Stokes Wheeler Pty Ltd v Herriot
[2003] QDC 333
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- Unreported Judgment
- Stokes Wheeler Pty Ltd v Herriot[2003] QDC 333
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Stokes Wheeler Pty Ltd v Herriot[2003] QDC 333
Stokes Wheeler Pty Ltd v Herriot[2003] QDC 333
DISTRICT COURT OF QUEENSLAND
CITATION: | Stokes Wheeler Pty Ltd v Herriot [2003] QDC 333 |
PARTIES: | STOKES WHEELER PTY LTD (ACN 080 554 623) Plaintiff and IAIN HERRIOT Defendant |
FILE NO/S: | D347/2003 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Southport |
DELIVERED ON: | 22 August 2003 |
DELIVERED AT: | Southport |
HEARING DATE: | 28 July 2003 |
JUDGE: | Alan Wilson SC DCJ |
ORDER: | Judgment for the plaintiff against the defendant in the sum of $32,947.30, and interest under clause 42.9 of the contract between the plaintiff and the defendant from 17 June 2002 to the date of this judgment. |
CATCHWORDS: | CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – CONSTRCTION OF PARTICULAR CONTRACT – Where defendant engaged plaintiff to undertake building work, pursuant to a building contract incorporating Australian Standards AS2124-1992 – where plaintiff issued progress claim – where superintendent appointed under contract issued a payment certificate in respect of that progress claim outside the periods provided under the contract – whether progress claim was validly issued – meaning and effect of clause 42.1 of the building contract – whether defendant should be granted a stay of execution of judgment Cases considered: Algons Engineering Pty Ltd v Abigroup Constructions Pty Ltd (unreported, Supreme Court of NSW, Rolfe J, 14 October 1997)Carroll v Jensen (1900) 10 QLJ 60Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305Daysea Pty Ltd v Watpac Pty Ltd [2001] QCA 49Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Foster & Ors v Northern Land Council (1998) NTSC 62 Japaul Pty Ltd v St Hilliers (Qld) Pty Ltd, unreportedMcMaster Pty Ltd v Redcliff City Council [2000] QSC 92 McPhee v Zarb [2002] QSC 4Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd (1995) 2 Qd R 521The Commonwealth v Clark (1994) 2 VR 333Williams v Spautz (1992) 174 CLR 509Zauner Construction Pty Ltd v No. 2 Pitt Street Pty Ltd [2001] VSC 154 |
COUNSEL: | Mr T Matthews – applicant/plaintiff Mr S Sheaffe – respondent/defendant |
SOLICITORS: | Dibbs Barker Gosling – applicant/plaintiff McLaughlins – respondent/defendant |
- [1]The plaintiff seeks summary judgment pursuant to UCPR r 292(1), under which judgment may be entered if the Court is satisfied that a defendant has no real prospect of successfully defending all or part of a claim, and there is no need for a trial of the claim (or part of it)[1].
- [2]The plaintiff as builder and the defendant as developer entered into a contract to renovate an existing commercial building for a contract sum of $337,236.90. The contract was in the form of Australian Standard AS2124-1992, with special conditions. Conrad & Gargett was appointed to the office of Superintendent under the contract. The plaintiff commenced work at the end of January 2002, and the works were certified for practical completion by 27 May 2002. The plaintiff’s progress claims nos. 1, 2 and 3 were issued respectively on 4 March, 27 March and 1 May 2002 and paid in full. Progress claim no. 4 was issued on 3 June 2002 in the amount for which the plaintiff now seeks summary judgment, $32,947.30, and remains fully unpaid. The Superintendent did issue a payment certificate, on 11 September 2002 in the sum of $18,965.00 but it, also, remains unpaid. All of the four progress claims were in exactly the same form.
- [3]Payment of these claims is governed by clause 42.1 of the general conditions of contract document AS2124-1992, which provides as follows:
Payment Claims, Certificates, Calculations and Time for Payment
At the times for payment claims stated in the Annexure and upon issue of a Certificate of Practical Completion and within the time prescribed by clause 42.7, the Contractor shall deliver to the Superintendent claims for payment supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require. Claims for payment shall include the value of work carried out by the Contractor in the performance of the Contract to that time together withall amounts then due to the Contractor arising out of or in connection with the Contract or any alleged breach thereof.
