Re Bird

[1992] QCA 339

IN THE COURT OF APPEAL

[1992] QCA 339

SUPREME COURT OF QUEENSLAND

Appeal No. 90 of 1992

BETWEEN:

NICK FAVOT PTY. LTD.

(First Plaintiff) First Respondent

- and -

GLEN BIRD and KAREN BIRD
trading as BIRD'S PLUMBING

(Second Plaintiffs) Appellants

- and -

GROSSMAN BUILDERS PTY. LTD.

(First Defendant) Second Respondent

- and -

QUEENSLAND AMBULANCE SERVICE

(Second Defendant) Third Respondent

McPherson J.A.

Davies J.A. Moynihan J.

Judgment of the Court delivered on the seventh day of October
1992

LEAVE TO APPEAL GRANTED. APPEAL ALLOWED WITH COSTS. ORDER MADE ON 23 APRIL 1992 DISMISSING APPLICATION WITH COSTS SET ASIDE. IN LIEU ORDER THAT APPLICANTS BE JOINED AS PARTIES TO ACTION NO. MISC. 1/1992, DISTRICT COURT, TOWNSVILLE BETWEEN NICK FAVOT PTY. LTD. AS PLAINTIFF AND GROSSMAN BUILDERS PTY. LTD. AS FIRST DEFENDANT. FURTHER ORDER THAT RESPONDENT PAY APPELLANTS' COSTS OF AND INCIDENTAL TO THE APPLICATION.

RESPONDENT TO HAVE CERTIFICATE UNDER THE APPEAL COSTS FUND

ACT.

CATCHWORDS: BUILDING AND ENGINEERING
CONTRACTORS - SUBCONTRACTORS’

CHARGES -

appellants/subcontractors served notice of claim on employer but failed to bring action within time - whether fatal to joining in action brought by another

subcontractor - whether

appellants’ charge extinguished by lapse of time - whether s.15 dominant provision.

Counsel:  C. A. White for the appellants
C. Carrigan for the respondents

Solicitors: Cooper Grace & Ward t/a for Nehmer Davenport Dean McKee, Townsville, for the appellants

Connolly Suthers, Townsville,

for the first respondent

Wilson Ryan & Grose, Townsville,

for the second respondent

Hearing date: 21 September 1992
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 90 of 1992

Before	McPherson J.A. Davies J.A. Moynihan J.
BETWEEN:

NICK FAVOT PTY. LTD.

(First Plaintiff) First Respondent

- and -

GLEN BIRD and KAREN BIRD
trading as BIRD'S PLUMBING

(Second Plaintiffs) Appellants

- and -

GROSSMAN BUILDERS PTY. LTD.

(First Defendant) Second Respondent

- and -

QUEENSLAND AMBULANCE SERVICE

(Second Defendant) Third Respondent

JUDGMENT OF THE COURT

Delivered the Seventh day of October 1992

Subcontractors’ Essentially the matter for this Court is whether the interpretation of the Act adopted in those two decisions is correct.

This appeal raises a question under the
Charges Act 1974-1979 that has previously been the subject of
decision by Douglas J. in Re Queensland Tiling Service Pty.
Limited [1978] Qd.R. 142 and by Kneipp J. in Ex parte

The appellants carry on in partnership a plumbing business known as Bird’s Plumbing. Between June and October last year they did plumbing work and supplied materials for an ambulance station and residence being built for Queensland Ambulance Service (“QAS”) at Black River. QAS was the building owner, or, as the Act calls it, the “employer”. The head contractor, which had agreed with QAS to construct the building, was Grossman Builders Pty. Ltd. It in turn engaged the appellants to do the plumbing work.

The appellants are still owed $47,000 for plumbing work done on the building. Unfortunately the head contractor is now insolvent and in liquidation. On the other hand, a sum of $44,045 payable by QAS to the head contractor under the construction contract has been paid into court to abide the determination of claims of subcontractors asserting the right to charges under the Act. Apparently the claims of all subcontractors total some $97,427, of which the appellants’ claim of $47,000 is alleged to be part.

