President Constructions Pty Ltd v KE
[2015] WADC 104
•1 SEPTEMBER 2015
PRESIDENT CONSTRUCTIONS PTY LTD -v- KE [2015] WADC 104
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 104 | |
| Case No: | CIV:1710/2015 | 22 JULY 2015 | |
| Coram: | PRINCIPAL REGISTRAR MELVILLE | 1/09/15 | |
| PERTH | |||
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application for dismissal or stay of action dismissed | ||
| PDF Version |
| Parties: | PRESIDENT CONSTRUCTIONS PTY LTD YAN SU KE |
Catchwords: | Avoidance of concurrent proceedings Meaning of matter to which the complaint relates Dismissal or stay of action |
Legislation: | Building Services (Complaint Resolution and Administration) Act 2001 s 54, s 56 Building Services (Complaint Resolution and Administration) Regulations 2011 r 5 |
Case References: | Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56 Psaros Builders Pty Ltd v Owners of Strata Plan 52843 [2014] WASC 34 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
YAN SU KE
Defendant
Catchwords:
Avoidance of concurrent proceedings - Meaning of matter to which the complaint relates - Dismissal or stay of action
Legislation:
Building Services (Complaint Resolution and Administration) Act 2001 s 54, s 56
Building Services (Complaint Resolution and Administration) Regulations 2011 r 5
Result:
Application for dismissal or stay of action dismissed
Representation:
Counsel:
Plaintiff : Mr Herschowitz
Defendant : Ms Tariq
Solicitors:
Plaintiff : Robertson Hayles Lawyers Pty Ltd
Defendant : Fletcher Law
Case(s) referred to in judgment(s):
Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56
Psaros Builders Pty Ltd v Owners of Strata Plan 52843 [2014] WASC 34
1 PRINCIPAL REGISTRAR MELVILLE: On 14 May 2015 President Constructions Pty Ltd commenced proceedings against Yan Su Ke for an alleged breach of a contract whereby Mr Ke agreed to pay President Constructions a sum of money for renovations and shop-fitting works at a place described in the statement of claim as BBQ Noodle House at Unit 19, 160 St Georges Terrace, Perth (the premises).
2 President Constructions say that in breach of that agreement, Mr Ke has not paid the full amount and there remains owing $80,592.82 or, alternatively, President Constructions is entitled to the payment of a reasonable sum for the works done, the value of which is the same amount.
3 Mr Ke has brought an application to set aside the writ of summons, or alternatively, for a stay of the action pending the determination of Building Commission complaint C109463. Mr Ke says a complaint having been made pursuant to the Building Services (Complaint Resolution and Administration) Act 2011 (the Act) in respect of work performed by President Constructions, the claim brought by President Constructions is, pursuant to s 54 of the Act, not justiciable. The consequence of it not being justiciable is that the action should be dismissed or stayed.
The Evidence
4 The application brought by Mr Ke is supported by the affidavit of Bushra Tariq affirmed 30 June 2015. There are three documents annexed to that affidavit, constituted by a copy of the agreement said to exist between Mr Ke and President Constructions (BT1), a copy of a building complaint form evidencing a complaint received by the Building Commission on the 30 July 2014 (BT2) and a copy of a letter issued by Mr Colin Hadfield, complaints officer of the Building Commission to Heshan Pty Ltd dated 9 January 2015.
5 The other evidence before me was an affidavit of Mr Albert Pang, director of President Constructions who deposes to some negotiations between he and Mr Ke in respect of renovation and shop-fitting works at the premises. Annexed to his affidavit are seven documents constituted by what he says is a true copy of the memorandum of agreement dated 22 May 2013 signed between the defendant (Mr Ke) and he (Mr Pang) on behalf of President Constructions (AP1), various completion and compliance certificates (AP2), and the results of various Australian Securities and Investment Commission searches on President Constructions, the business name BBQ Noodle House, and Heshan Pty Ltd.
6 The ASIC searches show President Constructions as being registered on 23 June 2008, Heshan Pty Ltd as being registered on 10 October 2013, and the business name, 'BBQ Noodle House' as being registered on 22 October 2013 with Heshan Pty Ltd recorded as the current holder of that business name starting as of 22 October 2013. Hence, it can be seen that the agreement entered into between President Constructions and Mr Ke for the renovation and shop-fitting works that appears to have been entered into around 22 May 2013, pre-dated the existence of Heshan Pty Ltd and the business name BBQ Noodle House by some five months.
