Re: Northbuild Construction P/L
[1998] QSC 196
•25 September 1998
IN THE SUPREME COURT
OF QUEENSLAND
Brisbane O.S. No.6399 of 1998
Before the Hon. Mr Justice Shepherdson
[Re: Northbuild Construction P/L]
IN THE MATTER of Section 21 of the Subcontractors’ Charges Act 1974
and
IN THE MATTER of an application by Northbuild Construction Pty Ltd for an Order pursuant to the Subcontractors’ Charges Act cancelling claim of charge claimed by Peter James Lockton as trustee for the Lockton Family Trust t/as PJ Lockton Fabrications on or about the 19th day of May 1998 addressed to The Crown in the Right of the State of Queensland through the Director-General, Department of Public Works and Housing
CATCHWORDS: SECURITIES - Subcontractors’ Charges Act 1974 - application under s.21 to cancel charge because claimant sub-contractor not licensed under s.42 of Queensland Building Services Authority Act and therefore not entitled to be paid any reward for work done - claims by respondent:-
(1) Crown immunity for sub-contractor
(2) whether s.42(3) applied to claim if brought in quantum meruit
(3) estoppel against head contractor
claims discussed - application dismissed.
Counsel:Mr D.A. Savage for the applicant
Mr T. Matthews for the respondent
Solicitors:Bowdens for the applicant
Barwicks for the respondent
Hearing date: 6 August 1998
JUDGMENT - SHEPHERDSON J.
Judgment delivered 25 September 1998
Northbuild Construction Pty Ltd has applied for the following orders:-
(a)that a charge made by Peter James Lockton as trustee for the Lockton Family Trust trading as PJ Lockton Fabrications under the Subcontractors’ Charges Act 1974 dated 19 May 1998 in respect of moneys payable by the Crown in the right of the Director-General, Department of Public Works and Housing to the applicant be cancelled.
(b)that the respondent Peter James Lockton as trustee for the Lockton Family Trust trading as PJ Lockton Fabrications pay the applicant’s costs of and incidental to the application.
The material before me shows the following:-
(a)That on or about 16 June 1997 the applicant (“Northbuild”) entered into a contract with the Crown in the right of the State of Queensland through the Director-General, Department of Public Works and Housing (“the Department”) for the redevelopment of the Salisbury State High School.
(b)On 10 July 1997 Northbuild entered into a lump sum contract with the respondent for the respondent “to perform the required structural steel, metal work and handrails” at the Salisbury State High School site “in accordance with the general conditions of contract contained on the rear of this order and attached appendix A”. The lump sum contract is on a document styled “SUB-CONTRACT ORDER” and there is no dispute that this subcontract was in respect of Northbuild’s head contract for work at the Salisbury State High School. Appendix A to the “SUB-CONTRACT ORDER” is headed “SCOPE OF WORKS SALISBURY STATE HIGH SCHOOL”, shows “TRADE: STRUCTURAL STEEL/METAL WORK” and continues:-
“A. TERMS AND CONDITIONS OF CONTRACT
The Head Contract is AS2124-1992 as amended by the Department. A copy is available for viewing at Northbuild Construction’s Head Office. The Terms and Conditions of the Head Contract are deemed to apply to the Sub-contract.”
By document dated 23 March 1998 and served upon Northbuild on 24 March 1998 the respondent “Lockton Family Trust trading as Lockton Fabrication” gave Northbuild notice that the respondent had given a notice to “The Crown in right of the Director-General, Department of Public Works and Housing” of a claim under the Subcontractors’ Charges Act 1974-1976 (as amended) of charge upon moneys which then were or would be payable to Northbuild in respect of work done by the respondent on the Salisbury State High School, namely the supply of material and labour for the structural steel and metal works under a subcontract with Northbuild. The amount claimed as payable was $129,777 and the notice stated the work was done from 25 June 1997 to 19 March 1998.
On or about 1 April 1998 Northbuild addressed to “The Crown in right of the Director-General, Department of Public Works and Housing” a Notice of Dispute (Form 4) in respect of the claim of the respondent. On 15 April 1998 the Crown Solicitor (State) paid into the District Court held at Brisbane the sum of $129,777 that payment being made in relation to the respondent’s Notice of Intention to Claim Charge dated 23 March 1998. This payment was made pursuant to the provisions of s.11(5) of the Subcontractors’ Charges Act 1974. The moneys paid in were not retention moneys and the employer, which in the notice of payment into court was described as “State of Queensland”, claimed to be entitled to a discharge pursuant to s.11(6) of the said Act from all further liability in respect to the moneys and of the costs of any proceedings in relation thereto.
On 19 May 1998 Peter James Lockton as trustee for the Lockton Family Trust trading as P.J. Lockton Fabrications gave notice to Northbuild that he withdrew his notice of claim of charge dated 23 March 1998. On the same day the same person gave to Northbuild notice that he had given notice to the Crown in Right of the State of Queensland through the Director-General Department of Works and Housing of a charge upon the same moneys and in respect of the same work as were shown in the Notice of Claim of Charge dated 23 March 1998. It is not in issue that the notice of withdrawal and the notice of claim of charge both dated 19 May 1998 were served on Northbuild’s solicitors on 19 May 1998.
