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  • Unreported Judgment

Quality Concrete v Honeycombes Townsville

 

[2005] QSC 192

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Townsville

DELIVERED ON:

15 July 2005

DELIVERED AT:

Townsville

HEARING DATE:

12 July 2005

JUDGE:

Cullinane J

ORDER:

1. Dismiss the application insofar as it seeks the cancellation of the charge

2. Order that the respondent, Quality Concrete Pty Ltd’s notice of claim of charge dated 20 August 2003 be modified by reducing the amount thereof to $60,657.05

3. Order that the sum of $62,285 with accretions if any, be paid out of court to the first defendant, such sum representing the balance of the amount paid into court by the applicant.

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION SUBCONTRACTORS’ CHARGE ACT (QLD) – where the plaintiff and the first defendant entered into a supply and services contract for the performance by the plaintiff of concreting works where variations in the form of additional works were required after the work had been underway for some time where a second contract was entered into for the additional works – where the plaintiff’s notice of claim for payment did not discriminate between the works to be performed under each contract – whether the plaintiff’s notice of claim for payment for the works was defective

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION SUBCONTRACTORS’ CHARGE ACT (QLD)  – where the plaintiff and the first defendant entered into a supply and services contract for the performance by the plaintiff of concreting works where in the course of performing the work it was decided that the bondek formwork which was to be provided should be removed and replaced with conventional formwork where a variation order was not obtained as required by clause 118 of the two contracts where it was alleged that there was an agreement that the respondent would perform the bondek variation work

free of charge but subject to certain terms and conditions whether the bondek variation work was work performed under the subcontracts or was the subject of a collateral contract whether the plaintiff was entitled to a charge under the Act for the bondek variation works

Subcontractors’ Charges Act 1974 (Qld), s 5, s 10, s 21

Groutco (Aust) Pty Ltd v Thiess Contractors Pty Ltd [1985] 1 Qd R 238, considered

Liebe v Molloy (1906) 4 CLR 347, cited

Update Constructions Pty Ltd v Rozelle Child Care Centre Limited (1990) 20 NSWLR 251, cited

COUNSEL:

T Matthews for the plaintiff/ respondent

A Moon for the first defendant/ applicant

No appearance for the second defendant

SOLICITORS:

Boulton Cleary and Kern for the plaintiff/ respondent

Connolly Suthers for the first defendant/ applicant

No appearance for the second defendant

[1] This is an application pursuant to section 21 of the Subcontractors’ Charges Act 1974 (Qld) (“the Act”) as amended for an order that a notice of claim pursuant to section 10 of that Act be cancelled or alternatively modified.

[2] The applicant relies upon three grounds. The first relates to the form of the notice of claim.  The details of this challenge will appear in the course of these reasons.  This is the basis upon which the order for cancellation is sought.  The alternative order sought, namely the modification of the order, is sought upon two associated grounds. The first is that the relevant works relate to a variation to the contractual works and no order signed by the project manager was obtained prior to the commencement of such works as required by clause 118 of the contracts.  As the result of an amendment to the reply and answer and of the contents of an affidavit of Mr Stevens, the sole director of the plaintiff, a further ground was relied upon, namely that the agreement for the work, the subject of that part of the notice of claim of which modification is sought, was to be performed pursuant to a collateral or separate contract and the plaintiff’s remedy in relation to any alleged breach of this is in damages and it is not entitled to a charge under section 5 of the Act.

[3] The plaintiff and the first defendant entered into a contract described as a supply and services contract dated 3 December 2001 for the performance by the plaintiff of concreting works associated with the construction of a block of apartments in Townsville.  It appears that after the work had been underway for some significant time some variations in the form of additional works were thought to be necessary.  This could have been done by way of a variation to the contract but instead another contract dated 7 March 2002 was entered into.  Both of the contracts are exhibited to an affidavit of Mr Stevens.

[4] In the second contract the scope of the works is generally described in the same way as in the first contract.  The difference occurs in relation to the part of the description of the works referred to as “re-designed elements”.  There is at least one other difference in that clause 117, which was crossed out in the first contract, appears in the second contract.  Mr Stevens says he overlooked its inclusion in the second contract.

