IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 10882 of 1996
Brisbane
[Central Electrics (Contracting) P/L & Anor. v. A&P Constructions P/L (in liq)]
BETWEEN:
CENTRAL ELECTRICS (CONTRACTING) PTY. LTD. ACN 010 543 987
(Third Respondent) Appellant
and
QUEENSLAND WINDOWS PTY. LTD ACN 009 801 050
(Tenth Respondent) Appellant
AND:
A & P CONSTRUCTIONS PTY. LTD. (IN LIQUIDATION) ACN 010 764 548
(Applicant) Respondent
UNIVERSITY OF CENTRAL QUEENSLAND
(First Respondent)
Davies J.A.
Derrington J.
de Jersey J.
Judgment delivered 24 October 1997
Judgment of the Court
1. ORDERS MADE BELOW ON 1 DECEMBER 1996 AND 20 DECEMBER 1996 SET ASIDE.
2. OUT OF THE MONEYS PAID INTO COURT BY CENTRAL QUEENSLAND UNIVERSITY:
(a) THE APPELLANT CENTRAL ELECTRICS (CONTRACTING) PTY. LTD. BE PAID THE SUM OF $62,477.35 TOGETHER WITH PROPORTIONATE ACCRETIONS THEREON (IF ANY);
(b) THE APPELLANT QUEENSLAND WINDOWS PTY. LTD. BE PAID THE SUM OF $14,101.07 TOGETHER WITH PROPORTIONATE ACCRETIONS THEREON (IF ANY).
3. THE RESPONDENT TO PAY THE APPELLANTS' COSTS HERE AND BELOW.
CATCHWORDS: STATUTORY INTERPRETATION - dispute between the appellants and respondent concerning a sum of money paid into court pursuant to s. 11(5) of the Subcontractors' Charges Act 1974 - the appellants were subcontractors to the respondent who was a contractor of Central Queensland University for the construction of a building - whether the moneys were moneys payable to the contractor (respondent) under the building contract within the meaning of s. 5(1) of the Act.
Wood Hall Ltd. v. Pipeline Authority (1978) 141 C.L.R. 443
Subcontractors' Charges Act 1974, ss. 5(1), 11(5)
Counsel: Mr. J. K. Bond for the appellants
Mr. F. G. Forde for the respondent
Solicitors: Hunt & Hunt for the appellants
Dunhill Madden Butler for the respondent
Hearing Date: 9 September 1997
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 10882 of 1996
Brisbane
Before Davies J.A.
Derrington J.
de Jersey J.
[Central Electrics (Contracting) P/L & Anor. v. A&P Constructions P/L (in liq)]
BETWEEN:
CENTRAL ELECTRICS (CONTRACTING) PTY. LTD. ACN 010 543 987
(Third Respondent) Appellant
and
QUEENSLAND WINDOWS PTY. LTD ACN 009 801 050
(Tenth Respondent) Appellant
AND:
A & P CONSTRUCTIONS PTY. LTD. (IN LIQUIDATION) ACN 010 764 548
(Applicant) Respondent
UNIVERSITY OF CENTRAL QUEENSLAND
(First Respondent)
REASONS FOR JUDGMENT - THE COURT
Judgment delivered 24 October 1997
The appellants were subcontractors to the respondent who was a contractor of Central Queensland University ("the University") for the construction of a computer and information technology building pursuant to a building contract dated 1 February 1993 ("the building contract"). The dispute between the parties, here and below, concerns a sum of $192,699.40, moneys paid into court by the University pursuant to s. 11(5) of the Subcontractors' Charges Act 1974 ("the Act") on 5 December 1994 and 19 July 1995. A notice of claim of charge pursuant to s. 10 of the Act had been given by each of the appellants on 27 January 1994. The amount claimed by the first appellant was $37,211.00. The amount claimed by the second appellant was $164,870.04. The learned primary Judge ordered that the moneys be paid out to the respondent and it is against that order that the appellants appeal.
The question is an apparently simple one; whether the moneys were moneys payable to the contractor, the respondent, under the building contract within the meaning of s. 5(1) of the Act. If they were, or to the extent that they were, the appellants' charges attached to them and the appellants were entitled to have a proportionate share of those moneys paid out to them. The learned primary Judge held that no part of the moneys were moneys payable to the contractor under the building contract. It is necessary to explain how this question arose.
Under the building contract, if the respondent defaulted in performance and failed within a specified period of notice thereafter to show cause why certain powers should not be exercised by the University, the University could take over the whole or any part of the work remaining to be completed. However by letter dated 31 January 1994 to the University ("the 1994 agreement") the respondent agreed to the University taking over the works under the building contract upon certain conditions.
The amount of $192,699.40 is a balance arrived at by a process of addition and subtraction in consequence of the 1994 agreement. It is common ground that that process was as follows. The amount of unpaid contract moneys under the building contract at the time the University took over the work was $168,175.51. There were then three unconditional bank undertakings, one for the security deposit under the contract of $53,786.00 and two for the total of retention moneys of $258,928.00 all of which the University called up on 1 February 1994. Those three sums added together amounted to $480,889.51. From that sum was then deducted the cost of completing the contract, presumably after 1 February, which was $288,190.11 leaving the above balance. There is no dispute between the parties as to the correctness of these sums.
The question, in the end, is whether the character of the sums of $53,786.00 and $258,928.00, precludes the balance sum or some part of it from being moneys payable to the respondent under the building contract.
Clause 5.1 of the building contract provided:
"Security, retention moneys and performance undertakings shall, when the same or any of them are required, be provided and given for the purpose of ensuring the due and proper performance of the Contract and of satisfying the obligations of the Contractor under the Contract."