Northbuild alleges that it is prejudicially affected in that the sum of $129,777 has been withheld from progress payments due and owing to Northbuild. The essence of Northbuild’s present application is that at the time the respondent performed its work under the subcontract none of Lockton family trust trading as Lockton Fabrications, Lockton Family Trust trading as P.J. Lockton Fabrications, Peter James Lockton Fabrications, Peter James Lockton and P.J. Lockton Fabrications had a current appropriate licence with the Building Services Authority. Thus it is argued that at the material times the respondent was not licensed under the Queensland Building Services Authority Act 1991 (the “BSA Act”), that the work the subject of the claim of charge fell within the description in that Act of work required to be done by a person holding the appropriate licence and that as a result the respondent has and will have no claim to be paid any money under its contract with Northbuild and the charge ought to be cancelled.
Mr Savage for the applicant relies on Groutco (Aust) Pty Ltd v Thiess Contractors Pty Ltd (1985) 1 Qd.R 238; Marshall v Marshall, unreported Court of Appeal decision (CA 9365 of 1996) and Morton Engineering Co Pty Ltd v Stork Wescon Australia Pty Ltd, an unreported decision of Derrington J. delivered on 2 June 1998.
Section 42 of the BSA Act appears in “DIVISION 7 - Requirement to be licensed” and is headed “Unlawful carrying out of building work”. Section 42 relevantly provides:-
“42(1) A person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class under this Act.
(2) For the purposes of this section-
(a)a person carries out building work whether that person carries it out personally or directly or indirectly causes it to be carried out; and
(b)a person is taken to carry out building work if that person provides advisory services, administration services, management services or supervisory services in relation to the building work; and
(c)a person undertakes to carry out building work if that person enters into a contract to carry it out or submit a tender or makes an offer to carry it out.
(3) A person who carries out building work in contravention of this section is not entitled to any monetary or other consideration for doing so.
(4) An unlicensed person who carries out, in the course of employment, building work for which that person’s employer holds a licence of the appropriate class under this Act does not contravene this section.
. . .
(7) A person who contravenes this section commits an offence.”
I add that DIVISION 7 appears in “PART 3 - LICENSING” in the BSA Act.
There is no dispute that in the present case the respondent did carry out building work within the definition of building work in the BSA Act and there is no dispute that at the relevant time the respondent did not hold a contractor’s licence of the appropriate class under the BSA Act.
I mention now further facts alleged by the respondent in the affidavit of Peter James Lockton read on the hearing and which were not disputed on the hearing. They are relevant to the matter of estoppel raised by the respondent’s counsel, Mr Matthews. In or about early June 1997 a Mr Darryl Burgess, the respondent’s office manager received a telephone call from Mr Allan Beecroft of the applicant requesting the respondent P.J. Lockton Fabrications to submit a tender for the construction of new buildings at the Salisbury State High School site. Following that telephone conversation tender documents were couriered to the respondent’s office. A tender on behalf of the respondent was prepared for a total price of $464,000. This tender was faxed to Northbuild. Thereafter, Mr Barry Glover of the applicant informed Mr Burgess that the respondent’s tender has been accepted and that the structural steel work for the school buildings would be awarded to the respondent P.J. Lockton Fabrications.
Mr Matthews for the respondent raised three issues any one of which he submitted justified dismissal of the application. I now turn to these issues:-
Is the respondent entitled to Crown immunity?
Mr Matthews submitted that the BSA Act does not bind the Crown either by express words or by implication. He argued that the respondent’s subcontract was with Northbuild who had contracted directly with the Department of Public Works and Housing - the Crown in right of the State of Queensland. He further submitted that where an act can be lawfully done by the Crown either at common law or by statute the Crown should not be restricted in its choice of agents or in the form of their appointment with the result that the respondent being a subcontractor or an independent contractor employed by the Crown is not bound by the Act, and in particular is freed of the necessity to hold the appropriate trade contractor’s licence.
The leading Australian authority on the question whether a statute binds the Crown is Bropho v State of West Australia (1990) 171 CLR 1.
In that case the High Court of Australia held that a statute applies to and binds the Crown if its provisions, including the subject matter and disclosed purpose and policy, when construed in the context of permissible extrinsic aids, disclose an intention to bind the Crown. The case marked a change of direction in deciding whether a statute binds the Crown and held that before a court can decide the Crown is bound, it is no longer necessary that (in accordance with earlier authority) that intention to bind the Crown should be “manifest” from the terms of the statute or that its purpose would be wholly frustrated if the Crown were not bound.
This change in direction was recognised by the Queensland Court of Appeal in Jellyn Pty Ltd v State Bank of South Australia (1996) 1 Qld.R 271 at p.274.
Despite the change in direction the High Court of Australia said (at p.22-23):-
“The effect of the foregoing is not to overturn the settled construction of particular existing legislation. Nor is it to reverse or abolish the presumption that the general words of a statute do not bind the Crown or its instrumentalities or agents. It is simply to recognise that a stringent and rigid test for determining whether the general words of a statute should not be read down so as to exclude the Crown is unacceptable.”