A subcontractor making a valid claim to a charge under the Act on money payable to his head contractor is required to give notice to the employer by whom the money is payable. The notice must specify the amount and other particulars under s.10(1)(a). Notice of having made the claim is to be given to the head contractor: s.10(1)(b). If notice is not given under s.10 the charge does not attach: s.10(4). The consequence of giving notice of claim of charge is that the person to whom the notice is given is bound to retain a sufficient part of the money payable under the contract to satisfy the claim: s.11(1).

In the present case the appellants on 28 October 1991 duly gave their notices under s.10 both to the building owner or employer QAS and to the head contractor Grossman Builders Pty. Ltd. A number of other subcontractors also did so. One was the first plaintiff Nick Favot Pty. Ltd. (which is the first respondent on appeal), which gave its notices on 1 November 1991. Section 12(1) of the Act provides that a subcontractor may recover the amount of the charge from the person by whom the money subject to the charge is payable. An action to enforce the charge was on 5 November 1991 commenced by the plaintiff Nick Favot Pty. Ltd. against both the employer and the head contractor. The action, which was instituted in the Magistrates Court at Townsville, has since been removed into the District Court and consolidated with another such action transferred into that court.

Section 15(3) of the Act provides:

"(3) Every charge shall be deemed to be extinguished unless the subcontractor duly commences a proceeding under this section to enforce it."

What is meant by duly commencing a proceeding "under this section" is to be gathered from s.15(1). Section 15(1)(a) provides, so far as material, that a proceeding in respect of a charge under the Act is, in the case of a claim of charge in respect of retention money only, to be commenced within four months after the retention money is payable. In all other cases, says s.15(1)(b), the proceedings:

"... shall be commenced within two months after notice of claim of charge has been given pursuant to section 10 and no later."

Section 15(1)(c) adds that a proceeding in respect of such a charge "shall be brought by way of action".

Here no action as such was ever brought by the appellants, whether within the period specified in s.15(1) or otherwise. If s.15 was the only relevant provision, then the conclusion would follow that the appellants' claim to a charge under the Act must fail. By virtue of s.15(3) the charge claimed would have been extinguished because of the appellants' failure duly to commence proceedings under s.15 to enforce the charge.

Section 15 is, however, not the only provision bearing on the matter. There is also s.12(3), which is in the following terms:

"(3)(a) An action to enforce a charge under this Act may be brought by or on behalf of any number of subcontractors claiming charges.

(b) Every action brought by a subcontractor to enforce a charge shall be deemed to be brought on behalf also of every other subcontractor who has given notice of claim of charge pursuant to section 10 and who in accordance with rules of the Court and this Act becomes a party to the action. Subject to any rules of the Court, every such subcontractor may become a party at any time before the date appointed for the hearing or any adjournment thereof (whether or not he has given a notice of claim of charge) by filing in the Court and serving on all other parties in the same manner as if he were commencing the action a statement of claim endorsed with a request that he be joined as a party in the proceedings."

Section 12(3) is concerned with cases where, as so often happens, there are many subcontractors interested in enforcing a charge against money payable under the contract. In that event an action may be brought by or on behalf of any number of subcontractors who claim charges: s.12(3)(a), and s.12(3)(b) expressly deems "every action" brought by a subcontractor to enforce a charge "to be brought on behalf also of every other subcontractor ...".

The statutory provision in s.12(3)(b) imposes a number of
qualifications or conditions that must be fulfilled before the
action is deemed so to be brought. First, the deeming

process operates only in favour of subcontractors who have given notice of claim of charge under s.10. The applicants satisfied this requirement on 28 October 1991. Secondly, it is necessary that every such subcontractor should, "in accordance with rules of Court and this Act", become a party to the action. Thirdly, the subcontractor must become a party before the date appointed for the hearing - which can only refer to the hearing of the action - or any adjournment thereof; but he may do so at any time before that date.

Under s.12(3)(b) the procedure for being joined is by filing in the Court and serving on all other parties, in the same manner as if an action were being commenced, a statement of claim endorsed with a request that the subcontractor be joined as a party in the proceedings.

