McDonald v MAK Constructions and Building Services Pty Ltd - [2024] NSWCA 63

Court of Appeal

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: McDonald v MAK Constructions and Building Services Pty Ltd [2024] NSWCA 63
Hearing dates: 12 March 2024
Date of orders: 21 March 2024
Decision date: 21 March 2024
Before: Payne JA at [1];
Adamson JA at [2];
Griffiths AJA at [3]
Decision:
(1) The applicant have leave to file the proposed amended notice of appeal.
(2) The applicant have leave to appeal.
(3) The appeal be allowed.
(4) The orders made by Olsson SC DCJ on 21 July 2023 be set aside.
(5) The notice of motion filed in the District Court on 17 April 2023 be dismissed, with costs.
(6) The respondents pay the appellant’s costs of the appeal.

Catchwords:
CIVIL PROCEDURE — Stay of proceedings — whether the home owner’s proceedings claiming damages should be stayed until payment of the judgment debt in favour of the builder obtained by filing an adjudication certificate under s 25 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act) — operation and effect of s 32 of the SOP Act — whether the home owner’s proceedings are properly characterised as a “cross-claim” for the purposes of Pt 3 of the SOP Act — where the primary judge failed to consider the strength of the home owner’s case — where the builder has delayed in enforcing the judgment debt
BUILDING AND CONSTRUCTION — Contract — Damages — need to reconcile the policy of the SOP Act that a builder should receive progress payments promptly with the preservation of common law rights in s 32 of that Act

Legislation Cited:
Building and Construction Industry Security of Payment Act 1999 (NSW) ss 3, 8, 9, 13, 14, 15, 17-25, 32
Commercial Arbitration Act 2010 (NSW) s 47
Corporations Act 2001 (Cth) s 459H
Home Building Act 1989 (NSW)
Supreme Court Act 1970 (NSW) s 23

Cases Cited:
A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144
Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576; [1994] FCA 1074
Goodwin Street Developments Pty Ltd v DSD Builders Pty Ltd [2018] NSWSC 1229
Grant Constructions Pty Ltd v Claron Constructions Pty Limited [2006] NSWSC 369
Grosvenor Constructions (NSW) Pty Limited (in administration) v Musico [2004] NSWSC 344
Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd; BaptistCare NSW & ACT v Denham Constructions Pty Ltd [2016] NSWSC 1120
RJ Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390
Samadi Developments Pty Ltd v SX Projects Pty Ltd [2015] NSWSC 1576
Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63
TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118

Category: Principal judgment
Parties: Kylie McDonald (Applicant)
MAK Constructions and Building Services Pty Ltd ACN 144 852 979 (First Respondent)
Matthew Joseph Burns…

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.

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Details

Case: [2024] NSWCA 63
Decision Date: 21 March 2024

CaseChat Overview and Summary

The appeal concerned a dispute between a home owner, McDonald, and a builder, MAK Constructions and Building Services Pty Ltd. MAK Constructions had obtained a judgment debt against McDonald by filing an adjudication certificate under section 25 of the *Building and Construction Industry Security of Payment Act 1999* (NSW) (SOP Act). McDonald sought to pursue proceedings claiming damages against MAK Constructions, but MAK Constructions sought to stay these proceedings until the judgment debt was paid. The primary judge had ordered a stay of McDonald's proceedings.

The central legal issues before the Court of Appeal were the operation and effect of section 32 of the SOP Act, and whether McDonald's claim for damages could be characterised as a "cross-claim" for the purposes of Part 3 of the SOP Act. The court was also required to consider whether the primary judge had erred by failing to assess the strength of McDonald's case and by not taking into account MAK Constructions' delay in enforcing the judgment debt.

The Court of Appeal allowed the appeal, finding that the primary judge had erred in ordering the stay. The court reasoned that section 32 of the SOP Act preserves a party's common law rights, and that the policy of the SOP Act, which aims for prompt payment of progress claims, must be reconciled with the preservation of these rights. The court determined that McDonald's claim was not properly characterised as a cross-claim within the meaning of Part 3 of the SOP Act, and that the strength of McDonald's case and MAK Constructions' delay in enforcing the judgment were relevant considerations that had not been adequately addressed by the primary judge. Consequently, the orders of the primary judge were set aside, and McDonald's notice of motion was dismissed.

Orders

Orders of the court

(1) The applicant have leave to file the proposed amended notice of appeal.

(2) The applicant have leave to appeal.

(3) The appeal be allowed.

(4) The orders made by Olsson SC DCJ on 21 July 2023 be set aside.

(5) The notice of motion filed in the District Court on 17 April 2023 be dismissed, with costs.

(6) The respondents pay the appellant’s costs of the appeal.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	McDonald v MAK Constructions and Building Services Pty Ltd [2024] NSWCA 63
Hearing dates:	12 March 2024
Date of orders:	21 March 2024
Decision date:	21 March 2024
Before:	Payne JA at [1]; Adamson JA at [2]; Griffiths AJA at [3]
Decision:	(1) The applicant have leave to file the proposed amended notice of appeal. (2) The applicant have leave to appeal. (3) The appeal be allowed. (4) The orders made by Olsson SC DCJ on 21 July 2023 be set aside. (5) The notice of motion filed in the District Court on 17 April 2023 be dismissed, with costs. (6) The respondents pay the appellant’s costs of the appeal.
Catchwords:	CIVIL PROCEDURE — Stay of proceedings — whether the home owner’s proceedings claiming damages should be stayed until payment of the judgment debt in favour of the builder obtained by filing an adjudication certificate under s 25 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (*SOP Act) — operation and effect of s 32 of the SOP Act* — whether the home owner’s proceedings are properly characterised as a “cross-claim” for the purposes of Pt 3 of the SOP Act — where the primary judge failed to consider the strength of the home owner’s case — where the builder has delayed in enforcing the judgment debt BUILDING AND CONSTRUCTION — Contract — Damages — need to reconcile the policy of the SOP Act that a builder should receive progress payments promptly with the preservation of common law rights in s 32 of that Act
Legislation Cited:	Building and Construction Industry Security of Payment Act 1999 (NSW) ss 3, 8, 9, 13, 14, 15, 17-25, 32 Commercial Arbitration Act 2010 (NSW) s 47 Corporations Act 2001 (Cth) s 459H Home Building Act 1989 (NSW) Supreme Court Act 1970 (NSW) s 23
Cases Cited:	A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576; [1994] FCA 1074 Goodwin Street Developments Pty Ltd v DSD Builders Pty Ltd [2018] NSWSC 1229 Grant Constructions Pty Ltd v Claron Constructions Pty Limited [2006] NSWSC 369 Grosvenor Constructions (NSW) Pty Limited (in administration) v Musico [2004] NSWSC 344 Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd; BaptistCare NSW & ACT v Denham Constructions Pty Ltd [2016] NSWSC 1120 RJ Neller Building Pty Ltd v Ainsworth [2009] 1 Qd R 390 Samadi Developments Pty Ltd v SX Projects Pty Ltd [2015] NSWSC 1576 Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2018] NSWCA 33 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; [2006] HCA 63 TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118
Category:	Principal judgment
Parties:	Kylie McDonald (Applicant) MAK Constructions and Building Services Pty Ltd ACN 144 852 979 (First Respondent) Matthew Joseph Burns…