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  • Unreported Judgment

Mulherin Rigging & Cranes Australia Pty Ltd v Roberts and Schaefer Australia Pty Ltd

 

[2009] QSC 429

Reported at [2011] 1 Qd R 139

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Mulherin Rigging & Cranes Australia Pty Ltd v Roberts and Schaefer Australia Pty Ltd & Ors [2009] QSC 429

PARTIES:

MULHERIN RIGGING & CRANES AUSTRALIA PTY LTD ACN 098 804 712

(plaintiff)

v

ROBERTS & SCHAEFER AUSTRALIA PTY LTD ACN 071 756 119

(first defendant)

and

KOGAN CREEK POWER STATION PTY LTD ACN 088 229 832 formerly known as CEPA (KOGAN CREEK) HOLDING PTY LTD

(second defendant)

and

SIEMENS LTD ACN 004 347 880

(third defendant)

and

HITACHI LTD ARBN 002 539 693

(fourth defendant)

FILE NO/S:

BS7423/2007

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court, Brisbane

DELIVERED ON:

23 December 2009

DELIVERED AT:

Brisbane

HEARING DATE:

17 July 2009

JUDGE:

Douglas J

ORDER:

Further submissions as to the form of the orders and as to costs are to be heard

CATCHWORDS:

CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – REMUNERATION – SUBCONTRACTORS’ CHARGES ACT (QLD) – where second defendant was served with a notice of charge under the Subcontractors’ Charges Act 1974 (Qld) and paid a sum of money into court – where plaintiff was obliged to commence proceedings to avoid the charge being deemed to be extinguished under s. 15(3) of the Act – where plaintiff sought to further amend its statement of claim to increase the amount claimed by it to include GST – where first defendant submitted that the charge was extinguished in respect of the difference between the amount paid into court and the amount claimed by the plaintiff – whether the plaintiff’s claim for a lower amount rather than the full amount paid into court had the effect of extinguishing the charge for the amount of the difference – whether amendment of the sum claimed revived the charge – whether GST can be the subject of a charge under the Act

Subcontractors’ Charges Act 1974 (Qld) s. 3A(a), s. 5(2), s. 15 and s. 21(1)

A New Tax System (Goods and Services Tax) Act 1999 (Cth) s. 9-70

Stumann v Spansteel Engineering Pty Ltd [1986] 2 Qd R 471, 475 applied

Re QMT Constructions Pty Ltd [2000] 1 Qd R 284, 285 – 286 referred

Re A & P Constructions Pty Ltd (in liq.) [1999] 1 Qd R 228, 231 – 232 referred

Multiplex Constructions Pty Ltd v Abigroup Contractors Pty Ltd [2004] QSC 198 referred

Multiplex Constructions Pty Ltd v Abigroup Contractors Pty Ltd [2005] 1 Qd R 610 referred

COUNSEL:

B D O’Donnell QC for the plaintiff

R M Derrington SC for the first defendant

SOLICITORS:

Gadens Lawyers for the plaintiff

HWL Ebsworth Lawyers for the first defendant

  1. Douglas J:  The plaintiff’s application to further amend its amended statement of claim is not resisted, at least if the first defendant’s application for payment out of court of the sum of $536,025.84 were also ordered.
  1. The amendment to the pleading sought by the plaintiff increases the amount claimed by it in a dispute under a building contract by including a sum said to be payable to the plaintiff as a subcontractor “on account of GST”[1].  The result is to increase the amount claimed by ten percent from $3,424,876.20 to $3,767,363.82.
  1. The complicating factor arises from the fact that the second defendant was served with a notice of charge under the Subcontractors’ Charges Act 1974 (Qld) on 24 July 2007 and paid $3,960,920.04 into court on or about 31 October 2007.  That was calculated as $3,600,820.04 plus GST.
  1. The only parties now claiming any entitlement to that money are the plaintiff and the first defendant. The plaintiff sought to enforce its claim by instituting these proceedings on 24 August 2007, but then claimed only $3,424,876.20. It was obliged to commence the proceedings to avoid the charge being deemed to be extinguished under s. 15(3) of the Act. The first defendant’s argument is that the charge was extinguished in respect of the difference between the amount of $3,960,920.04 paid into court and the amount of $3,424,876.20 claimed in the proceedings instituted on 24 August 2007.
  1. The difference is said to be $536,025.84 but on my calculation it is $536,043.84.  Of that amount, the plaintiff admits that the first defendant is entitled to $193,556.22.  That is the difference between the amount paid into court and the amount now sought to be claimed by the proposed second amended statement of claim of $3,767,363.82.
  1. The first defendant’s arguments for seeking payment out of court of the sum of $536,025.84 rather than just $193,556.22 are, as I have said, that the delivery of the claim for the lower amount of $3,424,876.20 rather than the full amount paid into court of $3,960,920.04 had the effect of extinguishing the charge for the amount of the difference. It also argues that the amendment to increase the sum claimed to $3,767,363.82 does not revive the charge to that extent. It also submits that, if the proposed amendment would re-enliven the charge over the sum of $536,025.84, then the amendment should not be allowed and, in any event, and as a last resort, it argues that GST is not an amount that can be made the subject of a charge under the Act as it is not money payable “for work done” by a subcontractor under the contract pursuant to s. 5(2) of the Act.
  1. The plaintiff’s case was that its failure to claim an amount payable on account of GST originally appears to have been an oversight. The original notice of claim lodged before these proceedings began claimed the amount owing under the subcontract plus GST. So, the plaintiff argues that no prejudice is shown to the first defendant by allowing the amendment. There was no argument from the first defendant that it would suffer prejudice except to the extent that it might be found that an amendment would re-enliven the charge over the sum of $536,025.84.
  1. For reasons I shall develop it does not seem to me that the charge was ever extinguished, accordingly it does not need to be re-enlivened and, therefore, I shall permit the plaintiff to further amend its statement of claim in the manner proposed. The questions that remain are what effect, if any, that has in respect of whether any amount in court should be paid out in excess of the figure of $193,556.22.

