Raedel v Jezer Construction Group Pty Ltd
[2002] QDC 79
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- Unreported Judgment
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- Raedel v Jezer Construction Group Pty Ltd[2002] QDC 79
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Raedel v Jezer Construction Group Pty Ltd[2002] QDC 79
Raedel v Jezer Construction Group Pty Ltd[2002] QDC 79
DISTRICT COURT OF QUEENSLAND
CITATION: | Raedel v. Jezer Construction Group Pty Ltd & Ors [2002] QDC 079 |
PARTIES: | GREGORY MELVILLE RAEDEL AND KATHLEEN THERESA RAEDEL (Plaintiffs) v. JEZER CONSTRUCTION GROUP PTY LTD (First defendant) And COMPTON’S VILLAGE LIMITED (Second defendant) And MICHAEL WAI MAN CHOI, DORIS NGIE LIK CHOI (AKA DORIS TING) AND PETER GRAHAM SCHMITH (Third defendants) |
FILE NO/S: | D1291 of 1999 |
DIVISION: |
|
PROCEEDING: | Application |
ORIGINATING COURT: | District Court Brisbane |
DELIVERED ON: | 19 April 2002 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 10 April 2002 |
JUDGE: | McGill D.C.J. |
ORDER: | Application dismissed |
CATCHWORDS: | BUILDING AND ENGINEERING CONTRACTS – Subcontractor’s charges – whether charge attaches to additional amount becoming payable later to contractor on valuation of variations – Subcontractors Charges Act 1974 s. 5(1). Henry Walker Etlin Contracting Pty Ltd v. Mostia Constructions [2001] QSC 089 – distinguished. Concept Constructions (Qld) Pty Ltd v. Asphalt Pavements Pty Ltd [2000] QSC 269 - applied Re: James Hardie Building Systems Pty Ltd (1999) 15 BCL 199 – cited Qline Interiors Pty Ltd v. Jezer Construction Group Pty Ltd [2002] QSC 88 – followed Re: A. & P. Constructions Pty Ltd [1999] 1 Qd.R. 228 - applied Riteway Constructions Pty Ltd v. Baulderstone Hornibrook Pty Ltd [1998] 2 Qd.R. 218 - distinguished |
COUNSEL: | D.A. Skennar for the first defendant Mrs. Raedel appeared in person |
SOLICITORS: | Conomos Lawyers for the first defendant |
- [1]On 1 April 1999 Ramaville Pty Ltd commenced proceedings against the first defendant for a sum alleged to be payable under a subcontract agreement between it and the first defendant, and against the second defendant to enforce a charge under the Subcontractors Charges Act 1974 (“the Act”). Subsequently Ramaville Pty Ltd went into liquidation, and its cause of action against the first and second defendants was assigned to Mr. and Mrs. Raedel, who were substituted as plaintiffs by order of O'Sullivan D.C.J. on 25 February 2002.
- [2]On 13 March 2002 the second defendant paid into court the sum of $24,700.87 purported pursuant to s. 11(5) of the Act. The first defendant has now applied to have that money paid out of court to it, on the ground that that money is not subject to the plaintiffs’ charge, and therefore is not money which the second defendant is obliged to retain under the Act, and ought not to have been paid into court, and therefore ought to be paid to the first defendant. The second defendant did not oppose such an order, presumably on the assumption that the applicant’s argument in support of the application is correct. The order however was opposed by the plaintiffs.
- [3]There have been other proceedings in respect of the same head contract between the second defendant and the first defendant, and other monies have been paid into court by the second defendant in respect of the plaintiffs’ claim and other claims. It appears that four claims were advanced, by the former plaintiff and two other companies and an individual, but all of the other claims have been settled with the first defendant, and some other money paid into court has been paid out. Proceedings commenced by PR Trading (Qld) Pty Ltd in the District Court were subsequently transferred to the Magistrates Court, and on 9 November 2000 resolved by a consent order under which part of the sum paid into court by the second defendant was paid out to the solicitors for that plaintiff, and the balance paid out to the solicitors for the current first defendant, who was also the first defendant in those proceedings.
- [4]Aussie Cabinet Co Pty Ltd commenced proceedings in the District Court which were resolved on 18 September 2001 when an order was made that most of a sum paid into court by or on behalf of the second defendant be paid out to that plaintiff, with the balance paid out to the solicitors for the first defendant. One claimant did not commence proceedings, and that claim was settled by payment from the first defendant. An amount of $73,729.73 was paid into court on 21 May 1999 in District Court Plaint 1355/99, the proceeding commenced by PR Trading (Qld) Pty Ltd. Part of this was the money dealt with by the consent order in the Magistrates Court, for which purpose $31,870.50 was transferred to that court on 19 June 2000[1]. As at 31 December 2001 a balance of $47,695.83 inclusive of accretions remained in the District Court, presumably available to satisfy any judgment on the claim by the plaintiffs in the present action. However, that amount plus the further payment in by the second defendant on 12 March 2002 remains less than the plaintiffs’ claim, so that, if that amount is subject to the plaintiffs’ charge, it is not in excess of the amount properly charged.