Clause 5.2 then provided that the contractor should give security to ensure the due and proper performance of the contract in accordance with a formula which yielded the sum of $53,786.00. Clause 5.3 provided that the security could be in the form of an unconditional bank undertaking.
Clause 5.6 provided that retention moneys would be retained by the University from moneys due under progress certificates. However cl. 42.8 provided that, if the respondent elected to provide an unconditional bank undertaking in lieu of retention moneys, it should be for five percent of the contract price. The sum of $258,928.00 was five percent of the contract price.
Inexplicably, both the security and the retention moneys were initially provided by the respondent in cash. Unconditional bank undertakings were substituted in August 1993. However nothing turns on this, it being accepted, as appears plainly to be the case, that the unconditional bank undertakings were provided pursuant to cll. 5.3 and 42.8 respectively.
Subject to a condition which is not material, upon completion of the work by the respondent the University would have been obliged under the building contract to release the security to the respondent within one month of the issue of the certificate of practical completion: cl. 5.2. The term "release" was plainly intended to include payment of money where the security was in cash: cl. 5.3. Similarly, upon completion by the respondent the retention moneys would have been payable to it: cl. 42.7. This latter clause had, in its original standard form, also obliged the University to return the security to the respondent upon completion but, no doubt because of the inclusion of the above provision in cl. 5.2, this obligation was deleted.
Upon default by the respondent, the University was empowered under the building contract to complete the work and recover from the respondent the cost of completion or deduct that cost from moneys owing by it to the respondent, including retention moneys and, if those were insufficient, the security: cll. 44 and 46. It is implicit in these provisions that, in the case of deduction, the balance of such moneys was payable to the respondent. Moreover, whatever the position may be under the Act, the parties' intention under the building contract was that "retention moneys" and "security" should include the proceeds of any unconditional bank undertakings given therefor. The University was entitled to realise those undertakings at any time whilst it had a right to retain retention moneys and security.[1]
Under the 1994 agreement the University became entitled to complete the remaining work and any rectification work and, for that and other purposes, to utilize:
"... so much of any moneys otherwise due under the contract to A. & P. Constructions, including:
- any outstanding or further progress claims
- retentions
- security deposit."
It is also implicit in the 1994 agreement that, subject to the rights conferred on the University under that agreement, retentions and security deposit were "moneys otherwise due under the [building] contract to [the respondent]". The reference to "retentions" and "security deposit" in the 1994 agreement must also have been intended to refer to sums paid pursuant to the unconditional bank undertakings for those undertakings were then the only means of producing moneys capable of being described as retentions and security deposit and it is likely that, on 31 January, it was contemplated that payment of those sums would be required as they were the following day.
In the present case, of course, the University, in completing the work, was not acting under cl. 44 of the building contract and, in deducting moneys owing to it by the respondent from the unpaid contract moneys, the retention amount and the security deposit, it was not acting under cl. 46. In both cases it was acting pursuant to the 1994 agreement. That agreement provided that the conditions of the building contract, not inconsistent with the 1994 agreement, should remain on foot with only such modifications as were necessary to accommodate the 1994 agreement. In this respect, however, the two were consistent: that in the event that the University took over and completed the work and deducted from the moneys itemized in the 1994 agreement the cost of completion, the balance was payable to the respondent under the building contract. Moreover it is common ground that, as between the University and the respondent, that balance is payable to the respondent; and there can be no doubt that the building contract is the source of that obligation. It is therefore, in the ordinary sense of those words, payable to the respondent under the building contract.
It does not necessarily follow from the fact that the balance is, in the ordinary sense of those words, money payable to the respondent under the building contract, that it can be characterized as such within the meaning of s. 5(1) of the Act. Nevertheless unless there is some basis for reading down the phrase "money payable to the contractor ... under the contractor's ... contract" in that subsection it should be given its ordinary meaning.
The learned primary Judge read down the above phrase in s. 5(1) to exclude the above balance or, at least that part of it which included moneys paid pursuant to the unconditional bank undertakings. The respondent supports that narrow construction, submitting that the phrase is limited to moneys payable under progress certificates. Alternatively it submits that the respondent's entitlement to these moneys arises, not because they are payable under the contract but because of an equitable right, albeit related to its contractual rights.
In our view there is nothing in the context of s. 5 or in the general context of the Act or in the Act's evident purpose which requires any such limitation on the ordinary meaning of the phrase. Indeed the immediate context of s. 5 gives a contrary indication. In contrast with s. 5(1), subs. (2) refers to money " ... payable ... to the subcontractor for work done by the subcontractor under the subcontract". It is unnecessary to consider whether retention moneys or the proceeds of an unconditional bank undertaking in substitution therefor are moneys payable for work done under a contract. It is sufficient to note that the limitation which the respondent seeks to impose, by implication, in subs. (1), or one which is similar, is specifically imposed in the underlined words in subs. (2). There is no authority in point. Road Surfaces Group Pty. Ltd. v. Brown,[2] Wood Hall Ltd. v. Pipeline Authority[3] and Australasian Conference Association Ltd. v. Mainline Constructions Pty. Ltd. (in liq.)[4] were referred to but none of them decides or even relevantly discusses the central question in issue here. For the reasons we have given, the phrase should be given its ordinary meaning in subs(1).
We would therefore conclude that the balance sum of $192,699.40 was money payable to the respondent under the building contract within the meaning of s. 5(1). Once that conclusion is reached the parties have agreed that the following orders should be made:
We would accordingly make those orders. The parties could not agree on appropriate orders as to costs. However we would order that the respondent pay the appellants' costs here and below.