I turn then to the BSA Act - an Act passed after the decision in Bropho and consequently an Act to which Bropho is directly relevant being enacted after 20 March 1990 the date on which the decision in Bropho was delivered.
The BSA Act does not expressly bind the Crown. The preamble reads:-
“An Act to regulate the building industry.”
Section 3 of the Act is headed “Objects of Act” and relevantly reads:-
“3. The objects of this Act are–
(a)to regulate the building industry–
(i) to ensure the maintenance of proper standards in the industry; and
(ii) to achieve a reasonable balance between the interests of building contractors and consumers; and
(b)to provide remedies for defective building work; and
(c)to provide for the efficient resolution of building disputes; and
(d)to provide support, education and advice for those who undertake building work and consumers.
“Building work” is defined as follows:-
“‘Building work’ means–
(a)the erection or construction of a building; or
(b)the renovation, alteration, extension, improvement or repair of a building; or
(c)the provision of lighting, heating, ventilation, air-conditioning, water supply, sewerage or drainage in connection with a building; or
(d)the demolition of a building; or
(e)any site work (including the construction of retaining structures) related to work of a kind referred to above; or
(f)the preparation of plans or specifications for the performance of building work; or
(g)any work of a prescribed kind
but does not include work of a kind excluded by regulation from the ambit of this definition.”
I pause to point out the affidavit of Paul Joseph Boddington, a director of Northbuild and filed on 14 July 1998 deposed to Northbuild’s contract being with the Crown in right of the State of Queensland through the Director-General, Department of Public Works and Housing. There is no doubt that the work which Northbuild was to perform in terms of the contract - and this work included the work subcontracted to the respondent to perform - fell within the definition of “building work”.
I point out also that “building work” may include the preparation of plans or specifications for the performance of building work (see para (f) of the definition of “building work”).
In my view those plans and specifications might well be prepared by architects and draftsmen in the employ of the Crown in right of the State of Queensland and working in the Department of Public Works and Housing. One would reasonably expect that before the contract was let to Northbuild, the Department must have prepared or had prepared plans and specifications which were delivered to Northbuild to enable Northbuild to tender a price to perform the works the subject of the contract.
Now the basic reason why Northbuild has brought the present application is because the respondent, at the time it performed the work pursuant to its subcontract, did not hold a licence being one of the classes of licence specified in PART 3 of the BSA Act, that part being headed “LICENSING”.
Section 30 of BSA Act deals with classes of licences and provides:-
“30(1) A licence may be issued authorising the licensee -
(a)to carry out, and to supervise, all classes of building work; or
(b)to supervise (but not to carry out) all classes of building work; or
(c)to carry out, and to supervise, building work of 1 or more classes specified in the licence; or
(d)to supervise (but not to carry out) building work of 1 or more classes specified in the licence.
(2) Licences are to be divided into classes by regulation -
(a)according to whether the licence is a contractors’ licence or a supervisors’ licence; and
(b)according to whether the licence relates to all classes of building work or is limited to a specified class or specified classes of building work; and
(c)if the licence is limited to a specified class, or specified classes, of building work - according to the class or classes of building work to which it relates.”
Sub-sections 30(1)(a) and (b) refer to licenses for “all classes of building work”.
Sub-sections 30(1)(c) and (d) refer to licences for building work of one or more classes specified in a licence.
The classes of licence with which BSA Act is concerned are of two types - contractors’ licence and supervisors’ licence (see ss.30, 31 and 32 of BSA Act), but it should be noted that in Queensland Building Services Authority Regulation 1992 regulation 6 provides for classes of licence and regulation 6(1) states - “Licenses are divided into classes in accordance with Schedule 2" [of the Regulation].
BSA Act establishes a body corporate known as Queensland Building Services Authority (s.5). This authority is required to keep a register of licensees (s.39) and may issue certificates concerning (inter alia) whether or not a particular person was licensed under the Act at a particular date or over a particular period.
I return to BSA Act, relevant sections of which I earlier set out.
Sub-s.42(2) defines the phrases “carry out” and “undertake to carry out” appearing in sub‑s.42(1).
To return to my earlier illustration of work falling within para.(f) of the definition of “building work”; it can scarcely be said that an employee of the Department who did not hold the appropriate licence and who in the course of his duties with the Department prepared the plans and specifications for Northbuild and thereby carried out “building work” and, not holding a contractor’s licence of the appropriate class “Building Design/Drafting Licence” committed an offence by contravening s.42. If however, his employer held the appropriate licence he would not contravene s.42 (see s.42(4)). His employer however is the Crown and it is not required by the BSA Act to hold the appropriate licence.
I point out also that s.42(1) does not in any way limit the meaning of “person”.
In my opinion the legislature did not intend BSA Act to bind the Crown.
I turn now to the question whether the respondent is entitled to the shield of the Crown.
