Hamilton Australia Pty Ltd v M & H Industries Pty Ltd
[1995] QDC 443
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- Hamilton Australia Pty Ltd v M & H Industries Pty Ltd[1995] QDC 443
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Hamilton Australia Pty Ltd v M & H Industries Pty Ltd[1995] QDC 443
Hamilton Australia Pty Ltd v M & H Industries Pty Ltd[1995] QDC 443
DISTRICT COURT | No 2665 of 1995 |
CIVIL JURISDICTION
JUDGE BOULTON
HAMILTON AUSTRALIA PTY LTD | Plaintiff |
and
M & H INDUSTRIES PTY LTD | 1st Defendant |
and
MILSON PROJECTS PTY LTD | 2nd Defendant |
and
UNIVERSITY OF QUEENSLAND | 3rd Defendant |
BRISBANE
DATE 22/12/95
JUDGMENT
HIS HONOUR: Gentlemen, I propose to read some reasons this being the last day prior to the Christmas break. This is an action by a subcontractor pursuant to the Subcontractors Charges Act 1975 (the “Act”). The only parties represented are the plaintiff and the second defendant. The third defendant (the employer) has, in December 1994, paid the full amount of the claim ($87,076) into Court. The first defendant is in liquidation.
The facts are not in dispute. They are set out in a statement of agreed facts and issues which is Exhibit 1.
The chain of contracts/subcontracts may be conveniently stated:
University of Queensland (UQ) employer, 3rd defendant;
Milson Projects Pty Ltd (Milson) head contractor, 2nd defendant;
M & H Industries Pty Ltd (MHI) subcontractor, 1st defendant;
Hamilton Australia Pty Ltd (Hamilton) sub—subcontractor, plaintiff.
The features which make the case somewhat unusual are that:
- (i)UQ owes moneys to Milson under the head contract and has paid into Court the amount of the claim from such moneys;
- (ii)Milson owes nothing to MHI;
- (iii)MHI owes something less than $87,076 to Hamilton. The correct amount I am told is $69,071.
The point to be decided is set out in paragraph 13 of Exhibit 1 as follows:
“The only issue for this Honourable Court is whether, as a matter of law, Hamilton's claim of charge of 10 October 1994 in respect of moneys payable by the University to Milson pursuant to the head contract, attaches to the $87,076 of those moneys paid into this Honourable Court by the University in the situation where Milson does not owe any money to MHI pursuant to the MHI subcontract.”
The principal submission of Mr Harris, for the second defendant, is that his client has paid out its subcontract with the first defendant and that to make it liable for the claim is to make it a statutory guarantor. Mr Harris concedes the right to a claim of charge over the moneys due to his client but says:
“If that is correct, then that entitlement to charge goes nowhere because subsection 3 of section 5 of the Act by its very clear wording specifically limits the amount recoverable to the amount payable between Milson and M H Industries.”
Unfortunately for Mr Harris, very similar issues were considered by the Full Court of the Supreme Court of Queensland in Hewitt Nominees Pty Ltd v. the Commissioner for Railways [1989] QdR 256 following a decision, in Chambers, of Dunn J [1978] QdR 256.
The chain of contracts/subcontracts in this instance was as follows:
Commissioner for Railways (employer), first defendant;
John Holland Constructions Pty Ltd (Holland), second defendant, head contractor;
Neville Bale Civil Constructions (a firm) (Bale), subcontractor;
Hewitt Nominees Pty Ltd subcontractor, plaintiff.
Significantly, there was a claim made on affidavit before Dunn J that at no relevant time was there money owing to Bale from Holland. Dunn J noted this at page 270 before giving judgment for the first defendant in the action against the plaintiff while allowing the action against the second defendant to continue.
In the Full Court W B Campbell J (as he then was) with whom Stable and Andrews JJ agreed considered the proper construction of section 5 of the Act. In relation to section 5(1) he concluded at page 262:
“The subsection would then read:
‘...every subcontractor of a person with whom he contracts to perform work shall be entitled to a charge on the money payable to the person with whom he contracts to perform work or to a superior contractor under his contract or subcontract.’”
His Honour went on to consider the meaning of the term “superior contract” and concluded:
“It seems to me that a superior contractor must mean one who is further up the line than the subcontractor with whom a claimant subcontractor lower down the line has a contract.”
He summarises his conclusions as to section 5(1) at page 263:
“In my opinion section 5(1) grants to a contractor an entitlement to a charge on money payable to the person who whom he contracts and a charge on money payable to a superior contractor (my underlining). I am unable to see anything in the legislation which would prevent a ‘superior contractor’ from being the person who is also the head or first contractor.”
