Feenix Queensland Pty Ltd v Grocon Constructions (QLD) Pty Ltd [2012] QDC 346

DISTRICT COURT OF QUEENSLAND CITATION: Feenix Queensland Pty Ltd v Grocon Constructions (QLD) Pty Ltd [2012] QDC 346 PARTIES: Feenix Queensland Pty Ltd ACN 007 940 170 (Applicant) v Grocon Constructions (QLD) Pty Ltd ACN 120 476 495 (Respondent) FILE NO: 156/2012 PROCEEDING: Application for Judgment ORIGINATING COURT: District Court, Southport DELIVERED ON: 19 June 2012 DELIVERED AT: Southport HEARING DATE: 5 May 2012 JUDGE: Judge C F Wall QC ORDER: Application for judgment dismissed with costs assessed on standard basis unless agreed LEGISLATION: Building & Constructions Industry Payments Act 2004, Sections 7, 8, 12, 13(a), 17, 18, 19, CASES: Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (2005) 64 NSWLR 462 Brookhollow Pty Ltd v R & R Consultants Pty Ltd, unrep, [2006] NSWSC Simcorp Developments & Constructions Pty Ltd v Gold Coast Titans (Property) Pty Ltd & Others, unrep, [2010] QSC 162 CATCHWORDS: BUILDING & CONSTRUCTION – application for judgment pursuant to s19 Building and Construction Industry Payments Act 2004 (Qld) – payment claims by applicant previously paid by respondent – whether applicant able to rely on further (second) payment claims for the same subject matter by using a different reference date in circumstances where respondent did not serve a payment schedule in respect of those claims – whether second payment claims valid. COUNSEL: Mr G Beacham for the applicant Mr M Steele for the respondent SOLICITORS: Cronin Litigation for the applicant Norton Rose Australia for the respondent -- 1 of 8 -- 2 DISTRICT COURT OF QUEENSLAND REGISTRY: SOUTHPORT NUMBER: 156/12 Applicant: FEENIX QUEENSLAND PTY LTD ACN 007 940 170 AND Respondent: GROCON CONSTRUCTIONS (QLD) PTY LTD ACN 120 476 495 JUDGMENT Delivered the 19th day of June 2012 [1] This is an application for judgment pursuant to s.19 of the Building & Construction Industry Payments Act 2004 (“the Act”) for $218,698. [2] The applicant relies on 3 payment claims served on the respondent on 14 December 2011 (the second payment claims). Leaving aside the plaintiff‟s contention that the second payment claims lacked the particularity required by s.17(1) of the Act, payment claims by the applicant for the same subject matter and amounts dated 1 November 2010 (the first payment claims) had previously been served on the respondent and paid by the respondent. In respect of the first payment claims no payment schedule was served on the claimant applicant by the respondent. [3] The reference date for the first payment claims was end October 2010 and for the second payment claims, end November 2011. [4] Section 12 of the Act provides: “12 Rights to progress payments From each reference date under a construction contract, a person is entitled to a progress payment if the person has -- 2 of 8 -- 3 undertaken to carry out construction work or supply related goods and services, under the contract.” [5] The Dictionary in Schedule 2 of the Act provides: “reference date, under a construction contract, means – (a) a date stated in, or worked out under, the contract as the date on which a claim for a progress payment may be made for the construction 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 does not provide for the matter – (i) 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 (ii) the last day of each later named month.” [6] So far as is relevant s.13(a) of the Act provides that the “amount of a progress payment to which a person is entitled in relation to a construction contract is the amount calculated under the contract”. [7] The “reference date” definition refers to “a claim for a progress payment… for construction work carried out… under the contract”. [8] Section 17 of the Act provides that a payment claim: - may be served on the person who is liable to make the payment (s.17(1)) - must identify the construction work to which it relates (s.17(2)(a)) - may include an amount that has been the subject of a previous claim (s.17(b)) [9] In my view it is an implicit requirement of s.17(b) that the “previous claim” had not been paid. -- 3 of 8 -- 4 [10] The object of the Act is to “ensure that a person is entitled to receive and recover progress payments if the person undertakes to carry out construction work under a construction contract” (s.7). The object is to be achieved by “granting an entitlement to progress payments” (s.8(a)). [11] If the respondent does not serve a payment schedule on the claimant the respondent is “liable to pay the claimed amount to the claimant” (s.18(4) and (5)). [12] If the respondent then fails to pay the claimed amount the claimant may recover it from the respondent as a debt owing to the claimant (s.19). In the present case this was not necessary in the case of the first payment claims as the respondent paid those claims. [13] The issue here is whether in these circumstances the claimant can claim again for the same amounts by serving the second payment claims. [14] What happened between the first and second payment claims was that the respondent recovered amounts it paid to the applicant under the applicant‟s bank guarantee relating to the contract. [15] This aspect is summarised as follows in para 16 of the applicant‟s written outline “16. …In the present case, there is an additional overlay in that the claims are made in respect of sums that were originally held as retention monies, then released to Feenix in return for bank guarantees. Those bank guarantees have now been called upon (Feenix asserts wrongly) with the result that the payment of the retention monies has, effectively, been reversed by Grocon.” [16] The applicant‟s argument is then stated as follows in paras 17-19 “17. Section 17(3)(b) of the Payments Act provides: „The claimed amount may include any amount – (a) … (b) that is held under the construction contract by the respondent and that the claimant claims is due for release.