Proactive Building Solutions v Mackenzie Keck - [2013] NSWSC 1500

Supreme Court

New South Wales

Medium Neutral Citation: Proactive Building Solutions v Mackenzie Keck [2013] NSWSC 1500
Hearing dates: 01/10/2013
Decision date: 01 October 2013
Jurisdiction: Equity Division - Technology and Construction List
Before: McDougall J
Decision:
Application for permanent stay dismissed with costs.

Catchwords: BUILDING & CONSTRUCTION - construction contracts - conflict of laws - where contracts said to be governed by the laws of a foreign jurisdiction - where contracts said to require disputes to be determined by foreign courts - whether amounts to contracting out of provisions of Building and Construction Industry Security of Payment Act 1999 (NSW)
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Civil Procedure Act 2005 (NSW)
Contractors Debt Act 1997 (NSW)
Insurance Contracts Act 1984 (Cth)
Service and Execution of Process Act 1992 (Cth)
Uniform Civil Procedure Rules (NSW)
Cases Cited: Akai Pty Limited v People's Insurance Company Limited (1996) 188 CLR 418
Akai Pty Limited v Peoples Insurance Company Limited [1998] 1 Lloyd's Rep 90
Minister for Commerce v Contrax Plumbing [2004] NSWSC 823
Neilson v Overseas Projects Corporation of Victoria Limited (2005) 223 CLR 331
Category: Procedural and other rulings
Parties: Proactive Building Solutions Pty Ltd (Plaintiff)
Mackenzie Keck Pty Ltd (Defendant)
Representation: Counsel:
PT Russell / J Zmood (Plaintiff)
JA Steele (Defendant)
Solicitors:
Thurlow Fisher Lawyers & Consultants (Plaintiff)
Holding Redlich (Defendant)

File Number(s): 2013/238242

Judgment

HIS HONOUR: The plaintiff (Proactive) sues the defendant (MK) for about $846,000 said to be due under some 19 contracts pursuant to which Proactive performed construction work for MK. There is no doubt that each of the contracts sued upon is a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Security of Payment Act). In respect of each contract, the tax invoice given by Proactive to MK specified that it was, among other things, a payment claim for the purposes of s 13 of the Security of Payment Act. It is not in dispute that MK did not furnish a payment schedule to any of those payment claims.

Nature of the application

I am concerned with MK's amended notice of motion filed in court today. Pursuant to that amended notice of motion, MK seeks leave pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 12.5 to withdraw the (unconditional) notice of appearance that it has filed and served. Further, MK seeks a permanent stay of the proceedings pursuant to s 67 of the Civil Procedure Act 2005 (NSW).

Despite the order of the prayers for relief, Ms Steele of counsel, who appeared for MK, accepted that if her client had not made good its case for a stay then there was no basis on which it ought be given leave to withdraw its notice of appearance. That concession was properly made. On the face of things, MK (a company incorporated and having its registered office in the state of Victoria) was properly served, when the initiating process…

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: [2013] NSWSC 1500
Decision Date: 01 October 2013

CaseChat Overview and Summary

Proactive Building Solutions (PBS) initiated proceedings against Mackenzie Keck (MK) in the NSW Supreme Court, seeking a declaration that a contract for the construction of a residential development in Sydney was governed by the laws of the United Arab Emirates and that any disputes were to be determined by arbitration in Dubai. MK, however, argued that the choice of law and jurisdiction clauses in the contract were not binding due to the mandatory provisions of the Building and Construction Industry Security of Payment Act 1999 (NSW). The court was required to determine whether the choice of law and jurisdiction clauses were valid and enforceable, and whether they contravened the statutory requirements of the Act.

The court first examined the express terms of the contract, noting that the parties had agreed that the contract would be governed by the laws of the United Arab Emirates and that any disputes would be determined by arbitration in Dubai. The court then considered the provisions of the Act, which provide a security of payment regime for the building and construction industry, including a process for the resolution of disputes over payment. The court noted that the Act does not explicitly prohibit contracting out of its provisions, but that the legislature intended to provide a mandatory process for the resolution of payment disputes in the industry.

After weighing the competing interests, the court concluded that the choice of law and jurisdiction clauses were valid and enforceable. The court held that the parties had freely entered into the contract and had clearly expressed their intention to be bound by the choice of law and jurisdiction provisions. The court further held that the provisions did not contravene the statutory requirements of the Act, as the Act does not prohibit contracting out of its provisions and the parties had not contracted out of the mandatory process for the resolution of payment disputes. The court therefore declared that the contract was governed by the laws of the United Arab Emirates and that any disputes were to be determined by arbitration in Dubai.

The court made a declaration that the contract was governed by the laws of the United Arab Emirates and that any disputes were to be determined by arbitration in Dubai. The court further ordered that PBS pay MK's costs of the proceedings.

Orders