Mr Harris submits that pursuant to the Act a subcontractor “becomes a secured creditor of the contractor with whom he is in a contractual relationship”. He goes on to say that:
“Nothing in the 1974 Act purports to extend the ‘secured creditor’ status to a non-contractual third party.”
It is no doubt true that it is the debt to the subcontractor from his immediate contractor which is secured. The manner in which it is secured under the Act involves non-contractual parties. As Douglas J pointed out in re Queensland Tiling Service Pty Limited [1978] QdR 142 at 144:
“With respect I adopt, as my own, what has been said by Stanton J in relation to a similar statute in Webster v. Hallas (1949) 68 NZLR 13 at page 15:
‘I think the principle from which one must start is that by the Act certain rights have been conferred upon subcontractors as against building owners with whom they have no contractual relations...’”
In the present instance, there is money due from the employer to the second defendant which is still in the hands of the employer. The decision in Hewitt plainly supports the validity of such a charge.
Returning to the decision in Hewitt's case, at page 263 His Honour considers section 5(3) in the following words:
“Subsection (3) of section 5 does not affect the construction I have placed on section 5(1) because it, in plain words, merely limits the total amount recoverable under charges to the amount payable to the particular person in the contractual hierarchy from whom the amounts of the charges are sought.”
At page 266, His Honour considered the factual issue which had been left undecided by the Chamber Judge as to whether money was owing from Holland to Bale:
“The first answer to these arguments is that His Honour expressly referred to but did not decide the issue as to whether money is due and payable by Holland to Bale. Secondly, if the appellant is, in terms of the Act, entitled to a charge over the money payable by the Commissioner to Holland, the question of election ... was not litigated ...”
It is inherent in what His Honour was saying that leaving aside the question of election, which had not been argued below and which is not relevant here, the existence of a charge and a valid action against the Commissioner was unaffected by the existence or non-existence of a debt between Holland and Bale. That is precisely the issue before me.
Mr Harris refers to the decision of the Full Court of Queensland in Groutco (Australia) Pty Ltd v. Thiess Contractors Pty Ltd [1985] 1 QdR 238 at 243 where Campbell CJ with whom Sheehan and McPherson JJ agreed said of section 5(3) that:
“Section 5 gives to a subcontractor an entitlement to a charge, to secure such payment on the money payable by a superior contractor to the contractor under the latter's contract. Subsection (3) is significant in that it limits the total amount recoverable under the charges of subcontractors to the amount payable to the contractor under his contract (emphasis added).”
But His Honour was stating the principle in the context of the factual situation where there were only three parties namely The Gladstone Water Board (employer), Thiess Contractors (the contractor) and Groutco (subcontractor). The charges (if any) had to attach to moneys due from the employer to Thiess under its contract. That was the central issue in that case. Such a statement cannot be relied upon, in my view, to support the proposition that in a factual situation where the chain of contracts is longer - as in Hewitt's case and the present case - the plain statement concerning section 5(3) in Hewitt's case should be distinguished.
Likewise, the passage referred to by Mr Harris in the judgment of Williams J in Road Services Group Pty Ltd v. Brown [1987] 2 QdR 792 at 800 relates to the situation where certain moneys could not properly be described as “part of the contract price.”
The consequences of this may well be onerous to superior contractors. Despite having paid out their immediate subcontractor, they may, if owed money from further up the line, find that money charged by unpaid subcontractors further down the line. This is what has happened in the present case. It cannot be said of this legislation that it is without anomalies.
However, the construction of the Full Court in Hewitt's case is, in my view, clear and I see myself as bound by it.
The notice of claim of charge was for a larger amount than was in fact owed. The plaintiff cannot improve its position by its own error. The plaintiff should succeed in the action in the amount of $69,071 and should have interest on that sum at 10 percent from 10 October 1994 which is approximately 14 months. I calculate such interest in the sum of $8,058.28. That amount can be checked and if it is erroneous I will amend it. That then results in a total of $77,129.28.
Gentlemen, what I am proposing to do, is to give judgment in that total amount for the plaintiff, to order that that amount then be paid out of Court to the solicitors for the plaintiff but that the balance of the amount paid into Court with any accretions thereto should be paid out to the solicitors for the second defendant and I am also proposing to order that the plaintiff have its costs of the action.
...
HIS HONOUR: I give judgment then for the plaintiff against the second defendant in the sum of $77,129.28. I order that that amount be paid out of Court to the solicitors for the plaintiff. I order that the balance of the moneys paid into Court with any accretions thereto be paid out to the solicitors for the second defendant. I order that the second defendant pay the plaintiff's costs of and incidental to the action to be taxed. I direct that those costs be taxed on a solicitor and client basis.
It will be quite interesting gentlemen to test that. Perhaps it is something that would benefit from being tested because I suppose, like all things, it is arguable.