Mr Matthews relied heavily on Roberts v Ahern (1904) 1 CLR 406. The appellant Roberts was a servant of an independent contractor employed by the Commonwealth of Australia to remove night soil from Commonwealth premises. He carried out that work without a licence from and without having given any security to the relevant local authority. He was charged on information with having carted away night soil without a licence from and without having given any such security as is required by the local authority contrary to the Act in such case made and provided. The prosecution was instituted under s.5 of the Police Offences Act 1890 (Victoria). The appellant was convicted and fined.
There was no dispute that he had not obtained a licence from and had not given any security to the local authority. It appeared that on the hearing of the information the appellant had said:-
“I was employed by one Appleby, who has a contract with the Commonwealth and I was acting as his servant on behalf of the Commonwealth through the Postmaster.”
The High Court of Australia concluded that the relevant legislation did not affect the Government of the Commonwealth of Australia or its agencies in the management of departments transferred to the Commonwealth. The court also considered an argument that the immunity of the executive government extended only to persons who stand to it in the direct and immediate relation of servants and does not afford any protection to persons who stand in the relation of contractors for service, or at any rate, not to the servants of such contractors.
After commenting that the exact facts as to the appellant’s employment had not been ascertained before the court below, the High Court accepted the facts to be as stated in the affidavit by the appellant which I have earlier set out. The court considered a decision of Dixon v London Small Arms Company (1 App.Cas.632). I take the following statement of facts from the judgment of the High Court (at p 419):-
“The appellant in that case was the holder of certain patents for improvements in the manufacture of small arms. The respondents were contractors for the manufacture and supply of small arms for the use of His Majesty and in the course of the manufacture they made use of the appellant’s patents. It was not disputed that the Crown was itself entitled to use the patents but the question was whether, under the circumstances, the defendants could take advantage of the Crown rights.”
The High Court said the real question in that case was whether, under the circumstances, the contract which was made between the respondent and the Government was a contract of agency or a contract of sale. The court pointed out that all the learned Lords considered the matter from that point of view and came to the conclusion that the contract was one of sale and not of agency and that the respondents were not therefore entitled to the benefits which they would have had if the contract had been one of agency. The High Court then went on:-
“Lord Selborne said (p.660):
‘The case, therefore, in my opinion, depends upon the question whether the relation of master and servant, or of principal and agent, existed between the Crown and these respondents during the process of the manufacture of the breech action in question, and for the purposes of that manufacture; and this question must, in my opinion, be decided by a strict and accurate application of legal principles to this particular contract, exactly in the same manner as if any private person, and not a public department, had contacted with the respondents in the terms of the documents before us for the supply of these arms.
I cannot doubt as to the answer to be given to the question when that test is applied. There is clearly no contract of hiring and service, and I am equally clear that any private persons who entered into such a contact would not have been liable for the acts of the defendants during the process of manufacture, as a principal is liable for the acts of his agent. It is not like the case of a railway contactor who executes work which the company itself is bound by law to execute, and which can only be executed by the directors, or by some person acting by their authority, and entitled on their behalf to exercise the powers vested in them by the legislature.’
The Court continued (at p.420):-
“Applying the same principle to the present case, it appears to us that the relation of principal and agent existed between the Commonwealth Government and Appleby and his servants, in the discharge of the duties in question, and that the mode of their remuneration and the terms of their employment are immaterial. When an act unlawful at common law is made lawful by Statute, it is clear that the authorization extends to the protection of all persons and agencies employed in doing the act, and it is immaterial whether the persons are so employed under a contract or stand in the direct relationship of servants to the persons who have the statutory authority. Of this rule, Newton v Ellis, 5 E.&B., 115; 24 L.J.Q.B., 337 affords a good illustration. Nor can it make any difference whether the act in question is one which, being unlawful at common law, is made lawful by Statute, or is one which, being lawful at common law, is not made unlawful by any Statute. The case of Black v Christchurch Finance Co., (1894) A.C., 48, is authority, if authority be needed, for the proposition that the liability of the principal for the acts of his agent is not excluded by the fact that the agent is a contractor, or himself works by sub-agents. The terms of the employment must be the subject of inquiry to the extent of ascertaining that the relation of service or agency exists in fact, but in our judgment the Executive Government cannot be controlled either in its choice of agents or in the form of their appointment or mode of their remuneration. Nor, in our judgment, is it material whether the appointed agent does the work with his own hands, or through the medium of his servant.”
Roberts v Ahern was considered and applied by the Full Court of the Federal Court of Australia in Woodlands v Permanent Trustee Co Limited (1996) 139 ALR127. At p.143 the Full Court of the Federal Court identified the principle of Roberts v Ahern saying:-
“The principle of Roberts seems to be that the immunity that attaches to the Crown itself, from the effect of a statute making unlawful a particular act, extends also to persons retained by the Crown to perform the Act, whatever the precise nature of the relationship between the Crown and them. The rationale no doubt is that the Crown acts through servants and agents. It would make a mockery of Crown immunity if servants and agents of the Crown were bound by the statute although performing the very act they were retained to perform and in relation to which the Crown itself was immune.”