[5] In the second contract the following words appear after the description of the re-designed elements:

“The above scope of works is an addendum to the contract and is to be read in conjunction with the main contract.  Any works not specifically excluded in the above but included in the contract are deemed to be included.”

[6] The contract price for the first contract was $1,200,000 and for the second contract, $368,000.

[7] Clause 118 of each contract provides as follows:

“No variation to this contract will be binding on Honeycombes unless   the Contractor can produce an order signed by the Project Manager   prior to the commencement of the variation works.”

[8] In the course of performing the work it seems that it was decided that the bondek formwork which was to be provided should be removed and replaced with conventional formwork.  The sum of $62,285 (almost one half of the amount claimed in the notice of claim) relates to this work.  This is the amount in respect of which the modification is sought.

[9] In the notice of claim dated 20 August 2003 (again attached to Mr Stevens’ affidavit) it is stated that the work was carried out between 12 November 2001 and 31 May 2003.  The total claim was $122,942.05 and the contract is described as “High Point Apartment Project”.

[10] It is desirable if I set out the annexure which contains the particulars of claim in full.

“ANNEXURE ‘A’

PARTICULARS OF CLAIM

Original contract sum:

     First contract (dated 3 December 2001)

    Second Contract (dated 11 March 2002)

$1,200,000.00

$ 368,000.00

$1,568,000.00 + GST

Add:

Approved variations (1-11 & 16-18)

$    24,782.00

Add:

Approved variation for fixing reinforcement at $400.00 per tonne (not less than)

$    80,000.00 

Sub-Total:

$1,672,782.00

Add:

Variation No 13 (footings Building B)

$       2,128.00

Add:

Variation No 14 (retainer walls northern end)

$         456.00

Add:

Variation No 15 (columns, beams STH end

$       3,312.00

Add:

Variation for deleting bondek formwork and replacing with conventional formwork

$     62,285.00

Sub-Total

$1,740,963.00

Deduct:

Payments received from Honeycombes Townsville Pty Ltd

$1,629,197.50

Balance Owing

Total:

$  111,765.50

$    11,176.55 GST

$ 122,942.05 

[11] The applicant contends that the notice is defective and incapable of creating a charge under the Act because a single claim is made in respect of two contracts.

[12] Reliance was particularly placed upon section 5(2) which provides as follows:

“The charge of a subcontractor secures payment in accordance with the subcontract of all money that is payable or is to become payable to the subcontractor for work done by the subcontractor under the subcontract.”

[13] The words “the subcontract” were particularly emphasised.

[14] No authority was cited by counsel on either side in relation to this aspect of the matter.

[15] Section 10 provides for the giving of a notice of claim of charge.  Section 10(5) is as follows:

“A notice of claim of charge may be in the approved form, but the validity of the notice is not affected by any inaccuracy or want of form if the money sought to be charged and the amount of the claim can be ascertained with reasonable certainty from the notice.”

[16] The claim appears with particularity and no point is made in relation to this.  The charge is sought to be attached to the monies owing by the employer (Castle Hill Apartments Pty Ltd) to the respondent and there can be no doubt as to the monies sought to be charged.

[17] It was contended that if such a charge was permissible it would not be possible to be satisfied that the notice of claim was given within the time provided for by section 10(2) because there is no discrimination between the works done under two different contracts.  As I have said the notice of claim states the work was done between the 12 November 2001 and 31 May 2003.  The applicant did not seek to challenge this by evidence or to show that works performed under either contract was completed at some earlier time.  The notice of claim should, in my view, be taken to mean that work was done under both contracts during the period stated.

[18] It can be accepted that, generally speaking, difficulties could arise in relation to some of the provisions of the Act (for example, section 8) if a single claim was made in relation to two separate contracts which did not permit the amount claimed under each contract to be separately identified.

[19] The circumstances of this case are, it seems to me, rather special.  The works generally did not alter although some aspects of those works did.  The parties described the second contract as an addendum to the first which was referred to as the main contract. There is nothing misleading about the notice of claim and both the amount of the claim and the money sought to be charged appear on its face.  There are, I am told, no other persons who could be affected.

[20] I would not, given the particular circumstances of the matter, be inclined to deny the respondent the benefit of the charge it sought by the notice unless the legislation either expressly prohibits the giving of a notice in such terms or there was something in the scheme for which the Act provides which would compel this conclusion.  Apart from the matter of timing and the argument based upon the terms of section 5(2) of the Act to which I have already referred, no other obstacle is suggested.  I am not persuaded that the language of section 5(2) requires the rejection of the notice of claim in this case and I do not see any other obstacle to its acceptance.