7 An issue immediately arises as who are the parties to the contract. This issue assumes some significance given what at first sight seems to be a lack of clarity as to who lodged the building complaint with the Building Commission. On the face of it, under the heading 'Complainant Details' (the person making the complaint), there appears to be two complainants, namely Mr Ke on the one hand and Heshan Pty Ltd on the other. However, the letter of the Building Commission (BT3) describes Heshan Pty Ltd as the complainant, there being no reference to Mr Ke.
8 The picture becomes clearer when regard is had to the letter of Fletcher Law, solicitors for Mr Ke, dated 20 May 2015 (AP7). In that letter Fletcher Law advise they act for Mr Ke, the named defendant in District Court action CIV 1710 of 2015. They go on to say that the defendant (Mr Ke) is not the owner of the business trading as BBQ Noodle House at unit 19, 160 St Georges Terrace, Perth and say 'the entity which owns these premises, and which also owns and carries on the business, is Heshan Pty Ltd'. They go on to say 'As you also well know, Mr Ke signed the Agreement, as defined in the Statement of Claim, in his capacity as a director of Heshan Pty Ltd'.
9 The significance of this is that if the complaint to the Building Commissioner is properly to be regarded as having been made by Heshan Pty Ltd, this is a relevant consideration in determining whether an action brought against Mr Ke, is justiciable.
10 Fletcher Law do not provide any explanation in this letter of how it is alleged Mr Ke signed in his capacity as director of Heshan Pty Ltd, a company which did not exist at the time of signing the agreement. This has caused me to consider the operation of s 131 of the Corporations Act 2001.
11 No argument was advanced by Mr Ke that he was the promoter of a company to be incorporated in the future or that Mr Ke was entering into the agreement with President Constructions on behalf of, or for the benefit of, a company before it was registered. Nor is there any evidence that Heshan had ratified the contract either within any time agreed to between President Constructions and Mr Ke or, in the event no time had been agreed, within a reasonable time after the contract had been entered into.
12 These are requirements of s 131 of the Corporations Act that must be satisfied before Heshan could be regarded as a party to the contract and if anyone was able to give evidence of the existence of these facts it would be Mr Ke, as the person who signed the memorandum of agreement on 22 May 2013 and who, according to the ASIC records, was the sole director, sole secretary and sole shareholder of Heshan and had been since the date of its registration. However, no evidence is presented addressing any of these issues, either by Mr Ke or anyone else, and on the evidence before me I would find that the contract was entered into between President Constructions and Mr Ke in his personal capacity.
13 Given Mr Ke's position as stated by his solicitors, that he had no interest in the contract, no interest in the business and no interest in the property I conclude and find that following the incorporation and registration of Heshan as both a company and as the owner of the business name 'BBQ Noodle House', Mr Ke transferred his interests in the business and the property to Heshan. It seems likely that Mr Ke in signing the complaint to the Building Commission and describing himself therein as a complainant was doing so in his capacity of director of Heshan rather than in his own personal capacity on the basis that Heshan was a person whose interests were adversely affected by work allegedly not being carried out in a proper and proficient manner or being otherwise faulty or unsatisfactory. However the contractual relationship between President Constructions and Mr Ke remained unchanged.
14 It is also necessary to consider the nature of the complaint. In this case the complaint form on page 2 requires the complainant to particularise the complaint. The heading is '5. Complaint Details'. The complaint at that point in the document is broadly particularized as being in respect of building work and painting work that is alleged to have commenced in May 2013.
15 On page 3 of the complaint form, the complainant is required to complete a 'complaint schedule'. The form's instructions at this point of the document require the complainant to give a brief description of the complaint stating '(You MUST also complete the "Complaint schedule" below)'. The complaint is then further described as 'the construction is not built according to COP approved design. Construction time is too long, a lot of items did not installed. Builder did not use correct materials according to Australia standards/safety'.