‟ -- 4 of 8 -- 5 18. In Trysams Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 at [64] McDougall J considered the equivalent provision in the New South Wales version of the Payments Act. His Honour held that this section permitted a claimant to include in a payment claim a claim for a retention fund held under a construction contract. 19. By parity of reasoning, where the security under the construction contract is a bank guarantee, rather than a retention fund, s.17(3)(b) permits a claimant to include in the payment [sic] a sum that has been obtained by the respondent pursuant to that bank guarantee. The effect of the respondent‟s call under the bank guarantee is exactly the same as a refusal to release a retention fund. The legislature can be taken to have known that security under a construction contract is sometimes provided by way of a bank guarantee rather than a retention fund. It would be passing strange if a [sic] legislature intended to provide only for one but not for the other. In addition, were it otherwise, principals could avoid the operation of the Payments Act in respect of the security by providing in the contract only for the provision of bank guarantees, and refusing to allow security to be provided by way of a retention fund. That cannot have been the legislative intention. In fact, in Trysams, McDougall J said: „[73] It is correct to say that the effect of the adjudicator‟s decision is to deprive Trysams of the practical protection afforded by the retention fund. That, however, is a necessary consequence of [the relevant section], and the power given to adjudicators to decide disputes as to payment claims, including a dispute as to a retention fund.‟” -- 5 of 8 -- 6 [17] The applicant also relies on what Ipp J said in Nepean Engineering Pty Ltd v Total Process Services Pty Ltd (2005) 64 NSWLR 462 at [76] as follows: “[76] In regard to the issue the subject of this application for leave to appeal, for the reasons given by Hodgson JA I would construe the Building and Construction Industry Security of Payment Act 1999 as follows. Provided that a payment claim is made in good faith and purports to comply with s.13(2), of the Act, the merits of that claim, including the question whether the claim complied with s.13(2), is a matter for adjudication under s.17 and not a ground for resisting summary judgment in proceedings under s.15. In particular, if no adjudication is sought summary judgment cannot be resisted on grounds that could have been raised by way of a payment schedule leading to adjudication” (emphasis added by the applicant). [18] The applicant submits that the second payment claims relate to a different reference date and that the respondent did not serve a payment schedule in relation to them and has not paid the claims and therefore is liable for them. [19] The applicant also relies on a decision of Palmer J in the New South Wales Supreme Court in Brookhollow Pty Ltd v R & R Consultants Pty Ltd, unrep, [2006] NSWSC 1 at paras [41] – [49]. [20] Ipp J in Nepean recognised that a valid payment claim is one which is made in good faith and which purports to comply with (s17(2)) of the Act. [21] I agree with McDougall J that a claim for a retention fund may be included in a payment claim but only if the amount claimed has not already been paid and I do not understand His Honour to say otherwise. [22] Likewise a claimant may include in a payment claim a sum that has been obtained by the respondent pursuant to a bank guarantee but only if the amount claimed has not already been paid. [23] In my view, notwithstanding the use made by the respondent of the applicant‟s bank guarantee, a payment claim in respect to an amount paid by the respondent under a previous payment claim is not one made in good faith or in purported compliance with s.17(2). In other words a second -- 6 of 8 -- 7 payment claim cannot be made for the same work/amount which has been paid by the respondent merely by using a new or additional reference date for that purpose. [24] The second payment claims are not, in my view, even apparently valid claims to which the remarks of Palmer J in Brookhollow at paras [46] – [48] could be said to apply. Because the amounts the subject of the second payment claims have in fact been paid, the respondent is, in my view, able to resist an application for judgment notwithstanding that it did not serve a payment schedule in respect of the claims. [25] I agree with the respondent‟s submission that the second payment claims in these circumstances are not valid claims and that no amount claimed by the applicant remains unpaid. [26] The respondent also relies on clause 22.2 of each contract which is in the following terms: “22.2 Once each month, by the date stated in the Appendix, the Subcontractor must submit to the Builder: (a) its progress claim for payment of that part of the subcontract Amount which, in the Subcontractor‟s opinion, is due for work completed up until the date of the progress claim; (b) all amounts which the Subcontractor believes is due to the Subcontractor arising out of or in connection with the Subcontract.” [27] The second payment claims seek payment again for the work referred to in clause 22.2 and already paid by the respondent. In my view a payment claim which purports to do this is not a valid claim. [28] The respondent also relies on Simcorp Developments & Constructions Pty Ltd v Gold Coast Titans (Property) Pty Ltd & Others, unrep, [2010] QSC 162 at para [35] where Douglas J held that a second claim covering the same work referred to in earlier claims could not be relied on as it would breach s.17(5) of the Act and Neuman Contractors Pty Ltd v Traspunt No 5 Pty Ltd, unrep, [2010] QCA 119 at para [49]. These decisions are relevant by -- 7 of 8 -- 8 analogy provided it is appreciated that in them the same reference date was relied on for all payment claims. [29] The second payment claims being invalid for the reasons I have explained, it is not necessary to consider the other arguments relied on by the respondent. [30] The application for judgment will be dismissed with costs to be assessed on the standard basis unless agreed. -- 8 of 8 --