Procon Developments (Australia) Pty Ltd v Seeley

[2013] VCC 1922

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-13-05964

PROCON DEVELOPMENTS (AUSTRALIA) PTY LTD	Plaintiff
v.
BRUCE C. SEELEY AND JENNIFER H. SEELEY	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	6 December 2013
DATE OF JUDGMENT:	6 December 2013 (revised 9 December 2013)
CASE MAY BE CITED AS:	Procon Developments (Australia) Pty Ltd v. Seeley & Anor
MEDIUM NEUTRAL CITATION:	[2013] VCC 1922

REASONS FOR JUDGMENT

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Catchwords:             Practice and procedure – Originating motion seeking judgment – Construction contract – Progress claim – Whether “claimable variations” included in the progress claim – Whether the defendants could raise an equitable set-off based on a defects claim – Whether the existance of an earlier separate proceeding made the present application an abuse of process – Judgment entered – Building and Construction Industry Security for Payments Act 2002 (Vic).     

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R. Andrew	Kliger Partners
For the Defendant	Mr A. Laird	KO Construction Law

HIS HONOUR:

1The plaintiff seeks judgment in the sum of $194,620.12 pursuant to the Building and Construction Industry Security for Payments Act 2002 (Vic) (“the Act”). The application was opposed by the defendant who raised three matters:

a.the claim includes variations and the plaintiff has not established in its material in support of the application for judgment that the variations are “claimable variations” pursuant to s10A of the Act;

b.the defendant has an equitable set off in respect of the cost of rectifying defective works performed by the plaintiff and consequential losses;

c.the plaintiff’s claim had previously been included in proceeding CI-13-04157. That proceeding had been defended and a defence and counterclaim filed. The present application was an abuse of process.

Variations

2The present claim relates to progress claim no. 8 for the total sum of $194,620.12. The material filed in support of the application for judgment includes what is described as a “progress claim form”. The form indicates that, at the stage the claim was made, the total of the claims made by the plaintiff was $2,694,620.33 and that previously, in claims 1 to 7, a total of $2,517,692.95 had been claimed (both figures excluding GST). Progress claim no. 8 included variation claims. By deducting the claims for variations made in claims 5 to 7, it can be seen that the total amount claimed for variations in claim no. 8 was $67,124.05 excluding GST. The balance of claim number 8 was made up of a claim for contract works. 

3The plaintiff submits that the claim for variations included in progress claim no. 8 constitutes a claim for “claimable variations”, pursuant to s10A of the Act, for the following reasons:

a.the variations were agreed between the parties and therefore come within the “first class of variation” specified in ss2. The variation works registrar, which formed part of the progress claim, showed, in respect of each variation claimed, the “date requested” and the “date approved” and included in the “description of work” a statement that the variation was “requested” or “approved” by “BS”, presumably the first defendant, Mr Bruce Seeley;

b.the sum of $350,567.40 had previously been claimed as “variations approved” in claims 5, 6 and 7.

4The defendants have not filed affidavit material in the application to dispute that the variations were claimable, or to assert that there was a basis on which they should be excluded from the amount claimed in the progress claim. Further, in their defence to the earlier proceeding, the defendants had not disputed the amounts claimed in that proceeding, pursuant to progress claims 8 and 9, on the basis that those progress claims included amounts for variations which had not been agreed by the parties.

5Defendants’ counsel, Mr Laird, submitted the onus was upon the plaintiff to establish that progress claim no. 8 only included “claimable variations”. He submitted that the defendants would not have been permitted to file affidavit material which simply raised a matter of “defence” in relation to “matters arising under the construction contract”.  I consider, however, that the defendants, if they had wished to dispute the factual basis for the inclusion of variations in the progress claim, could have filed an affidavit setting out the factual matters upon which they wished to rely to set up a defence that some of the amounts included in the progress claim related to excluded variations.

6In the circumstances, I consider that the plaintiff has established that the variations included in progress claim 8 were “claimable variations”. If I had concluded that the matters raised by the defendants had a real prospect of success, and were not simply “fanciful”, I would have excluded the sum of $67,127.05 from the amount the plaintiff would otherwise have been entitled to recover and have required the defendants to pay that amount into Court pursuant to s47 of the Act.

Equitable set off

7The defendant asserts that the work performed by the plaintiff pursuant to the contract was not carried out in a proper and workman-like manner and, in particular, that there were substantial defects to the slab requiring rectification works and with resulting economic loss described as “loss of business”. Ordinarily, the Act does not permit a defendant to raise a defence “in relation to matters arising under the construction contract”. Mr Laird submitted that the case should proceed to trial as there was an argument that had a real prospect of success and was not simply fanciful, namely that the defendant had an equitable set-off on the basis of the alleged defective work, which required rectification works and had led to consequential economic loss.

8Mr Laird supported his submission by reference to a passage in the text Security of Payment in the Australian Building and Construction Industry by Marcus S. Jacobs QC, 4th Edition, 2012, at pages 172-174. Upon analysis, the submission was based upon the author’s comment that “there is much force” in an argument advanced in an article written by Mr Adrian Bellemore criticizing the decision of Einstein J in ISIS Projects Pty Ltd v Clarence Street Pty Ltd [2004] NSWSC 714.

9In that case, Einstein J considered whether arguments of an estoppel and defences under the Trade Practices Act were open to a defendant on a summary judgment claim brought pursuant to the equivalent NSW Act. Einstein J had rejected the argument that such defences were open. He held, in relation to both matters, that there was “not an arguable case in the environment of the Act”. I respectfully agree with Einstein J that the structure of the Act is not such as would permit a defendant to raise matters, which are essentially matters of defence arising from the construction contract, as an ”equitable set off”.

10Plaintiff’s counsel, Mr Andrew, also relied upon s10B(2)(c) and(d) of the Act which excludes from consideration “in calculating the amount of a progress payment to which a person is entitled under a construction contact

…

(c) any amount claimed for damages for breach of the construction contract or for any other claim for damages arising under or in connection with the contract;

(d) any amount in relation to a claim arising other than under the construction contract”.

Duplication of proceedings

11The earlier claim, CI-13-04157, was brought by writ issued on 14 August 2013. In that proceeding, the defendant has filed and served a defence and counterclaim and the plaintiff has filed and served a reply and defence to counterclaim. No trial date has been fixed and no other interlocutory steps have been taken.

12The Courts have recognised the fact that claims brought pursuant to the statute might be brought independently and in a proceeding separate to an action which seeks to litigate other issues under a construction contract; (See Falgat Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 and Rubana Holdings Pty Ltd v 3D Commercial Interiors Pty Ltd [2008] NSWSC 1405).

13The present proceeding was commenced by originating motion, which the Rules generally require for a claim which is based on a claim made by statute. Although it is possible that the present claim for summary judgment might have been brought in the earlier proceeding, that fact is not a bar to the present proceeding. I do not accept the defendants’ submission that the issuing of the present proceeding should be treated as an abuse of process.

14In the circumstances, the plaintiff is entitled to judgment for the amount it seeks of $194,620.12.

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Certificate

I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 6 December 2013 and revised 9 December 2013.

Dated:       9 December 2013

Philippa Gilkes

Associate to His Honour Judge Anderson