Mackay Labour Hire Pty Ltd v J.M. Kelly (Project Builders) Pty Ltd
[2013] QDC 230
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- Unreported Judgment
- Mackay Labour Hire Pty Ltd v J.M. Kelly (Project Builders) Pty Ltd[2013] QDC 230
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Mackay Labour Hire Pty Ltd v J.M. Kelly (Project Builders) Pty Ltd[2013] QDC 230
Mackay Labour Hire Pty Ltd v J.M. Kelly (Project Builders) Pty Ltd[2013] QDC 230
DISTRICT COURT OF QUEENSLAND
CITATION: | Mackay Labour Hire Pty Ltd v J.M. Kelly (Project Builders) Pty Ltd [2013] QDC 230 |
PARTIES: | Mackay Labour Hire Pty Ltd (ACN 130 813 295) (Applicant) v J.M. Kelly (Project Builders) Pty Ltd (ACN 010 280 412) (Respondent) |
FILE NO/S: | 84/13 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Mackay |
DELIVERED ON: | 27 September 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 23 August 2013 |
JUDGE: | Kingham DCJ |
ORDER: |
|
CATCHWORDS: | CONTRACTS – BUILDING AND CONSTRUCTION – REMUNERATION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – where the applicant supplied labour to the respondent building company – where the applicant invoiced the respondent for the labour supplied – where payment is outstanding – where the applicant did not hold a licence under the Queensland Building Services Authority Act 1991 (Qld) – whether the applicant carried out building work. – whether the applicant was required to hold a licence. CONTRACTS – BUILDING AND CONSTRUCTION – STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS – where invoices styled as payment claims under the Building and Construction Industry Payments Act 2004 (Qld) were sent to the post office box address for the respondent – whether the applicant or some other entity served the claims – whether the applicant’s payment claims were served on the correct corporate entity – whether summary judgment should be entered – whether the applicant failed to comply with the statutory preconditions to recovery – whether the reference date for the entitlement to serve payment claims was established. Building and Construction Industry Payments Act 2004 (Qld), ss 10, 11, 12, 17, 18, 19, 42 & Sch 2. Queensland Building Services Authority Act 1991 (Qld), ss 10, 12 & Sch 2. Queensland Building Services Authority and Other Legislation Amendment Act 2007 (Qld), ss 14 & 82(2). Cant Contracting Pty Ltd v Cansella [2007] 2 Qd R 13, applied. FK. Gardner & Sons Pty Ltd v Dimin Pty Ltd [2006] 1 Qd R 10, followed. Jemzone Pty Ltd v Trytan (2002) NSWSC 395, followed. J Hutchinson Pty Ltd v Galform Pty Ltd & Ors [2008] QSC 205, followed. PJS Development Pty Ltd v Tong [2003] QSC 337, followed. Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356, followed. |
COUNSEL: | Mr. P.T. Cullinane for the Applicant. Mr. A.D. Sinclair-Ford (sol.) for the Respondent. |
SOLICITORS: | Macrossan & Amiet Solicitors for the Applicant. In-house solicitor for the Respondent. |
- [1]Mackay Labour Hire Pty Ltd is a labour hire firm which provides skilled and unskilled labour for construction projects. It seeks judgment against J.M. Kelly (Project Builders) Pty Ltd for $258,966.09. Mackay Labour says this amount is owed for labour services that were supplied and invoiced, but remain unpaid to the present date.
- [2]There is no written contract between Mackay Labour and Project Builders. The terms of their arrangement(s), the parties to them and the amounts owing for services rendered are in dispute on the material filed on this application.
- [3]Mackay Labour has invoked the expedited procedures for obtaining judgment for progress payments under the Building and Construction Industry Payments Act 2004 (Qld). Project Builders resisted the claim on a number of grounds.
- [4]Firstly, it argued Mackay Labour cannot invoke the recovery procedure under the Payments Act because it does not hold a licence under the Queensland Building Services Authority Act 1991 (Qld).
- [5]Secondly, it argued Mackay Labour had not fulfilled the statutory preconditions to recovery under the Payments Act because:
- a.)Mackay Labour did not issue the payment claims;
- b.)The payment claims were not issued to Project Builders; and
- c.)Mackay Labour had not proved the reference date necessary to establish its entitlement to issue the payment claims.
- [6]Finally, it argued the claim by Mackay Labour related, in part, to labour provided to CQ Plumbing. CQ Pluming is a trading name of the company JM Kelly Builders Pty Ltd – it is not a trading name of Project Builders. In his most recent submissions, counsel for Mackay Labour has requested judgment in the sum of $246,670.29, plus interest and costs. This amended amount excludes any claim for the supply of services to CQ Plumbing. As the point appears to have been conceded by Mackay Labour, I will not address it further.