- [5]The applicant first defendant submitted that the amount paid into court by the second defendant on 12 March 2002 was not in fact subject to the plaintiffs’ charge on two grounds:
- (a)The money was payable by the second defendant to the first defendant in respect of work other than work done by the plaintiff pursuant to its subcontract;
- (b)Payment was not in respect of a specific sum objectively determinable as at the date on which notice of claim of charge was given, so the charge did not attach to it.
I will deal with these arguments separately.
Did the debt by the head contractor have to relate to the subcontractor’s work?
- [6]As to the former, s. 5(1) of the Act provides that the charge of the subcontractor is “on the money payable to the contractor or a superior contractor under the contractor’s, or superior contractor’s contract or subcontract.” It is not expressly limited to payments due in respect of work which was the subject of a subcontract under which the subcontractor claims, and there is no reason in my opinion why the scope of the section should be read down in that way. No authority was cited on behalf of the first defendant in support of a reading down on that basis, and in my opinion it is unjustified by the terms of the legislation, and would be contrary to the objects of the legislation. The subsection should be given its ordinary meaning: Re: A. & P. Constructions Pty Ltd [1999] 1 Qd.R. 228. In my opinion, the scope of the charge is not so confined by the terms of the Act.
- [7]Nevertheless, it was submitted on behalf of the applicant that the charge in the present case was so confined because of the terms in which it had been claimed. The notice of claim of charge given on 4 February 1999 stated relevantly:
“We claim under [the Act] a charge upon the monies that are now or will be payable by you to [the first defendant] in respect of the following work done by us in respect of your contract with [the first defendant] …, that is to say the supply of material and labour for the landscaping works, which was done under a subcontract with the said [first defendant] between 17 April 1998 and 17 January 1999.”
A separate notice in similar terms claimed a charge in respect of the retention monies. It was submitted that this had the effect of confining the charge claimed to one on monies payable in respect of the landscaping works under the contract between the second defendant and the first defendant.
- [8]In my opinion, this involves a misreading of the terms of the notice, reading it as if the expression “in respect of the following work done by us in respect of your contract …” governs “payable” where it earlier appears. In my opinion, it does not; it governs “charge” where that appears in the extract from the notice which I have quoted. That would be consistent with the scheme of the legislation, which provides that there is a charge on the money payable to the contractor (2.5(1)) which secures payment in accordance with the subcontract of all money that is payable to the subcontractor for work done by the subcontractor under the subcontract: s. 5(2). The form of words used in the notice follows the form provided for in regulations made under the Act, which relevantly provides for a claim of
“… a charge upon the * retention money that is now or will be payable by you to (name and address of the contractor to whom the money sought to be charged is payable), in respect of the following work done by me in respect of your contract with the said (name of contractor to whom the money sought to be charged is payable), that is to say (give a description of the nature of the work done and for which the charge is claimed), which work was done by me under a subcontract …”.
- [9]Clearly the reference to the work done is a reference back to the work done “by me”, that is to say, by the subcontractor. The charge only arises in respect of work done by the subcontractor in respect of the contract between the employer and the superior contractor, that is to say, pursuant to a subcontract in respect of that particular head contract, but that wording does not, in my opinion, properly understood confine the charge to money payable under the head contract in respect of work the subject of the subcontract. On the contrary it is a charge to enforce payment of a sum payable under the subcontract in respect of work done under the subcontract, which attaches to any money payable under the head contract. This argument therefore fails.
Does the sum to be payable under the head contract have to be ascertained?
- [10]The second argument was based on a passage in the judgment of Riteway Constructions Pty Ltd v. Baulderstone Hornibrook Pty Ltd [1998] 2 Qd.R. 218 where Derrington J at p. 220-1 said:
“Because the Act refers to money that is to become payable, there is clearly no limitation of security to any money that is presently determined and payable. However, to the extent that the effect of the Act is to impose a security that is limited to a particular amount of money in the hands of the principal, as a matter of ordinary understanding, the reference to “money to become payable” must refer to a specific sum that will become payable. That specific sum must be objectively determinable at the date of the charge by reference to the contract. For example, if work were to be done in a certain way and on completion to be valued by a certifier, upon which the certified value would be payable, it would not come within the Act, even though the value of the work might be capable of assessment otherwise. The concept is an integrated one that includes the provision of a security in respect of a specific sum that is payable or will become payable, and this predicates the identification of the sum payable under the contract. Accordingly, if the amount payable depends upon the assessment of any factor within the judgment of an intermediary, the specific sum cannot be identified until that determination is made.”
