Punton's Shoes v Citi-Con - [2020] VSC 514

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST

Not Restricted

S ECI 2019 5359

PUNTON’S SHOES PTY LTD (ACN 004 133 751)	Plaintiff
v
CITI-CON (VIC) PTY LTD (ACN 143 889 678) & ANOR	Defendants

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JUDGE:	Digby J
WHERE HELD:	Melbourne
DATE OF HEARING:	17 April 2020
DATE OF JUDGMENT:	24 August 2020
CASE MAY BE CITED AS:	Punton’s Shoes v Citi-Con
MEDIUM NEUTRAL CITATION:	[2020] VSC 514

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ADMINISTRATIVE LAW – Judicial review – Certiorari sought in relation to an adjudication determination - Whether claim under construction contract for return of retention moneys is valued in accordance with the Building and Construction Industry Security of Payment Act 2002 (Vic) – Whether progress claim for retention is based on a contractual entitlement giving rise to a reference date – Nature of retention and operation of construction contract in relation to retention moneys – Whether under the Building and Construction Industry Security of Payment Act 2002 (Vic) ss 1, 3, 5, 6, 9, 10, 11, 14(2), 15, 18 and 23, a claim for return of retention is in the nature of a payment claim for construction work carried out and the supply of related goods and services.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Morrison	HFW Australia
For the First Defendant	Ms C Jones	Eidelweisz Lawyers Pty Ltd

HIS HONOUR:

Background

On or about 16 December 2016, Punton’s Shoes Pty Ltd (plaintiff) and Citi-Con (Vic) Pty Ltd (first defendant) entered into a design and construction contract (Contract)[1] for the first defendant to design and construct a retail and residential building complex, including carpark spaces, at 107-109 Upper Heidelberg Road, Ivanhoe in the State of Victoria (Project).
[1]CB29-138.

The plaintiff is a developer and the first defendant is a commercial and residential builder and the head Contractor on the Project.

Pursuant to cl 5.5 and item 13 of Annexure Part A to the Contract, the first defendant agreed to provide security under the Contract in the amount of 5% of the contract sum, being $405,000, in the form of cash retention, with such retention moneys to be reduced to 50% pursuant to cl 5.8 and Item 17 of Annexure part A of the Contract, upon the issue of the Certificate of Practical Completion.

On 26 September 2019, the first defendant issued a payment claim in the amount of $222,750.00 (incl GST) (September 2019 Payment Claim)[2] in respect of the return of 50% of the retention money but without any claim in respect of the balance of the Works.
[2]CB224-250.

On 11 October 2019, the plaintiff issued a payment schedule (Payment Schedule) in response to the September 2019 Payment Claim recording the amount payable as ‘nil’ and scheduling an amount of -$419,339.50.[3]
[3]CB251-256.

On 25 October 2019, the first defendant issued an adjudication application in relation to its September 2019 Payment Claim.[4]
[4]CB257-273.

On 4 November 2019, the plaintiff issued an adjudication response.[5]
[5]CB285-306.

On 18 November 2019, pursuant to s 23 of

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: [2020] VSC 514
Decision Date: 24 August 2020

CaseChat Overview and Summary

Punton's Shoes sought judicial review in the Supreme Court of Victoria, aiming to challenge an adjudication determination made by Citi-Con. The dispute arose from a construction contract where Punton's Shoes claimed the return of retention moneys held by Citi-Con. The central issue was whether the claim for the return of retention moneys was properly valued according to the Building and Construction Industry Security of Payment Act 2002 (Vic), and if such a claim constituted a payment claim under the Act.

The court needed to determine whether the retention moneys, which are typically a percentage of the contract price held back until the end of the project, could be claimed as a payment claim under the Act. The court also had to consider whether the claim was based on a contractual entitlement that gave rise to a reference date. The nature of the retention, as well as the operation of the construction contract in relation to the retention moneys, were critically examined.

The Supreme Court of Victoria held that the claim for the return of retention moneys was not in the nature of a payment claim for construction work carried out or the supply of related goods and services. The court reasoned that the retention moneys were held in trust and were not intended to be paid until the completion of the project. Consequently, the claim did not meet the criteria for a payment claim under the Act. The court also found that the claim was not based on a contractual entitlement that gave rise to a reference date, as required by the Act. The adjudication determination was therefore quashed.

The Supreme Court of Victoria ordered that the adjudication determination made by Citi-Con be quashed, and it directed that the retention moneys be returned to Punton's Shoes. The court clarified that the claim for retention moneys was not subject to the expedited payment processes outlined in the Building and Construction Industry Security of Payment Act 2002 (Vic).

Orders