P T Building Services P/L v Kyren P/L
[2005] SADC 132
•29 September 2005
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
P T BUILDING SERVICES P/L v KYREN P/L
Judgment of His Honour Judge Clayton
29 September 2005
PROCEDURE - JUDGMENTS AND ORDERS - IN GENERAL
BUILDING CONTRACT
Application for immediate relief in respect of moneys claimed to be due under construction contract refused.
District Court Rules r.25.01, 25.02, 25.03, referred to.
Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd 14 Building and Construction Law Reports at p 215; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd (1974) AC 689; Lunn: Civil Procedure DCA section 43.25, considered.
P T BUILDING SERVICES P/L v KYREN P/L
[2005] SADC 132
P T Building Services Pty Ltd, the plaintiff in this action, has appealed from a decision of a Master which was handed down on 1 August 2005.
The plaintiff had applied for summary judgment in an action claiming an amount said to be due pursuant to a contract for the construction of a car park and apartment building at Vaughan Place, Adelaide.
The learned master delivered brief reasons for judgment. She said that having regard to the submissions that were made to her there were factual matters in dispute. She found that it was not a matter that could be dealt with readily in chambers. She was not satisfied that the defendant did not have a credible defence to the plaintiff’s claim and accordingly she refused the application for summary judgment.
The plaintiff’s application was made by a Notice for Specific Directions which claimed an order for summary judgment against the defendant. The application was made pursuant to Rule 25.02 and Rule 25.03 of the District Court Rules. Rule 25.02 contemplates an application for immediate relief. Rule 25.01 gives a plaintiff the right to obtain an order to dispose of an action summarily. In the present case there is no suggestion of circumstances of urgency. Whether the plaintiff’s claim is suitable for immediate relief depends upon whether there is a serious question to be tried.
The decision of the Master was made in chambers. There is an academic question as to whether the master’s decision was an interlocutory order or a final judgment. If the master had allowed the application and entered judgment in favour of the plaintiff that would have been a final judgment. However, the master’s dismissal of the application for summary judgment has left the question of a final judgment open and so the decision of the master would appear to be interlocutory rather than final. The importance of this distinction is that appeals against final judgments of masters are appeals stricto sensu whereas appeals against interlocutory decisions are by way of rehearing. (See cases referred to in Lunn: Civil Procedure (DCA section 43.25)). The evidence before me was the same evidence that was before the master and the distinction is inconsequential.
The reasons for the appeal are that the learned master erred in her findings first that there were factual matters in dispute, secondly that the matters in dispute could not be readily dealt with in chambers and thirdly that she was not satisfied that the defendant did not have a credible defence to the plaintiff’s claim. The grounds of appeal state that the plaintiff had proved that the labour and materials it supplied were approved by either the construction manager and/or the proprietor (the defendant) and that there are no factual matters in dispute in relation to the plaintiff’s claim.
The basis of the plaintiff’s claim is relatively simple. It is calculated as follows:
Contract sum $431,500.00 Variation 114,777.94 $546,277.94
Less amount paid 492,996.79 Balance due
$53,281.15
The application for summary judgment was supported by an affidavit of Mr Mario Madonna, a management accountant in the employ of the plaintiff, which established that work was carried out by the plaintiff for the defendant pursuant to the terms of a Trade Contract for Construction Management dated May 2003. Mr Madonna deposed that the contract sum was $431,500.00, that the plaintiff prepared a reconciliation of contract payments with the Trade Contractors invoices and receipts, that the contract variation for the completed works was $114,777.94 and that the plaintiff had been paid $492,996.79 in respect of the contract work. He deposed that a Notice of Practical Completion of the works by the construction manager was issued on 4 April 2005 and that pursuant to clause 5.3 of the Trade Contract any retention sums became payable in full on practical completion of the works. Mr Madonna deposed that at the date of his affidavit, namely 10 June 2005, the amount of $53,281.15 exclusive of GST remained due, payable and unpaid.
