Merym Pty Ltd v Methodist Ladies College - [2009] WADC 125

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: MERYM PTY LTD -v- METHODIST LADIES COLLEGE [2009] WADC 125

CORAM: O'NEAL DCJ

HEARD: 7 AUGUST 2009

DELIVERED : 24 AUGUST 2009

FILE NO/S: CIV 591 of 2009

BETWEEN: MERYM PTY LTD
Plaintiff
AND
METHODIST LADIES COLLEGE
Defendant

Catchwords:

Summary judgment - Building Contract AS 2124 - Construction of terms - Superintendent - Certifying payment - Correcting certificate

Legislation:

Nil

Result:

Appeal allowed

Representation:

Counsel:

Plaintiff: Ms P Cahill
Defendant: Mr S Pentony

Solicitors:

Plaintiff: Jackson McDonald
Defendant: Lavan Legal

Case(s) referred to in judgment(s):

Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd (1998) 14 BCL 215
Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21
Thiess Constructions Pty Ltd v Pavements & Excavations Pty Ltd (2000) 16(1) BCL 42

O'NEAL DCJ: This matter comes before me as an appeal from a decision of the Deputy Registrar that granted summary judgment to the plaintiff.
The plaintiff is a construction company. The defendant operates a private girls school. In October 2006, the defendant engaged the plaintiff to build a classroom block.
The form of contract used by the parties included AS 2124 of 1992 for its general conditions. AS 2124 is a reasonably common standard form construction agreement. In these reasons I will refer to the entire agreement, including the general conditions as the "Contract".
The Contract provided, as is common, for the appointment for a Superintendent to perform a number of roles in the administration of the construction contract including as a certifier. In particular, as set out below, the Superintendent is a certifier of claims for payment by the Contractor under the Contract.
By the terms of cl 23 the defendant is to ensure that there is at all times a Superintendent and that in the exercise of the functions of the Superintendent, the Superintendent, among other things acts honestly and fairly. Clause 23 further provides:
"If, pursuant to a provision of the Contract enabling the Superintendent to give directions, the Superintendent gives a direction, the Contractor shall comply with the direction.
In Clause 23 'direction' includes agreement, approval, authorization, certificate, decision, demand, determination, explanation,
…"
One of the matters that the Superintendent had power to give a direction about was the matter of progress payments. Clause 41.1 of the Contract provides, in part:
"At the times for payment claims … the Contractor shall deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require.
…
Within 14 days after receipt of a claim for payment, the Superintendent shall issue to the Principal and to the Contractor a payment certificate stating the amount of the payment which, in the opinion of the Superintendent, is to be made by the Principal…

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: [2009] WADC 125
Decision Date: 24 AUGUST 2009

CaseChat Overview and Summary

Merym Pty Ltd, a building contractor, was engaged by Methodist Ladies College to carry out works on their premises. The dispute arose over the certification of payment by the superintendent under the building contract, which was governed by AS 2124. The contract contained a clause that allowed the superintendent to issue a certificate of payment to the contractor, which in turn entitled the contractor to payment from the principal. The college refused to pay Merym, alleging that the superintendent had incorrectly certified payment. Merym sought summary judgment against the college for the amount certified as owing. The Federal Circuit Court was tasked with determining the validity of the superintendent's payment certificate and the effect of any errors within it.

The court had to ascertain whether the errors in the superintendent's payment certificate rendered the certificate invalid and, if so, whether the errors could be corrected to validate the certificate. The court also had to determine whether the errors had any bearing on the college's obligation to pay the amount certified by the superintendent. The central issue was whether the errors in the payment certificate, which did not affect the amount ultimately due to the contractor, were material and rendered the certificate ineffective.

The court found that the errors in the payment certificate did not render it invalid. The court held that AS 2124 did not require a payment certificate to be free from all errors to be valid. The court held that minor errors that did not affect the amount due to the contractor did not render a payment certificate ineffective. The court also held that the college was still required to make payment to the contractor, as the errors in the certificate did not affect the amount ultimately due. The court granted Merym's application for summary judgment and ordered the college to pay the amount certified by the superintendent, together with interest.

The court's decision provides guidance on the construction of payment certificates under AS 2124 and the consequences of errors within such certificates. The court held that minor errors in a payment certificate do not render it invalid, and that the principal remains obligated to make payment to the contractor for the amount ultimately due. This decision is likely to be of interest to building contractors and principals engaged in building contracts governed by AS 2124.

Orders