McMaster Pty Ltd and Redcliffe City Council

[2000] QSC 92

SUPREME COURT OF QUEENSLAND

CITATION:

McMaster Pty Ltd and Redcliffe City Council [2000] QSC 092

PARTIES:

McMASTER PTY LTD ACN 011 059 073
(plaintiff)
and
REDCLIFFE CITY COUNCIL
(defendant)

FILE NO:

1805 of 2000

DIVISION:

Trial Division

DELIVERED ON:

26 April 2000

DELIVERED AT:

Brisbane

HEARING DATE:

5 April 2000

JUDGE:

Mackenzie J

ORDER:

1.  I give judgment that the respondent defendant pay the applicant plaintiff the sum of $520,397.20 as moneys due and payable pursuant to the contract together with interest on that sum from 29 February 2000 to the date of judgment.
2.  I order that the respondent pay the applicant's costs of and incidental to the application and the claim to be assessed.

CATCHWORDS:

CONTRACT – BREACH – time for payment of moneys due and owing under construction contract – time for issue of payment certificate – whether superintendent had been validly appointed.

Re Concrete Constructions group Pty Ltd (1997) 1QdR6
Algons Engineering Pty Ltd v Abigroup Contractors Pty Limited (1997) 14 BCL 215
Triden Contractors Pty Ltd v Belvista Pty Ltd (1987) 3 BCL 203

COUNSEL:

J Bond SC for plaintiff
P McMurdo QC and D Bates for defendant

SOLICITORS:

Clayton Utz for plaintiff
McCulloough Robertson for defendant

1. MACKENZIE J:  This is an application for entry of judgment for moneys allegedly due and owing under a contract.  The facts are uncontroversial.  The applicant (the contractor) contracted with the respondent (the principal) to demolish the Redcliffe Jetty and build a new jetty in its place.  The superintendent named in the contract received the relevant progress claim from the respondent on 31 January 2000.  On 9 February 2000 the superintendent's appointment was terminated.

1. The contract is in the form of General Conditions of Contract (AS2124-1992).  Clause 23 required the principal to ensure at all times that there was a superintendent.  Clause 24 permitted the superintendent to appoint an individual to exercise functions of the superintendent under the contract. 

1. In respect of claims by the contractor it was the function of the superintendent under cl 42 to issue to the principal and contractor within 14 days after receipt of the claim by the superintendent, a payment certificate stating the amount of payment which in the superintendent's opinion was to be made.  Clause 42 also provides as follows:

"Subject to the provisions of the Contract, within 28 days after receipt by the Superintendent of a claim for payment or within 14 days of issue by the Superintendent of the Superintendent's payment certificate, whichever is the earlier, the Principal shall pay to the Contractor or the Contractor shall pay to the Principal, as the case may be, an amount not less than the amount shown in the Certificate as due to the Contractor or to the Principal as the case may be, or if no payment certificate has been issued the Principal shall pay the amount of the Contractor's claim.  A payment made pursuant to this Clause shall not prejudice the right of either party to dispute under Clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under Clause 47 or as otherwise agreed) of the amount so properly due and payable, the Principal or Contractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.
Payment of moneys shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided by Clause 42.8."

(my emphasis)   

1. On 9 February 2000 the respondent wrote to Mr Shandil, its Director, Strategic Planning and Coordination, advising him that consequent upon the superintendent being terminate the respondent would oversee the contract itself.  It purported to appoint Mr Shandil as superintendent's representative.  The documentation made specific reference to cl 24.  The same day, the respondent advised the applicant that Mr Shandil had been appointed as representative under cl 24 in respect of "all functions of the superintendent" under the contract.  Counsel for the respondent expressly refrained from making a submission that the respondent had appointed itself superintendent. 

1. The terms of Mr Shandil's appointment as expressed in the correspondence make it untenable to conclude that he was appointed as superintendent even though all powers of the superintendent under the contract were delegated to him. 

1. The applicant's application is based on contentions that once 28 days had elapsed from receipt by the superintendent of its claim the respondent was obliged to pay the full amount of the claim.  It was argued that no superintendent was ever validly appointed and that no payment certificate was ever issued by a validly appointed superintendent or superintendent's representative.  It should be mentioned that after more than 14 days had elapsed but within the 28 day period after delivery of the claim Mr Shandil purported to issue a payment certificate. Reference will be made to this later. 

1. On behalf of the respondent it was submitted that factual questions arose (although they were conceded not to be extensive) concerning the appointment of Mr Shandil upon which findings of fact had to be made and that it was inappropriate to determine the matter in an application for summary judgment for that reason.  It was also submitted that there was a question of legal consequences of the facts found. 

1. It was submitted that the issue of Mr Shandil's appointment should not be approached in a narrow or pedantic way.  A commonsense approach compelled the conclusion that the respondent, as principal, had appointed Mr Shandil as superintendent, notwithstanding the terms in which the documentation had been prepared. 

