D A Story Pty Ltd, Re [1992] QSC 452 [1993] 2 Qd R 355

~·tate Rep- orting Hureau· ~ ~b·- .Su'1'3/~ TRANSCRIPT OF PROCEEDINGS (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold ·without the written authority of the Director, State Reporting Bureau.) ------~·-, E=.v:.::.;~.::o COP~ES ISSUED. 8:::::-a: 111>{36r'tf~ig: Bureau I Date q:, / 1 c;-·3 SUPREME COURT OF QUEENSLAND CHAMBERS RYAN J os No 1260 of 1992 IN THE MATTER OF "THE SUBCONTRACTORS CHARGES ACT" 1974 and IN THE MATTER OF CHARGES ISSUED BY BRISBANE PROTECTIVE COATINGS PTY LTD and No 1833 of 1992 D A STORY PTY LTD TRADING AS STORY STEEL Plaintiff and BRISBANE PROTECTIVE COATINGS PTY LTD Defendant BRISBANE .. DATE 14/12/92 .. JUDGMENT 1 4th Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 227 4360. Facsimile: (07) 227 5532 -- 1 of 14 -- --~--~---- ~--~---~~--------~ 141292 HIS HONOUR: The applicant, D A Story Pty Ltd, has applied for an order that notices of claim of charge given by Brisbane Protective Coatings Pty Ltd dated 10 November and 12 November 1992 be cancelled pursuant to section 21 of the Subcontractors Charges Act 1974. On 14 December 1990 the applicant entered into a subcontract. with Jennings Group Ltd (the head contractor) with respect to the supply, fabrication and erection of structural steel and 10 purlins at the Queensland Newspaper site at Murrarrie. The 20 subject contract requires the subcontractor inter alia to, "fabricate, deliver, unload, hoist, erect and complete all structural steel purlins, braces and all other steel work elements required by the contract documents" and to, "paint all surfaces of steel work as required by the contract documents" and, "after the erection has been completed, touch up all damaged paint work." On 18 February 1991 the respondent submitted a written quotation to the applicants for surface preparation, protective coating and storage of the structural steel to be erected on the site by the applicant after the works had been completed by the respondent. The respondent quotation was accepted by the applicant on 27 March 1991. The letter of acceptance refers to the amended quotation dated 18 February 1991 for the painting, storage, handling, touch-up and stacking of structural steel work to the project at Murrarrie. Pursuant to the agreement the respondent was required to redeliver the goods to the applicant at the JUDGMENT 2 30 40 50 60 .. -- 2 of 14 -- 141292 respondent's yard once the work had been carried out by the respondent. It is deposed on behalf of the applicant that from 27 March to 4 April 1991 the applicant 9 delivered some goods to the respondent and the respondent carried out some work on the 10 goods. On 3 April 1991 the applicant received a letter from the head contractor requesting an immediate cessation of all work in relation to the project pending further instructions. The applicant then sent a letter dated 4 April 1991 to the respondent advising of the head contractor's request for an 2o immediate cessation of all work in relation to the project. On 29 May 1991 the applicant sent a written confirmation to the respondent that the workings under the agreement were to proceed and works were recommenced under the agreement. On 29 May 1991 and 5 August 1992 the applicant sent to the respondent goods for the purpose of allowing the respondent to perform the works. From time· to time between 29 May 1991 and 6 November 1992 the respondent delivered certain of the goods 30 to the applicant once the works on the goods had been carried 40 out by the respondent. It is dePJsed ~:t-J1at·.the··applicant has paid to the respondent all monies properly due and owing in respect of the works. On 1 November 1991 the applicant received notice that the business of the head contractor was sold to Fletcher Challenge Ltd on 31 October 1992. It nominated Fletcher Jennings as the agents of the head contractor. JUDGMENT 3 50 60 -- 3 of 14 -- 141292 On 10 November 1992 the respondent served upon the applicant a,, notice of claim of charge pursuant to Subcontractors' Charges Act 1974 to 1976 (the Act). On 12 November 1992 it served upon the applicant a further noti~e of claim of charge. 10 Notices of dispute under the Act were sent by the applicant to Fletcher Construction Australia Ltd and the head contractor. It is deposed that the applicant by itself or its subcontractors carried out the fabrication of goods between 20 August 1990 and March 1992. The head contractor, it is deposed, has paid the applicant for the fabrication of the goods by payments made from 17 September to 23 November 1992. After fabricating the goods, the applicant delivered the goods so to the respondent's yards in order that the respondent carry out its obligations,under the agreement. The respondent, despite a request from the applicants to make available the goods for collection by the applicant, has now refused to redeliver to the applicant the balance of the goods and still 40 retains possession of goods set out in the schedule. It is deposed that due to the conduct of the respondent the applicant is unable to perform its obligations under the subcontract. This refusal has caused and will cause delay to so the applicant in performance of its obligation under the subcontract with the head contractor, thereby causing the applicant to be in breach of its subcontract. JUDGMENT 60 4 -) I Il I ll I ! l -- 4 of 14 -- 141292 By reason of the receipt of the notices of claim of charge, 1 · the head contractor has withheld the amount of moneys claimed therein from moneys which are presently due and owing to the applicant. On 10 November 1992 the respondent's solicitors wrote to the 10 applicant's solicitors stating that the applicant presently owed it the sum of $154,611.90. On 19 November 1992 the applicant's solicitors replied denying it was indebted to the respondent. The notice of