Concept Constructions (Qld) Pty Ltd v Asphalt Pavements Pty Ltd (in liq) [2000] QSC 269

SUPREME COURT OF QUEENSLAND CITATION: Concept Constructions (Qld) P/L v Asphalt Pavements P/L (In Liquidation) [2000] QSC 269 PARTIES: CONCEPT CONSTRUCTIONS (QLD) PTY LTD ACN 063 669 198 (applicant) v ASPHALT PAVEMENTS PTY LTD (In Liquidation) ACN 010 157 543 (respondent) FILE NO/S: No 5212 of 2000 DIVISION: Trial Division PROCEEDING: Application pursuant to s 21 Subcontractors’ Charges Act 1974 (Qld) ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 17 July 2000 DELIVERED AT: Brisbane HEARING DATE: 7 July 2000 JUDGE: Williams J ORDER: Applicant granted leave to commence and pursue the application, but application dismissed with costs to be assessed. CATCHWORDS: CONTRACTS – BUILDING, ENGINEERING & RELATED CONTRACTS – REMUNERATION – SUBCONTRACTORS’ CHARGE ACT (Q) – application pursuant to s 21 for an order that a claim of charge made by respondent pursuant to the Act be cancelled – where applicant head contractor contracted with respondent for latter to carry out certain earthworks for a specified sum – where respondent was subsequently wound up – where on that basis leave of court pursuant to s 500(2) of the Corporation Law required to commence and pursue this application – leave granted – whether respondent has valid claim of charge against applicant – whether there was money payable or to become payable to respondent under subcontract at material time – where parties are in dispute as to whether respondent in fact fulfilled its obligations to complete works under contract – factual issues determinative of whether or not respondent has a valid charge cannot be resolved summarily – application dismissed. -- 1 of 6 -- 2 Corporations Law, s 500(2) Subcontractors’ Charges Act 1974 (Qld), s 5(2), s 10(1A), s 21 Milgun Pty Ltd v Austco Pty Ltd & State of Queensland [1988] 2 Qd R 670, followed Re: An Application by James Hardie Building Systems Pty Ltd (1999) 15 BCL 199, distinguished Re: Androma Pty Ltd [1987] 2 Qd R 131, applied Re: Gordon Grant & Grant Pty Ltd (1982) 6 ACLR 727, applied Re: Westpac Australia Pty Ltd (unreported, Nos 859 and 897 of 1994, judgment 15 November 1994), followed Riteway Constructions Pty Ltd v Baulderstone Hornibrook Pty Ltd [1998] 2 Qd R, distinguished COUNSEL: K A Barlow for the applicant J K Bond SC for the respondent SOLICITORS: Allen Allen & Hemsley for the applicant Doyles for the respondent [1] WILLIAMS J: This is an application brought pursuant to s 21 of the Subcontractors' Charges Act 1974 ("the Act") for an order that a claim of charge made by the respondent pursuant to the Act be cancelled. [2] The applicant, Concept Constructions (Qld) Pty Limited, was the head contractor responsible for carrying out certain earthworks for Eastern Suburbs Leagues Club Limited ("the Club"). By documents dated 30 September 1999 the applicant contracted with the respondent, Asphalt Pavements Pty Ltd, for the latter to carry out certain parts of the total works, being these parts particularised in the subcontract documents, for the contract sum of $211,195. It will be necessary to refer to the subcontract in more detail later. [3] The respondent proceeded with the subject works, and on 9 November 1999 administrators were appointed to that company. Subsequently on 16 December 1999 the respondent was wound-up and the administrators became its liquidators. [4] According to M J Chamberlain, a director of the respondent up until the winding- up, the subcontract works were completed by or on 16 December 1999. That appears from paragraphs 50 and 72 of his affidavit. [5] Then on 21 January 2000 the respondent, under the hand of its liquidators, gave notice of claim of charge pursuant to the Act in the sum of $130,394. Pursuant to that notice of charge the Club paid that amount into the District Court at Brisbane. [6] This application is brought seeking an order cancelling the charge. Because the respondent is now in liquidation leave of the court pursuant to s 500(2) of the -- 2 of 6 -- 3 Corporations Law is required. I am satisfied that in accordance with principles discussed in Re: Gordon Grant & Grant Pty Ltd (1982) 6 ACLR 727 and Re: Androma Pty Ltd [1987] 2 Qd R 131 at 147 leave should be granted to commence and pursue this application. [7] The main contention of the applicant is that the respondent has no valid claim of charge because at the material time there was no money