1. There are clear indications in the documents and correspondence that the respondent had adverted to the distinction between the superintendent and the superintendent's representative and had consciously nominated Mr Shandil as superintendent's representative with all the superintendent's powers delegated to him.  The inevitable conclusion is that the appointment was not intended to be an appointment as superintendent and that, as the respondent's counsel resiled from any suggestion that it had intended to appoint itself as superintendent, there was no valid appointment of a superintendent's representative who could exercise the superintendent's powers. 

1. The obligation with respect to payment is governed by cl 42.1.  Provision is made for two eventualities, the case where a certificate is issued and the case where a certificate is not issued.  The triggering event in the circumstances of this case was the delivery of the claim to the superintendent on 31 January 2000.  The obligation then lay on the superintendent to issue to the principal and the contractor a payment certificate within 14 days.  This was not done on any view of the facts.  Where the certificate is issued the first of the paragraphs of cl 42 quoted above then defines the time for payment as whichever date is the earlier of 28 days after receipt of the claim or 14 days after the issue of the payment certificate.  The latest date for payment is 28 days after receipt of the claim by the superintendent but it can be earlier if a period of 14 days after the date of issue of the payment certificate is shorter than 28 days. 

1. Where a payment certificate has not been issued the obligation is to pay the amount of the claim, although payment does not prejudice rights to dispute entitlement to the money.  Nor is it evidence of the valuation of the work, an admission of liability or evidence of satisfactory execution of the work. 

1. Although the provision suffers from compressed drafting it is implicit that the obligation to pay if no payment certificate was issued is to pay the amount claimed within 28 days of the claim being delivered to the superintendent.

1. Reference has previously been made to the issuing within the 28 day period of a document purporting to be a payment certificate by Mr Shandil.  In view of the finding that Mr Shandil did not have authority to give the payment certificate under the contract it is unnecessary to consider a further argument advanced by the respondent that a payment certificate issued after 14 days had elapsed was not denied effect by the contract.  The argument was that there was no express provision that a certificate issued after 14 days had elapsed was of no effect. 

1. Further, it was submitted that the provision for the time of payment could only be read sensibly if the possibility of the certificate being issued after 14 days was being contemplated since it was only if the certificate was issued after 14 days had elapsed that 28 days was the lesser of the times prescribed.  It was submitted that cl 42.1 operated with the following results:

(a)         if a certificate issues within 14 days of a claim, the amount as certified is payable within 14 days of the certificate being issued;

(b)         if a certificate issues more than 14 days from the claim but within 28 days from the claim, an amount is payable 28 days from the claim, but the amount payable is that as certified;

(c)         if no certificate is issued within 28 days of the claim, then as "no payment certificate has been issued" the principal must pay the amount of the contractor's claim.

1. It was essential to this submission that a certificate issued more than 14 days after receipt of the claim should not be treated as a nullity notwithstanding the requirement that the superintendent issue a certificate within 14 days of receipt of the claim.

1. On the view taken of the validity of the appointment of  Mr Shandil it is unnecessary to decide this issue.  However, repeating the argument should not be taken as endorsement of it.  There appear to be difficulties in the way of its acceptance.  Implication of terms into this particular standard contract, which would be required to establish category (b) in par 14 above, is not encouraged by Re Concrete Constructions Group Pty Ltd (1997) 1 QdR6. Nor does the proposition sit easily with the underlying approach in Algons Engineering Pty Ltd v Abigroup Contractors Pty Limited (1997) 14 BCL 215, although the point there discussed was not exactly the same, nor with Triden Contractors Pty Ltd v Belvista Pty Ltd (1987) 3 BCL 203, where a different form of contract was being construed.

1. It was also submitted that there were discretionary considerations concerning the matter.  It was submitted that in an application for summary judgment there was a discretion whether an issue of law should be decided summarily.  It was submitted that the present case had two unusual features.  The first was that the amount payable under cl 42.1 was provisional only as explained above (cf Concrete Constructions).  The second was that there had already been a reference of the dispute inherent in Mr Shandil's certificate to arbitration.  It was submitted the final determination of the entitlements of the parties would be made within a few months and the determination of the present questions would not dispose of the dispute between the parties.  The potential for an appeal was also referred to. 

1. It was submitted that in the circumstances there was no utility in embarking upon a determination of the legal questions within the summary judgment application and for that reason the court should exercise its discretion to refuse the application on that basis alone.

1. I am not persuaded that I ought to exercise any discretion against determining the matter at this point.  The arguments of disadvantage to the respondent are mirrored in the case of the applicant who, on the view taken, has an entitlement to be paid the amount of the claim.  Accordingly I give judgment that the respondent defendant pay the applicant plaintiff the sum of $520,397.20 as moneys due and payable pursuant to the contract together with interest on that sum from 29 February 2000 to the date of judgment.  I also order that the respondent pay the applicant's costs of and incidental to the application and the claim to be assessed.