CANAM CONSTRUCTION LIMITED Plaintiff AND GEORGE DEVELOPMENTS LIMITED
[2004] NZHC 1222
•9 November 2004
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2004-404-3565
BETWEEN CANAM CONSTRUCTION LIMITED
Plaintiff
AND GEORGE DEVELOPMENTS LIMITED
Defendant
CIV-2004-404-4770
AND BETWEEN GEORGE DEVELOPMENTS LIMITED
Plaintiff
AND
CANAM CONSTRUCTION LIMITED
Defendant
Hearing: 8-9 November 2004
Appearances: Mr G J Christie and Ms D A Welsh for Canam Construction Ltd Mr A Commons for George Developments Ltd
Judgment: 10 November 2004 at 3.30 pm
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
[re upon applications for summary judgment]
Canam’s claim
[1] Canam is a construction company. George Developments Limited (“George”) is the trustee of the George Trust, the owner of property at 11 Cheshire Street, Parnell, Auckland (“the property”).
CANAM CONSTRUCTION LIMITED V GEORGE DEVELOPMENTS LIMITED HC AK CIV-2004-404-
3565 10 November 2004
[2] Canam and George entered into two written contracts dated 2 April 2003 and 22 May 2003 respectively for the construction of apartments on the property. The contracts incorporated NZS3915:2000 General Conditions of Contract (“the general conditions”). The Construction Contracts Act 2002 applies to the contracts.
[3] On 3 June 2004 Canam served its payment claim no. 15 (“PC-15”)on George under the contract. The claim was made pursuant to and in compliance with the Construction Contracts Act 2002. PC-15 was for $443,053.61 (including GST). That sum included the sum of $158,591.76 (including GST) which had previously been invoiced to the defendant but which sum was subject to an adjudication under the Act, upon which the decision of the adjudicator was still awaited. The balance sum of $264,637.88 including GST (“the claimed sum”) was the amount for which judgment is sought upon Canam’s summary judgment application.
[4]Canam alleges:
1)That its payment claim PC-15 was served on George on 3 June 2004.
2)Pursuant to clause 2.2.1 of the general conditions George had seven working days and to 15 June 2004 to assess the payment claim and notify Canam of any proposed amendments.
3)Clause 12.2.4 of the general conditions provided that if George did not give notice of any amendments within that time then Canam was entitled to be paid the amount of its claim within five working days thereafter ie by 22 June 2004.
4)In accordance with s22(b)(i) of the Act and clause 12.2 of the general conditions, George was required to serve a payment schedule on Canam within seven working days of being served by the payment claim (by 15 June 2004).
5)Otherwise the amount claimed in the payment claim would become a debt due and owing under s 23 of the Act.
6)George did not serve a payment schedule on Canam by 15 June 2004.
[5] On 15 June 2004 George’s representative, Rider Hunt Auckland Limited (“Rider Hunt”) issued a valuation report (dated 14 June 2004) to George recommending that payment be made to Canam in the amount of $179,668.82 inclusive of GST in respect of payment claimed on PC-15. That valuation report was copied to Canam.
[6] By facsimile dated 20 June 2004 George detailed claims against Canam for alleged damage, uncompleted work and delay. Canam says that s 79 of the Act provides that such claims cannot give rise to any counterclaim, set-off or cross- demand per s 23 of the Act.
[7] On 16 June 2004 Canam sent two invoices to George, each for a portion of the total amount claimed under PC-15. One invoice was in the amount Rider Hunt had recommended for payment. The second invoice was for $84,969.06 (including GST) being the balance of PC-15 less the amount of $158,591.76 which was then subject to adjudication.
[8] Canam’s claim for judgment is based on the premise that George did not respond to its PC-15 appropriately or within time. George says that by 15 June 2004 Canam was served with a notice (by the Rider Hunt valuation report, but also by a facsimile date 10 June 2004) amending PC-15. It followed (according to George) that if within five working days thereafter the parties had not agreed on the total amount payable in respect of the progress payment Canam would be entitled to be paid a disputed portion of its claim subject to clause 12.2.4 of the general conditions. That clause states:
WHERE [Canam] has become entitled to be paid any amount under …12.2.3 [George] shall pay such amount less any deductions that [George] is entitled to make within five working days after [Canam] has become so entitled. [Canam] shall issue a tax invoice to [George] for the amount of the entitlement within the time required by the Goods and Services Act 1985.
[9] It is the George’s position therefore that any payment due from it to Canam by 22 June 2004 was the amount claimed less any deductions claimable pursuant to clause 12.2.4.
[10] In summary, Canam asserts George had until 15 June 2004 to submit a payment schedule but did not. George says it did so but had in any event until 22 June 2004 to claim any deductions it was entitled to, and that it also did.
[11] The contracts provided for the granting of extensions of time from time to time. Such extensions, George says, had been granted and/or agreed to up to 23 December 2003. George claims it is entitled to deduct liquidated damages at $3,500 per week from 21 December 2003 to date of completion. By tax invoice dated 20 June 2004 George applied for deductions in the sum of $711,728.63. Accordingly, George’s position pursuant to clause12.2 of the general conditions and ss 17, 21, 22 and 24 of the Act is that it is not liable to pay Canam upon its claim.
George’s claim
[12] Canam’s claim for summary judgment was filed on 9 July 2004. George’s notice of opposition was filed on 6 September 2004, the day before it filed its own proceedings including its own claim for summary judgment. Their proceedings relate to an earlier payment claim (PC-12) in respect of which there had been a dispute referred to an adjudicator. George did not appear at the adjudication. The adjudicator determined that George’s payment schedule (in the form of Rider Hunt’s valuation report) was presented one day late and accordingly out of time to affect Canam’s entitlement upon PC-12. Canam have now filed proceedings in the District Court to enforce the adjudicator’s determination. George opposes those proceedings on the grounds that Rider Hunt was not its representative and asserts its principal representative, Mr R Barton did deliver a payment schedule within the prescribed time after PC-15 was delivered to him.
[13] On 1 April 2004 Canam forwarded its PC-12 to Mr Barton. Mr Barton says this was not received by him until 5 April 2004. This gave George until 16 April 2004 to notify Canam in writing and give reasons for any proposed amendment to the claim. On 15 April 2004 Rider Hunt on behalf of George forwarded to Canam its valuation report approving payment of $142,403.25 (including GST). George duly paid Canam that sum but not the balance demanded by PC-15. Accordingly Canam sought, by invoking the adjudication process, payment of the balance of PC-
12 namely $158,591.75 plus GST. The adjudicator upheld that claim. In all the total amount of the award was $185,457.95 including GST, adjudication fees, interest and costs.
[14]George claims the determination was wrong because:
1)Its principal representative under the contracts was not Rider Hunt but Mr Barton.