16 The complaint schedule subsequently goes on to provide advice to the complainant that:
It is critical to the resolution of the complaint that the items are expressed in a clear and concise manner enabling easy reference. Please provide a short description of each item of complaint below. The items below should reflect those communicated to the respondent in your Notice of Proposed Complaint.
17 A note to these instructions stated that 'general descriptions such as "faulty", "poor" or "unacceptable" were not appropriate'.
18 The schedule finally enables and requires the complainant to further refine the complaint or matters of complaint by inserting information into prescribed columns. The columns facilitate the insertion of information in respect of the item or items of complaint by way of an identifying number, location or clause, a brief description and the remedy sought. For example, the complainant has in respect of item 1 identified the location or clause as 'the front floor (wooden)', described it as 'uneven, cracking after 2 months', and under the heading 'remedy sought', said 'repair floor'. The remedy sought in respect of most items described in the schedule is repair, relocation, installation or rebuild.
The law
19 Section 54 of the Act provides as follow:
Avoidance of concurrent proceedings
54. Avoidance of concurrent proceedings
(1) If —
(a) a building service complaint is made; or
(b) a HBWC complaint is made claiming that there has been a breach of a home building work contract,
the matter to which the complaint relates (whether as shown in the complaint or as emerging in the course of the determination of the complaint) is not, unless subsection (2) applies, justiciable by a court that would otherwise have jurisdiction to determine the matter.
(2) This subsection applies if —
(a) the matter was before the court at the time when the complaint was made; or
(b) the Building Commissioner does not accept the complaint; or
(c) the complaint is dismissed for want of jurisdiction or without deciding the matter on its merits; or
(d) the complaint is withdrawn or not pursued; or
(e) the matter is ordered to be transferred to the court under section 55(3); or
(f) as a result of judicial review, a determination of the complaint is quashed or declared invalid on the ground that there was not jurisdiction to deal with the complaint under this Act.
21 Section 5(1) of the Act provides, 'subject to the Regulations, a person may make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and professional manner or being faulty or unsatisfactory'.
22 The Building Services (Complaint Resolution and Administration) Regulations 2011 provides, in reg 5 that:
A Building Service complaint about the carrying out of a regulated building service may only be made by a person whose interests are being, or have been, adversely affected by the carrying out of the regulated service.
23 There is no dispute that the contract is for the carrying out of a regulated building service.
24 I also observe that a complaint may legitimately be lodged in respect of such work by people other than the people who originally contracted for the performance of the work and who are not in a contractual relationship with the builder. This much case been made clear by Allanson J in Psaros Builders Pty Ltd v Owners of Strata Plan 52843 [2014] WASC 34 [11].
25 It is not hard to understand why Parliament would provide this remedy. It may be years after building work is performed that defects become apparent. In that time the property may have changed hands one or more times. The other contractual obligations as between the builder and the original customer may have long been satisfied and the original customer having sold the property for a profit and having no liability to the subsequent purchaser may have no interest in pursuing a complaint in the Building Commission. These provisions give that subsequent purchaser a remedy.
26 In determining the question, what is the matter to which the complaint relates that is said to be not justiciable by this Court, it is necessary to:
(a) consider what is the matter of complaint in the Building Commission;
(b) consider what is the matter calling for decision in this Court; and
(c) compare the two and consider if they are related.
27 Dealing firstly with the consideration, what is the matter of complaint in the Building Commission, the phrase 'matter of complaint' can potentially be interpreted as either:
(i) a complaint by a person whose interests are or have been adversely affected (Heshan Pty Ltd) by work that was not carried out in a proper and proficient manner or was faulty or unsatisfactory; or, more simply,
(ii) a complaint that work was not carried out in a proper and proficient manner or was faulty or unsatisfactory.
28 The provisions of s 54 of the Act need to be interpreted by first having regard to the plain meaning of the words. In the case of ambiguity an interpretation that best gives effect to the legislative intention, discerned from the context in which that provision is found, including the whole of the statutory enactment where necessary, should be adopted: Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross [2012] HCA 56.
29 Hence, it is relevant also to consider the remedies that are available to a complainant under the Act. Those remedies, for present purposes, are set out in s 36 to s 39. Broadly speaking, they distil to an order requiring the builder (or person carrying out the regulated building service) to remedy the work done, an order to pay an agreed person the costs of remedying the building service, or an order to pay an agreed person compensation.