Within 14 days after receipt of a claim for payment, the Superintendent shall issue to the Principal and to the Contractor a payment certificate stating the amount of the payment which, in the opinion of the Superintendent, is to be made by the Principal to the Contractor or by the Contractor to the Principal.
The Superintendent shall set out in the certificate the calculations employed to arrive at the amount and, if the amount is more or less than the amount claimed by the Contractor, the reasons for the difference. The Superintendent shall allow in any payment certificate issued pursuant to this clause 42.1 or any Final Certificate issued pursuant to clause 42.8 or a Certificate issued pursuant to clause 44.6, amounts paid under the Contract and amounts otherwise due from the Principal to the Contractor and/or due from the Contractor to the Principal arising out of or in connection with the Contract including but not limited to any amount due or to be credited under any provision of the Contract.
If the Contractor fails to make a claim for payment under clause 42.1, the Superintendent may nevertheless issue a payment certificate.
Subject to the provisions of the Contract, within 28 days after receipt by the Superintendent of a claim for payment or within 14 days of issue by the Superintendent of the Superintendent’s payment certificate, whichever is the earlier, the Principal shall pay to the Contractor or the Contractor shall pay to the Principal, as the case may be, an amount not less than the amount shown in the Certificate as due to the Contractor or to the Principal as the case may be, or if no payment certificate has been issued, the Principal shall pay the amount of the Contractor’s claim. A payment made pursuant to this clause shall not prejudice the right of either party to dispute under clause 47 whether the amount so paid is the amount properly due and payable and on determination (whether under clause 47 or as otherwise agreed) of the amount so properly due and payable, the Principal or Contractor, as the case may be, shall be liable to pay the difference between the amount of such payment and the amount so properly due and payable.
Payment of moneys shall not be evidence of the value of work or an admission of liability or evidence that work has been executed satisfactorily but shall be a payment on account only, except as provided by clause 42.8.
- [4]Progress claim no. 4 was delivered to the Superintendent on 3 June 2002. Under the second paragraph of clause 42.1, then, the Superintendent was required to assess it not later than 17 June 2002 and issue to the plaintiff and the defendant a “payment certificate” stating the amount of the payment which in the Superintendent’s opinion was to be paid by the defendant to the plaintiff (or vice versa). The defendant admits no payment certificate was issued, by the Superintendent, on or before 17 June 2002. On its face the fourth paragraph of clause 42.1 has the clear meaning that, if no payment certificate was issued by the Superintendent by that date the defendant was required to pay the entire amount of the plaintiff’s progress claim no. 4 not later than 1 July 2002.
- [5]The clause has been extensively considered by the courts. There is clear authority that, where a payment certificate has not been duly issued by the Superintendent within the period stipulated, the obligation is to pay the full amount of the claim without deduction: Daysea Pty Ltd v Watpac Pty Ltd [2001] QCA 49; McMaster Pty Ltd v Redcliff City Council [2000] QSC 92 at para [11] per McKenzie J; Algons Engineering Pty Ltd v Abigroup Constructions Pty Ltd (unreported, Supreme Court of NSW, Rolfe J, 14 October 1997) and Zauner Construction Pty Ltd v No. 2 Pitt Street Pty Ltd [2001] VSC 154 (in which Byrne J, of the Victorian Supreme Court, followed Daysea and Algons). In each case summary judgment was granted in the builder’s favour.
- [6]While the effects of the clause might seem at first blush draconian, it is explained in those cases that the payments are “on account”: Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd (1995) 2 Qd R 521, per McPherson J at 524; and, are intended to be “provisional”. A final resolution of money issues between the builder and the contractor is, under the contract, to await the time when a final certificate issues in which the ultimate indebtedness by one party to the other is ascertained, and fixed: re Concrete Constructions Group Pty Ltd (1997) 1 Qd R 6, per McPherson JA and Helman J at 12. The significance of the clause, recognised in that judgment, is that the progress payments may be critical to the survivor of the builder, and the completion of the project.