Was any part of the charge extinguished?

  1. To answer this question it is necessary to consider a number of sections of the Act, particularly s. 5(2), s. 15 and s. 21(1). They are as follows:-

 

5  Charges in favour of subcontractors

(2) 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.

15  Proceedings in respect of charges

(1) A proceeding in respect of a charge under this Act -

  1. in the case of a claim of charge in respect of retention money only - must be commenced within 4 months after such retention money or the balance thereof is payable and no later; and
  1. in all other cases - must be commenced within 1 month after notice of claim of charge has been given pursuant to section 10 and no later; and
  1. must be brought by way of action.

(2) For the purposes of a proceeding under this section, it is sufficient if the subcontractor proves that the charge in respect of which the proceeding is brought attached to money payable or a security in existence on any date prior to the date of hearing.

(3) Every charge is deemed to be extinguished unless the subcontractor duly commences a proceeding under this section to enforce it.

21  Application to court by person prejudicially affected

(1) A person who alleges that the person is prejudicially affected by a claim of charge under this Act may at any time make application to the court for an order—

  1. that the claim be cancelled; or
  1. that the effect of the claim be modified.”
  1. The first defendant’s cross application is that the effect of the plaintiff’s claim be modified so as to charge the monies paid into court only to the extent of the original claim for $3,424,876.20 and for payment out to it of $536,025.84. In making the submission that the effect of the plaintiff’s original claim, made for an amount less than that charged, was to extinguish the charge in respect of any amount greater than $3,424,876.20, the first defendant encountered several problems.
  1. The plaintiff relied, for example, on the terms of s. 5(2) providing that the charge of a subcontractor secures payments in accordance with the subcontractor of all money that was payable or was to become payable to the subcontractor for work done by the subcontractor under subcontract to argue that the Act clearly distinguishes between the statutory charge and the payment obligations that the charge secured. Mr O’Donnell QC submitted that the charge came into existence when the notice of claim of charge was given[2] and continues until the charge is satisfied or extinguished pursuant to s. 15(3). 
  1. He argued further, and it seems to me plausibly, that the monies secured by the charge can change during the life of the charge. If, for example, the subcontractor reduced the amount it claimed, then the amount secured by the charge can also reduce and the charge can be modified by using the powers available under s. 21(1). He characterised the first defendant’s argument made in reliance on s. 15(3) that there had been a partial extinguishment of the charge as unsustainable, partly because s. 15(3) provides only for extinguishment to occur if proceedings to enforce the charge are not commenced. Here such proceedings have been commenced. He also drew my attention to a statement by Thomas J in Stumann v Spansteel Engineering Pty Ltd[3] where his Honour spoke of the effect of extinguishing a charge as equivalent to it no longer existing.
  1. Where extinguishment is able to be effected under s. 15(3) only because proceedings are not commenced in time, but a charge can be cancelled or its effect modified under the separate statutory power available under s. 21(1) and the Act envisages possible modification of the amount secured by the charge, it is not appropriate to construe s. 15(3) as effecting a partial extinguishment of the charge simply because the proceeding commenced to enforce the charge claims less than the amount charged. In that situation s. 21(1) provides the appropriate remedy to the person prejudicially affected.
  1. Accordingly, it is my view that the charge has not been partially extinguished and that it remains in place to secure the amount now claimed by the plaintiff in its second amended statement of claim. There is no need, therefore, to consider whether the amendment could have had the effect of reviving the charge as it has not been extinguished. There are no limitation issues relevant to affect this position.

Can payment of GST be secured by a charge under the Act?

