Taylor Construction Group Pty Ltd v Adcon Structural Group Pty Ltd - [2023] NSWSC 723

Supreme Court

New South Wales

Medium Neutral Citation: Taylor Construction Group Pty Ltd v Adcon Structural Group Pty Ltd [2023] NSWSC 723
Hearing dates: 22 June 2023, last submissions 23 June 2023
Date of orders: 27 June 2023
Decision date: 27 June 2023
Jurisdiction: Equity - Technology and Construction List
Before: Rees J
Decision:
Permanent injunction and declaratory relief.

Catchwords:
SECURITY OF PAYMENT ACT– construction contract terminated – subcontractor serves payment claim – contractor serves payment schedule disputing validity of payment claim – subcontractor serves another payment claim without withdrawing the earlier claim – s13(1C), Building and Construction Industry Security of Payment Act 1999 – contractor now says earlier payment claim was valid – whether contractor can ‘approbate and reprobate’ – s13(1C) applies to preclude later payment claim.
CONTRACT – contractor purports to terminate contract – subcontractor elects to affirm – contractor reasserts that contract is terminated – subcontractor elects to terminate – whether termination effective – is later repudiation “distinguishable” from earlier breach – GEC Marconi v BHP – principles at [25]-[32] – later breach need not be breach of different obligation or breach of same obligation by different means – sufficient if later breach is temporally distinguishable, occurring on a separation occasion.

Legislation Cited:
Building and Construction Industry Security of Payment Act 1999 (NSW) ss 13(1C), 13(2)

Cases Cited:
Ailakis v Olivero (No 2) [2014] WASCA 127; (2014) 100 ACSR 524
AllianzAustraliaInsuranceLtdvDelorVueApartmentsCTS39788 (2022) 406 ALR 632; [2022] HCA 38
Autodesc Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6
BCFK Holdings Pty Ltd v Rork Projects Pty Ltd [2022] NSWSC 1706
Carr v J A Berriman Pty Ltd (1953) 89 CLR 327; [1953] HCA 31
GECMarconiSystemsPtyLtdvBHPInformationTechnologyPtyLtd (2003) 128 FCR 1; [2003] FCA 50
Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602
Larking v Great Western (Nepean) Gravel Ltd (1940) 64 CLR 221; [1940] HCA 37
NC Refractories Pty Ltd v Consultant Bricklaying Pty Ltd [2013] NSWSC 842
Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444; [1976] HCA 21
Rojo Building Pty Ltd v Jillcris Pty Ltd [2006] NSWSC 309
The New South Wales Netball Association Ltd v Probuild Construction (Aust) Pty Ltd [2015] NSWSC 1339

Category: Principal judgment
Parties: Taylor Construction Group Pty Ltd (Plaintiff)
Adcon Structural Group Pty Ltd (Defendant)
Representation:
Counsel:
Mr D Byrne (Plaintiff)
Mr F Hicks SC / Ms D Levi (Defendant
Solicitors:
HWL Ebsworth Lawyers (Plaintiff)
Roberts Legal (Defendant)

File Number(s): 2023/188806

Judgment

HER HONOUR: The plaintiff contractor, Taylor Construction Group Pty Ltd, seeks to permanently injunct the defendant subcontractor, Adcon Structural Group Pty Ltd, from making adjudication applications under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). Adcon served two payment claims in May 2023 in respect of construction work undertaken on projects in Banksmeadow and Ingleburn respectively.
The injunction is sought on the…

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: [2023] NSWSC 723
Decision Date: 27 June 2023

CaseChat Overview and Summary

Taylor Construction Group Pty Ltd and Adcon Structural Group Pty Ltd were involved in a dispute concerning a terminated construction contract. Adcon, a subcontractor, served a payment claim under the Security of Payment Act, which Taylor disputed by issuing a payment schedule. Adcon subsequently submitted another payment claim without withdrawing the first, prompting Taylor to assert that the initial claim was valid. The legal issues centred on whether Taylor could change its stance on the validity of the payment claim and whether this constituted an impermissible "approbation and repudiation." Additionally, the court examined whether Taylor's termination of the contract and subsequent repudiation could be considered distinguishable breaches, allowing Adcon to affirm the contract initially and then terminate it upon the second repudiation.

The court found that Taylor's changing position on the validity of the payment claim was impermissible and that section 13(1C) of the Security of Payment Act precluded Adcon's later payment claim. The court held that Taylor could not approbate and reprobate, and that Adcon's later payment claim was invalid. Regarding the contract's termination, the court determined that Taylor's second repudiation was not distinguishable from the initial breach, following the principles outlined in GEC Marconi v BHP. The court concluded that Adcon's election to affirm the contract upon the first repudiation prevented it from terminating the contract after the second repudiation.

As a result, the court ruled in favour of Taylor on both issues. The later payment claim was deemed invalid, and the contract remained effective despite Taylor's repudiation. The final orders of the court were that Adcon's second payment claim was invalid and that the construction contract between the parties remained in force.

Orders