In my view Roberts v Ahern is in one respect not distinguishable from the present case. In Roberts the statute made unlawful a particular act - an act performed by Roberts. In the present case the acts performed by the respondent were made unlawful by s.42 of BSA Act because the respondent performed the acts at a time when he had no licence to perform the work.
However, the present respondent is not in as fortunate a situation as was Roberts who was an employee of Appleby who had a contract with the Crown in right of the Commonwealth of Australia. The present respondent is a subcontractor of Northbuild who has the head contract with the Crown. It is my view that on the authority of Woodlands Northbuild was, in accordance with the principle in Roberts v Ahern, entitled to Crown immunity in respect of the work which it was required to perform under its head contract with the Crown in right of the State of Queensland.
This work included the very work which Northbuild subcontracted with the respondent to perform on Northbuild’s behalf. The Crown was not a party to that subcontract and it seems to me to be quite anomalous that if the respondent were an employee of Northbuild at the time the work was performed Crown immunity would attach to him; yet, because he is a subcontractor, Crown immunity does not or may not attach. This is not the occasion to discuss the distinction between employee and subcontractor. In Woodlands the Full Court thought the precise nature of the relationship between the Crown and the person retained to perform a particular act was irrelevant. Nevertheless, what is beyond dispute is that the respondent performed the work which Northbuild contracted to perform (with some apparent variations) and did so in the capacity of subcontractor, and it is because he is a subcontractor that he is prima facie entitled to the benefits of the Subcontractors Charges Act 1974.
At p.144 of Woodlands the Full Court of the Federal Court decided that:-
“. . . for Crown immunity to attach to a person who is not ‘the Crown’, or a transaction to which the Crown is not a party, the legislation must significantly prejudice the Crown, e.g. by restricting actions it would otherwise be free to undertake or diminishing the value of its property. It seems to us that it is not enough that the interests of the Crown will be indirectly affected by the application of the statute.”
I shall accept the view of the Federal Court of Australia in Woodlands that for Crown immunity to attach to the respondent the BSA Act must significantly prejudice the Crown e.g. by restricting actions it would otherwise be free to take or diminishing the value of its property.
It appeared to be assumed during argument that the site at which the respondent performed his work under the subcontract was Crown land and I proceed on the basis that that assumption is correct.
I shall assume that Northbuild was not an agent of the Crown when it entered into its contract with the Director-General, Department of Public Works and Housing, but was an independent contractor and further that the respondent was not an agent of the Crown but an independent contractor.
In “Liability of the Crown” (second Edition) by Professor Hogg in a chapter headed “Crown Agents and Servants”) the author (at p.238 in a passage headed “Crown Contractors”) said:-
“The test of Crown prejudice will occasionally extend the Crown’s immunity to persons who are neither Crown agents nor Crown servants. For example, plumbers working as independent contractors on Crown land have been held immune from statutory regulations requiring permits from a local authority for plumbing work; if persons working on Crown land even as independent contractors were subject to this requirement the property rights of the Crown would be prejudiced (Lower Hutt City v Attorney General (1965) NZLR 65 (C.A.)); followed in Wellington City v Victoria University (1975) 2 NZLR 301 (S.C.). Firms contracting with the Crown have been held immune from trade practices legislation; if Crown contractors were subject to the legislation, the Crown’s freedom to enter into anti-competitive contracts would be prejudiced (Bradken Consolidated v BHP (1979) 145 CLR 107, 123-124. See also Re Telephone Apparatus Manufacturers Application (1963) 1 WLR 463 (C.A.) (agreement to which Crown was not a party held exempt from trade practices legislation). Cf R v Eldorado Nuclear (1983) 2 SCR 551 (Crown Agents held exempt from price fixing prohibition; no suggestion that private participants with the Crown Agents were also immune). These cases all seem to me to be wrongly decided. This is not because the Crown immunity was extended to persons who were not Crown Agents or Crown Servants, because that extension is justifiable when there is prejudice to the Crown. Rather the fault with the reasoning is the finding of prejudice to the Crown: it seems to me that compliance with building standards or trade practices legislation was not incompatible with the pursuit of the Crown’s purposes and therefore there was insufficient prejudice to the Crown to warrant the grant of immunity.”
The decisions of Lower Hutt City v A.G. and Wellington City v Victoria University are decisions which support the present respondent’s argument. Nevertheless, while Professor Hogg focuses on ‘compliance with building standards’, the vice in the present case alleged against the respondent is that he did not have the appropriate licence at the time he did the work. This work was done on Crown land. “Building standards” is not in issue. In each of the above New Zealand cases the court - in one case the Court of Appeal - followed and applied an old New Zealand decision - Doyle v Edwards (1898) 16 NZLR 572.
In the Wellington City case Cooke J, after referring to Lower Hutt City v Attorney-General said (at p.305):-
“That decision was limited to work done by Crown contractors on Crown land. Here, although the work is on land vested in the Crown the contract is with the university. But as the Crown is paying for the work it seems obvious at first sight that a requirement to obtain a building permit and to submit to a measure of control by the City Council exercised through the Council’s Building Inspectors and other officers must affect the rights and property of the Crown. From the purely financial point of view it might well be to the advantage of the Crown for the project to be free of all of some of the 21 conditions previously mentioned. Therefore the conclusion seems inevitable that the interest of the Crown and the property in question will be affected if a building permit is required ... .”
