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Cromer Excavations Pty Ltd v Cruz Concreting Services Pty Ltd [2011] NSWSC 51 (17 February 2011)
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Cromer Excavations Pty Ltd v Cruz Concreting Services Pty Ltd [2011] NSWSC 51 (17 February 2011)
Last Updated: 7 March 2011
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Case Title:
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Cromer Excavations Pty Ltd v Cruz Concreting
Services Pty Ltd |
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Medium Neutral Citation:
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Hearing Date(s):
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Decision Date:
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Jurisdiction:
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Decision:
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The parties are to bring in Short Minutes of Order
to reflect the reasons. |
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Catchwords:
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BUILDING AND CONSTRUCTION - progress payments -
payment plan served on Defendants - failure of Defendants to provide payment
schedule
within time limited by Building and Construction Industry Security of
Payment Act 1999 - Plaintiff serves notice of intention to make adjudication
application - Plaintiff thereafter takes proceedings for debt - whether
Plaintiff made an election. |
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Legislation Cited:
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Cases Cited:
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Texts Cited:
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Parties:
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Cromer Excavations Pty Ltd (Plaintiff) Cruz
Concreting Services Pty Ltd (First Defendant) Jose da Silva (Second
Defendant) |
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Representation
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Counsel: J S Whyte (Plaintiff) B Wilson
(Defendants) |
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- Solicitors:
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Solicitors: Mills Oakley Lawyers
(Defendants) |
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File number(s):
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Publication Restriction:
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Judgment
| 1 | The Plaintiff, Cromer
Excavations Pty Ltd, carries on the business of concreting, excavation and site
preparation work. It claims
to have carried out work for Cruz Concreting
Services Pty Ltd between October 2009 and March 2010 for which it delivered tax
invoices
to Cruz. The invoices have not been paid and the present proceedings
have been instituted for recovery by Cromer of what it asserts
is owed by Cruz
on those invoices. A claim is also made against the Second Defendant as
guarantor of Cruz's liabilities. |
| 2 | The Plaintiff now seeks
summary judgment. This is resisted by the Defendants who say they have a number
of arguable defences which
should not be determined on a summary judgment
application. |
Background
| 3 | On or about 28 September 2009
Cruz requested Cromer to submit its quotation in respect of demolition and
excavation works concerning
the grandstand and kiosk upgrade at Rushcutters Bay
Park. |
| 4 | On 30 September 2009 Cromer
submitted its quotation which was by way of providing hourly rates for disposal
of material and equipment
hire. |
| 5 | Cromer attended the site on
about 7 October 2009 and commenced work in accordance with the quotation. Cromer
continued to carry out
the work pursuant to the quotation up to and including 13
March 2010. |
| 6 | At a time not specified but
certainly by 19 April 2010 Cromer issued 6 invoices to Cruz. These invoices are
as follows: |
11.1 Invoice 395 dated 30 October 2009 in the amount of $23,902.56.
11.2 Invoice 405 dated 30 November 2009 in the amount of $34,728.11.
11.3 Invoice 415 dated 22 December 2009 in the amount of $20,192.48.
11.4 Invoice 428 dated 25 January 2010 in the amount of $37,871.47.
11.5 Invoice 437 dated 22 February 2010 in the amount of $42,117.79.
11.6 Invoice 499 dated 16 March 2010 in the amount of $28,609.19.
| 7 | The Second Defendant, Mr Jose
da Silva, a Director of Cruz, executed a guarantee o n 11 February 2010 (the
reason it was executed
on this date is not explained) in these terms:
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IN CONSIDERATION of Cromer Excavations Pty Limited agreeing to Supply:
Cruz Concreting Services Pty Ltd ("the Customer") with services on credit I/We
HEREBY AGREE jointly and severally to be answerable
and responsible to Cromer
Excavations Pty Limited for the due payment by the Customer for all such
services as Cromer Excavations
Pty Ltd may from time to time render to the
Customer and I/WE ACKNOWLEDGE that this Agreement shall be a continuing
guarantee to
Cromer Excavations Pty Limited for all debts whatsoever and
whensoever contracted by the Customer with Cromer Excavations Ply Limited
in
respect of services to be supplied to the Customer.