In Re Queensland Tiling Service Pty. Limited [1978] Qd.R. 142 Douglas J. was confronted with a matter in which three of four claimants had failed to give the requisite notice of claim of charge under s.10. The fourth claimant (Pettigrew Engineering Pty. Ltd.) had given notice but had failed to commence proceedings within the time limited by s.15(1). All four contended that, by reason of the provisions of s.12(3) of the Act they were not obliged to comply with any of these requirements. His Honour held that all of the claimants failed. In the form in which s.12(3)(b) stood at the relevant time, it did not contain, in reference to "every other subcontractor", the qualifying expression "who has given notice of claim of charge pursuant to section 10", which was inserted by legislative amendment in 1976. His Honour nevertheless concluded that giving notice of claim of charge was essential to the efficacy of the claims. He reached that conclusion because of the presence of the words "who in accordance with rules of the Court and this Act becomes a party to the action", which appeared in the subsection then and continue to do so. He considered that no valid distinction could be made in the case of the claimant Pettigrew Engineering, which had given notice under s.10 but had not commenced an action within the time stipulated in s.15.

On behalf of the claimants in that case it was argued that, because of s.12(3), they were entitled to disregard ss.10 and 15 if, despite their not having complied with the requirements of those two sections, there was an action in being by a claimant who had so complied. The argument was specifically rejected by Douglas J. in Re Queensland Tiling Service Pty. Limited [1978] Qd.R. 142, 145. His Honour seems there to have held (ibid. at 146) that s.12(3)(b) was available only to subcontractors who were still within the prescribed times for giving notice and commencing an action even if they had not yet done so.

It was this particular aspect of that decision that was followed and applied by Kneipp J. in Ex parte Collinsville Buckhoe & Truck Hire [1985] 1 Qd.R. 233. The circumstances of the claimants in that case were indistinguishable from those of Pettigrew Engineering in Re Queensland Tiling Service Pty. Limited or of the appellants in this. Notices of claim of charge had been duly given but actions had not been commenced by claimants within the period of two months specified in s.15(1)(b), although such an action had been duly commenced by another subcontractor. The applications of all the claimants to be joined in that action pursuant to s.12(3)(b) were dismissed.

Apart from the authority afforded by the decision of Douglas J. in the earlier case, there were primarily two reasons that led Kneipp J. to his conclusion. One was that he considered it "more consonant than not with the scheme of the legislation that s.15 should be read as the dominant provision". He considered s.12(3)(b) to be "procedural only and designed to avoid a multiplicity of actions, rather than to give additional rights to the subcontractor" ([1985] 1 Qd.R. 233, 235). The other reason he gave was that if s.12(3)(b) was interpreted as contended for by the claimants in that case, "a charge which has been extinguished by the operation of s.15(3) may be revived at any time thereafter by the fortuitous circumstance that the subcontractor has found that there is another action to which he can become a party" (ibid. at 235-236). Such an interpretation would, his Honour thought, be quite unfair to employers who should, he considered, be entitled to assume that the charge had been extinguished if, despite a notice under s.10, no proceeding had been commenced within two months.

As regards the last of these matters, it is not easy to see why an employer should suppose the charge to be extinguished simply because a particular subcontractor, who has given notice under s.10, has not also brought proceedings individually, or has not yet taken steps to be joined in proceedings brought by some other claimant. Preventing a multiplicity of proceedings seems to be the particular aim or object of s.12(3). To that end it encourages, but does not compel (" ... may become a party"), subcontractors to become parties to existing proceedings rather than to start actions of their own to enforce the charge.

An employer knows that once notice under s.10 has been given by a subcontractor, it becomes perilous to pay the contract moneys to the head contractor if at least one subcontractor commences proceedings within the times specified in s.15(1). That imposes no disadvantage on the employer, who is amply protected if (as was done in this instance) he pays the amount into court in accordance with s.11(5) of the Act.

The real hardship is suffered by the head contractor, who fails to get his money. However, in most cases (of which this is one) the head contractor is in practice already insolvent, which is why the charge is claimed.