- [11]On the basis of that passage it was submitted that, as the sum paid into court related to variations to the contract and that it was only upon a determination by the architects that the second defendant came under any specific liability for the variations, that sum did not fall within the security because it only became payable upon an assessment of a factor within the judgment of an intermediary. That assessment was made after the notice of claim of charge had been given.
- [12]What had happened was that the further sum was paid because of a determination by the architect in respect of various claims for variations. On 31 October 2001, the architect issued a final certificate which involved a review of previous variations claims, a number of which were dealt with. Some of these were said to have been previously approved but not issued, although one was dealt with by allowing an amount on the basis of an assessment by the engineers. The effect was that, pursuant to six variation claims, there was an adjustment of the contract sum certified on 31 October 2001 in the sum of $24,700.88. There was then a final certificate given on the same date for an amount payable under the contract of $24,700.87, plus a sum for GST. The first defendant’s claim was that this amount did not become payable under the contract until it had been certified or authorised by the architect, because of a provision in the contract under which the amount payable in respect of variations was to be determined by the architect. Until that determination had been made, there was no specific determined amount payable under the contract. On the basis of the reasoning of the decision in Riteway, the charge only attached to an amount which was payable under the contract, in a way which did not involve the subsequent determination by some third party, as at the date on which the notice of claim of charge was given.
- [13]In my opinion there is no substance in this argument either. The difficulty with the reliance which is sought to be placed on the judgment in Riteway is that His Honour was not talking about money payable under the head contract to which a claim of charge may attach; he was talking about money payable under the subcontract which can be the subject of a charge. The facts in that case make this clear. His Honour was determining an application by the head contractor that the claim be cancelled because the amounts claimed by the subcontractor were either disputed or were yet to be determined by measure or by the decision of an intermediary, and therefore could not be the subject of a claim. As a result, His Honour was directing his attention not only to s. 5(2) of the Act, but also s. 10(1A) and (2), both of which deal with what the claim may be in respect of, that is, for what sum may a subcontractor claim the benefit of a charge.
- [14]Hence His Honour said earlier at p. 220:
“This means that security is designed to enforce only sums payable or to be payable under the subcontract for work done under it, and this excludes, for example, damages that might be payable for its breach. … This does not mean that the amount be due and owing at the time of the notice, for it is clear from the section set out above that it may include amounts that are to become payable; and s. 10(2) confirms that it is not necessary that the time for the payment of the money in respect of which the charge is claimed has arrived, provided that the work is completed.”
Note that in the earlier part of this quote His Honour is talking about sums payable or to be payable “under the subcontract”, and in the latter part talking about the effect of s. 10(2) which is about the money in respect of which the charge is claimed, not the money over which the charge is claimed. Furthermore, His Honour subsequently assessed whether various amounts said to be payable by the contractor to the subcontractor fell within the scope of the principle he had stated in the passage at the foot of p. 220.
- [15]In the light of this it is clear, in my opinion, that in that quote, where His Honour referred to a specific sum which will become payable, he was referring to a sum which will become payable under the subcontract, not under the contract, and that the reference on p. 221 to “the amount payable depends upon the assessment of any factor within the judgment of an intermediary” was a reference to the amount payable under the subcontract. The same applies to the recent decision of Ambrose J in Henry Walker Etlin Contracting Pty Ltd v. Mostia Constructions [2001] QSC 089, which followed Riteway and also involved a situation where the amount payable under the subcontract was not specific.
- [16]That this is the correct interpretation of His Honour’s judgment is made clear by a judgment of Williams J (as His Honour then was) in Concept Constructions (Qld) Pty Ltd v. Asphalt Pavements Pty Ltd [2000] QSC 269, where His Honour after referring to the decision in Riteway, and the subsequent decision in Re: James Hardie Building Systems Pty Ltd (1999) 15 BCL 199, of Shepherdson J, which adopted a similar analysis, said at para. [9]:
“In each case the judge concluded that, given the terms of the relevant contract, no money was payable to, or was to become payable to, the subcontractor for work done prior to the date on which the notice of the charge was given. … I do not regard either case as laying down any principle other than that the subcontractor must establish that there is money payable or to become payable with respect to work done prior to the date of the charge before the charge can be legally effective; so much necessarily follows from the statute.”
