Maxcon Constructions Pty Ltd v Vadasz - [2016] SASCFC 119

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
MAXCON CONSTRUCTIONS PTY LTD v VADASZ
[2016] SASCFC 119
Judgment of The Full Court
(The Honourable Justice Peek, The Honourable Justice Blue and The Honourable Justice Lovell)
25 October 2016
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - FROM SUPREME COURT - BY LEAVE OF COURT - INTERLOCUTORY ORDERS AND JUDGMENTS
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - ADJUDICATION OF PAYMENT CLAIMS
Appeal and applications for permission to appeal against refusals of applications for stays of execution of a judgment founded on an adjudication determination under the Building and Construction Industry Security of Payment Act 2009 (SA).
On 25 February 2016, the first respondent served on the appellant a payment claim for $204,864.55 (inclusive of GST) plus adjudication costs. On 8 March 2016, the appellant served on the first respondent a payment schedule showing the scheduled amount it proposed to pay as $141,163.55. The appellant deducted $38,999.40 as a 5% retention and $24,750 for administration charges.
On 15 March 2016, the first respondent applied pursuant to section 17 of the Act to the second respondent for adjudication of the shortfall. The second respondent appointed the third respondent as adjudicator.
On 11 April 2016, the adjudicator made a determination in favour of the first respondent that $204,864.55 was payable. The adjudicator concluded that the contractual provisions for the retention sum were “pay when paid” provisions rendered void by section 12 of the Act. The adjudicator concluded that the appellant was not contractually entitled to the administration charges.
On 26 May 2016, the appellant instituted this action by way of judicial review seeking the setting aside of the adjudication determination because the adjudicator made errors of law vitiating his decision on the retention sum and the administration charges. After the appellant became aware that the first respondent was an undischarged bankrupt, it added an additional ground that the adjudicator lacked jurisdiction because the contract was rendered void by section 269 of the Bankruptcy Act 1966 (Cth) as a result of non-disclosure by the first respondent of his bankrupt status.
In the meantime, the first respondent had obtained judgment in the District Court of New South Wales for $214,614.35 based on the adjudication certificate pursuant to section 25 of the Act. The appellant had paid $215,030.85 into the District Court. A consent order had been made that this sum be transferred to this Court and the District Court action be dismissed with no order as to costs.
In July 2016, the first respondent sought an order for payment out of $141,163.55 being the scheduled amount. The appellant sought a stay of execution pending hearing and determination of the action. The appellant argued that it had additional claims against the first respondent of $72,141.50 (inclusive of…

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.

Continue reading Maxcon Constructions Pty Ltd v Vadasz

Details

AGLC: Maxcon Constructions Pty Ltd v Vadasz [2016] SASCFC 119
Case: [2016] SASCFC 119
Decision Date: 25 October 2016

CaseChat Overview and Summary

The Full Court of the Supreme Court of South Australia heard an appeal and applications for permission to appeal concerning interlocutory orders made by single judges. The dispute arose from a judgment based on an adjudication determination under the Building and Construction Industry Security of Payment Act 2009 (SA). The appellant, Maxcon Constructions Pty Ltd, sought to stay the execution of this judgment and prevent the payment out of money paid into court to the first respondent, Michael Christopher Vadasz, an undischarged bankrupt and piling subcontractor.

The primary legal issues before the Full Court were whether to grant a stay of execution of the adjudication determination and whether to permit the payment of funds held in court to the respondent. This involved considering the appellant's grounds of appeal against various interlocutory orders made by single judges, including those refusing successive applications for a stay and ordering payment out of court. The court also had to determine the extent to which any payment out should be permitted, given the respondent's bankruptcy and the ongoing nature of the appellant's challenges.

The Court reasoned that while the appellant had grounds to appeal certain orders, a complete stay of payment was not warranted. Applying principles related to the enforcement of adjudication determinations and considering the respondent's status as an undischarged bankrupt, the Court sought a balance between enforcing the adjudication and protecting the appellant's interests pending further appeal. The Court granted permission to appeal against one specific order made on 30 September 2016, allowing that appeal and setting aside the original order.

