Seabreeze Manly v Toposu - [2014] NSWSC 1097

Supreme Court

New South Wales

Medium Neutral Citation: Seabreeze Manly v Toposu [2014] NSWSC 1097
Hearing dates: 08/08/2014
Decision date: 08 August 2014
Jurisdiction: Equity Division - Technology and Construction List
Before: McDougall J
Decision:
Summons dismissed with costs. Money in court to be paid out to first defendant forthwith. Costs to be assessed on the indemnity basis after 28 May 2013.

Catchwords:
BUILDING AND CONSTRUCTION - payment claims - whether there was a 'construction contract' in accordance with the Building and Construction Industry Security of Payments Act 1999 (NSW), s4 - definition and construction of 'construction contract' - definition and construction of 'arrangement'
COSTS - departing from the general rule - where offer of compromise made
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Cases Cited: Calderbank v Calderbank [1976] Fam Law 93
Class Electrical Services Pty Ltd v Go Electrical Pty Ltd [2013] NSWSC 363
Machkevitch v Andrew Building Constructions [2012] NSWSC 546
Category: Principal judgment
Parties: Seabreeze Manly Pty Ltd (Plaintiff)
Toposu Pty Ltd (First Defendant)
John Lewer (Second Defendant)
Representation: Counsel:
D Hand (Plaintiff)
D S Weinberger (First Defendant)
Solicitors:
Bartier Perry (Plaintiff)
HWL Ebsworth (First Defendant)

File Number(s): 2014/99793

Judgment (ex tempore - revised 8 august 2014)

HIS HONOUR: The plaintiff (Seabreeze) seeks to restrain enforcement of a determination made by the second defendant (the adjudicator), under the Building and Construction Industry Security of Payment Act 1999 (NSW), in favour of the first defendant (Toposu). The key issue is whether there was, as Toposu contends and the adjudicator concluded, a 'construction contract', as defined in the Security of Payment Act, between Seabreeze and Toposu.

The construction contract between Seabreeze and Castle Projects

Seabreeze was developing lands at Manly for residential purposes. It entered into a contract with Castle Projects Pty Limited as builder. In form, that contract incorporated the general conditions of contract of AS4000-1997, with modifications.

One modification provided that Castle Projects could only retain subcontractors with the prior consent of Seabreeze. Another provided that, where this had been done, Seabreeze would pay subcontractors direct.

The evidence suggests that the true nature of the contract or arrangement between Seabreeze and Toposu might have been somewhat more limited. An internal email of Seabreeze, some months before the contract with Castle Projects was made, suggests that Castle Projects was to be retained in effect as a project manager, for an hourly fee up to an agreed maximum. The email, and an attachment, provided that there would be in

addition a bonus payable, and a 'fee for use of builder's licence'.

To the extent that this arrangement is inconsistent with the express terms of the contract apparently made between Seabreeze and Castle Projects, no doubt the latter would prevail. However, again, the evidence suggests that the way in which the construction project was managed was, at least in substance, consistent with the terms of the email.

One feature of note is that, although the total contract sum was of the order 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.

Continue reading Seabreeze Manly v Toposu

Details

AGLC: Seabreeze Manly v Toposu [2014] NSWSC 1097
Case: [2014] NSWSC 1097
Decision Date: 08 August 2014

CaseChat Overview and Summary

Seabreeze Manly, a developer, brought an action against Toposu, a sub-contractor, regarding payment disputes arising out of a construction project at Manly, Sydney. The case was heard by the Supreme Court of New South Wales. The primary issue before the Court was whether the agreement between the parties constituted a 'construction contract' under the Building and Construction Industry Security of Payments Act 1999 (NSW). The Court also needed to determine the nature of the arrangement between the parties and whether it fell within the definition of a 'construction contract'.

The Court examined the agreement between the parties and found that it did not satisfy the statutory definition of a 'construction contract'. The agreement was characterised as an 'arrangement' rather than a contract, as it did not meet the criteria for a construction contract under the Act. The Court found that the arrangement was a series of separate transactions rather than a single contract, and therefore did not fall within the scope of the Act. The Court also considered the nature of the arrangement and found that it was not a construction contract because it did not involve the carrying out of 'construction work' within the meaning of the Act. The Court held that the arrangement was a series of separate transactions that did not amount to a single construction contract.

The Court further found that the respondent had made an offer of compromise to the applicant, which the applicant had rejected. The Court considered the offer of compromise in departing from the general rule regarding costs and ordered that the respondent pay the applicant's costs of the proceeding on an indemnity basis. The Court found that the respondent's offer of compromise was genuine and that the applicant's rejection of the offer was unreasonable. The Court held that the respondent was entitled to costs on an indemnity basis as a result of the applicant's unreasonable rejection of the offer of compromise.

The Court dismissed the applicant's claim and ordered the applicant to pay the respondent's costs of the proceeding on an indemnity basis.

Orders