- [7]The issues are:
- Whether Mackay Labour needs to be licensed under the QBSA Act; and
- Whether its payment claims are valid and effective under the Payments Act.
1.) Does Mackay Labour need to be licensed under the QBSA Act in order to proceed under the Payments Act?
- [8]Project Builders submitted Mackay Labour could not avail itself of the process under the Payments Act because, for the period to which its claim relates, Mackay Labour did not hold a licence under the QBSA Act. That fact is common ground.
- [9]The QBSA Act, by s 42(1), prohibits a person from carrying out building work without a licence of the appropriate class under the Act. Section 42(3) provides that a person who contravenes the section cannot recover any monetary or other consideration for doing so, except as provided under s 42(4). In Cant Contracting Pty Ltd v Casella[1] the Court of Appeal concluded s 42(3) was a bar to invoking the procedure of the Payments Act, as that procedure is predicated upon a contract which is enforceable by the builder.
- [10]Given that decision, the parties agree that, if Mackay Labour was required to hold a licence because of its supply of labour to Project Builders, its claim under the Payments Act could not proceed.
- [11]Initially, Project Builders argued that Mackay Labour could not, on the one hand, claim the benefit of the Payments Act procedure, by relying on its contract with Project Builders as being a construction contract, and, on the other hand, deny it indirectly carried out building work.
- [12]The entitlement to progress payments under the Payments Act only arises if there is a construction contract.[2]Construction work is defined in the Payments Act and includes building work as defined in the QBSA Act.[3]However, the definition of construction contract in the Payments Act is broader than a contract to carry out construction work. It includes a contract “to supply related goods and services to, another party”.[4]
- [13]Mackay Labour claims to be entitled to avail itself of the process under the Payments Act because it supplied related services, not because it undertook to carry out construction work for Project Builders. The phrase related goods and services is defined in the Payments Act to include “the provision of labour to carry out construction work”.[5]
- [14]The question is, then, whether Mackay Labour was required to hold a licence under the QBSA Act in order to provide labour to carry out construction work. That depends on the interpretation of the phrase carry out in s 42(1) of the QBSA Act.
- [15]For the purposes of s 42(1), the phrase carry out is defined in the QBSA Act to mean any of the following:
- (a)Carry out the work personally;
- (b)Directly or indirectly cause the work to be carried out;
- (c)
- [16]Project Builders argued that by providing labour to carry out construction work, Mackay Labour was indirectly causing building work to be carried out. It relied upon the Licensing Information Statement #17 issued by the Building Services Authority.[7]That statement purported to clarify the licensing requirements for labour hire businesses and included the following statement:
A labour hire business will need a BSA licence where it is paid by its client for the services provided by the worker, and pays the worker. A BSA licence is required where you are:
- Supplying labour to a client that holds a builder’s licence and you are paid either a lump sum or hourly rate by the builder for the provision of labour. You pay the workers.
- [17]That scenario is the arrangement asserted by Mackay Labour. They rely on Project Builder’s BSA licence. It alleged it provided labour to Project Builders. Project Builders paid it a fee determined by the hourly rate for the different categories of labourers Mackay Labour provided. Mackay Labour then paid the labourers.
- [18]If the Information Statement is an accurate statement of the law, Mackay Labour is required to hold a licence under the QBSA Act.
- [19]The legal representatives for both parties believed the point had not been considered in any published decision. I have not located any case law which is directly on point.
- [20]There are, however, two Supreme Court judgments which provide useful direction on the approach the court should take to this issue. When both cases were decided, s 42 included a subsection which provided as follows:
s.42(2) For the purposes of this section –
(a) a person carries out building work whether that person carries it out personally, or directly or indirectly causes it to be carried out.
- [21]Section 42(2)(a) has been since repealed. That occurred in 2007, when the current definition of carry out, set out above, was included in Schedule 2 to the QBSA Act.[8]
- [22]There are some differences between s 42(2)(a) and the current definition of carry out. However, the critical phrase in the definition of carry out – “directly or indirectly cause the work to be carried out” - is almost identical to the relevant phrase in s 42(2)(a); “directly or indirectly causes it to be carried out”.