In my view the above comments are applicable to the present case. Here the work done was on land the property of the Crown and in addition, there is an element of control over the Crown in that the respondent, who was contractually obliged to perform work on the site, was required by s.42 of the BSA Act to have an appropriate licence.
Lower Hutt City v Attorney-General in my view provides stronger authority for the respondent.
In that case one question for the court’s determination was whether plumbers and drainlayers under contract with the Ministry of Works acting for and on behalf of the Crown were required to take out drainage and plumbing permits in respect of such work within the City of Lower Hutt and to pay the appropriate fee therefor (in respect of):-
(a)Crown land
(b)Other land.
The Court of Appeal answered“No” to question (a). The Court of Appeal was asked to decide the case on the basis that the contract created the relationship of independent contractor between the tenderer and the Ministry of Works.
North P. referred to s.5(k) of the Acts Interpretation Act 1924 which provided that “no provision or enactment in any Act shall in any manner affect the rights of [Her] Majesty . . . unless it is expressly stated therein that [Her] Majesty shall be bound thereby . . ..”
In Queensland comparable legislation exists. Section 13 of the Acts Interpretation Act 1954 provides:-
“No Act passed after the commencement of this Act shall be binding on the Crown or derogate from any prerogative right of the Crown unless express words are included in the Act for that purpose.”
In my view land owned by the Crown is land over which the Crown has prerogative rights (see Elderton’s Case (1703) 2 Ld. Raym. 978 at 980 where Hale C.J. speaking of the Court of King’s Bench said:-
“We are indeed bound to take notice of everything that belongs to the Queen’s privilege”.
As Robertson noted in “Civil Proceedings of the Crown” at p.595 - “The question there was the privilege claimed in respect of a royal residence, into which the Court would naturally not enquire with unseemly nicety (Winter v Miles (1809) 10 East. 578). See also Attorney-General v De Keyser’s Royal Hotel Ltd (1920) A.C. 508 at p.526 where Lord Dunedin said:-
“The prerogative is defined by a learned constitutional writer as ‘The residue of discretionary or arbitrary authority which at any given time is legally left in the hands of the Crown.’”
North P. went on to apply the decision of Doyle v Edwards (supra) and he said (at p.75):-
“That case raised the question whether a builder was required to take out a building permit from the Wellington City Council before he commenced to construct a building on Crown land which had been leased to a tenant for a term of seven years. The builder was employed by the tenant and not by the Crown so there was no room for a contention that the builder was a Crown agent. Nevertheless Prendergast C.J. relying on s.3 of the Municipal Corporations Act 1886 which provided:
‘Nothing in this Act contained, nor in any by-laws made thereunder, shall be construed to apply to or shall in any way affect any property of any kind belonging to or vested in Her Majesty The Queen’
held that no permit was required, saying:
‘It is plain there is a property in the land and building vested in the Crown. It is true also that there is a property in the lessee; but inasmuch as serious liabilities would be imposed on the Crown if its land, though under lease, were subject to all building by-laws, and to the various provisions of the Municipal Corporations Act relating to nuisances etc., I think s.3 does exempt land belonging to and vested in the Crown although a leasehold interest is created and that it cannot be said that this builder was liable to get a permit.’” (ibid., 573, 574)
North P continued:
“That case has stood unchallenged ever since, though its effect was later limited to Crown property not the subject of a lease, licence or other interest. . . . It is true that Prendergast C.J. relied on a provision of the Municipal Corporations Act whereas in the present case reliance is placed on s.5(k) of the Acts Interpretation Act. But in substance there appears to be no material difference between the two provisions. Nor do I think that it matters that we are here concerned with a regulation made pursuant to the provisions of the Health Act 1956 and not with a local body by-law, for these regulations are enforced by local authorities and really provide a standard set of rules governing drainage and plumbing work throughout the country. Moreover it is not just a question of the drainlayer or plumber being required to obtain a permit and pay a prescribed fee, as Mr Relling submitted was the case, for the local body engineer can require the plans prepared by the Ministry of Works to be submitted to him for his approval and the work is subject to his inspection and approval. In a very real sense then, if the regulations are held to apply to this housing project the whole of the drainlaying and plumbing work would be subject to the control of the Lower Hutt Municipality and therefore would affect the ‘rights’ of the Crown.
In my opinion then though the matter is not wholly free from doubt the better view and the one more consistent with established authority in New Zealand is that the Drainage and Plumbing Regulations 1959 cannot be enforced against drainlayers and plumbers engaged by the Ministry of Works to carry out work on Crown land.”
Turner J. also applied Doyle v Edwards saying he thought that in the case before the court the court should consider itself bound by the authority of Doyle v Edwards. Hutchison J. the remaining member of the court agreed with the judgments of the other members of the court to the effect that Doyle v Edwards should be applied.