2)PC-12 was not correctly served on Rider Hunt as the principal’s representative on 1 April 2004 and was not received by Mr Barton as the correct principal’s representative until 5 April 2004.
3)George’s payment schedule was not served late on Canam but was in fact correctly served within time.
[15] By its proceedings George seeks a determination that the principal’s representative is Mr Barton and following from that that there should be judgment against Canam in the sum of $185,457.95.
[16]In opposition to George’s application Canam claims:
1)The Act prescribes that any challenge to the adjudicator’s determination being enforced is in the District Court. Canam has
issued proceedings before that Court to enforce the adjudicator’s determination. George has taken steps to oppose that application.
2)It is strongly arguable the adjudicator’s determination is correct; that the principal’s representative under the contracts was Rider Hunt; and that no payment schedule was served in time by George Developments as the adjudicator determined.
[17] There are matters of common ground to both applications for summary judgment – in particular regarding the role played by Rider Hunt on behalf of George in the latter’s dealings with Canam. This has meant there has been a need for the
Court in the separate proceedings to refer to affidavits filed in the other.
Nevertheless the issues raised upon each are distinct and are confined. I consider it appropriate to deal with Canam’s summary judgment application first.
Canam’s summary judgment application
The Evidence
[18] Canam’s director Mr L S Petrou, swore his first affidavit in these proceedings on 8 July 2004. He said following the issue of PC-15 Canam issued two invoices. The first was in the amount recommended by Rider Hunt because Canam believed George would at least pay that amount recommended by its own representative. The second invoice was for the balance sum to make up the claim amount.
[19] Mr Petrou says George’s invoice for $711,728.63 dated 20 June 2004 was received by Canam on 21 June 2004. He responded to it immediately on 22 June 2004 with advice it was rejected because it lacked contractual substance. On 23 June 2004 Canam received another statement from George. This was also dated 20 June 2004 and purported to deduct from George’s claim (for $711,728.63) the amount that Rider Hunt had valued as suitable for payment. So a balance of
$532.039.81 was now claimed by George from Canam.
[20] Mr Petrou believes the issues raised by George’s invoice are not relevant to these proceedings because George is not permitted by the Act to use its claims against Canam (which were denied) in any event to set-off or as a reason not to make payment.
[21] Mr R L Maiden, an Auckland registered quantity surveyor has filed an affidavit dated 3 September 2004 in opposition to Canam’s summary judgment application.
[22]Mr Maiden states:
1)There is a dispute as to the justification for Canam’s claim that the sum of $264,637.88 including GST is immediately payable to it.
2)In response to Canam’s PC-15 Canam was served with an amending notice pursuant to clause 12 of the general conditions.
3)Canam did not object to the amending notice nor was the difference between PC-15 and the amending notice resolved by the parties.
4)George served on Canam, within time, its progress claim that had correctly identified deductions that should have been made under the contract.
5)Canam is therefore obliged to resolve any claim in the normal way, once disputed facts have been determined.
[23] Upon his consideration of the items deducted by George in its 20 June 2004 tax invoice he considers they may be split into items that cannot be disputed and those which may be disputed.
[24] In his opinion there are proper reasons for George Developments to deduct the contractually agreed liquidated damages for non completion. In his assessment the correct deduction for items in relation to which there can, in his view, be no dispute under the contracts, is a sum of $103,493.54 which relates to defective work and are therefore deductible although the quantum may well be disputed by Canam. Further he said there should be credits in the sum of $143,075 for items Canam contracted to supply and install but which, in the event, were provided by George. He calculated that a sum of $362,580 included in the 20 June invoice may be disputed. In summary, of George’s invoice the quantum asserted in relation to claims that cannot be disputed is $146,568.54, and the quantum asserted in relation to claims that may be disputed is $362,580.
[25]He is critical of other aspects in relation to Canam’s claim. He said:
1)PC-15 relates to the combined value of the two contracts whereas strictly speaking the two contracts should have been claimed and paid for separately.
2)The value of provisional sums shown on PC-15 is at variance with the value claimable in terms of the contract documents.
3)The variation summary contained in Canam’s claim includes 256 items of alleged variations totalling $500,814.72 whereas there is an assessed variation order in the sum of $78,532.92 only. He said in terms of the general conditions the only instructions allowable for variation orders are those approved in writing by the principal. No such approval exists with respect to the extent of Canam’s claims for variations.
[26] By his affidavit in opposition to Canam’s summary judgment application Mr Barton annexes a copy of his affidavit filed in support of his application for review of the adjudicator’s determination. The import of that affidavit and its many exhibits is that Rider Hunt was not George’s representative under the terms of the contracts. It asserts that Rider Hunt were engaged to assess and decide “all claims for variations” but its work in that capacity did not detract from nor replace Mr Barton’s position as the contract principal’s representative. The import of that submission is that the Rider Hunt valuation report dated 14 June 2004 was not on its own a payment schedule but when considered together with Mr Barton’s tax invoice of 20 June 2004 (and when considered also with the tax invoice dated 10 June 2004 which Mr Barton claims was earlier delivered to Canam) collectively accounts for all obligations incumbent on George to defeat Canam’s entitlement for payment on its PC-15.
[27] In his reply affidavit dated 1 October 2004 Mr Petrou disputes that Rider Hunt were not the principal’s representative. He doubts in any event the relevance of this issue because it is Canam’s position that George had received it PC-15 and in response no payment schedule was, as required by the Act, served in response. He stated it had not been alleged that the Rider Hunt valuation of 14 June 2004 was a
payment schedule. He noted that the valuation report did not purport to be given pursuant to clause 12.2.1 and gave no reasons for the proposed amendments to Canam’s claim as required. He expresses uncertainty about what exactly is said to be the payment schedule issued as required by the Act. Further he denies that George’s invoice of 20 June 2004 is a certificate under clause 12.2.3 where under that clause the principal is required to issue a certificate for the “undisputed portion” of its claim. George’s invoices dated 20 June 2004 did not do this. Nor did they make any deductions in accordance with the contract; ie invoices were simply issued to Canam for George’s claims.
[28] Mr Petrou was also critical of Mr Maiden’s conclusions. Mr Maiden had said that George had an undisputed claim for liquidated damages which included claims for late completion of contract beyond the agreed extensions date of 21 December 2003. Mr Petrou counters that Canam has extension of time claims well beyond this date and up to 15 July 2004 which had not been ruled upon. The liquidated damages claim was therefore very much in dispute. As regards Mr Maiden’s claim that “the quantum of liquidated damages is deductible in terms of the payment schedule” Mr Petrou states that no payment schedule has been received from George purporting to deduct liquidated damages. He said Mr Maiden’s assertion that the contracts were incomplete was wrong because practical completion has been achieved.