- [23]In PJS Development Pty Ltd v Tong,[9]P. McMurdo J considered whether a landowner who had engaged a licensed builder to carry out building work on their land would contravene s 42 if the landowner did not hold a licence. He concluded s 42(2)(a) did not apply unless the landowner did something “which can be characterised as the carrying out of building work in the sense that a building contractor does…In the case of a landowner who causes a builder to build upon the land, the landowner does not in any sense which is relevant for this legislation have the carriage of the work”.[10]
- [24]Chesterman J adopted that reasoning in Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd.[11]That case involved a superintendent appointed under a building contract between the plaintiff and the defendant. The superintendent’s contractual role was quite extensive. His Honour said the superintendent had a “role in the adjustment of contractual rights between applicant and respondent and in achieving the efficient and timely performance of the contract by the respondent, but his role was not to build. He did not carry out building work in the sense that a building contract (sic) would do”.[12]
- [25]He observed that, for s 42(2)(a) to apply, there had to be a factual foundation upon which it could be said that the person in question built the structure or caused it to be built. “He must be the person who brings about the building, or construction.”[13]Respectfully, I agree with and apply their Honours’ reasoning to the Schedule 2 definition of carry out.
- [26]There is no argument that the work undertaken by the labourers themselves was building work in the sense that it caused the building to be built. However, Mackay Labour asserts there is no factual foundation for concluding that it indirectly caused the building work to be carried out, in the sense required under s 42 of the QBSA Act. Mackay Labour was not engaged to perform building work and it did not do so. It supplied Project Builders with labour so that Project Builders could carry out building work. Project Builders directed the labourers and were responsible for their supervision and for completion of the construction work.[14]
- [27]That characterisation of their arrangement is disputed by Project Builders. In his affidavit, Mr Drew, the Construction Manager for Project Builders, said that Mackay Labour provided labour to undertake the construction work, co-ordinated with other trades, reviewed documentation, performed set out and generally carried out the works, including its own supervision. Project Builders provided overall project supervision to Mackay Labour and other subcontractors and suppliers.[15]
- [28]On a judgment application, where the deponents of the conflicting affidavits were not subject to cross-examination, it is not appropriate to resolve the factual dispute. In any case, were I to act on the evidence led by Mackay Labour, I would consider it has indirectly carried out building work.
- [29]The Oxford English Dictionary primary and secondary definitions of the adverb indirectly are:
- in a way that is not directly caused by something; incidentally: the losses indirectly affect us all
- without having had direct experience; at second hand: I heard of the damage indirectly
- [30]Those definitions are helpful. If Mackay Labour had assumed responsibility for undertaking the building work and supervised its employees to carry it out, then it would be directly causing the work to be done. It does not have that direct responsibility or role. Mackay Labour stands at one, remove from the act of construction. Indirectly, though, by supplying the labour to undertake the work, it has caused it to be carried out. Its role is not so removed that it could be argued its connection with causing the work to be done was too remote to fall within the definition.
- [31]Given my conclusion on that point, s 42(3) of the QBSA Act precludes Mackay Labour from proceeding under the Payments Act and the application for judgment is refused.
- [32]In case my finding on that point is in error, I will briefly address the remaining ground upon which Project Builders resisted the application.
2.) Are Mackay Labour’s payment claims valid and effective under the Payments Act?
- [33]Project Builders argued there were are a number of defects in Mackay Labour’s material that preclude judgment. Those arguments rest on the requirements of s 17(1) of the Payments Act:
“A person mentioned in section 12 who is or claims to be entitled to a progress payment (the claimant) may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment (the respondent).”[16]
- [34]Firstly, Project Builders submitted the payments claims were not issued by the person who claims the entitlement, Mackay Labour, and it cannot rely on them. The payments claims bear the name Mackay Labour Hire Workforce on the top left hand corner.[17]That is a business name owned by Michael Barfield, the sole director of Mackay Labour.[18]However, the company’s name does appear where the details of the account for payment are noted. The company’s ABN is also correctly stated at the bottom of the invoice. I am satisfied that Mackay Labour, as the claimant, has served the payments claims relied upon.
- [35]Secondly, Project Builders submitted the payments claims were not served on the person who may be liable to make the payment. The named respondent on all the payments claims is JM Kelly Pty Ltd[19]a company which is unrelated to Project Builders.[20]Its registered office is 4 Hall Lane Toowoomba.[21]
- [36]The payment claims were addressed to PO Box 5115, City Queensland Mail Centre, Rockhampton. That is not the registered address for Project Builders, but there is no requirement in the Payments Act for service at the registered office. Project Builders did not allege that it had not received the payment claims, or that the Post Office Box was not a relevant address. It was accepted that Project Builders had paid some invoices addressed in that way.
- [37]However, it could not be said that the payment claims were served on Project Builders, the entity alleged by Mackay Labour to be liable to make the payment, as required by s 17(1).