[21] The second ground concerns the terms of clause 118 of the contract.  There are some factual issues as to the practice of the applicant in the issuing of variation orders.  Mr Rosel for the applicant said he invariably issued orders in relation to variations.  Mr Stevens said that he had never seen a variation order and there was other evidence supporting what he said.  It is not appropriate on a hearing of an application of this kind to embark upon a determination of disputed factual issues and it is not, in my view, in any case necessary to do so.

[22] The respondent alleges that because of the conduct of the applicant it abandoned its right to rely upon clause 118 or waived the requirement for the respondent to obtain a signed variation prior to the commencement of the bondek variation works or the subcontracts were varied as to their terms so as to delete the requirement to obtain a signed variation order prior to the commencement of the bondek variation works.  It is also alleged that the applicant is estopped from asserting that it was necessary to comply with clause 118.

[23] By its amended reply and answer the respondent alleges that there was an agreement that the bondek variation work would be performed by the respondent free of charge to the applicant but subject to certain terms and conditions. These are set out in paragraph 5A(b)(i) of the pleading.  Mr Stevens in a second affidavit has sworn in substantially similar terms.

[24] The applicant contends that this being so, the bondek variation works cannot be regarded as works performed under the subcontracts but are rather the subject of a collateral contract or agreement separate to and independent of the two written contracts.  In these circumstances the respondent’s remedy is for damages for breach of the separate contract. The respondent contended that upon breach the respondent was entitled to claim these works under the contract itself.

[25] It seems to me upon the respondent’s own sworn evidence (and its pleading) that the works were not intended to be performed as a variation to the contract and it was not envisaged that any order under clause 118 would be signed as it was not intended that the respondent would charge the applicant for them.

[26] It is difficult in these circumstances to see on what basis the respondent could claim the cost of these works under the subcontracts.  The applicant is in my view correct in its contention that this is not a claim to secure payment due under the contract but is a claim for damages under a collateral contract.  It is clear that the purpose of the charge conferred by the legislation is to secure payments payable or to become payable under a subcontract for work done under it.  See Groutco (Aust) Pty Ltd v Thiess Contractors Pty Ltd [1985] 1 Qd R 238.

[27] This is also made clear by section 5(6)(b) of the Act.

[28] On this basis the applicant is entitled to the modification sought.

[29] It is not necessary to consider the argument based upon clause 118 in view of what I have just said.  As I have said, the evidence that this work was to be performed without charge subject to certain conditions means that clause 118 was not relevant to their dealings on this subject. It was not intended that the matter be the subject of a claim for a variation and thus the question of the signing of an order pursuant to clause 118 did not arise.

[30] Emphasis has been placed by counsel for the respondent on Update Constructions Pty Ltd v Rozelle Child Care Centre Limited (1990) 20 NSWLR 251 in support of the claim that an estoppel may arise precluding a contractor from relying upon the requirement for written notice in a building contract.  The applicant on the other hand emphasised that the case was not concerned with a variation properly so called but work countenanced by the contract payment for which work was subject to certain steps being taken.  The applicant argued that this was a case which fell squarely within the principles contained in Liebe v Molloy (1906) 4 CLR 347.

[31] For the reasons that I have already set out it is not necessary to deal further with this issue. 

[32] I dismiss the application insofar as it seeks the cancellation of the charge.

[33] I order that the respondent, Quality Concrete Pty Ltd’s notice of claim of charge dated 20 August 2003 be modified by reducing the amount thereof to $60,657.05.

[34] I order that the sum of $62,285 with accretions if any, be paid out of court to the first defendant, such sum representing the balance of the amount paid into court by the applicant.

Close

Editorial Notes

  • Published Case Name:

    Quality Concrete v Honeycombes Townsville & Anor

  • Shortened Case Name:

    Quality Concrete v Honeycombes Townsville

  • MNC:

    [2005] QSC 192

  • Court:

    QSC

  • Judge(s):

    Cullinane J

  • Date:

    15 Jul 2005

Litigation History

No Litigation History

Appeal Status

No Status