contract or subcontract ...".

Section 6 provides, inter alia:

"6. For the purposes of the charge of a subcontractor the amount of money payable to the contractor ... or to a superior contractor, under the contract ... shall be deemed to include ...".

Section 8 provides:

"8. Where the money that is or is to become payable under the contract is insufficient to meet the claims of 2 or more subcontractors any insufficiency shall be borne by them in proportion to the amounts of their claims."

The first thing to notice about the wording of s.8 is that it refers to the sufficiency of money payable under "the contract" to meet the claims of two or more subcontractors. While "subcontractor" is defined in s.3 to mean "a person who contracts with a contractor or with another subcontractor for the performance of work", that in my view is insufficient to require that the words "the contract" where used in s.8 be construed as referring only to monies payable to the contractor (or superior contractor who might be a subcontractor to somebody else) with whom the subcontractor making the claim has contracted to perform the subcontract work.
           In my view the principal object of the Subcontractors' Charges Act - to the extent that that may be confidently ascertained from its language  - is to allow subcontractors to obtain security over monies to which their immediate contractor has or will become entitled by claiming a charge on those monies in accordance with the Act. Ultimately, the source of the money to pay for the work performed for the benefit of the employer will be that employer.  That money will become payable as a consequence of the express or implied terms of the contract between the employer and the first or head contractor who initially undertakes the obligation to perform the relevant work.
It may well be the case that some "superior contractor", to use the terminology of s.10 of the Act, higher up the line between the employer and the subcontractor claiming a charge will be liable to pay its subcontractors more money than it is entitled to receive under its contract with the employer or earlier superior contractors. The structure of the Act however gives subcontractors a charge only over those monies which a contractor is entitled to receive from earlier "superior contractors" or the employer.
I would construe s.8 as referring to the fund of money payable by BHP Coal to Thiess under the head contract for the performance of the work, the subject of the various charges. I am unpersuaded that the "two or more subcontractors" in s.8 refer only to subcontractors at the same level or who have subcontracted with the same contractor.
           Under s.9A(1), any subcontractor may obtain the name and address of the "employer" from the contractor or a superior contractor in the line of contracts stretching from the employer down to the subcontractor.
Section 10(1) of the Act entitles a subcontractor to claim a charge on money "payable under the contract to the subcontractor's contractor or to a superior contractor".
Section 11(1) provides, inter alia:

"11.(1) When a notice of claim of charge is given pursuant to section 10, the person to whom it is given shall retain, until the court in which the claim is heard directs to whom and in what manner the same is to be paid, a sufficient part of the money that is or is to become payable by the person under the contract to satisfy the claim."

Section 11(5) provides:

"(5) An employer or superior contractor may, at any time after notice of claim of charge has been given to the employer or superior contractor, pay into court the amount that the employer or superior contractor is required to retain under this section."

Payment into court under s.11(5) then discharges the employer or superior contractor from all further liability in respect of that amount paid - presumably liability to pay that sum to its contractor or other superior contractor.
Section 11(7) of the Act then provides that money paid into court under s.11 may not be paid out except under order of the court.
           Section 12(3A) of the Act provides:

"(3A) Every action brought by a subcontractor to enforce a charge shall be deemed to be brought on behalf also of every other subcontractor who has given notice of claim of charge pursuant to section 10 and who in accordance with rules of the court and this Act becomes a party to the action."

Section 13 of the Act provides:

"13. When separate actions are brought under this Act against the same person or against several persons in respect of the whole or any part of the work specified in the same contract between the employer and the contractor, the court may order those actions to be consolidated on such terms as it thinks just."