Mr Madonna requested that summary judgment be entered for the following reasons:
·All accounts of the plaintiff have been invoiced to the construction manager or the defendant with full details.
·The defendant has not claimed that the debt owed is not bona fide.
·It is a simple debt for labour and materials provided.
·The defendant has not denied that the work was actually completed.
·The defendant has not filed a defence nor does it claim to have a good defence on the merits with respect to the whole of the amount claimed or at all.
So far as the Defence is concerned documents on the court file establish that the defendant has delayed filing a Defence whilst it pursues a pleading argument.
Both counsel referred me to and relied upon the decision of Rolfe J in Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd[1]. In that case Rolfe J held that a subcontractor was entitled to summary judgment on a proper construction of the subcontract. Apart from establishing that a court can award summary judgment on a claim for progress payments the other principle to be gleaned from the case is that the rights of the parties must be determined according to the terms of the particular contract. Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd[2].
[1] 14 Building and Construction Law Reports at p 215
[2] (1974) AC 689
In the present case, the question before the learned master was whether summary judgment should be granted. The circumstances, which govern applications for summary judgment, are well understood.
On the basis of the affidavit of Mr Madonna the plaintiff’s claim is clear-cut. If the matters listed in the affidavit of Mr Madonna were the end of the matter the claim would be suitable for summary judgment. However, it is necessary to consider the matters raised by the defendant. The fact that summary judgment was granted in Algons Engineering does not mean that summary judgment is appropriate with all claims for progress payments. Obviously the claim and the matters raised by the defence must be considered in each case on their merits.
While no Defence has been filed, the grounds of defence are set out in the affidavit of Mr Theodore Samaras sworn 27 June 2005. Mr Samaras is a director of the defendant company. He acknowledged that the Trade Contract provided for works to be carried out for a contract sum of $431,500.00 plus GST which was a lump sum fixed price. Mr Samaras deposed that on 19 April 2005 the plaintiff commenced proceedings for the sum of $41,712.87 which it asserted to be due and owing under the terms of the Trade Contract. Mr Samaras complained that the Statement of Claim did not provide a break down of the sum of $41,712.87 and that it was not possible to ascertain whether or not that claim constituted a balance of the contract sum, a payment for variations, a release of retention moneys or costs incurred in respect of delay to the project. He complained that on 18 May 2005 the plaintiff filed an Amended Statement of Claim which maintained the claim for $41,712.87, but also contained an annexure which reflected a total balance allegedly due and owing of $39,920.79. He pointed out that the plaintiff now claims $53,281.15 exclusive of GST as opposed to the earlier sum of $41,712.87 inclusive of GST.
Mr Samaras acknowledged that the sum of $53,281.15 was supported by a reconciliation which is MM2 to the affidavit of Mr Madonna, but complained that the reconciliation “contains considerable inconsistencies and it is not entirely clear from that reconciliation of the precise break down of the plaintiff’s claim”. The alleged uncertainty as to the calculation of the plaintiff’s claim is the first basis for the defendant’s opposition to the claim for summary judgment.
Mr Samaras complained that it was unclear how the sum of $115,366.29, which is said to be payments in respect of variations, can be reconciled with the variation summary which totals $114,777.94. The net result as shown in MM2 is an overpayment of $588.35, for which the defendant is given credit.
Mr Samaras also complained that the inconsistency in the variation figures refer to total variations invoiced of $154,268.89 and payments towards variations of $123,030.29 and said “it is entirely unclear how those figures reconcile with the certified variations figure of $115,366.29 or the submitted variations figure of $114,777.94”.