| 8 | The parties agree that the
arrangements between them are to be considered in terms of the Building and
Construction Industry Security of Payment Act 1999. This Act, as the object
in s 3 makes clear, is to ensure that any person who undertakes to carry out
construction work or undertakes
to supply related goods and services under a
construction contract is entitled to receive and recover progress payments in
relation
to the carrying out of that work and the supplying of those goods and
services. Section 3 then goes on to set out the means by which
the Act ensures
that that should happen. As the primary judge in Nepean Engineering Pty Ltd v
Total Process Services Pty. Ltd. (In Liq) [2005] NSWCA 409; (2005) 64 NSWLR 462 said at [20]:
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It seems to me that this Act was put in place for a purpose. That is, to allow
parties to a contract to deal with it quickly and
efficiently. It is put in, as
I understand it, so subcontractors can render accounts and have them paid with
not as much problem
and fuss as there was in the past.
| 9 | The determination of this
summary judgment application largely turns on the construction of various
sections of that Act and on what
the parties in the present case did in respect
of that Act. |
Legislation
| 10 | The Act relevantly provides:
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7 Application of Act
(1) Subject to this section, this Act applies to any construction contract,
whether written or oral, or partly written and partly
oral, and so applies even
if the contract is expressed to be governed by the law of a jurisdiction other
than New South Wales.
...
8 Rights to progress payments
(1) On and from each reference date under a construction contract, a person:
(a) who has undertaken to carry out construction work under the contract, or
(b) who has undertaken to supply related goods and services under the contract,
is entitled to a progress payment.
(2) In this section, reference date , in relation to a construction
contract, means:
(a) a date determined by or in accordance with the terms of the contract as the
date on which a claim for a progress payment may
be made in relation to work
carried out or undertaken to be carried out (or related goods and services
supplied or undertaken to
be supplied) under the contract, or
(b) if the contract makes no express provision with respect to the matter - the
last day of the named month in which the construction
work was first carried out
(or the related goods and services were first supplied) under the contract and
the last day of each subsequent
named month.
...
13 Payment claims
(1) A person referred to in section 8 (1) who is or who 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.
(2) A payment claim:
(a) must identify the construction work (or related goods and services) to which
the progress payment relates, and
(b) must indicate the amount of the progress payment that the claimant claims to
be due (the claimed amount ), and
(c) must state that it is made under this Act.
(3) The claimed amount may include any amount:
(a) that the respondent is liable to pay the claimant under section 27 (2A), or
(b) that is held under the construction contract by the respondent and that the
claimant claims is due for release.
(4) A payment claim may be served only within:
(a) the period determined by or in accordance with the terms of the construction
contract, or
(b) the period of 12 months after the construction work to which the claim
relates was last carried out (or the related goods and
services to which the
claim relates were last supplied),
whichever is the later.
(5) A claimant cannot serve more than one payment claim in respect of each
reference date under the construction contract.
14 Payment schedules
(1) A person on whom a payment claim is served ( the respondent )
may reply to the claim by providing a payment schedule to the claimant.
(2) A payment schedule:
(a) must identify the payment claim to which it relates, and
(b) must indicate the amount of the payment (if any) that the respondent
proposes to make (the scheduled amount ).
(3) If the scheduled amount is less than the claimed amount, the schedule must
indicate why the scheduled amount is less and (if
it is less because the
respondent is withholding payment for any reason) the respondent's reasons for
withholding payment.
(4) If:
(a) a claimant serves a payment claim on a respondent, and
(b) the respondent does not provide a payment schedule to the claimant:
(i) within the time required by the relevant construction contract, or
(ii) within 10 business days after the payment claim is served,
whichever time expires earlier,
the respondent becomes liable to pay the claimed amount to the claimant on the
due date for the progress payment to which the payment
claim relates.
15 Consequences of not paying claimant where no payment schedule
(1) This section applies if the respondent:
(a) becomes liable to pay the claimed amount to the claimant under section 14
(4) as a consequence of having failed to provide a
payment schedule to the
claimant within the time allowed by that section, and
(b) fails to pay the whole or any part of the claimed amount on or before the
due date for the progress payment to which the payment
claim relates.