[29] On 5 November 2004 Mr Barton swore an additional affidavit in opposition to Canam’s summary judgment application. The late arrival of that document is not adequately explained and Mr Christie opposes leave being granted for it to be read. Initially I reserved my judgment upon the issue. Ultimately I ordered it should be admitted as part of the record upon Canam’s summary judgment application. The affidavit annexes a number of documents which are, in all cases but one, part of a record that will have been in Canam’s possession throughout in these proceedings. The exception relates to the tax invoice dated 10 June 2004 from George to Canam. Earlier in this judgment I have referred to that document but quite clearly that document has not, until Mr Barton’s 5 November affidavit, been identified or referred to in any way at all.
[30]Of it Mr Barton, in paragraph 1.3 of his affidavit of 5 November 2004 avers:
1.3Annexed and marked (D) is a true copy of George Development’s 10 June 2004 statement to Canam. To the best of my recollection and belief I sent annexure (D) to Canam on or about 10 June 2004 together with a copy of Canam’s PC-15. The tax invoice was clearly referable to PC-15.
[31] I am invited to consider that the tax invoice provides proper notice of deductions claimable in response to delivery of PC-15 in the event that George’s tax invoice dated 20 June 2004 does not serve that purpose.
[32] While in the context of these proceedings that 10 June invoice could have some significance, I expressed my concern about it to Mr Commons. Save for some minor aspects of detail its form and its content is identical to the tax invoice dated 20 June 2004. I pointed out to Mr Commons that the 20 June 2004 tax invoice purports at its conclusion to make a claim for deductions amounting to $106,000 for a late penalty calculated at $500 per day from 21 November 2003 to 20 June 2004. I then pointed out to Mr Commons that the 10 June 2004 tax invoice made the same claim using the same calculation. I expressed curiosity about the fact that an invoice dated 10 June 2004 should provide a calculation to the date contained in the 20 June 2004 invoice. I then briefly adjourned the hearing to enable Mr Commons to take
instruction from Mr Barton who was then present in the back of the Court.
[33] Upon resumption of the hearing Mr Commons reported from the bar that his instructions were the date 20 June 2004 was used in the 10 June 2004 invoice because that would have been the monthly anniversary from the date from which late penalty payments were due from 21 November 2003. Although Mr Commons invited Mr Barton to give evidence and be cross-examined upon the point it seemed to me inappropriate upon a summary judgment application to do so. I declined his request.
[34] In fairness to Mr Commons I should not make too much of the instructions related to him and his client. Nonetheless the curiosity remains in particular because:
1)Penalties for late completion were by the contracts to be calculated on a weekly (and not daily) basis;
2)Extensions to the contract had been agreed to 21 December 2003, not 21 November 2003 as expressed in the 10 June 2004 tax invoice.
[35] At the end of the day it was my view that if the veracity of that document dated 10 June 2004 is to be tested then it ought not to be done in the course of a summary judgment application.
[36] Mr Barton’s 5 November 2004 also exhibits a copy of the PC-15 claim and a summary attached to that claim. Its purpose was to demonstrate Mr Commons’ submissions that credits and variations agreed upon had not been allowed for in Canam’s calculation of the amount due to it by PC-15. The ultimate purpose of those documents and Mr Commons’ submissions thereon was to support the submission that PC-15 was not in fact a valid claim because it was not presented in a form required by the Act. That said, Mr Commons’ submissions about how the
Court should deal with the credits and variations expressed in PC-15 is unsupported by reference to affidavit or expert opinion.
Contractual conditions/statutory provisions
NZS 3915:2000
SECTION 12 – PAYMENTS
12.1Contractor’s claims
12.1.1 The Contractor may submit to the Principal claims for payment under the contract in the form of provisional progress payment certificates. Unless otherwise provided in the Contract Documents such claims shall be submitted in respect of work carried out during periods of not less than one Month. The provisional progress payment certificate shall be in the form given in the Eleventh Schedule.
12.1.2The Contractor’s claims shall show:
(a) The estimated extent and value of the Contract Works, excluding Variations, which have been carried out;
(b) The estimated extent and value of all work done or other Cost which is claimed in respect of Variations;
(c) The estimated extent and value of Materials delivered to the Site which are intended to be incorporated in the Contract Works but have not yet been so incorporated;
(d) Any advances for Temporary Works or Plant or for Materials not yet on Site for which payment is provided in the Special Conditions;
(e) The estimated value of Cost fluctuations;
(f) The estimated amount of any bonus to which the Contractor claims to be entitled under 10.6.
If any item of the Contractor’s claim cannot be verified within the prescribed time the Contractor shall be entitled to a reasonable estimate of the amount due.
12.2Progress payment certificates
12.2.1 Within 7 Working Days after the receipt of the Contractor’s claim the Principal may assess the Contractor’s claim and may notify the Contractor in writing of any proposed amendment to the claim which the Principal believes necessary to comply with the terms of the contract. Any such notice shall give reasons for the proposed amendment.
12.2.2 If within the period provided for in 12.2.1 the Principal does not give a notice thereunder, the Contractor shall be entitled to be paid the amount of its claim under 12.1.1 and the provisional progress payment certificate shall be the progress payment certificate.
12.2.3 If within five Working Days of the Principal notifying the Contractor of a proposed amendment under 12.2.1 the Principal and the Contractor have not agreed upon the total amount payable in respect of the progress payment, the Contractor shall be entitled (without prejudice to its rights under Section 13) to be paid the undisputed portion of its claim. The Principal shall forthwith issue a progress payment certificate for such amount. The progress payment certificate shall be in the form given in the Eleventh Schedule.
12.2.4 Where the Contractor has become entitled to be paid any amount under 12.2.2 or 12.2.3 the Principal shall pay such amount, less any deductions that the Principal is entitled to make, within five Working Days after the Contractor has become so entitled. The Contractor shall issue a tax invoice to the Principal for the amount of the entitlement within the time required by the Goods and Services Tax Act 1985.
Construction Contracts Act 2002
Part 1 Preliminary provisions
3 Purpose
The purpose of this Act is to reform the law relating to construction contracts and, in particular,—
(a) to facilitate regular and timely payments between the parties to a construction contract; and
(b) to provide for the speedy resolution of disputes arising under a construction contract; and
(c)to provide remedies for the recovery of payments under a construction contract.
4 Overview
In this Act,—
(a)…
(b) provisions invalidating any contractual clause that makes payment to any party to a construction contract conditional on the payer first receiving payment from someone else are set out in section 13:
(c)…
(d) default provisions granting an entitlement to progress payments, and setting out a statutory mechanism for determining the amount of, and the due date for, those payments, in circumstances where the relevant construction contract is silent on any of those matters are set out in sections 15 to 18:
(e) provisions establishing a procedure that allows a party to a construction contract to recover a progress payment by making a payment claim, and the party who is liable for that payment to respond by means of a payment schedule, are set out in sections 19 to 24:
(f) provisions relating to the adjudication of disputes are set out in sections 25 to 71:
(g)…
(h) provisions enabling an adjudicator's determination to be enforced by entry as a judgment on application to a District Court are set out in sections 73 to 78:
(i) miscellaneous matters (for example, the method of service of notices) are set out in sections 79 to 82.