The affidavit of Mr Samaras continued that “for the Plaintiff to sustain a claim against Kyren for any monies whatsoever the Plaintiff needs to substantiate that the submitted variations of $114,777.94 comply with the terms of the Trade Contract”. The defendant accepted the correctness of the variations identified by the letters A, B, C, D, E, F, G, H, I, J, L, O and R. As to the balance of the variations, Mr Samaras complained that the variations had not been signed and approved by him and that they are not accepted as due and owing. The total cost of the variations which have been approved was $122,916.29, but after allowing a credit to which Kyren is entitled for $18,565.00 (reference J) the balance of the variations was reduced to $104,351.29. On that basis Mr Samaras argued that the contract sum should be reduced from $546,277.94 to $535,851.29 ($431,500.00 plus $104,351.29).
In his affidavit, Mr Samaras argued that if payments of $492,996.79 have been made the balance owing should be $42,854.50. However, Mr Samaras disputed that even sum is properly due and owing and claimed that the balance of the variations and/or credit adjustments referred to in the variations summary included at least $29,723.80 in credit adjustments (references V, W, X, Y, Z. Z(i) and Z(ii)).
By way of example, Mr Samaras said that the variation with reference Z allowed a credit of $10,836.00 for abrasive blasting of concrete pillars by At Call Services. Mr Samaras says that work was within the scope of the works to be performed by P T Building Services, but they refused to undertake the work so that Kyren is entitled to an adjustment of $18,300.00, being the eventual cost of carrying out the work by At Call Services. P T Building Services has only given credit for $10,836.00, being the provision in the contract. There would therefore appear to be a genuine issue as to whether the allowance of $10,836.00 is sufficient.
Mr Samaras identified a further issue. He claimed that Kyren is entitled to a credit of $10,000.00 in respect of works which should have been undertaken by P T Building Services, but were in fact undertaken by Kyren with respect to the removal and trimming of trees. Mr Samaras says that P T Building Services did not carry out the work and accordingly Kyren is entitled to a credit of $10,000.00.
Mr Samaras also said that he did not accept the value allocated to the credit adjustments and deposed that the credit adjustments properly due and owing to Kyren may exceed the amount which has been allowed. Mr Samaras complained that the variations and credits identified by the references K, M, N, P, Q, S, T, U, V, W, X, Y, Z, Z(i) and Z(ii) have not been signed or approved by him and do not comply with the terms of the Trade Contract.
Mr Samaras challenged variation K because that work, which was a sand blinding below a polyethylene film membrane installed by others, was already included in the scope of the works. He said that the work included in variation K was one and the same thing as the work included in the scope of works under the contract and accordingly he disputed that the amount claimed in variation K is properly due and owing.
As to variation N, Mr Samaras again claimed that the work in question was not a variation but was included within the scope of the contract. He disputed that variation N constitutes an appropriate variation. The amount of variation N is $4,825.75.
With respect to variation S, for the sum of $2,622.90, Mr Samaras disputed that the work in question constituted an appropriate variation and again said that the works were part of the scope of the project.
Mr Samaras also deposed that Kyren has offsetting claims being:
·A claim for $19,966.00 which was paid to Joseph Constructions for work included in the original works but not performed by the plaintiff.
·The sum of $10,000.00 in respect of detailed excavation for pile caps, footings, beams and thickenings which was included in the scope of works but also added to the contract sum.
·Liquidated damages of $5,000.00 per week for delay.
Counsel for the plaintiff argued that Mr Samaras had acknowledged that certain of the claims by the plaintiff were acceptable and he argued that the plaintiff should be entitled to have judgment for at least those sums. He submitted that whether Kyren has other claims “which are alluded to and referred to by way of generality in the Samaras affidavit is not to the point so far as (the plaintiff’s) application is concerned. That is another issue for another day at another time. That can’t impact upon whether we have an authorised variation that hasn’t been paid”. That submission really brings into focus the real dispute on this appeal. Later counsel identified the question on the appeal as being whether the moneys due for the work that has been done are payable now or whether the owner is entitled to withhold the moneys “because somewhere down the track I’m going to make back-charge claims against you and I’ll effectively use your money as security and hang onto it for that purpose”.
