Westbourne Grammar School v Gemcan Constructions Pty Ltd - [2017] VSC 645

IN THE SUPREME COURT OF VICTORIA Not Restricted
AT MELBOURNE
COMMERCIAL COURT
TECHNOLOGY ENGINEERING AND CONSTRUCTION LIST
S ECI 2017 00163

WESTBOURNE GRAMMAR SCHOOL Plaintiff

v

GEMCAN CONSTRUCTIONS PTY LTD & ORS Defendants
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JUDGE:

ROBSON J

WHERE HELD:

Melbourne

DATE OF HEARING:

2 October 2017

DATE OF JUDGMENT:

26 October 2017

CASE MAY BE CITED AS:

Westbourne Grammar School v Gemcan Constructions Pty Ltd

MEDIUM NEUTRAL CITATION:

[2017] VSC 645

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BUILDING AND CONSTRUCTION – Application for certiorari by the principal under a building contract – Determination by an adjudicator in favour of builder under an adjudication under the Building and Construction Industry Security of Payment Act 2002 (Vic) – Whether ‘show cause’ validly given to builder – Whether s 48 of the Building and Construction Security of Payment Act 2002 (Vic) rendered void a clause entitling the principal to take over the balance of the works and to suspend builder’s entitlement to payment under the contract – Section 48 of the Building and Construction Industry Security of Payment Act 2002 (Vic) not enlivened – Southern Han Breakfast Points Pty Ltd v Lewence Constructions Pty Ltd [2016] HCA 52 applied – Whether show cause notice validly specified the date and time in which the builder was to show cause – Application granted.
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APPEARANCES:
Counsel Solicitors

For the Plaintiff Mr R Andrew Champions Lawyers

For the Defendants Mr L J Connolly Maddocks Lawyers
HIS HONOUR:
Introduction

1 A builder, Gemcan Constructions Pty Ltd (Gemcan), obtained an adjudication determination under the Building and Construction Industry Security of Payment Act 2002 (Vic) (the Act) that it be paid by the principal, Westbourne Grammar School (Westbourne), $241,073.33 for work done under a construction contract between Gemcan and Westbourne. Westbourne seeks an order quashing the adjudication on the grounds of jurisdictional error by the adjudicator and errors of law on the record.

2 For the following reasons, the Court allows the application and quashes the adjudication.

The Background facts

3 On 25 July 2016, Gemcan was engaged by Westbourne under a contract, to construct alterations to Westbourne’s Williamstown campus (the contract).

4 Under clause 39 of the contract, if Gemcan committed a substantial breach of the contract, Westbourne could by hand, or by certified post, give to Gemcan a written notice to show cause.

5 Clause 39 of the contract provided that a show cause notice was to state, inter alia, that Gemcan was required to show cause, in writing, as to why Westbourne should not exercise a right conferred by subclause 39.4, and the date and time by which Gemcan must show cause, which should not be less than 7 clear days after the notice was received by the Contractor.

6 Subclause 39.4 provided that if Gemcan failed to show reasonable cause by the stated date and time, Westbourne could by written notice to Gemcan, take out of Gemcan’s hands the whole or part of the work remaining to be completed and suspend payment to Gemcan until such payment becomes due and…

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: [2017] VSC 645
Decision Date: 26 October 2017

CaseChat Overview and Summary

Westbourne Grammar School, the principal under a building contract, filed an application for certiorari against Gemcan Constructions Pty Ltd, the builder, in the Supreme Court of Victoria. The dispute centred on an adjudication decision made in favour of Gemcan under the Building and Construction Industry Security of Payment Act 2002 (Vic). The principal sought to challenge the validity of the 'show cause' notice issued to Gemcan, the correctness of the adjudication decision, and the enforceability of a contractual clause allowing the principal to take over the balance of the works and suspend payment. The court was tasked with determining whether the 'show cause' notice was validly issued, if section 48 of the Act rendered void a contractual clause allowing the principal to take over the works, and whether the 'show cause' notice correctly specified the date and time for Gemcan to show cause.

The court considered whether the 'show cause' notice was validly issued under the Act. It examined if section 48 of the Act rendered void a clause in the contract that allowed the principal to take over the balance of the works and suspend payment. The court applied the principles from the case Southern Han Breakfast Points Pty Ltd v Lewence Constructions Pty Ltd [2016] HCA 52 to assess the validity of the 'show cause' notice and the contractual clause. The court found that section 48 of the Act did not render void the clause allowing the principal to take over the works. Additionally, the court determined that the 'show cause' notice was validly issued as it correctly specified the date and time for Gemcan to show cause.

The Supreme Court granted the application for certiorari, thereby quashing the adjudication decision. The court held that the 'show cause' notice was validly issued, and the clause allowing the principal to take over the balance of the works and suspend payment remained enforceable. The court's decision was based on the proper interpretation of the Building and Construction Industry Security of Payment Act 2002 (Vic) and the relevant case law. The final orders included the quashing of the adjudication decision and the enforcement of the contractual clause allowing the principal to take over the works and suspend payment.

Orders