Although it may be said that the facts in Lower Hutt City differed from those before me and that BSA Act does not contain provision for an engineer to view and approve plans and inspect and improve work, there are in the BSA Act provisions of not dissimilar effect.
I refer to Part 6 of BSA Act dealing with “RECTIFICATION OF BUILDING WORK”. Part 6 is found in ss. 72, 73 and 74 of the Act. In particular by s.72, if the Queensland Building Services Authority is of the opinion that building work performed by the respondent is defective or incomplete, it may direct the respondent to rectify the building work within a reasonable period (ss.72(1) and (2)). A direction to rectify may require that a building or part of a building be demolished (s.72(3)).
I note that a direction to rectify may be given to the person who, for profit or reward carried out the building work (ss.72(2)(d)). On my interpretation of ss.72(2)(d) that person is not required to have had a current licence but he must have the required work carried out by a licensed contractor (s.72(4) - a contractor who may be chosen by neither Northbuild nor the Crown.
In my view these provisions, if activated by the Authority against the present respondent would in a very real sense affect a prerogative right of the Crown viz., its unfettered enjoyment of the land owned by it and would plainly demonstrate that BSA Act significantly prejudiced the Crown.
I propose to apply Lower Hutt City v Attorney-General and I find that the respondent enjoys Crown immunity and was not required to hold the relevant licence at the time it performed the work. This conclusion is enough to justify dismissal of the application. If I am wrong, I now consider the remaining matters relied on by Mr Matthews.
Whether apart from the matter of Crown immunity, Section 42(3) applies
Mr Matthews submitted that it does not. Mr Savage submitted the contrary, relying on Marshall v Marshall (CA 9365 of 1996, 28 October 1997).
There the plaintiff claimed a total of $51,000 paid to the first defendant Marshall in respect of building work done by him or his company on the plaintiff’s land. The primary basis of the claim was that the plaintiff had paid the money to the defendant under a mistake of law. The mistake alleged and found by the trial judge to have been made was that the plaintiff believed that the defendant was legally entitled to be paid the money, whereas, not being a licensed builder he was not in law entitled to it.
The above recital of facts comes from the judgment of McPherson J.A..
McPherson J.A. decided that the effect of s.42(3) of the BSA Act was to prevent an unlicensed builder, in proceedings of any kind, from recovering the price or any part of it payable under a contract for building work carried out in contravention of that section.
Such a conclusion is absolute in its terms and appears to prevent a claim based on a quantum meruit, but the other two members of the court, Pincus J.A. and de Jersey J. (as he then was) did not expressly agree with it.
In their joint judgment their Honours noted that the trial judge would have ordered reimbursement of the $51,000 but he deducted $1,672.50 being the true value of the work done which left the respondent with a judgment for $34,327.50. Their Honours said:-
“The deduction was made on the basis that s.42 did not exclude an unlicensed builder’s entitlement to recover on a quantum meruit, an approach not challenged on the appeal.”
In my respectful view I must follow the decision of the majority and I construe Marshall v Marshall as leaving open the question whether an unlicensed builder can recover on a quantum meruit.
I would add also that in his reasons in Marshall McPherson J.A. pointed to what he regarded as several persuasive reasons for his interpretation of s.42. First were the substandard workmanship and materials which were principal targets of the BSA Act (s.3(a)(i)) and penalising incompetent and unlicensed builders was one method of achieving that object. Next was the statutory scheme whereby a building contractor must, before commencing residential construction work, pay to the Queensland Building Services Authority the appropriate insurance premium (s.68(1)). Next was the obvious regulatory function of BSA Act, one of the main objects of which is to protect building owners or consumers from dishonest builders.
Mr Matthews makes the point that in the present case Northbuild is not a “consumer” but a licensed contractor and the further point that the work in question here was not residential but commercial.
I conclude that the respondent has a right to claim in quantum meruit but such conclusion still leaves the question whether such a claim is for “money payable to the subcontractor . . . under the subcontract” pursuant to s.5(2) of the Subcontractors Charges Act. I pause to say that the claim by the respondent to a quantum meruit will be an alternative claim - not yet made - but arising only if s.42(3) is held to apply against him.
Mr Savage relies on Groutco (Aust.) Pty Ltd v Thiess Contractors Pty Ltd (1985 1 Qd R 238 in which the Full Court held that a claim for damages for breach of contract was not a payment of money in accordance with the subcontract.
The Full Court held that the words “in accordance with the subcontract” in s.5(2) should be narrowly or strictly construed and that the Subcontractors Charges Act should not be read so as to obtain for a subcontractor the status of a secured creditor in respect of a claim for unliquidated damages for breach of contract.
Groutco in my view is distinguishable from the present case. Here there is a claim of a charge - Schedule A to the actual claim makes it plain that the claim is not in damages - the claim in Groutco was plainly for damages.
In the present case the composition of the claim is detailed in a schedule to the notice of claim of charge being given. It begins with the contract sum $435,500, adds 12 variation items (for each of which a sum of money is claimed), deletes 2 items being bike racks ($3243) and oxy bench ($1297) with the result that nett variations total $60,584. The revised contract sum is stated then at $496,084 and credit is given for “amount paid to date” $366,307, leaving $129,777 “balance outstanding”.