(2) In those circumstances, the claimant:
(a) may:
(i) recover the unpaid portion of the claimed amount from the respondent, as a
debt due to the claimant, in any court of competent
jurisdiction, or
(ii) make an adjudication application under section 17 (1) (b) in relation to
the payment claim, and
(b) may serve notice on the respondent of the claimant's intention to suspend
carrying out construction work (or to suspend supplying
related goods and
services) under the construction contract.
(3) A notice referred to in subsection (2) (b) must state that it is made under
this Act.
(4) If the claimant commences proceedings under subsection (2) (a) (i) to
recover the unpaid portion of the claimed amount from the
respondent as a debt:
(a) judgment in favour of the claimant is not to be given unless the court is
satisfied of the existence of the circumstances referred
to in subsection (1),
and
(b) the respondent is not, in those proceedings, entitled:
(i) to bring any cross-claim against the claimant, or
(ii) to raise any defence in relation to matters arising under the construction
contract.
...
17 Adjudication applications
(1) A claimant may apply for adjudication of a payment claim (an adjudication
application ) if:
(a) the respondent provides a payment schedule under Division 1 but:
(i) the scheduled amount indicated in the payment schedule is less than the
claimed amount indicated in the payment claim, or
(ii) the respondent fails to pay the whole or any part of the scheduled amount
to the claimant by the due date for payment of the
amount, or
(b) the respondent fails to provide a payment schedule to the claimant under
Division 1 [which includes ss 14-16] and fails to pay
the whole or any part of
the claimed amount by the due date for payment of the amount.
(2) An adjudication application to which subsection (1) (b) applies cannot be
made unless:
(a) the claimant has notified the respondent, within the period of 20 business
days immediately following the due date for payment,
of the claimant's intention
to apply for adjudication of the payment claim, and
(b) the respondent has been given an opportunity to provide a payment schedule
to the claimant within 5 business days after receiving
the claimant's notice.
(3) An adjudication application:
(a) must be in writing, and
(b) must be made to an authorised nominating authority chosen by the claimant,
and
(c) in the case of an application under subsection (1) (a) (i) - must be made
within 10 business days after the claimant receives
the payment schedule, and
(d) in the case of an application under subsection (1) (a) (ii) - must be made
within 20 business days after the due date for payment,
and
(e) in the case of an application under subsection (1) (b) - must be made within
10 business days after the end of the 5-day period
referred to in subsection (2)
(b), and
(f) must identify the payment claim and the payment schedule (if any) to which
it relates, and
(g) must be accompanied by such application fee (if any) as may be determined by
the authorised nominating authority, and
(h) may contain such submissions relevant to the application as the claimant
chooses to include.
(4) The amount of any such application fee must not exceed the amount (if any)
determined by the Minister.
(5) A copy of an adjudication application must be served on the respondent
concerned.
(6) It is the duty of the authorised nominating authority to which an
adjudication application is made to refer the application to
an adjudicator
(being a person who is eligible to be an adjudicator as referred to in section
18) as soon as practicable.
The acts and omissions of the parties
| 11 | It can be seen that where a
payment claim under s 13 is served the person on whom it is served has the
option of replying by providing
a payment schedule which can dispute the amount
claimed and must indicate why that is so. If the recipient does not serve a
payment
schedule the claimant is entitled to recover the unpaid amount in a
court of competent jurisdiction or make an adjudication application
(s
15)(2)(a). |
| 12 | In the present case no
payment schedules were served by Cruz. |
| 13 | On 19 April 2010 Cromer
issued a letter to Cruz in these terms: |
Notice under Section 17(2) of the Building and Construction Security of
Payment Act 1999 NSW.
In response to this Company's payment claims numbered;
Invoice 405 dated 30/11/2009 Balance due$18349.70 plus GST
Invoice 415 dated 22/12/2009 for $18356.80 plus GST
Invoice 428 dated 25/01/2010 for $34428.61 plus GST
Invoice 437 dated 22/02/2010 for $38288.90 plus GST
Invoice 499 dated 16/03/2010 for $26008.35 plus GST
Your Company failed to provide a payment schedule within the time allowed by the
Building and Construction Industry Security of Payment Act 1999 NSW.
As a consequence your Company became liable to pay the whole amount of these
claims on the due date. The whole amount has not been
paid. Our Company has
elected to apply for adjudication of the payment claims. Your Company has 5
business days in which to serve
a payment schedule or pay the payment claim in
full.