As for the scheme of the legislation, there appears to be no compelling reason why s.15 should be treated as the dominant provision. At least that is so where more than one subcontractor has given notice of claim of charge under s.10 and one of them commences proceedings in accordance with the time limits prescribed in s.15(1). In that event "A proceeding in respect of a charge under this Act" in s.15(1) would include an action "brought on behalf also of every other subcontractor" within s.12(3)(b); with the consequence that, provided a claimant has given notice of claim of charge pursuant to s.10 and becomes a party to the action pursuant to s.12(3)(b), the limitations stated in s.15(1) apply to that action in respect of that claimant. It is irrelevant, on this construction, whether that claimant becomes a party to the action within the time stated in s.15(1) for commencement of the action.

If s.12(3)(b) does not have the effect stated above, there would be little obvious or useful purpose for it to serve. Its only function would be to provide an optional alternative procedure for commencing proceedings within the comparatively narrow limits of time prescribed in s.15(1)(a) and (b). A more rational explanation is that it is designed to ensure, so far as possible, that all claimant subcontractors become parties to a single action (preferably, no doubt, the first of those instituted), which has been commenced within the time allowed by s.15(1), to enforce the charge. The advantages of encouraging such a course is that all claimants and all claims against the contract moneys (which in the end are almost invariably paid into court) can be assembled in a single proceeding in which the claims can be administered and the funds in court distributed among all those interested. The same policy is evident in s.13, providing for consolidation of separate actions that are brought in respect of work under the same contract.

Against these considerations of interpretation and convenience, the most that can be said is that the terms of s.15(3) are strong. Section 15(3) provides that every charge is extinguished unless the subcontractor duly commences a proceeding under this section to enforce it. However, for reasons which we have expressed, we think that the subsection includes within actions duly commenced by a subcontractor those actions which are deemed to be brought on that subcontractor's behalf.

For all these reasons we consider that the interpretation appeal, be sustained.

placed upon ss.12(3) and 15 adopted in Re Queensland Tiling
Service Pty. Limited and Re Collinsville Buckhoe and Truck

That would ordinarily mean that the appeal in the present case should be allowed. As has previously been said, the appellants gave the requisite notices under s.10 on 28 October 1991, even if they did not commence an action to enforce the charge or apply to be joined as a party until well after the period of two months under s.15(1)(b) had expired. The application they made on 2 April 1992 was an application under s.12(3)(b) to be joined as a party to the action already commenced by Nick Favot Pty. Ltd. on 5 November 1991 to enforce a claim to a charge under the Act. On the authority of the two decisions referred to, the learned judge of District Courts refused the application of the appellants.

Logically, the consequence should now be that the appeal should be allowed and the order below reversed so that the joinder can be effected. The respondent, however, objected that the order below was not final but only interlocutory, and that leave had not been granted to appeal to this Court. While acknowledging that it is a question of some difficulty whether the order appealed from is properly regarded as final or interlocutory, we have reached the firm conclusion that the matter is one in which leave to appeal, now sought by the appellants, should be granted. The circumstance that the matter has, as was predicted at the outset, proved to require a close consideration of the correctness of two decisions of the Supreme Court in a branch of the law that frequently falls to be applied in courts of this State - often in cases of some magnitude - is we think sufficient to justify the granting of leave to appeal in this case.

The orders to be made will therefore be as follows.

Leave to appeal is granted. The appeal is allowed with costs. The order made on 23 April 1992 dismissing the application with costs is set aside. In lieu thereof it is ordered that

the applicants Glen Bird and Karen Bird trading as Bird's Plumbing be joined as parties to action no. Misc.1 of 1992 in the District Court at Townsville between Nick Favot Pty. Ltd. as plaintiff and Grossman Builders Pty. Ltd. as first defendant. It is further ordered that the respondent pay the appellants' costs of and incidental to the application to the District Court.

The case is a proper one for a certificate in favour of the respondent under the Appeal Costs Fund Act. We accordingly order that such a certificate issue.