…
12 No contracting out of Act
This Act has effect despite any provision to the contrary in any agreement or contract
…
20 Payment claims
(1) A payee may serve a payment claim on the payer for each progress payment,—
(a) if the contract provides for the matter, at the end of the relevant period that is specified in, or is determined in accordance with the terms of, the contract; or
(b) if the contract does not provide for the matter, at the end of the relevant period referred to in section 17(2).
(2)A payment claim must—
(a)be in writing; and
(b) contain sufficient details to identify the construction contract to which the progress payment relates; and
(c) identify the construction work and the relevant period to which the progress payment relates; and
(d)indicate a claimed amount and the due date for payment; and
(e) indicate the manner in which the payee calculated the claimed amount; and
(f) state that it is made under this Act.
…
21 Payment schedules
(1) A payer may respond to a payment claim by providing a payment schedule to the payee.
(2)A payment schedule must—
(a)be in writing; and
(b)identify the payment claim to which it relates; and
(c)indicate a scheduled amount.
(3) If the scheduled amount is less than the claimed amount, the payment schedule must indicate—
(a)the manner in which the payer calculated the scheduled amount; and
(b) the payer's reason or reasons for the difference between the scheduled amount and the claimed amount; and
(c) in a case where the difference is because the payer is withholding payment on any basis, the payer's reason or reasons for withholding payment.
22 Liability for paying claimed amount
A payer becomes liable to pay the claimed amount on the due date for the progress payment to which the payment claim relates if—
(a)a payee serves a payment claim on a payer; and
(b)the payer does not provide a payment schedule to the payee within—
(i) the time required by the relevant construction contract; or
(ii) if the contract does not provide for the matter, 20 working days after the payment claim is served.
23 Consequences of not paying claimed amount where no payment schedule provided
(1)The consequences specified in subsection (2) apply if the payer—
(a) becomes liable to pay the claimed amount to the payee under section 22 as a consequence of failing to provide a payment schedule to the payee within the time allowed by section 22(b); and
(b) fails to pay the whole, or any part, of the claimed amount on or before the due date for the progress payment to which the payment claim relates.
(2)The consequences are that the payee—
(a)may recover from the payer, as a debt due to the payee, in any court,—
(i) the unpaid portion of the claimed amount; and
(ii) the actual and reasonable costs of recovery awarded against the payer by that court; and
(b) may serve notice on the payer of the payee's intention to suspend the carrying out of construction work under the construction contract.
(3) …
(4) In any proceedings for the recovery of a debt under this section, the court must not enter judgment in favour of the payee unless it is satisfied that the circumstances referred to in subsection (1) exist.
24 Consequences of not paying scheduled amount in manner indicated by payment schedule
(1)The consequences specified in subsection (2) apply if—
(a)a payee serves a payment claim on a payer; and
(b) the payer provides a payment schedule to the payee within the time allowed by section 22(b); and
(c) the payment schedule indicates a scheduled amount that the payer proposes to pay to the payee; and
(d)the payer fails to pay the whole, or any part, of the scheduled amount on or before the due date for the progress payment to which the payment claim relates.
…
79 Proceedings for recovery of debt not affected by counterclaim, set- off, or cross-demand
In any proceedings for the recovery of a debt under section 23 or section 24 or section 59, the court must not give effect to any counterclaim, set-off, or cross-demand raised by any party to those proceedings other than a set-off of a liquidated amount if—
(a)judgment has been entered for that amount; or
(b) there is not in fact any dispute between the parties in relation to the claim for that amount
Considerations
[37] The Act introduced a new scheme dealing with progress claims made under a construction contract. One of the stated purposes of the Act was to facilitate regular and timely payments between parties to a construction contract. Prior to the Act a subcontractor’s position was often subject to vulnerability whereby its contractual right to be paid was often made subject to payment being received by the head contractor. The Act eliminated the “you get paid if I get paid” kind of provision then commonly contained in construction contracts.
[38] The Act provides for a contractor to make progress claims by way of a “payment claim” which must be paid or responded to with a “payment schedule”. In the absence of this, the contractor becomes entitled to its payment claim as a debt. The “payment claim” and “payment schedule” scheme is designed to ensure timely payment and cashflow. It follows that the scheme is not designed to determine for all time whether the amount claimed is properly owed to the contractor. A principal who fails to issue a payment schedule will still be entitled to pursue an arbitration or
other claim against the contractor, but must pay the contractor’s claim in the meantime. The process is designed to require strict compliance with regulatory procedures without necessarily or consequently determining what is in dispute between the parties. That said, the regulatory process allows the issue of a payment scheme in which for proper and appropriate purposes deductions can be made and allowed for pending any resolution of a dispute concerning that deduction. That deduction process is confined and restrained by the provisions in the Act, in particular s 21.
[39] Canam’s claim is pursuant to the provisions of the Act. George’s position is that the timelines set out in clause 12.2 of NZS 3915, do provide a time within which the payment schedule should be provided. Mr Commons’ submits there is a marked difference in interpretation as to the definition of a “payment schedule” pursuant to the Act and pursuant to the contracts. He submits that where possible relevant clauses of NZS 3915 should be given effect consistent with the Act; that clause 12 of NZS 3915 provides for, potentially, four stages, on completion of which there is, for the purposes of the Act, a “payment schedule”.
[40]For George it is submitted:
1)Within seven days of receiving PC-15 provided its assessment of PC- 15 (12.2.1).
2)There was no agreement between George and Canam within a further five working days of the assessment as to the total amount payable.
3)Therefore George should forthwith issue a “progress payment certificate” for the amount of the assessment.
4)Where Canam is entitled to be paid the assessment pursuant to 12.2.3 George should pay the amount less any deductions it is entitled to make within five working days. George should issue a tax invoice for the amount of the entitlement.
5)George submits that that is precisely what it did within the provisions of 12.2.
[41] It appears then to follow from Mr Commons’ submission that deductions incorporated into a payment schedule must be taken into account for the purposes of s 24 of the Act (which provides for the consequences of not paying the scheduled amount in the manner indicated by the payment schedule). He submits that if properly incorporated as deductions within the payment schedule they are distinguished from and treated separately to those which are applied after the issue of a payment schedule, which deductions are precluded by s 79 of the Act from being raised in the context of a payment claim.
[42] It is central to these submissions that the tax invoice of 20 June 2004 (and for that matter the tax invoice of 10 June 2004) amount to deductions properly raised in the context of a payment claim.