In lieu of the set-aside order, the Court ordered that a sum of $105,000 be paid out of the monies in court to the respondent, Michael Christopher Vadasz. The remaining balance held in court was to be retained until the determination of the appellant's appeal against another order made on 30 September 2016. The appeal against the orders of 9 September 2016 was dismissed, and permission to appeal against other orders made on 16 September and 7 October 2016 was refused. Costs were reserved.

Orders

Orders of the court

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Background

Background to the litigation

This is an appeal and applications for permission to appeal against interlocutory orders made by single Judges of this Court refusing successive applications for a stay of execution of a judgment founded on an adjudication determination pursuant to the Building and Construction Industry Security of Payment Act 2009 (SA) (the Act) and ordering payment out to the first respondent of money paid into Court by the appellant.Background The appellant/applicant Maxcon Constructions Pty Ltd is a building contractor. Maxcon entered into a contract with the owner of 150 Wright Street Adelaide to construct a multi-storey apartment building to be known as Bohem Apartments. The first respondent Michael Christopher Vadasz is a piling subcontractor who carries on business under the business name Australasian Piling Contractors (APC). Mr Vadasz is an undischarged bankrupt, having been made bankrupt on 7 December 2010. In about July 2015, Maxcon advertised for tenders in respect of the Bohem project. APC tendered for the piling works. On 15 December 2015, Maxcon entered into a contract with APC to design and construct piling for the construction of the Bohem Apartments for a Contract Sum of $711,000 (plus GST).[1] The contract provided for variations to the Contract Sum.[2] The contract provided for progress claims.[3] [1] All dollar figures quoted herein are exclusive of GST, unless otherwise specified.[2] Principally clauses 10.1 and 12.1.[3] Principally clauses 1(b) and 10(a) to (m). The contract provided for security to be given by the subcontractor in the form of the retention by the contractor of 5 per cent of the adjusted Contract Sum (exclusive of GST).[4] Subject to deductions the contractor was entitled under the contract to make, the retention sum was to be released to the subcontractor as to 50% thereof 90 days after the issue of a certificate of occupancy and any other regulatory approvals required for occupancy (CFO) and as to the balance thereof 365 days after achievement of CFO.[5] For ease of reference, we use the expression “certificate of occupancy” to encompass all regulatory approvals required for occupancy.[4] Clause 11 and Schedule E item 7. The retention sum was to be built up progressively by deducting 10% of progress claims until a total retention of 5% of the contract sum was reached.[5] Clause 11 and Schedule E item 8. The contract provided by Special Conditions B27 to B30 for the concrete supplier, nominated to be Hanson (Hanson Construction Materials Pty Ltd), and the steel reinforcement supplier, nominated to be Bianco (Bianco Reinforcing Pty Ltd), to invoice Maxcon directly and be paid on 30 day payment terms. The contract provided by clause 7.5(d) that, if the contractor agreed to assist the subcontractor in administration of its business which is not part of the contract, the contractor could charge the subcontractor at the rate of $80 per hour (plus GST) subject to rise and fall. The contract provided by clause 10(l) that if the contractor was required to manage the subcontractor’s accounts more than what should be normally required, the contractor was entitled to charge the subcontractor a reasonable sum.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Proceeding conservatively for these reasons, we conclude that there should be a stay of payment out of the monies in Court in excess of $105,000 and an order for payment out of $105,000 to Mr Vadasz.Conclusion For the reasons given above, the Court made the following orders:1The appeal against the orders made on 9 September 2016 is dismissed.2Permission to appeal against order 2 made on 16 September 2016 is refused.3Permission to appeal against the orders made on 7 October 2016 is refused.4Permission to appeal against order 2 made on 30 September 2016 is granted.5The appeal against order 2 made on 30 September 2016 is allowed and that order is set aside and in lieu thereof it is ordered that the sum of $105,000 be paid out of the monies in court standing to the credit of this action to the defendant Michael Christopher Vadasz and that the balance be held until the determination of the appellant’s appeal against order 1 of the orders made on 30 September 2016.6Costs of the applications for permission to appeal and of the appeals the subject of the first and second notices of appeal insofar as they have been determined and of the application for a stay made on 10 October 2016 are reserved.

Ratio Decidendi

Legal Principle Established

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