If, within that time, your Company fails to pay the whole amount, this company
will proceed to adjudication. If your company also
fails to serve a payment
schedule, your Company will be barred from lodging an adjudication response [see
Section 20(2A) of the Act].
| 14 | After the service of this
letter no payment schedule in accordance with s 17(2)(b) was served by Cruz.
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| 15 | Notwithstanding what was
contained in the letter of 19 April Cromer brought these proceedings and did not
proceed to an adjudication.
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The contentions of the parties
| 16 | Cromer says that in the
absence of any payment schedules having been served by Cruz, s 15(4)(b)(ii)
provides that Cruz is not entitled
to raise any defence in relation to matters
arising under the construction contract. In those circumstances, Cromer says,
with the
invoices unpaid, there is no defence to the claim made and it is
appropriate that summary judgment be ordered. |
| 17 | Cruz makes 4 principal
submissions. First, it says that it is not established that there is a
construction contract between the parties
to bring into consideration the
provisions of the Act. Secondly, there is no evidence when the invoices were
served. Thirdly, Cruz
says that in the letter of 19 April 2010 there was an
election by Cromer to go to adjudication. Cromer cannot resile from that
election
and bring the present proceedings. Fourthly, Cruz points to the fact
that what the present proceedings seek are damages rather than
liquidated
amounts being the total of the invoices. |
(a) Is there a construction contract?
| 18 | Section 4 of the Act defines
construction contract as meaning: |
a contract or other arrangement under which one party undertakes to carry out
construction work, or to supply related goods and services,
for another party.
| 19 | In Okaroo Pty Limited v
Vos Construction and Joinery Pty Limited & Anor [2005] NSWSC 45 Nicholas
J discussed the meaning of "arrangement" in s 4:
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[40] Arrangement" is a word without precise meaning. It appears in many
statutory contexts and has been given meaning in those contexts
in many cases.
For the purposes of this case I find assistance in the following statements:
"... the word "arrangement" is apt to describe something less than a binding
contract or agreement, something in the nature of an
understanding between two
or more persons - a plan arranged between them which may not be enforceable at
law". ( Newton v Federal Commissioner of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1 at p
7).
"The expression "arrangement or understanding'' in ss 45(2) and 45A requires
that at least one party assume an obligation or give
an assurance or undertaking
that it will act in a certain way. A mere expectation that as a matter of fact a
party will act in a
certain way is not enough". ( Australian Competition and
Consumer Commission v CC (New South Wales) Pty Ltd (No 8) [1999] FCA 954; (1999) 165 ALR 468
per Lindgren, J at p 469).
(See also, Legal & General Assurance v Stock [1993] 49 IR 464 at pp
480-481; State Bank of NSW v Grover (1996) 64 IR 451 at pp 456-457).
[41] With regard to the authorities, and to its context in the Act, in my
opinion the term "arrangement" in the definition is a wide
one, and encompasses
transactions or relationships which are not legally enforceable agreements. The
distinction in the definition
between "a contract" and "other arrangement" is
intended by the legislature to be one of substance so that under the Act
construction
contracts include agreements which are legally enforceable and
transactions which are not. Thus in distinguishing between these relationships
I
understand the legislature intends that "contract" is to be given its common law
meaning and that "arrangement" means a transaction
or relationship which is not
enforceable at law as a contract would be. Accordingly I reject the submission
for Okaroo that the term
"arrangement" should be understood to mean an agreement
which is tantamount to a contract enforceable at law.
[42] In deciding whether a contract or other arrangement is within the
definition of construction contract the only matter for consideration
is whether
it is one under which one party undertakes to carry out construction work, or to
supply related goods and services, for
another party. There is no other
requirement or qualification which is expressly or by implication included in
the definition which
must be satisfied. It may be safely assumed that had the
legislature intended any additional requirement or qualification it would
have
included it in the definition ... .
| 20 | The Managing Director of
Cromer, Robert Pilat, swore an affidavit detailing the matters which I have set
out in paras [3] - [7] above.
He was not cross-examined on the material in his
affidavit, nor was any evidence to the contrary adduced by Cruz. A challenge was
made to one paragraph of his affidavit which purported to show, inadmissibly,
that Cruz had orally accepted the quotation provided
by Cromer. I rejected that
paragraph. |
| 21 | Nevertheless, Mr Pilat
deposed to the fact that Cromer attended the site and carried out work "pursuant
to the agreed quotation".