- [7]The contract also provides, under clause 47, a process for dispute resolution and a mechanism for the raising and resolution of disputes, reinforcing the point that the obligation for prompt payment under clause 42 does not prejudice either party’s right to dispute entitlement to the sum claimed. Neither is the payment evidence of the value of the work or an admission of liability, or evidence of a satisfactory execution of the work. As Davies JA said in Merritt Cairns Constructions Pty Ltd v Wulguru Heights Pty Ltd at 523:
…Notwithstanding that claims and counterclaims may later be the subject of arbitration, a prima facie sum may be made payable by issue by the Superintendent of a payment certificate pursuant to clause 42.1.
- [8]These matters are germane to the fact the defendant has pleaded a set-off and counterclaim which does not however affect the plaintiff’s right to payment of the sum claimed, or judgment for it. Mr Sheaffe, for the respondent contractor, did not ultimately argue that those pleas supplied in themselves a basis upon which the defendant might resist judgment although he did contend that, because the final certificate had not issued, there should be a stay of any judgment the plaintiff might obtain, or the matter should simply be adjourned with an order for a mediation to resolve all the issues between the parties. I will deal with that contention later but note, in the interim, that the set-off and counterclaim are contingent only and not “money due” and do not affect the plaintiff’s right, if any, to judgment.
- [9]It is also relevant to note, in this context, that the Superintendent’s late certificate of 11 September 2002 in the sum of $18,965.00 is invalid. There is no power to issue a late certificate because to do so does not accord with the terms of the contract, as was held in Dacey and Zauner, where Byrne J said at para [17]:
…Where the Superintendent fails to issue a certificate or where the certificate is issued late, the principal must pay the amount of the claim within the prescribed time.
…Where the certificate is issued late, it is ineffective so that the same consequence flows. This has been the construction of clauses such as the present clause 42.1 by the Queensland Court of Appeal; it is consistent with the decision of Rolfe J in New South Wales. If I may respectfully say so, I agree with these analyses and will follow them.
- [10]In light of the authorities to which I was referred, the plaintiff appears to have a strong case for summary judgment.
- [11]The defendant contended claim no. 4 was not valid or complete because the plaintiff had not, in the words of clause 42, delivered “...to the Superintendent claims for payment supported by evidence of the amount due to the contractor and such information as the Superintendent may reasonably require”. Reliance was placed upon a letter from the supervisor to the defendant of 11 September 2002 which, it was said, signifies the Superintendent’s inability to assess various claims until further material was provided. On its face, however, the letter refers to variations “instructed directly by Iain Herriot” and seems to have nothing to do with any aspect of the plaintiff’s claim no. 4. As the evidence otherwise showed that claim was in the same form as the previous three, and contained appropriate particulars.
- [12]There are several things to be said about this submission. First, it was simply not pleaded. Second, claim no. 4 was, on its face, supported by appropriate particulars (in the same form as claims nos. 1, 2 and 3, all of which were paid in full and without question). Third, the defendant purported to rely upon a decision of his Honour Judge Britton SC of 18 October 2001[2], but, in that case, the builder seems to have delivered nothing more than a bare claim for an amount, without particulars or supporting evidence. There is authority, from the New South Wales Court of Appeal[3] that a Superintendent is not obliged to issue a payment certificate until appropriate evidence and information is provided, and I am not persuaded the letter of 11 September 2002 shows, on its face, any failure of that kind on the part of the plaintiff.
- [13]For the sake of completeness, it is also appropriate to address paragraph 12 of the amended defence although, again, Mr Sheaffe did not seem to rely upon it. It denies that progress claim no. 4 is a valid claim because the plaintiff could only claim “the amount then due to the contractor” and claim no. 4 included variations which were “subject to approval”. I am satisfied that defence is without merit because, as already noted, each and every claim was identical and the first three claims had been paid. Further, clause 42.1 makes it clear that the purpose of the claims procedure is for the contractor to claim what it says is due and for the Superintendent to make a decision but, until that decision is made, all claims would be “subject to approval” by the Superintendent – that is precisely why claims are submitted to a Superintendent.
- [14]It might also be noted that, by letter 8 July 2003 from the Superintendent to the defendant it was made clear that the earlier letter of 11 September 2002 specifically requested details of defects and variations alleged by the defendant which have not, however, been provided by it and which have prevented the issue of a final certificate.