The disputes raised by the defendant fall into two classes. First there are those disputes which reduce the entitlement of the plaintiff under the Trade Contract. Secondly there are matters which give rise to a setoff. Both categories will require evidence to be given so that the disputes can be determined.
The plaintiff’s case, as I have mentioned, is that it should not be kept out of its money pending determination of the claims of the defendant. That argument may have validity so far as the claimed setoff is concerned, but the first category of dispute raised by the plaintiff puts in issue the actual amount said to be due under the contract. Mr Samaras has asserted that the plaintiff has not carried out all of the work which was included in the Trade Contract. Accordingly, there is a challenge to the core claim of $53,281.15.
In essence, the plaintiff’s argument is that the core claim should be paid and that if the defendant wishes to challenge the claim, or to raise matters of setoff, that can be done subsequently. Counsel summarised the plaintiff’s claim this way:
We say that our paper trail is complete, we’ve done the work and we want to be paid for it. We say that if Mr Samaras wants to bring claims against us and have someone adjudicate on those in due course, so be it, but the triable issue is ‘has the plaintiff done the work, has the defendant agreed to pay them and has the defendant paid them?’
In my opinion, the matter is not as simple as that. Contrary to the submission of counsel, the affidavit of Mr Samaras does assert that the plaintiff has not done all the work required by the Trade Contract. There may or may not be merit in that argument, but it is an issue which needs to be determined. In my opinion there is a serious question to be tried. The material before me did not permit any analysis of the question. The questions raised are not simple questions; they involve an analysis of what work was included in the Trade Contract, whether the work was carried out by the plaintiff and what the proper allowance for that work would be. There is no evidence of urgency and this is not a case where the plaintiff’s claim is so clear-cut that it cries out for immediate relief. I find that the affidavit of Mr Samaras does establish that there are genuine issues which the defendant wishes to raise.
I should mention in passing that I am more influenced by the fact that there are triable issues than I am by the claim that the defendant is having difficulty reconciling the amounts. If the assertion that the defendant cannot reconcile the amounts was the only basis for opposing summary judgment, I would have been inclined to accede to the application. I am particularly influenced by Mr Samaras’s assertion, yet to be adjudicated upon, that the plaintiff has not carried out all of the work required by the Trade Contract.
As to paragraph 39 of Mr Samaras’s affidavit, which raises the allegation that the plaintiff did not carry out all of the work required by the Trade Contract, counsel for the plaintiff submitted that the affidavit was “a very broad approach trying to ... cloud the picture and doesn’t deal with the simple fact that work has been done, been authorised and hasn’t been paid for”. In my opinion, the matter goes further than that. As I have mentioned, the plaintiff claims that some work had not been done. In my opinion, paragraph 39 of the affidavit of Mr Samaras does raise matters of defence which need to be tried.
As to paragraph 40 of Mr Samaras’s affidavit, which refers to the offsetting claims, counsel for the plaintiff submitted that it was “a very broad approach to offsetting claims” and “that it is quite integral to the case which is before you which is ‘have we done the work, we build it, we want to be paid for it now’”. In my opinion, paragraph 40 of the affidavit does raise issues to be tried.
Counsel for the defendant submitted that the contract always intended that there would be a final accounting and that a right of setoff existed for the final accounting, even though it was not available against progress payments. I accept that argument. However, the issue is more fundamental than that. It is not only a question of whether there is a setoff, but there is the question of whether the plaintiff has carried out all the work required by the Trade Contract so as to be entitled to the contract sum.
For present purposes, I am not influenced by the defendant’s suggestion that there may be a claim for liquidated damages for delay. That claim has yet to be made.
In my opinion, the appeal should be dismissed. I agree with the learned master that this is not a matter that could be dealt with readily in chambers. In any event, the material required for the resolution of the dispute was not before the court.
I order that the application for summary judgment dated 10 June 2005 be refused.
I order that the defendant have its costs of and incidental to the appeal.
The matter will be referred back to the Master for consideration of the applications with respect to the pleadings.
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