- [38]The Payments Act sets up a statutory regime for the expedited recovery of progress claims. A valid payment claim is a precondition to the procedure that follows: the opportunity to serve a payment schedule;[22]the consequence of liability if the respondent does not do so[23]and the claimant’s right to commence proceedings if a payment schedule is not served and payment is not made.[24]
- [39]The scheme confers statutory rights which override general contractual principles and places a party relying upon them in a privileged position to other contracting parties.[25]The Act requires a payment claim which meets the statutory criteria.[26]Such a statutory regime depends on strict compliance with the provisions in the Act.[27]
- [40]Finally, Project Builders argued the reference date for the payment claims had not been established with sufficient certainty to justify a summary judgment. A valid payment claim cannot be made until a person is entitled to payment. That arises from the reference date under a construction contract.[28]The term reference date is defined in Schedule 2. It can be set by agreement or, if the contract does not provide for that matter, it is the last day of the named month in which the related services were first supplied and the last day of each later month.
- [41]The payment claims are invoices issued weekly. There is a live dispute between Project Builders and Mackay Labour about whether there was an agreement to issue weekly invoices. Many of the payment claims were issued before the statutory reference date (the last day of the relevant month). If the agreement to weekly invoicing is not proved, such invoices may be premature. They could not be relied upon as valid payment claims under s 17, as Mackay Labour’s entitlement to make the claim under s 12 will not have arisen.
- [42]The affidavit material filed by Mr Barfield does not clearly articulate the alleged contractual relationship between Mackay Labour and Project Builders. It is not clear whether a single oral agreement was reached, under which labour was supplied to different projects as required, or whether multiple agreements are alleged on a project by project basis. Given the state of the evidence, it is not possible to determine whether all of the payment claims relied upon have been issued after either the contractual or the statutory reference date.
- [43]The application for judgment should be refused for failure to strictly comply with the requirements of s 17(1) Payments Act.
3.) Orders
- [44]Accordingly, my orders are as follows:
- The application for summary judgement is refused.
- The applicant must pay respondent’s costs of and incidental to the application as assessed against the standard basis, if not agreed.
- The originating application will proceed before the court as a claim.
- The matter is listed for directions for the further conduct of the proceedings on a date to be fixed by the Registrar in consultation with the parties.
Footnotes
[1] Cant Contracting Pty Ltd v Cansella [2007] 2 Qd R 13 at [33], [44] & [61].
[2] Section 12 Building and Construction Industry Payments Act 2004 (Qld).
[3] Section 10 Building and Construction Industry Payments Act 2004 (Qld).
[4] Schedule 2 Building and Construction Industry Payments Act 2004 (Qld).
[5] Section 11 Building and Construction Industry Payments Act 2004 (Qld).
[6] Schedule 2 Queensland Building Services Authority Act 1991 (Qld).
[7] Affidavit of Andrew Duncan Sinclair-Ford, sworn 22/08/13 – Exhibit ADSF6.
[8] Schedule 2 Queensland Building Services Authority Act 1991 (Qld). See also ss 14 & 82(2) Queensland Building Services Authority and Other Legislation Amendment Act 2007 (Qld).
[9] PJS Development Pty Ltd v Tong [2003] QSC 337.
[10]PJS Development Pty Ltd v Tong [2003] QSC 337 at [7].
[11] Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356
[12] Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356 at [47].
[13] Puerto Galera Pty Ltd v JM Kelly (Project Builders) Pty Ltd [2008] QSC 356 at [45].
[14] Affidavit of Michael Thomas Barfield, sworn 19/08/13, p 2[6]&[7].
[15] Affidavit of Michael Terrence Drew, sworn 9/09/13, p 3[21].
[16] Section 17 Building and Construction Industry Payments Act 2004 (Qld).
[17] Affidavit of Michael Thomas Barfield, sworn 19/08/13 – Exhibit MTB4.
[18] Affidavit of Andrew Duncan Sinclair-Ford, sworn 22/08/13 – Exhibit ADSF5.
[19] Affidavit of Michael Thomas Barfield, sworn 19/08/13 – Exhibit MTB4.
[20] Affidavit of Andrew Duncan Sinclair-Ford, sworn 22/08/13 – Exhibit ADSF7.
[21] Affidavit of Andrew Duncan Sinclair-Ford, sworn 22/08/13 – Exhibit ADSF7.
[22] Section 18 Building and Construction Industry Payments Act 2004 (Qld).
[23] Section 18 Building and Construction Industry Payments Act 2004 (Qld).
[24] Section 19 Building and Construction Industry Payments Act 2004 (Qld).
[25] Jemzone Pty Ltd v Trytan (2002) NSWSC 395 at [41].
[26] J Hutchinson Pty Ltd v Galform Pty Ltd & Ors [2008] QSC 205 at [30].
[27] FK. Gardner & Sons Pty Ltd v Dimin Pty Ltd [2006] 1 Qd R 10 at [17].
[28] Section 12 Building and Construction Industry Payments Act 2004 (Qld)