- [15]In paragraph 15(b) of the Defence the defendant raised defences of waiver and estoppel, of which the plaintiff has twice requested particulars – of, especially, the conduct from which it is alleged a waiver of clause 42.1 might be inferred. Mr Sheaffe frankly conceded the plaintiff was entitled to those particulars but said they were contained in documents in the possession of the builder, or the Superintendent. Ultimately, as I understand the defendant’s submission, it was said that a significant volume of correspondence between the parties signified the existence of a clear dispute in the face of which, and in light of the discretion under r 292, it would be precipitate to enter judgment and, rather, the parties should be sent away to resolve all money claims; and, this course was particularly desirable when a final certificate is likely, it was submitted, to issue shortly.
- [16]Nothing in the 47 items of correspondence provided as particulars of the alleged waiver gives rise to any implication the plaintiff would not insist upon its rights under clause 42.1. It is trite that the essential ingredient of waiver is an intentional act, done with knowledge[4]. The plaintiff’s witness, Mr Wheeler, has sworn that he had no intention of waiving the effects of the clause and, indeed, says that the only apparent reason for the delay in processing claim no. 4 was the defendant’s failure to provide particulars of alleged back-charges to the Superintendent.
- [17]In paragraph 14 of its amended defence the defendant alleges that it was induced by and acted in reliance upon an agreement with the plaintiff to refrain from requesting the Superintendent to issue a progress certificate, or to withhold payment of any sum which may be found owing to the plaintiff. There is no clause in the contract which allows the defendant to request the Superintendent to issue a progress certificate, nor any clause permitting a request to the Superintendent to withhold payment of any sum. Clause 42.1 makes it clear the decision is that of the Superintendent who must, under clause 23, act in a fair and unbiased manner. Further, as Mr Matthews for the plaintiff pointed out, the claim for estoppel is bad in law because the defendant has failed to plead detriment and there is nothing here that suggests the defendant changed his position, to his detriment[5].
- [18]The defendant pressed for a stay of any judgment because the issue of a final certificate is due. Mr Sheaffe pointed to the events which occurred in Daysea as an example of the possibility that, when that occurred, the defendant might not be indebted to the plaintiff at all. (In Daysea the final certificate under which no money was, in fact, payable by the respondent to the appellant issued before the Court of Appeal gave judgment and the former obtained judgment for interest only on the amount it had originally claimed[6]). I was told by Mr Matthews, for the applicant plaintiff, however, (without demur) that the final certificate is already one month overdue and may never be issued. In those circumstances the mere prospect of its issuing at some unknown time does not appear to be a proper basis for refusing judgment if the plaintiff is entitled to it.
- [19]The Court has power to grant a stay of enforcement under UCPR r 800, and an inherent power to stay enforcement of a money order where there is an abuse of the process of the Court[7]. There is no suggestion, here, that the plaintiff is using Court proceedings for the purpose of obtaining some collateral advantage or threatening the defendant[8]; the plaintiff waited about nine months between the date upon which payment was due under claim no. 4, and the issue of these proceedings (29 April 2003), since when almost three months have passed. The facts and circumstances giving rise to this claim, the quite lengthy delay, the defendant’s apparent contribution to the events causing that delay and its conduct in failing to pay the claim (or for that matter the lesser sum certified by the supervisor) all militate against exercising any discretion to grant a stay in its favour.
- [20]The plaintiff ought to have judgment in the amount it seeks, $32,947.30 and interest on that sum calculated by reference to clause 42.9.
Footnotes
[1] UCPR r 292(2); as to the nature of the test under the UCPR, see McPhee v Zarb [2002] QSC 4
[2] Japaul Pty Ltd v St Hilliers (Qld) Pty Ltd, unreported (District Court of Queensland, Brisbane, 18 October 2001, D 3469/2001)
[3] Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2003] NSWCA 4
[4] Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, at 326
[5] Foster & Ors v Northern Land Council (1998) NTSC 62, following Dey v Victorian Railways Commissioners (1949) 78 CLR 62, at 91, and The Commonwealth v Clark (1994) 2 VR 333
[6] Supra, at para [31]
[7] Carroll v Jensen (1900) 10 QLJ 60
[8] Williams v Spautz (1992) 174 CLR 509 at 528