- [17]It follows that the analysis in Riteway was concerned with ascertaining what sums payable to the subcontractor could receive the benefit of the charge, not with ascertaining what sums payable to the head contractor by the employer could be subject to a charge. It therefore does not support the argument advanced by the applicant. As well Riteway does not apply by analogy. It is one thing to say that the charge has to be for a specific sum, so that the employer knows how much to retain or to pay into court to satisfy its statutory obligations. It is another to say that the charge will attach only to a specific sum payable or to be payable. No reason why the charge should be so limited emerges from the terms or scheme of the Act.
- [18]The proposition that, where the Act provides for a charge on “the money payable to the contractor … under the contractor’s contract …” it charges the amount payable from time to time, was decided by Muir J in Qline Interiors Pty Ltd v. Jezer Construction Group Pty Ltd [2002] QSC 88, a judgment recently delivered. His Honour held that a charge did not attach to any monies in the hands of the employer because having regard to various matters including a liquidated damages claim under the head contract and a damages claim for breach of contract, no monies were owing by the second defendant (employer) to the first defendant (head contractor). His Honour said at para. [93] that these claims were able to be set off against the first defendant’s claims under the head contract, and that as a result of that setoff the second defendant’s claims against the first defendant exceed any claim the latter may have against the former.
- [19]His Honour then had to deal with an argument that the claim attached to monies which had been payable at the time when the notice was given even though they subsequently ceased to be payable under the head contract (because of the set off). He said at para. [95]:
“The plaintiff’s argument necessitates the conclusion that the charge which comes into existence upon the due giving of the notices required by s.10 of the Act attaches to the money then payable to the contractor by the employer and is unaffected by any subsequent decrease in the amount of money payable to the contractor by the employer. I cannot accept this argument. … If the plaintiff’s argument is to be accepted, subsections (1) and (3) of s.5 must be read as if the words ‘at the time at which the charge comes into existence or attaches to monies payable to the contractor’ were added at the end of each provision. It is of some relevance that s.10(1A) does contain a time stipulation of this nature by providing that a claim is in respect of money payable to the subcontractor at the date of the notice. Section 11(1) requires a person to whom a notice of claim of charge is given to retain ‘a sufficient part of the money that is or is to become payable by the person under the contract to satisfy the claim’. (Emphasis supplied). This requirement indicates that the reference to ‘the money payable to the contractor’ in s.5(1) and (3) is a reference to the money payable from time to time, at least whilst the charge remains on foot. … The Act does not contemplate that a subcontractor creating a charge under the Act can recover money under s.11 or 12 only where the contract has been fully performed. That being the case, if the plaintiff’s contention is not accepted, a subcontractor who gives the statutory notices at a time when sufficient monies are payable by the contractor to the employer to satisfy its claim may have the claim defeated in whole or in part by a reduction in the amount payable by the employer to the subcontractor. But, there is nothing surprising or inequitable about that result. As previously noted, the amount payable by the employer to the contractor may increase and thus improve the subcontractor’s security”.
- [20]That is what occurred in the present case: the amount payable to the contractor was increased as a result of the architect’s determinations of the variations claimed. That simply had the effect, as His Honour said, of improving the subcontractor’s security. In my opinion, on the clear authority of these decisions, the principle in Riteway does not apply in the present case, and rather the situation is that the charge did attach to the additional amount as soon as it became payable under the contract, so that it was properly paid into court by the second defendant. Accordingly, this argument also fails. It follows that there is no justification for an order that the money paid into court in March this year be paid out to the first defendant.
- [21]The plaintiffs in an outline of argument which was filed in the court also sought an order that money paid out of court to the first defendant in October 2001 pursuant to the order of another judge made in the proceedings commenced by Aussie Cabinet Co Pty Ltd (D1263/01) be returned to the court pending the hearing of the plaintiffs’ claim. I cannot see any basis upon which I have jurisdiction to order that money paid out in favour of the first defendant pursuant to an order made by another judge of this court, which order has not been set aside on appeal or otherwise challenged in some proper fashion, be paid into court by the first defendant. I can find no jurisdiction under the Act which would empower me to make such an order. I therefore have no jurisdiction to make the order sought by the plaintiffs. There is therefore no point in my considering whether, given the general scheme of the Act and the terms of Uniform Civil Procedure Rules r. 561(2), that order was properly made.
- [22]In the result, the application is dismissed. The plaintiffs who were respondents appeared in person to resist the application, and Mrs. Raedel told me that they had not incurred any legal costs in relation to the application, so no order for costs can be made in their favour. There will therefore be no order as to costs.
Footnotes
[1] See the certificate of the Registrar of the District Court dated 8 April 2002, in respect of Plaint D1355/99.