payable or to become payable to it under the subcontract as required by sections 5(2) and 10(1A) of the Act. Section 5(2) provides: "The charge of a subcontractor shall secure payment in accordance with the subcontract of all money that is payable or is to become payable to the subcontractor for work done by the subcontractor under the subcontract." [8] Section 10(1A) provides: "The claim shall be in respect of – (a) money payable to the subcontractor at the date of the notice; (b) money to become payable to the subcontractor after the date of the notice for work done by the sub-contractor prior to that date." [9] Counsel for the applicant relied on the way those provisions were applied by Derrington J in Riteway Constructions Pty Ltd v Baulderstone Hornibrook Pty Ltd [1998] 2 Qd R 218 especially at 220-221, and by Shepherdson J in Re: An Application by James Hardie Building Systems Pty Ltd (1999) 15 BCL 199. In each case the judge concluded that, given the terms of the relevant contract, no money was payable to, or was to become payable to, the subcontractor for work done prior to the date on which notice of the charge was given. Counsel for the respondent submitted that the approach adopted by the judge in each of those cases was erroneous and that I ought not follow them. I do not regard either case as laying down any principle other than that the subcontractor must establish that there is money payable or to become payable with respect to work done prior to the date of the charge before the charge can be legally effective; so much necessarily follows from the statute. To that extent there is no error in the reasoning in those cases; it is not for me to express any view as to whether or not that principle was correctly applied to the facts of each of those cases. [10] As the reasoning of Dowsett J in Milgun Pty Ltd v Austco Pty Ltd & State of Queensland [1988] 2 Qd R 670 and of Ambrose J in Re: Westpac Australia Pty Ltd (unreported, Nos 859 and 897 of 1994, judgment 15 November 1994) demonstrates, the mere fact that there is some dispute as to whether or not an amount is payable does not necessarily mean that no charge can attach. [11] Given the submissions of each counsel it is necessary to refer to some provisions of the sub-contract. The Particulars of Engagement contain the following provisions: “CONTRACT SUM 14. The Sub-Contractor will be paid on (a) Lump Sum the following basis: [See Clause 19(a)] -- 3 of 6 -- 4 15. Contract Sum [See Clause 19(b)] $211,195.00 (Two (If lump sum applies, specify sum hundred and eleven opposite) thousand, one hundred and ninety-five dollars only)”. [12] That part of the sub-contract entitled "Concept Constructions Conditions of Sub- Contract" contained the following relevant clauses: "19. Contract sum (a) The Sub-Contractor will be paid either on a lump sum basis or schedule of rates basis, as stated in the Particulars of Engagement (paragraph 14). (b) If payment is to be made on a lump sum basis, the Contract Sum is the lump sum stated in the Particulars of Engagement (paragraph 15), adjusted by any additions or deductions in accordance with the Sub-Contract. . . . 20. Payments (a) The Sub-Contractor may submit progress claims to Concept Constructions each month in the form set out in the Particulars of Engagement (Attachment D)". Progress claims must not be submitted by facsimile. . . . (b) Every progress claim must be fully substantiated with information and documentary evidence sufficient to allow Concept Constructions to assess each Progress Claim and must be accompanied by statements . . . No payment will be made without this information, documentary evidence and the statements. (c) Provided the progress claim is submitted within the time specified in this clause, and subject to the Sub-Contractor complying with all conditions precedent to payment, Concept Constructions will assess the amount to be paid to the Sub-Contractor pursuant to Clause 20(e) and will make a progress payment to the Sub- Contractor and the time specified in clause 20(d). . . . . . . (h) After the Defects Liability Period expires and all defects have been made good, the Sub-Contractor must submit a Final Payment Claim (endorsed as such). Any claim in any way connected with or arising from the Sub-Contract Works which is not included in the Final Payment Claim will be barred." [13] Clauses 14 and 15 of the Terms of Engagement and clause 19 of the Conditions