No objection was taken to that evidence.
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| 22 | Moreover, the evidence of the
execution by Mr da Silva of the guarantee on 11 February 2010, during the period
when the work was being
carried out, and the terms of that guarantee, provide
further support for the fact that, despite there being no evidence of an express
acceptance of the quotation, a construction contract was entered into by virtue
of the acceptance by Cruz of the work carried out
by Cromer pursuant to the
quotation. |
| 23 | Mr da Silva swore an
affidavit which was read at the hearing. He relevantly said only that he had not
been able to locate any signed
written contract between Cromer and Cruz and that
he had not been involved with the awarding of any contract to Cromer. He did not
respond to the evidence of Mr Pilat that Cromer commenced work in accordance
with the agreed quotation nor continued to carry it
out up to and including 13
March 2010. He did not deny that Cromer carried out the work. Nor did he or Cruz
lead any evidence to
suggest that the work was carried out for some other entity
than Cruz. When it was Cruz that raised the issue of whether there was
a
construction contract between the parties, the absence of such evidence from Mr
da Silva enables me to accept more readily the
evidence of Mr Pilat.
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| 24 | Although I consider it likely
that there was a contract enforceable at law in the present case, there was at
least an arrangement
under which Cromer undertook to carry out construction work
and to supply goods and services for Cruz. Cromer establishes that there
was a
construction contract (as defined in s 4) with Cruz.
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(b) When were the invoices served?
| 25 | Whilst it is true that there
is no direct evidence of when the invoices were served, it is not clear what
benefit Cruz derives from
that absence. What is perfectly clear is that the
invoices must have been served by a date prior to 19 April 2010 because on that
day Cromer wrote the letter which I have set out in para [13] above. That letter
was put into evidence as an annexure to Mr da Silva's
affidavit.
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| 26 | There is no assertion, for
example, that the letter of 19 April 2010 was written within 10 business days
after the invoices were served
so that Cruz was denied the opportunity under s
14 to provide a payment schedule within that period of time (see s 15(4)(b)).
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| 27 | Precisely when the invoices
were served is irrelevant, particularly in the light of the fact that at no
stage has Cruz provided a
payment schedule whether under s 14 or s 17(2)(b), nor
has Cruz made any tender or offer of payment to Cromer.
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(c) Election
| 28 | Cruz submitted that s 15(2)
provides a clear choice of remedy to a claimant, and that in the present case
the claimant chose the adjudication
path by virtue of its letter of 19 April
2010. Cruz relied on the decision of Einstein J in Rojo Building Pty Limited
v Jillcris Pty Limited [2006] NSWSC 309 as providing support for this
submission. |
| 29 | In Rojo it appears
that a payment claim was served by the claimant. Thereafter, when no payment
schedule had been received by the claimant,
it gave a notice under s 17(2) of
its intention to apply for adjudication of the payment claim on the respondent.
The following day
the respondent provided a payment schedule to the claimant.
There was a dispute about whether the payment schedule was provided in
response
to the service of the payment claim or to the notice under s 17(2).
|
| 30 | In any event, the claimant
subsequently advised the respondent that it did not propose to proceed to make
an application for adjudication
under s 17(1), and it brought proceedings in
this Court, in which it sought summary judgment of the claim against the
respondent.
The application for summary judgment was heard by Einstein J.
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| 31 | Einstein J appeared to accept
that the payment schedule was given in response to the s 17(2) notice because he
said at [18]: |
It is plain that once Jillcris received the s 17(2)(a) and (b) notifications,
its anterior failure to provide a payment schedule
within the time delimited by
s 14 is no longer visited with Rojo's initial right to recover the unpaid
portion of the claimed amount
as a debt by curial process. Rather, Jillcris has
been given an alternate statutory opportunity to provide a payment schedule
within
an entirely different bracket of time: five (5) business days after
receiving the Rojo notification of intent to apply for adjudication.