[43] In my judgment the reason is flawed and appears to promote contractual conditions as providing a scheme for raising deduction claims in the face of provisions in the Act which clearly disallow them. Nor do I accept that the provisions of the contract are at odds with the Act to the extent Mr Commons submits. In any event, to the extent there is a difference then the statutory provision takes effect. In my view the contractual provisions cannot be applied to admit claims of the nature or extent provided in the 20 June 2004 tax invoice. Mr Commons’ assessment that George acted within the provisions of the contract is a
gloss upon what, in the Court’s view, George was permitted to do.
[44] Clause 12.2 concerns the issue of payment certificates and actions to be taken on it. The assessment available to the principal requires, in writing, details of reasons of any proposed amendment. If agreement cannot be reached on the total amount payable the contractor is to be paid the undisputed portion of its claim whereupon the principal “shall forthwith issue a progress payment certificate for such amount”. That certificate is to be in the form provided in the Eleventh Schedule of NZS 3915:2000.
[45] In my view that clause is related to progress payment claims and issues properly raised in connection therewith. It does not admit unrelated and unheralded and broadly cast claims relevant to the contract as a whole and significantly related to historical claims of late performance.
[46] If I am wrong then s 21 of the Act makes it clear any payment schedule is confined in scope to claims raised upon the payment claim. Neither clause 12.2 nor the Act admits claims which s 79 was clearly designed to exclude. It matters not whether those s 79 claims were raised in response to a payment claim or otherwise.
Payment schedule
[47] When a contractor serves a payment claim the amount therein becomes payable unless, within the time required by the contract, or if the contract does not provide for the matter within 20 days in accordance with the Act.
[48] Canam says that following delivery of the payment claim any response thereto was required by 15 June 2004. Although George does not accept a payment claim in proper form was delivered its position is that if such was properly delivered then any response was due by 15 June 2004. George says an appropriate response was delivered. I infer this response comprised the valuation report from Rider Hunt (who George says was not its principal representative) together with a tax invoice of 10 June 2004. It is Mr Commons’ submission that the amending notice in the form of the tax invoice dated 20 June 2004 is also to be brought into account as a document comprising the “payment schedule”. It would follow from that that the further amended invoice received by Canam on 23 June 2004 ought also to be included.
[49] If, for this submission, Mr Commons relies upon the provisions of 12.2 then in my view he cannot. Contrary to the submission that 12.2 provides a timeframe of seven days (to assess and notify with reasons) plus five days (to notify any proposed amendments) then that is not what clause 12.2 does provide. The five day period runs from the date the principal notifies the contractor of the proposed amendment which is not necessarily five days from the end of the seven day period. If the
principal gives notice within that seven day period then the five day period runs from the time that notice was given. If, as George submits, the notice was given by its tax invoice dated 10 June 2004 and if Rider Hunt was not the principal’s representative but instead its agent, then the date triggering the additional five day period began on 10 June 2004 – in particular, when it is considered that invoice makes no reference to any valuation report to be provided subsequently by Rider Hunt.
[50] Even if I am wrong in that assessment of clause 12.2, s 21 of the Act makes it clear that what George provided in its various documents do not amount to a payment schedule. A payment schedule must:
1)Be in writing;
2)Identify the payment claim to which it relates; and
3)Must indicate a scheduled amount.
[51] If the scheduled amount is less than the claimed amount the payment schedule must indicate:
1)The manner of calculations;
2)Reasons for the difference; and
3)Reasons for withholding payment.
[52] The tax invoices of various dates clearly do not comply. There is no cross- referencing therein to the payment claimed. Nor for that matter does the Rider Hunt valuation assist. The requirements for a payment schedule are cumulative such that if any is absent there will not be a payment schedule that complies with the Act. The Rider Hunt valuation does not state it is a payment schedule but even if that is not necessary it is apparent it does not purport to be a payment schedule. In whatever role George identifies for Rider Hunt it cannot be said to be the response of a “payer” as s 21 requires.
[53] “Payer” is a defined term (s 19) and “means the party to a construction contract who is liable for that payment”
[54] In the present case Rider Hunt had issued a valuation to George which was copied to Canam. No document issued from George to Canam.
[55] An example form of payment schedules is provided by G Bayley and T Kennedy-Grant in their text “A Guide to the Construction Contract Act” and in NZ Building Subcontractor’s Federation Inc reproduced in Smellie, Progress Payments and Adjudication (2003) pp 34-35.
[56] The Act does not prescribe the form of a payment schedule but the use of a form in line with those identified by the authors referred to should leave contracting parties in no doubt that the schedule complies with the Act. Incidentally the said authors both provide for the schedule to be issued by the payer.
[57] In this case the Rider Hunt valuation report is neither, in part or in whole, a payment schedule nor a notice under the contract. Furthermore George has taken the position that Rider Hunt simply acted in a checking role for the ASB.
[58] The payment schedule must indicate a “scheduled amount”. Section 19 defines a “scheduled amount” as an amount of progress payment specified in a payment schedule that the payer proposes to pay to the payee in response to a payment claim. George’s invoices do not do that. Neither does Rider Hunt’s valuation. All that is indicated in the valuation is the amount recommended for draw-down from the ASB by George as assessed by Rider Hunt.
[59] The Rider Hunt valuation together with George’s invoices could not be held to be a “scheduled amount”. There are not sufficient reasons identified for the difference claimed in PC-15 and in the figures identified in George’s documents. Whilst Rider Hunt’s valuation identifies that its calculations arise primarily because of variations no sufficient reason appears to have been given for disallowing Canam’s claims. Nor is that valuation assisted by the comment contained in it that
something will be addressed later as a “final account resolution” or that only a “provisional” assessment has been made.
[60] Section 21 contemplates that a payment schedule should be comprised in “a” (ie a single document). Even if that is not the case and a payment schedule could comprise more than one document then there must be a sufficiently identified relationship and cross-referencing of those composite parts to leave a contractor in no doubt about what is being addressed and the fact that those matters are appropriately being addressed in response to the payment claim.
[61] In my judgment a payment schedule was never delivered by George to Canam. It follows that George is liable to meet payment of Canam’s claim unless Canam did not serve a valid payment claim under the Act.
Was payment claim valid?
[62] The requirements of s 20 are cumulative and mandatory. A payment claim must:
· Be in writing;
· Contain sufficient details to identify the construction contract to which the payment claim relates;
· Identify the construction work and the relevant period to which the payment claim relates;
· Indicate a claimed amount and due date for payment;
· Indicate how the payee calculated the claimed amount;
· State that it is made under the Act.
[63] George submits Canam’s PC-15 claims an inflated figure because it includes the previously claimed amount in PC-12 in the sum of $158,591.76 (excluding GST)
which sum, since the adjudicator’s determination, is the subject of enforcement proceedings before the District Court.