Section 13 obviously has regard to works performed by different subcontractors at different levels as a consequence of the provisions of the head contract between the employer and the head contractor.
This is a case where competing claims come from subcontractors at the same level who subcontracted with ACT. All of those subcontractors gave notices to ACT and indeed to the head contractor with BHP Coal which was Thiess. One of them - Radair - in addition gave a notice to BHP Coal as employer and also to another subcontractor of ACT, Resource Reclamation. On the material, the basis upon which notices were given to both ACT and Resource Reclamation is unclear. Presumably part of the work to be performed by Resource Reclamation pursuant to its subcontract with ACT was in fact performed by Radair pursuant to a further subcontract between Resource Reclamation and Radair. In any event this would be consistent with the pleading in plaint 140/1996 where the liability of BHP Coal is asserted to be based upon a notice of claim served upon it as "employer". It is undesirable at this stage to embark upon consideration of what if any right against other subcontractors payment by BHP Coal into court under s.11(5) of the Act may give to Radair which obtained judgment by consent of Resource Reclamation only one of five defendants to that action for a lesser sum than those either claimed in the plaint or in the notices served under the Act. Presumably the action was "settled" between Radair and Resource Reclamation without reference to other parties to the action or to other subcontractors claiming charges under the Act. The basis of the settlement does not emerge from the material. The fact that under s.11(6) payment by BHP Coal into court of a larger sum than the amount of the consent judgment discharges the liability of BHP Coal to Thiess in respect of the sum paid in does not of itself lead to any conclusion as to Radair's entitlement to that money. I am unpersuaded that Resource Reclamation's consent to judgment has the effect of a compliance with s.10(3) and (4) of the Act. In my view the provision for consolidation of actions under s.13 is designed to facilitate the proportional distribution of monies payable under the head contract by the employer in respect of work done for its benefit among subcontractors who have performed work for the benefit of the employer where monies payable by it are insufficient to meet in full all their claims made and established under the Act.
           Basic to Radair's contention that it alone of the subcontractors with ACT has its claim secured over monies payable by BHP Coal to Thiess, is establishment of that claim; in my view this has yet to be done. When and if it is done, it will be necessary to determine the argument raised by Radair that monies to which it is entitled from Resource Reclamation are secured with priority over all other subcontractors upon monies paid into court by BHP Coal on the basis that they represent monies payable by BHP Coal to Thiess. In my judgment it would be premature to determine this point at the present time. Radair's entitlement ought be established along with the establishment of the entitlements of all other claimants after a proper examination of relevant evidence before any order is made for payment out of monies paid into court by BHP Coal.
In my judgment the construction of s.8 of the Act advanced by Long-Airdox is to be preferred to that advanced by Radair and accordingly I make the following orders:
           In OS No. 1013 of 1997, I order that the application be dismissed and that the applicant pay the respondent's costs of and incidental to it to be taxed.
           In Action No 9384, I order:

1. That the following actions be consolidated:

   (a)Action No 9384 of 1996

   (b)District Court Plaint No. 140 of 1996 (Mackay Registry) in which the Plaintiff is Radair Pty Ltd (A.C.N. 010 824 076);

   (c)District Court Plaint No. 145 of 1996 (Mackay Registry) in which the Plaintiff is Radair Pty Ltd (A.C.N. 010 824 076);

   (d)District Court Plaint No. 191 of 1996 (Mackay Registry) in which the Plaintiff is KCE Excavations Pty Ltd (A.C.N. 073 066 118);

   (e)Writ of Summons No. 8625 of 1996 in which the Plaintiff is Resource Reclamation Pty Ltd. (A.C.N. 071 332 753).

2. That all of the monies paid into Court in the proceedings so consolidated be paid into the Registry of the Supreme Court at Brisbane by 12 March 1997;

3. That each claimant subcontractor verify its claim by Affidavit in such detail as is appropriate having regard to the questions raised by the pleadings in the proceedings in the said Courts;

4. That the Affidavits of each subcontractor be filed and served on the solicitors for each of the other parties to the actions so consolidated by 12 March 1997;

5. That any Affidavit to be filed in opposition to the claim of any subcontractor be filed and served upon the solicitors for that subcontractor by 9 April 1997;

6. That the actions so consolidated be mentioned for further directions on 15 April 1997;

7. That the costs of and incidental to the application in relation to the said actions be reserved.