Section 9 of the Subcontractors Charges Act refers to “the debt secured by a charge”.
In Groutco at p.248 Campbell C.J. (with whose reasons Sheahan J. agreed) said that the word “debt” was a term not appropriate to describe claims for unliquidated damages for breach of contract and relied on the following statement by Lord Davey in Ogdens Ltd v Weinberg (1906) 95 LT 567 at 567:-
“I desire however to say that in my opinion the word “debts” no doubt means something recoverable by an action for debt and nothing can be recovered in an action for debt except what is ascertained or can be ascertained. The claim for an amount which is uncertain and cannot be adjusted in an account cannot, I think, be justly called ‘a debt’.”
The other member of the Court in Groutco, McPherson J. (as he then was) mentioned without deciding the question, whether a quantum meruit was recoverable by the old action of debt or only in an action of indebitatus assumpsit and whether the latter was in substance an action of debt.
His Honour noted that in Alexander v Ajax Insurance Co Ltd (1956) VLR 436 at 445 Sholl J. said that debt extended to quantum meruit for work although later on the same page said that such a claim is covered by the indebitatus or common count.
In my view of the authorities and given the detail with which the respondent’s claim is set out, the claim is for debt that debt being in effect a liquidated demand. It is thus capable of founding a claim of charge. The matter of quantum meruit will probably only arise if the s.42 claim by the applicant succeeds (in part) at trial of the action.
In my view, cancellation of the charge on summary proceedings and before the trial of the action should only occur in a case where it is demonstrated to the Court that the case for the claim to a charge is clearly untenable (see General Steel Industries Inc v Commissioner for Railways (NSW) 112 CLR 125 at 130). This claim of charge is not clearly untenable.
Estoppel
Mr Matthews relies on statements by Deane J. in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at p.444 et seq. where his Honour discussed the content and operation of the general doctrine of estoppel by conduct and in 8 paragraphs identified what he saw as the conceptual foundation and essential operation of the doctrine of estoppel by conduct. It is unnecessary to here set out all those paragraphs. The evidence of Mr Lockton, unchallenged on the date of the hearing before me, shows that he moved to Brisbane approximately five years ago, and was unaware until recently advised by his solicitors that he required a licence to carry out, tender or otherwise contract to carry out structural steelwork. He has sworn that at no time during his dealings with the applicant’s representatives was he asked to produce a licence, nor was any reference made to his requiring a licence to subcontract for the Salisbury State High School work.
The estoppel relied on is silence by Northbuild which by implication from the affidavit evidence of Lockton, led Lockton to believe no licence was required before he could enter into the contract and do the work.
At pp.444-5 Deane J. said:-
“2. The central principle of the doctrine is that the law will not permit an unconscionable – or, more accurately, unconscientious – departure by one party from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that other party’s detriment if the assumption be not adhered to for the purposes of the litigation.
3. Since an estoppel will not arise unless the party claiming the benefit of it has adopted the assumption as the basis of action or inaction and thereby placed himself in a position of significant disadvantage if departure from the assumption be permitted, the resolution of an issue of estoppel by conduct will involve an examination of the relevant belief, actions and position of that party.
4. The question whether such a departure would be unconscionable relates to the conduct of the allegedly estopped party in all the circumstances. That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it. The cases indicate four main, but not exhaustive, categories in which an affirmative answer to that question may be justified, namely, where that party: (a) has induced the assumption by express or implied representation; (b) has entered into contractual or other material relations with the other party on the conventional basis of the assumption; (c) has exercised against the other party rights which would exist only if the assumption were correct; (d) knew that the other party laboured under the assumption and refrained from correcting him when it was his duty in conscience to do so. Ultimately, however, the question whether departure from the assumption would be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted. In cases falling within category (a), a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption. Particularly in cases falling within category (b), actual belief in the correctness of the fact or state of affairs assumed may not be necessary. Obviously, the facts of a particular case may be such that it falls within more than one of the above categories.
5. The assumption may be of fact or law, present or future. . . .”
On the evidence before me at the hearing that evidence being not then challenged, there is a prima facie case of unconscientious conduct by the applicant. The applicant did not mention to the respondent any need for a licence under the BSA Act until it brought the present application. If the application succeeds, and the respondent, who claims to have performed his subcontract, is held disentitled to any financial reward because of s.42(3) of the BSA Act, then the applicant who will be entitled to receive payment from the Department - a payment which will include the work performed by the respondent (and which the applicant was, by its head contract required to perform) will have received a windfall - an unjust enrichment. I add that after the hearing and after I had reserved my decision the applicants solicitors filed a further affidavit, but I have ignored any parts of that affidavit seeking to join issue with the contents of Lockton’s affidavit. Furthermore, the claim of estoppel can only be properly adjudicated on after all the circumstances on which the respondent relies have been investigated at a full hearing or trial. Obviously then, cancellation of the charge is not clearly untenable at present.
CONCLUSION
In the result and for reasons which I have given I dismiss the application.
I shall hear from the parties on costs.
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