  1. As another reason for ordering that $536,025.84 should be paid out of the monies in Court in favour of the first defendant Mr Derrington SC also argued that the liability to pay GST was not secured by the charge. I have already set out the terms of s. 5(2) of the Act by which a charge secures payment of all money payable under the subcontract to the subcontractor for work done by it.  Mr Derrington SC’s argument was that GST was not an amount payable under the contract “for work done” by the subcontractor.  It is certainly, however, an amount payable under cl. 47.3 of the contract and the obligation to pay arises because the subcontractor has made a supply under the contract giving rise to an entitlement to payment of an amount on account of GST as well as to the primary payment due.  This follows from the terms of cl. 47.3 of the contract which reads:

“If any Primary Payment is for, or is in connection with, a Supply made by the Subcontractor under this Agreement, which is a Taxable Supply on which the Subcontractor is liable to pay GST in accordance with the GST law, then, in addition to such Primary Payment the Contract (sic) is also entitled to an amount on account of GST (GST Amount).  The GST Amount is to be the actual GST liability of the Subcontractor under the GST Law in respect of the relevant Taxable Supply.  The GST Amount shall be paid to the Subcontractor at the same time and in the same manner as the relevant Primary Payment is otherwise required to be paid or given.”

  1. The argument for the first defendant was that a payment “for work done” is different, for example, from “money payable…under…the…subcontract” referred to in s. 5(1)(a).[4]  It also argued that money payable for work done was different from amounts payable “in respect of” work done under the contract which might otherwise permit a claim for damages for breach of the contract.  It is clear, however, that money payable for work done under a subcontract does not include damages for breach of contract because of the explicit provision to that effect in s. 5(6)(b)(i) of the Act.[5]   Accordingly, the submission went, the amount payable for work done was limited to the primary payment due under the contract, and it did not include the amount on account of GST.
  1. That was also said to follow from the terms of s. 3A(a) of the Act which provides:

3A References to amount payable under contract and to completion of work specified in subcontract

In this Act save where a contrary intention appears -

(a) references to the amount of money payable under a contract or subcontract are deemed to include all amounts that, under the contract or subcontract, are to be credited or allowed in complete or partial satisfaction of the contract price otherwise than upon payment in money, and references to the payment of any moneys in reduction of the contract price include amounts so credited or allowed; and…”

  1. The argument was that what was payable under a contract for work done was properly identified as the contract price, defined in s. 3 as including “the money payable for the performance of work under a contract or subcontract … whether or not the price is fixed by express agreement”. Here, it was said, the subcontract price was pleaded in para. 11(b) of the amended statement of claim to be a contract sum of $3,912,000.00 excluding GST and, therefore, GST was not an amount which, under the contract, was to be credited or allowed in complete or partial satisfaction of the contract price. That definition in s. 3A(a), however, applies unless a contrary intention appears. It seems to me that the expression in s. 5(2) focusing on money payable for work done does suggest a contrary intention. Further, although the subcontract sum may have been pleaded as excluding GST, the subcontract made it perfectly plain in cl. 47.3 that the plaintiff was also entitled to payment of an amount on account of GST.
  1. The first defendant also argued that GST was calculated under s. 9-70 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) as ten percent of the “value of the taxable supply” and was not expressly payable “for” the taxable supply.
  1. All of these arguments seem to me, however, to be distractions from the particular focus imposed by the language of s. 5(2), namely, whether this charge secures payment of money “payable to the subcontractor for work done” by it under the subcontract. Mr O’Donnell QC’s submission was that the word “for” required a connection between the amount payable under the subcontract and the work done. Clause 47.3 of the subcontract makes the GST amount payable explicitly because a primary payment is to be paid for a supply made by the subcontractor under the agreement. That obligation, is, therefore, dependent on work having been done, is made pursuant to the subcontract and should, in my view, be construed as money payable to the subcontractor for work done by it under the subcontract.

Conclusion

  1. The plaintiff should be permitted to amend its statement of claim to include the amounts to which it claims an entitlement on account of GST. The charge over the money in court has not been extinguished but should be modified pursuant to s. 21(1)(b) of the Act by reducing the amount of the sum charged from $3,960,920.04 to $3,767,363.72 and ordering, as the parties agreed, that the sum of $193,556.22 be paid out to the first defendant from the amount paid into court.
  1. I shall hear further submissions as to the form of the orders and as to costs.

Footnotes

[1] See cl. 47.3 of the amended conditions of subcontract  (AS 4901:1998).

[2] See Re QMT Constructions Pty Ltd [2000] 1 Qd R 28.4, 285 – 286 at [12].

[3] [1986] 2 Qd R 471, 475.

[4] See Re A & P Constructions Pty Ltd [1999] 1 Qd R 228, 231 -232.

[5] See, e.g. Multiplex Constructions Pty Ltd v Abigroup Contractors Pty Ltd [2004] QSC 198 at [36], [58] per Chesterman J, a decision affirmed in Multiplex Constructions Pty Ltd v Abigroup Contractors Pty Ltd [2005] 1 Qd R 610.

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Editorial Notes

  • Published Case Name:

    Mulherin Rigging & Cranes Australia Pty Ltd v Roberts and Schaefer Australia Pty Ltd & Ors

  • Shortened Case Name:

    Mulherin Rigging & Cranes Australia Pty Ltd v Roberts and Schaefer Australia Pty Ltd

  • Reported Citation:

    [2011] 1 Qd R 139

  • MNC:

    [2009] QSC 429

  • Court:

    QSC

  • Judge(s):

    Douglas J

  • Date:

    23 Dec 2009

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2011] 1 Qd R 13923 Dec 2009-

Appeal Status

No Status
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