make it clear that this was a lump sum contract. However, the respondent could, if it was so minded, make claims for progress payments pursuant to clause 20 of the Conditions, and the applicant could then make progress payments pursuant thereto. The use of the word "may" in clause 20(a) to my mind makes it clear that the progress claim procedure was optional so far as the respondent subcontractor was concerned. But as the subcontract was a "lump sum" one, once the works were completed in accordance with the contract the subcontractor was entitled to payment of the lump sum (subject to any necessary adjustments) . -- 4 of 6 -- 5 [14] In this case the respondent in fact made claims for progress payments. Claims 1 and 2 were apparently processed without any problem. Progress claim number 3 for the sum of $61,344 appears to have been first submitted by the respondent on or about 1 December 1999. The applicant objected that it was not in the form required by the contract and requested that it be resubmitted. The administrators of the respondent resubmitted progress claim number 3 bearing date 6 December 1999; the applicant contends that was received on 13 December and that can be accepted for present purposes. [15] The applicant's submission is that as that progress claim had not been assessed by 21 January 2000 when the notice of claim of charge was given there was as at 21 January no amount payable to the respondent pursuant to the subcontract. The applicant subsequently proceeded to assess that claim and forwarded its "assessment" to the respondent on 4 February 2000. That document reveals that the applicant deducted some $59,000 being the value of work done by others to complete what the applicant contends was the respondent's responsibility under the subcontract. With that deduction, and other adjustments, the applicant arrived at a negative figure of $4,017.17, and in consequence assessed the amount payable to the respondent as "$Nil". [16] The respondent rejects the contention that work had to be done by others to complete works it was obliged by the subcontract to carry out. That dispute is not something which can be resolved on a summary application such as this. [17] After their appointment the liquidators submitted what was called progress claim number 4 dated 28 December 1999 in the sum of $69,050. It will be noted that the sum of progress claims 3 and 4 equates the amount specified in the notice of claim of charge. Because the applicant asserts that progress claim 4 was not in the proper form it has not yet been assessed. [18] It is in those circumstances that the applicant contends that the charge should be extinguished because there is no money payable or to become payable to the respondent pursuant to the subcontract. But, in my view, whether or not there was an amount payable or to become payable by the applicant to the respondent as at 21 January 2000 with respect to work done prior to that date can only be answered after factual matters in dispute between the parties have been resolved by a trial. If, as the respondent contends, the works were completed in accordance with the contract by 16 December 1999 it could be argued that the contract sum of $211,195 (with any agreed adjustments and less any progress payments made) was then due and payable. As the contract was a lump sum contract that would arguably be the case without the necessity of any assessment with respect to a progress claim. If the applicant be correct in contending that the works were not completed by the respondent in accordance with the contract, it may well be that no money was payable or was to become payable as at the date notice of charge was given and the consequence would be that the charge would then be extinguished. [19] On that analysis this case raises issues unlike those which were considered by Derrington J and Shepherdson J in the decisions referred to above. [20] For the above reasons the issues which will determine whether or not the respondent has a valid charge cannot be resolved summarily. Counsel for the -- 5 of 6 -- 6 respondent addressed further arguments to the court which could lead to the same result, but it is not necessary for me to consider them in the light of what I have already said. [21] In all the circumstances I would order that the applicant have leave to commence and pursue the application, but I would dismiss the application with costs to be assessed. -- 6 of 6 --