[64] Canam acknowledges PC-15 included reference to the amount previously claimed in PC-12. That is why when in the process of issuing its invoices, following receipt of Rider Hunt’s valuation report, no invoice was issued in respect of that amount previously claimed in PC-12. Mr Commons submits that the fact that PC-15 included a claim of a previously claimed amount in itself is a breach of the Act.
[65] Mr Commons identifies other respects in which he submits the validity of the payment claim can be challenged. In large part and for the purpose of demonstrating these submissions he refers to the exhibits attached to Mr Barton’s affidavit dated 5 November 2004. It is claimed:
1)PC-15 is also the cumulative running total of amounts unpaid on PC- 13 and PC-14.
2)It wrongly claims and in addition incorrectly calculates Canam’s claims for variations. Of those claimed (exceeding $500,000) just slightly in excess of $78,000 had been approved. It follows, submits Mr Commons, that Canam’s claim is by its own figures grossly inflated and inconsistent with the contracts; therefore the integrity of the figures used by Canam in PC-15 is undermined.
3)Canam cannot charge for work the subject of earlier payment claims especially where they have been responded to by earlier payment schedules.
[66] George asserts that PC-15 is non-compliant in form. Not only did it provide for a cumulative figure and not only were its calculations fundamentally flawed it did not:
1)Indicate the manner in which the payee calculated the claimed amount;
2)Provide a specified amount for work done solely in the period 1 May 2004 to 3 June 2004 – but rather provided a cumulative work schedule.
[67] Contrary to Mr Commons’ submissions I find all of the requirements under s 20 are satisfied by Canam’s PC-15, specifically:
1)It was in writing;
2)It identifies the construction contract to which the payment claim relates by its reference to the property address;
3)It identifies the construction work and the relevant period to which the payment claim relates. It states it is for the period 1 May 2004 – 3 June 2004 and sets out each of the trades and the work claimed for;
4)It indicates a claimed amount and a new date for payment;
5)It indicates the manner in which Canam calculated the amount claimed and its calculations in table form;
6)It is clearly stated at the top of the form that the claim is made under the Act.
[68] Challenges of the kind made by George are the stuff of which the scheme involving the issue of payment schedules and subsequent invoices were designed for. There is nothing in the process which disqualifies a payment claim for rolling over sums unpaid on previous payment claims. In any event it is clear from PC-15 and other progress claims previously submitted that this process was not only identified but well understood by the parties. This process does not undermine the integrity of PC-15 nor disqualify it pursuant to the provisions of s 20.
[69]In conclusion:
1)PC-15 was a valid payment claim;
2)No payment schedule was issued in response.
3)The s 22 liability provisions are triggered in the result.
George’s summary judgment application
[70] Central to George’s claim is the issue about the identity of the principal’s representative under the two contracts. George states that under the contracts it is Mr Barton. It says that if it can prove this then George is entitled to summary judgment against Canam in the sum of $185,457.95. This was the amount, inclusive of interest, costs, GST and adjudicator’s fees that the adjudicator ordered to be paid to Canam.
[71] In the course of his submissions to me Mr Commons’ submitted this Court could make a decision that not only had the adjudicator incorrectly found that Rider Hunt (and not Mr Barton) was George’s principal representative but also this Court
could then proceed to find on the merits of the matter that had been referred to adjudication. Mr Commons submitted that it was not only proper for this Court to
do so but also that George’s amended application for summary judgment provided a proper basis for that issue to be argued. He referred me to the sixth ground in George’s summary judgment application. That states:
Notwithstanding the matters referred to in 1-5 above [which submit that George’s principal representative was Mr Barton and that he had responded on behalf of George by delivering a payment schedule within time] George has wrongly obtained a determination pursuant to an adjudication under the Construction Contracts Act 2002 in the sum of $185,457.95.
[72] I ruled that George could not expand the basis of its summary judgment claim beyond the simple issue of whether or not the identity of George’s principal
representative had been properly determined. The adjudicator’s determination had been made on that ground alone. The adjudicator expressed it:
I found for the claimant [Canam] on a technicality of one day’s delay by the respondent [George] to comply with a term of the contract [para 107].
[73] Although the adjudicator’s brief had, in the alternative, empowered him to consider the contractual legality of the claims of Canam for variations and extension of time delays he did not proceed with that part of his brief because it was not necessary for him to do so he having determined on the basis of a technicality that George had not delivered a payment schedule within time.
[74] Accordingly for the purposes of George’s summary judgment application I ruled this Court would not proceed to determine the substance of any issue arising
under the contracts concerning those claims, which the adjudicator had not determined.
[75]It followed that if this Court was to find (if indeed it could proceed to make
such a finding) that the adjudicator was wrong in relation to that single technical element which gave rise to his determination, it did not mean that judgment would automatically be granted to George.
George’s case
[76]Clause 6.1.1 of NZS 3915 provides that, in part:
6.1.1 To ensure that there is a single identified channel for all
communications between the principal and contractor, the principal shall at all times be represented by the principal’s representative who shall be one natural person and not a body corporate or firm.
[77]George asserts the affidavit evidence proves:
1)Mr Barton was the principal’s representative under the contract at all times.
2)It was agreed between George and Canam that Rider Hunt (a firm not a natural person) would assess and decide all claims for variations.
3)The Rider Hunt assessments were to form the basis of the payment schedules upon George, unless further amended.
4)In the period that Rider Hunt was assessing and deciding claims for variations, Canam copied its payment claims to Rider Hunt as well as sending them, in every case, to Mr Barton as the principal’s representative.
[78] George’s summary judgment application concerns Canam’s PC-12 which had sought payment of $317,335.09. Rider Hunt determined that part of this claim should be paid and part should be disallowed. It was in respect of the disallowed part that Canam obtained reference to adjudication. George says that Rider Hunt was not its principal representative for the purpose of receiving notice of the payment claim but was its representative for the purposes of providing the response (albeit one day late as determined by the adjudicator) which George says was its (George’s) payment schedule.
[79] George says that because of the provisions of 6.1.1 the principal’s representative must be a natural person, not a body corporate or firm. It was therefore contractually impossible for Rider Hunt to have been the principal’s representative under the contracts, even though, as George asserts, Rider Hunt’s valuation report would serve the purpose of being George’s assessment (payment schedule) and response.
[80]Mr Commons referred the Court to a number of items of correspondence
between the parties which he says proves Mr Barton was at all times the principal’s representative.
[81] He referred to a facsimile dated 17 December 2003 from Mr Barton to Canam which states:
Further to our site meeting earlier today I wish to confirm that Canam are hereby authorised to sort out and resolve the remaining architectural issues. It has been understood and agreed that any additional issues will first be referred to Rider Hunt (Martin Price) together with ourselves.
I also confirm from the meeting held at Fearonhay offices on the 25th of August last that all claims for variations were to be assessed by and decided by Rider Hunt who are my representatives for the project.