Effectively
the case presently being pursued by Rojo would deny Jillcris' said alternate
statutory opportunity. Indeed, that alternate
statutory opportunity had been
exercised even prior to Rojo's endeavour to withdraw its notice of intention to
apply for adjudication.
| 32 | A little later in the
judgment Einstein J made reference to his earlier decision in Schokman v
Xception Construction Pty Ltd [2005] NSWSC 297 and then said this in Rojo
: |
[35] On the particular facts before the Court in that case, the Court observed
that it cannot have been the intention of the legislature
to permit a claimant
[in a circumstance where no payment schedule has been provided], to make an
adjudication application in relation
to the payment claim and later, in the
event that the adjudication miscarried, to pursue curial proceedings to recover
the unpaid
portion of the claimed amount from the respondent as a debt. This
would expose a respondent not to one set of interim procedures
aimed at a swift
(albeit interim) result, but to two such interim sets of procedures.
[36] Once Rojo had served its s 17 (2) notice of intent to make an adjudication
application [it being quite plain that certainly
by 22 December 2005 that
service had been effected], Jillcris became entitled to exercise its statutory
right to provide a payment
schedule within five business days of service of the
notice of intent to apply for adjudication. In those circumstances Rojo, having
elected:
i. not to proceed by the route provided for in s 15 (2) (a) [vide by proceeding
to recover the unpaid portion of the claimed amount
as a debt by curial
process],
ii. instead to make an adjudication application under s 17 (1) (b) became
disentitled from restoring the position ante .
[37] Rojo's election had now triggered a statutory right in Jillcris. That step
having been taken, Jillcris was entitled to exercise
that statutory right.
[38] The effect of Rojo's solicitors communication of 23 December 2005 [advising
that Rojo did not propose to proceed to make an
application for adjudication and
that accordingly, Jillcris was not required to provide a payment schedule in
accordance with s 17
(2) (b)]:
i. was not to restore the position to that which it had been prior to Rojo
having made the election provided for in s 15 (2) (a)
as between the two
inconsistent routes;
ii. was that Rojo had waived its anterior rights to proceed by curial process to
recover the unpaid portion of acclaimed amount as
a debt.
The strictures imposed by the Act
[39] Many of the authorities have focused upon the strictures imposed by the Act
and upon the need for formal compliance with the
provisions of the Act. The
scheme of the Act is unforgiving in terms of the technicalities which require to
be observed. There is
no room for a claimant to approbate and reprobate. There
is another party to be considered. There is no room for a claimant to leave
a
respondent in any form of doubt as to precisely what course is being followed by
the claimant. Nor is there room for a respondent
to leave a claimant in any form
of doubt as to precisely what course is being followed by the respondent.
| 33 | In those circumstances, his
Honour dismissed the application for summary judgment. He also ordered that if
Rojo had not notified the
Commercial List Judge by a certain time and date that
it wished to continue the proceedings and/or sought leave to amend the summons,
the summons was taken to be dismissed at that time and date.
|
| 34 | Rojo notified the Commercial
List Judge that it wished to continue with the proceedings. As a result, it came
before McDougall J for
final hearing - see Rojo Building v Jillcris
[2006] NSWSC 649 at [36]. As a result of the way the matter had been dealt
with by Einstein J the question of whether there was an issue estoppel in
respect
of the issue decided by Einstein J concerning an election was raised.
|
| 35 | McDougall J determined that
as there had been an opportunity for a final hearing and a full debate on the
point before Einstein J
he would not, as a matter of discretion, permit the
parties to have what he described as "another bite of the cherry". He then went
on to say at [52]: |
If the decision of Einstein J is wrong, so be it. But that, in my view, is a
matter to be determined by the Court of Appeal in the
usual way, and not by
another single Judge of this Court upon an attempt to reargue the same point
between the same parties.
His Honour thereafter ordered that the summons be dismissed and the Plaintiff
was to pay the Defendant's costs of the proceedings.