30 Section 56 of the Act provides:
Except as provided in section 54, nothing in this Part affects a right or remedy a person would have had this Part not been enacted, but a court or tribunal may have regard to a building remedy order or a HBWC remedy order in a proceeding in which the complainant and respondent are parties.
31 By providing that the court may have regard to a building remedy order in proceedings in which the complainant and respondent are parties, s 56 implies that those considerations are irrelevant where the parties to the action before the court are not the complainant and respondent in proceedings giving rise to the building remedy orders. This supports an interpretation that s 54 is not intended to be interpreted so as to preclude issues between those who are not the parties in proceedings before the Building Commission being justiciable.
32 It seems clear that the legislative purpose s 54 of the Act seeks to achieve is to avoid multiple litigation on the same matter, or on matters that relate to each other. To extend the enquiry to encompassing the identity of the complainant together with the quality of the work, that is, to give the phrase a broader application, rather than to narrow it to an enquiry as to whether the complaint is simply about work said to be not carried out in a proper and proficient manner or that was faulty or unsatisfactory, achieves s 54's purpose of preventing duplicate litigation on the same matter without impacting on the right of the Builder to pursue his contractual entitlements.
33 The builder's entitlements cannot be pursued in the Building Commission or elsewhere. I can discern no purpose in precluding a builder pursuing his claim for payment against the contracting party who has no cause for complaint and has on sold the building at a profit simply because a subsequent purchaser has a complaint about the work, which if justified, will result in the builder being required to remedy the work or pay that subsequent purchaser compensation in a manner that in no way impacts on the rights and liabilities between the builder and the contracting party. Further, this seems to me to work an unnecessary hardship on the builder.
34 Given my view that a complaint lodged by a subsequent purchaser of the building cannot affect a builders contractual entitlements as against the contracting party it is my view that the words in s 54 'the matter to which the complaint relates' require consideration to be given to the identity of the person who lodges a complaint in the Building Commission as a relevant consideration in trying to characterise the 'matter' to which the complaint relates.
35 This construction promotes the purpose of the legislation by precluding double litigation on the same matter, or in relation to the same matter, whilst at the same time preserving the builder’s common-law rights. This construction would preclude the matter being justiciable in this Court where the customer or some other person whose interests have been adversely affected by defective work sues the builder in respect of this work whilst at the same time lodging a complaint in the Commission. It would also apply where there was either a legal or equitable set off raised by way of a defence or counterclaim alleging defective workmanship by a defendant who had also lodged a complaint with the Commission.
36 It is my view that the matter of complaint before the Building Commissioner is a matter of complaint brought by Heshan Pty Ltd against Presidential Constructions for defective work.
37 Turning now to the second of the considerations, what is the matter calling for decision in this Court, the answer is, this is an action brought by Presidential Constructions against Mr Ke for unpaid monies under a contract between them, or alternatively the value of work Presidential Constructions performed for Mr Ke (the value of which the plaintiff alleges is the same as the amount said to be owing on the contract) that remains unpaid.
38 In considering the third step, and comparing the complaint in the Building Commission with the action before this court, it is my view that the action in the court does not relate to the matter of complaint before the Building Commissioner because the parties are different.
39 If I am wrong in interpreting the expression 'matter to which the complaint relates' as encompassing the identity of the complainant and that to take the narrower interpretation of the expression is the correct approach, then I would maintain my view that the action by Presidential Constructions for monies owing on the contract does not relate to the matter of complaint before the Building Commissioner.
40 However, President Construction’s alternate claim, in so far as it is for the reasonable value of the work done, is a claim that necessarily will involve an enquiry into the quality of the work; that is, the extent to which it was carried out in a proper and proficient manner and the extent to which it was faulty or unsatisfactory. These matters bear on the value of the work. These are matters that directly relate to the matter before the Building Commission. So if the more restricted interpretation of s 54 of the Act applied this part of the action would need to be stayed.
41 Given my finding that the action in this Court between President Constructions and Mr Ke is not related to the matters of complaint between Heshan Pty Ltd and President Constructions before the Building Commission, the application for dismissal of the action or a stay of the action pursuant to s 54 of the Act must be dismissed.
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