[82] Mr Commons insists that that facsimile makes it clear that Rider Hunt (Martin Price) was appointed George’s representative for the purposes of assessing contract variations only. This fact he says is reinforced by the contents of a facsimile to George from Canam dated 4 February 2004. That fax states:
Meeting summary and extension of time claims
We understand from the meeting yesterday at the offices of Rider Hunt that they [Rider Hunt] will be responsible for approving and processing out payment claims for your project. We also understand that they will process all variation claims. It was stated that they may offer comment on the content of variation claims, but will not be involved in any contention to any VO [variation order] claims.
…
Rider Hunt stated that they do not wish to be involved with any extension of time claims.
[83] There are other examples of correspondence referred to. It is not necessary to cover all of these. However, it is necessary to give context to George’s claims by referring to parts of the affidavit evidence provided for Canam on the issue.
[84] In the affidavit dated 2 August 2004 and sworn by Mr Petrou in opposition to George’s District Court application for review of the adjudicator’s determination Mr Petrou stated:
15.I believe that the answers provided by Canam show that Rider Hunt were George’s representative. By way of further detail and background to this, in mid-2003 Canam and George were having a number of problems and issues including regarding design issues, and in fact work had to be stopped for a couple of weeks in July 2003. I said to Robert Barton that he needed a representative to deal with these issues. He asked me how I would feel about Rider Hunt, and I said they would be fine. However, later when I spoke to Rider Hunt they said that they were not acting as George’s representative. I raised this with Mr Barton who insisted that they were his representative. Over the next few months problems
continued and there was some uncertainty about who the representative was, so Canam asked Mr Barton to put in writing that Rider Hunt were his representative, which he did in the letter of 17 December 2003. … Rider Hunt were involved and assessed the claims from payment claim no 4 onwards.
16.The actual person at Rider Hunt who was acting as representative was Martin Price. When we learned that Martin Price had left Rider Hunt, we wrote to George / Mr Barton on 16 April 2004 asking who the representative was. Mr Barton replied saying that Martin Price was still his representative and had been retained by George and Rider Hunt as consultant.
[85] The letter dated 16 April 2004 to which Mr Petrou refers is a letter from Canam to George upon which Mr Barton hand wrote his response. The letter states:
Rider Hunt and 11 Cheshire Street
Martin Price of Rider Hunt has been appointed by you, as the principal, to be your representative for this project and has been acting in this capacity.
We understand that Martin Hunt has left the employment of Rider Hunt. Please advise who your representative for this project is by 19 April.
[86]The hand written response provides:
16/4/04
Martin is still our representative – he has been retained by us and Rider Hunt as consultant.
Robert
[87] In support of George’s summary judgment application a Mr Russell of Rider Hunt as sworn an affidavit dated 9 August 2004. This affidavit exhibits a copy of the affidavit Mr Russell as sworn in support of George’s District Court application for review of the adjudicator’s determination. He states neither Rider Hunt nor any of its employees was the principal representative under the contract. He confirms that Rider Hunt acted on ASB’s behalf certifying draw-downs from the approved loan facility. He said the development contractor was best placed to deal with any matters that required interpretation of the contract documents and that Rider Hunt would have no part of those claims between the parties. He said that where there were claims relating to the interpretation of the contract documents, where Rider Hunt believed they could make a fair and impartial statement as to the claim’s
validity they would do so but ultimately it was going to be left to the parties to resolve and agree the final account.
[88] In my judgment the position is far from clear on an analysis of the affidavit evidence. I could not be satisfied there is sufficient evidence for George to prove, to the standard it must upon summary judgment applications, that Mr Barton was the principal representative. Furthermore, it is open to contention that notwithstanding the provision of 6.1.1 that the parties independently agreed to an arrangement appointing Rider Hunt, or Mr Price within that firm, as the principal representative. At the end of the day there is sufficient uncertainty on the issue which enables this
Court to say, upon a summary judgment application, that that issue would be better left for determination after hearing oral evidence.
[89] I have dealt with George’s summary judgment application on the basis, thus far, that on an analysis of the affidavit evidence there is insufficient proof of a claim that Mr Barton was the principal’s representative. I need not have gone that far because for other reasons I believe George’s summary judgment application is
misconceived and inappropriate. My reasons are that in my judgment this Court
does not have the jurisdiction to hear by way of summary judgment an application which in effect is designed to review the adjudicator’s determination at a time when that determination is subject to review before the District Court. But, if I am wrong in that judgment then I am firmly of the view that George’s summary judgment application amounts to an abuse of process.
Jurisdiction / Abuse of process
[90]Sections 26 and 27 of the Act provide:
26 Relationship between Part and other dispute resolution procedures
(1) To avoid doubt, nothing in this Part prevents the parties to a construction contract from submitting a dispute to another dispute resolution procedure (for example, to a court or tribunal, or to mediation), whether or not the proceedings for the other dispute resolution procedure take place concurrently with an adjudication.
(2) If a party to a construction contract submits a dispute to another dispute resolution procedure while the dispute is the subject of an adjudication, the submission to that other dispute resolution procedure does not—
(a)bring to an end the adjudication proceedings; or
(b)otherwise affect the adjudication.
3) However, an adjudicator must terminate the adjudication proceedings on a dispute if, before the adjudicator determines the dispute, that dispute is determined under another dispute resolution procedure.
(4) Nothing in any other enactment or rule of law or any contract affects the application of this Part.
27 Effect of Part on civil proceedings
(1) Except as provided in this section and section 61(2), nothing done under, or for the purposes of, this Part affects any civil proceedings arising under a construction contract.
(2) In any proceedings before a court or tribunal, or before an adjudicator under the Weathertight Homes Resolution Services Act 2002, in relation to any matter arising under a construction contract, the court or tribunal or adjudicator—
(a) must allow for any amount paid to a party to the contract under, or for the purposes of, this Part in any order or award the court, tribunal, or adjudicator makes in those proceedings; and
(b) may make any orders that the court, tribunal, or adjudicator considers appropriate, having regard to any steps taken by a party to the contract in good faith and in reliance on an adjudicator's determination under this Part (including an order requiring a party to the contract to pay for goods and services supplied by another party to that contract in good faith and in reliance on an adjudicator's determination).
[91] George submits that the adjudication procedure set up by the Act is intended to be fast rough justice; that it is not intended to exclude the parties from determination by the High Court of the very same issues which are being dealt with elsewhere. Specifically George relies on s 26(1) and s 27(1).