That judgment was given on
22 June 2006.
| 36 | Rojo ultimately appealed from
McDougall J's judgment and Einstein J's judgment: Rojo Building Pty Limited v
Jillcris Pty Limited [2007] NSWCA 68 . The Court of Appeal held that
McDougall J was in error and that Rojo had been deprived of an opportunity to
have a final determination
of its claim. In the course of his judgment Hodgson
JA (with whom Mason P and Ipp JA agreed) said: |
[20] In saying that the result before Einstein J was correct, I am neither
agreeing nor disagreeing with his view on the statutory
construction. However,
in my opinion, McDougall J should have embarked on a final hearing, permitting
Einstein J's view on statutory
construction to be challenged.
| 37 | The matter then came before
McDougall J again on 11 July 2007: Rojo Building Pty Limited v Jillcris Pty
Limited [2007] NSWSC 880. His Honour identified the fundamental question he
had to decide was whether Rojo, having given notice of its intention to make an
adjudication application, had to proceed with that statutory alternative or was
permitted to withdraw its notification and follow
the alternative statutory
remedy - see at [5]. |
| 38 | His Honour then set out the
facts and said that the primary issue raised a number of questions, the first
and second of which were
whether Rojo had made any election and, if so, what
that election was. His Honour then discussed the interlocutory judgment of
Einstein
J, the earlier decision of Einstein J in Schokman and the
decision of Bergin J in Kell & Rigby Pty Limited v Guardian International
Properties Pty Ltd [2007] NSWSC 554. |
| 39 | When considering the first
question of whether an election had been made his Honour said this:
|
[63] As both the language of s 17(2) and the decision of Bergin J in Kell
& Rigby make plain, an adjudication application cannot be made until
notice has been given under s 17(2)(a) and the respondent has been given
five
business days thereafter to provide a payment schedule. The provision of a
notice under s 17(2)(a) gives the respondent a right:
a further opportunity to
provide a payment schedule. But neither the giving of a notice under s 17(2)(a)
nor (if it happens) the
provision of a payment schedule under s 17(2)(b)
constitutes the making of an adjudication application. The claimant is not bound
to apply for adjudication after the payment schedule is provided. It may decide,
for any number of reasons, not to press the dispute
further. For the reasons
that I have given, I express no view as to whether the claimant could retreat to
the other statutory alternative
given by s 15(2)(a).
[64] For present purposes, I am prepared to assume that s 15(2)(a) does provide
for inconsistent alternatives, and that it does raise
a question of election.
That I think would be an election between remedies, not an election between
rights. The right is to be paid
the progress payment, or the statutory liability
created by s 14(4). Section 15(2)(a) provides alternative remedies whereby that
right can be enforced.
[65] But, assuming that s 15(2)(a) does entail the notion of election, it is an
election between bringing proceedings in a court
and making an adjudication
application. As I have said, a notice of intention to apply for adjudication
does not amount to making
an adjudication application. It is a procedural,
although necessary, precondition to the making of such an application.
[66] In those circumstances, I do not accept that the mere giving of a notice
under s 17(2)(a) is of itself sufficient to constitute,
or to trigger, the
making of any election for which s 15 (2)(a) provides.
| 40 | His Honour thereafter
directed entry of judgment for Rojo against Jillcris in the sum of $251,537.09
with interest and made various
ancillary orders including a costs order.
|
| 41 | The conclusion to which
McDougall J came in his judgment of 12 July 2007 would appear to be inconsistent
with the judgment of Einstein
J in that Einstein J considered that an election
was made when the notice under s 17(2) was given - see at [36], whereas
McDougall
J held that the mere giving of the notice was not sufficient to
constitute the making of any election under s 15(2)(a) - see at [63]
and [66].
|
| 42 | It must be said that Einstein
J did not have the full detail of the facts in evidence before him and appears
to have been influenced
by the fact that his view was that a payment schedule
had been provided in response to the s 17(2) notice.
|
| 43 | In my opinion, and with great
respect to Einstein J, the judgment of McDougall J is to be preferred.
|
| 44 | In Kell & Rigby
Bergin J appeared to distinguish the notice of intention to make the
adjudication application and the making of the application itself
- see at [24].
Similarly, McDougall J in Rojo at [63] stressed that the adjudication
application itself could not be made until the s 17(2) notice had been given and
that the giving
of the notice was not the making of the application. In the
light of what s 17(3) prescribes in relation to the adjudication application,
the distinction between the notice of intention and the application itself must
be a correct distinction. |
| 45 | It follows, therefore, that
the giving of a notice under s 17(2) does not, without anything more, amount to
an election between the
remedies provided in s 15(2)(a). That is the more so
when, as here, there is no evidence that the respondent has acted in any way
on
the basis that the s 17(2) notice has been served, whether by providing the
payment schedule that s 17(2)(b) provides for, or
otherwise.
|
| 46 | For these reasons, Cromer has
not made an election that prevents the claim made in the present proceedings.
|
(d) Relief claimed
| 47 | The Amended Statement of
Claim sought the following relief: |
A declaration that on the true construction and interpretation of the guarantee
executed and dated 11 February 2010, the Second Defendant
is not entitled to the
benefit of any set-off and / or claim arising in favour of the First Defendant
against the Plaintiff.