[92] In my view those sections do not serve the purpose of enabling George to seek a review of the adjudicator’s determination when that determination is presently the subject of near identical proceedings before the District Court. George’s summary judgment application bears some similarity to the circumstances in the case of Leighton Contractors Pty Limited v Campbelltown Catholic Club Limited [2003]
NZWSC 1103. That case too was concerned with whether or not a payment schedule had been served appropriately. In that case the defendant not only opposed the summary judgment application by the plaintiff, but brought its own summary judgment proceedings seeking a declaration that it did not owe the plaintiff any
amount in respect of the progress claim under consideration in that case. The Court
had no hesitation in dismissing the application and noted the following (at pp 36-36):
(a)The proceedings amounted to an abuse of process, being a backdoor route to, in substance, outflank s 15 of the Building and Construction Industry Security of Payment Act 1999 (NSW) (being those provisions of the New South Wales Act by which liability for payment was triggered in the event a payment schedule is not appropriately or timeously delivered;
(b)The tactic in commencing the proceedings was antithetic to the facilitation of the just, quick and cheap resolution of the real issues in the proceedings;
(c)The proceedings flew in the face of the principal of avoidance of multiplicity proceedings;
(d)The aim of the Act of allowing a contractor to have the benefit of peremptory interim determinations would be turned on its head if the proceedings were allowed to go forward;
(e)The defendant would be entitled to commence substantive proceedings for relief, concerning the parties’ rights under the contract.
[93] I accept Mr Christie’s submission that whilst George’s application is not in respect of the same claim in issue in Canam’s application, the principles in Leighton
are analogous. George is effectively seeking to overturn in this Court the
adjudicator’s determination in Canam’s favour. George has made no payment to Canam and despite this has already taken proceedings in the District Court by which it seeks to take the very same points.
[94] If George was successful in its claim the effect would be not only that Canam would not be entitled to the monies awarded to it by the adjudicator but Canam would then be required to pay $185,457.95 to George even though George has not itself already paid that sum to Canam.
[95] George has opposed the entry of the adjudicator’s determination as a judgment in the District Court. Accordingly the District Court is the appropriate forum to determine whether the adjudicator’s determination can be challenged or whether that determination must be entered as a judgment.
[96] The issue in the summary judgment application before me about who the principal’s representative was is not relevant to anything other than the interim
decision of the adjudicator. However, by its application to this Court George is
seeking to finally determine this issue and to determine whether Canam should have been awarded payment for the unpaid balance of its PC-12. If George wishes to challenge substantively the adjudicator’s determination it must do that by way of a claim in the normal way. That would not include filing a summary judgment
application in this Court seeking the same relief as is already the subject of
proceedings in another Court. Neither ss 26 or 27 contemplates that option being made available in this instance.
[97] The amount of the judgment sought by George upon its summary judgment application includes not just Canam’s claim for the balance of PC-12 but sums for costs and the adjudicator’s fees which the adjudicator awarded to Canam on the basis of George’s conduct during the adjudication. It is inconceivable how the “principal’s representative” issue could affect Canam’s entitlement to those costs. The fact that George seeks judgment for the sum awarded by the adjudicator,
inclusive of these costs, serves to underscore the Court’s view that what George is
attempting to do is to review the adjudicator’s determination in this Court,
concurrent with the District Court proceedings and to do so in a way whereby the High Court is not fettered by the restraints upon George in the matters proceeding in the District Court. In the District Court Canam has applied to enforce the adjudicator’s determination by entry as a judgment. George has opposed that
application. The finding in this Court that the adjudicator’s determination is
incorrect would have implications in the District Court, even though it would not necessarily follow that such a finding would disentitle Canam to a judgment in the
District Court. The reason is that pursuant to s 74(2) of the Act there are only three grounds on which George can oppose entry of the adjudicator’s determination as a judgment:
· That the amount payable under the adjudicator’s determination has been paid.
· That the contract to which the adjudicator’s determination relates is not a construction contract to which the Act applies.
· That a condition imposed by the adjudicator in his/her determination has not been met.
[98] It is apparent from the papers filed in the District Court that George has sought to oppose the entry of summary judgment on much wider grounds. To seek
to obtain in this Court a determination that the adjudicator had erred serves to
highlight the fact that this application is an abuse of process designed to circumvent the District Court and the express provisions of the Act.
[99] The Act allows for civil proceedings to be brought notwithstanding an adjudication. It does not allow for Court proceedings to be brought notwithstanding
the existence of other Court proceedings. It does not permit George to seek to have
the same issues determined in two Courts. Section 26 expressly provides that nothing in Part 3 of the Act prevents the parties from submitting a dispute to the Court whether or not this takes place concurrently with an adjudication. But the
adjudication in this case is at an end. Section 27 provides that nothing done under Part 3 of the Act affects any civil proceedings under a construction contract. Part 3 of the Act deals with adjudication. The identical issues raised by George in the District Court arise under Part 4 of the Act (opposition to enforcement of the adjudicator’s determination). Whilst the Act allows for civil proceedings concurrently with an adjudication it does not provide for those proceedings to be concurrent with other Court proceedings.
[100] If George is unsuccessful in the District Court proceedings it will have to make payment to Canam as prescribed by the adjudicator’s determination. If thereby it contends it has overpaid Canam it will still be entitled to bring its own claim in the normal manner wherein any matters would then be approached afresh but not in the manner of an “appeal” of the adjudicator’s determination. See Smellie, Progress Payments and Adjudication (2003) where it is stated:
… it always needs to be borne in mind that the determinations, even when entered as judgments, are provisional and can be varied or overturned at a later stage in litigation or arbitration if the initial payer is prepared to continue the fight (p 9).
[101] I accept Mr Christie’s submission that the approach of George in both the District Court and in its present application is to cut completely across these principles.
Summary
[102] Upon its application Canam has satisfied the onus of proving there is no defence to its summary judgment application. Having passed that initial threshold of onus of proof there is nothing in the evidence to which George can positively point in support of its defence.
[103] Upon George’s summary judgment application it does not pass the threshold of proof. Not only are there issues of fact which are substantially in dispute but for other reasons the application is misconceived and improper.
Judgment
[104] Judgment will be entered in favour of Canam upon its summary judgment application in the sum of $264,637.88 together with interest (as calculated by reference to the terms of the contract) on the aforesaid sum compounding monthly at the rate of 12.94 per cent per annum from 23 June 2004 to the date of judgment.
[105]George’s application for summary judgment is dismissed.
[106] I propose to give consideration to awarding costs on a basis outside of the scale. In relation to Canam’s summary judgment application s 23(2)(a)(ii) provides for recovery of “actual and reasonable costs”. Further, and for the reasons I have given for dismissing George’s summary judgment application I will on the application consider awarding costs in excess of the scale.
[107] Canam shall within 10 days of the date of this judgment file its submissions. Thereafter and within a further 10 days, George must file its submissions in response. Following receipt of those submissions I will issue my decision.
A Christiansen
Associate Judge
Signed at:am/pm on:
Solicitors:
Simpson Grierson, Private Bag 92518, Auckland – facsimile 307 0331 Hornabrook Macdonald Lawyers, P O Box 91845, Auckland – facsimile 353 7599
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