Damages.
Interest.
Costs.
| 48 | The pleading generally
recited the facts that I have set out in paras [3] - [7] above, asserted the
failure to issue payment schedules
in respect of the invoices, asserted a demand
on the Second Defendant and his refusal to satisfy that demand and then pleaded
these
paragraphs: |
[13] In breach of its performance of the accepted quotation, the Defendant has
failed and / or refused to pay the amounts claimed
in the invoices set out in
paragraph 11 above.
[14] As a result if the First Defendant's breaches pleaded in paragraph 13 above
the Plaintiff has suffered loss and damage.
...
[19] As a result of the First Defendant's breaches pleaded in paragraph 13
above, the Plaintiff claims damages against the Second
Defendant.
| 49 | Whilst it is true that any
alleged failure to pay the invoices by Cruz, and the failure by the Second
Defendant to satisfy the guarantee,
amounted to breaches of contract the damages
in respect of which were likely to be equal to the amount of the invoices, it
was a
cumbersome and unnecessary way to plead what in substance was a liquidated
claim. |
| 50 | What was really being claimed
was payment of the amounts specified in the invoices. The claim against the
guarantor was, in substance,
a claim for payment of those amounts because of the
guarantee. |
| 51 | Part 6 r 12 UCPR requires
that a Statement of Claim must specifically state the relief claimed by the
Plaintiff. The relief claimed
ought to have been for a judgment in a liquidated
sum being the total of the invoices. Further, sub-r (7) means that there ought
to have been a specific claim for interest for particular periods and at
particular rates. The Plaintiff has not done any of these
things. The purpose of
the Rule is to ensure, as far as possible, that the Defendant to any claim knows
precisely what is being claimed
against it. Provided the Court can be sure that
a Defendant is not in doubt or has not been misled, the Court has the undoubted
power
to give such judgment as the nature of the case requires (s 90 Civil
Procedure Act 2005, Pt 36 r 1 UCPR). |
| 52 | There is no suggestion in the
present case that there is any doubt on the Defendants' part what was being
sought in the Amended Statement
of Claim. Paragraphs 13 and 17 of the Amended
Statement of Claim make it clear that it is the amounts in the invoices that are
being
claimed. Further, the affidavit filed by the Second Defendant makes it
apparent that the Defendants understand that it was those
amounts that formed
the claims against them. |
| 53 | In my opinion, the fact that
a claim has not been made for a liquidated amount, and the fact that the
provisions of Pt 6 r 12(7) have not been complied with, should not be any bar to
Cromer obtaining a judgment to which it is otherwise entitled.
|
Conclusion
| 54 | None of the matters raised by
Cruz has been made out. The defence raises no matters of substance. It did not
even articulate the four
matters argued by Cruz. It simply contains denials and
non-admissions, in some cases where the Defendant is likely to have had
knowledge
which would make non-admissions inappropriate.
|
| 55 | Section 15(4)(a) requires the
Court to be satisfied of the existence of the circumstances referred to in s
15(1). I am satisfied that Cruz has become liable to pay the amounts of the
invoices, the subject of the claim as a consequence of having
failed to provide
a payment schedule to Cromer within the time allowed by s 14. I am satisfied
that Cruz has failed to pay the whole of the amounts in the invoices the subject
of the claim at any time. In those
circumstances the Plaintiff is entitled to
summary judgment in respect of the sum of the invoices together with interest.
|
| 56 | Cruz has also raised as part
of its defence that the present proceedings have been commenced in an
inappropriate jurisdiction and
that they should be transferred to the District
Court. I do not consider that that is an appropriate order. However, the
commencement
of the present proceedings in this Court may have costs
implications in the light of Pt 42 r 34 UCPR. |
| 57 | The parties should bring in
Short Minutes of Order to reflect these reasons. I will hear the parties on
costs. |
**********
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