intention to claim the charge of 10 November 1992 states that the amount payable of the 20 subcontractor for the work done is $154,611.90. It is deposed on behalf of the respondent that its business is primarily the blasting and painting of steel work for steel fabrication contractors~ 30 Matters are set out on behalf of the respondent supporting the claim that it is presently owed the sum of $154,611.90 by the applicant and disputing many of the statements contained in the affidavits filed on behalf of the applicants. It is 40 deposed that the respondent in August 1992 at the request of the applicant performed repair paint work to structural steel at the Murrarrie site in accordance with the architect's instructions communicated to the respondent by the applicant. ,: i 50 The application for an order that the notice of claim of charge be cancelled is based on section 21 of the Act. Section 21(1) provides that a person who alleges that he is prejudicially affected by a claim of charge under the Act may JUDGMENT 60 5 ,, i 1, , I 'I -- 5 of 14 -- 141292 ----- -------------- ---_-) ~.,. at any time make application to the Court for an order: (a) that the claim be cancelled; or (b.) that the effect of the claim be modified. Section 21(2) provides that the Court shall hear and determine summarily an application made pursuant to this section and may 10 --- make such order as it thinks fit. It was submitted for the applicant that the notice of claim of charge was bad. It was said that the obligation of the respondent was to carry out specified tasks on steel supplied 20 to it by the applicant so that it could then be installed on site and that there was no pJ:'ovision in theagreement between the applicant and the respondent which obliged the respondent to perform any work on the site. so-- Section 5(1) of the Act provides that where an employer contracts with the contractor for the performance of work upon or in respect of land or a buildin-g or other structure or permanent improvement upon land or a chattel, every subcontractor of the contractor be entitled to a charge on the 40 money payable to the contractor or a superior contractor under his contract or subcontract. In section 3(1) of the Act the word "subcontractor" is defined to mean a person who contracts with a contractor or with 50 another subcontractor for the performance of work. The word "work" is defined to include work or labour, whether skilled or unskilled, done or commenced upoh the land where the contract or subcontract is being performed by a person of any JUDGMENT 60 6 -- 6 of 14 -- 141292 l occupation in connection with: (a) the const~uction, 1 I ', declaration, alteration or repair of any building or other structure upon land or (d) the alteration or improvement of a chattel. The term includes also the supply of materials used or brought 10 on premises to be used by a subcontractor in connection with other work the subject of his contract or subcontract but does not include the delivery of goods sold by a vendor under a contract for the sale of goods, to, at or upon land .. 20 In Dowstress Pty Ltd against Holy Spirit Congregation [1987] 1 Queensland Reports 150, the appellant was employed by the owner under a "head contract" to engage in the construction of extensions to the building of the owner at the Holy Spirit Hospital. The appellant contracted with Dowstress 30 in respect of the supply of beams to be used by the appellant in the extensions. Dowstress' obligations pursuant to its contract with the applicant were discharged upon the delivery of the beams to the site of the works. 40 It was held by Moynihan J, with whose reasons Kelly ACJ agreed, that Dowstress was not a subcontractor to which money was payable under a subcontract. Moynihan J pointed out that nothing which Dowstress had engaged with the appellant to do called for the performance of work as distinct from delivery so of goods, to, at or upon the land where the contract between the appellant and the owner was being performed. He said at page 57, "At the risk of stating the obvious, what characterises a subcontractor as defined is not what he does JUDGMENT 60 7 I -- 7 of 14 -- but that he contracts with the contractor for the performance of work. By section 5 then such a person has a right to a )'- charge on money payable to a contractorwho has contracted with an employer in terms of section 5(1). Section 3, it will be seen, defines work in terms of what is done or commenced upon the land where the contract is being performed." 10 Derrington J agreed with Moynihan J that on the facts of the case the contractual obligations of the subcontractor were only for the supply of goods and not for the performance of work. Accordingly, it was not a subcontractor within the 20 meaning of the Act. His analysis of the relevant provisions was however differently expressed. He stated that the first step to consider was whether the head contractor was employed by an employer for the performance of work upon or in respect of land or a building or other structure or permanent 3(, '·' improvement upon land or a chattel. The next step was to look at the requirements of the subcontractor's contract. In relation to this, it was pointed out that the subcontractor was required to have a contract only for the performance of work and there was no need that the subcontractor's work have 40 any relationship with land. His Honour said (at page 52), "In respect of the subcontractor's contract, there is no need there be inherent in it any association with work upon land, only that it be a contract for the performance of work and that it not be within the exclusions contained in the 50 definition of work." I It is clear from the judgment of Derrington J that there is no need in respect of a subcontractor's contract that there be JUDGMENT 60 8 -- 8 of 14 -- 141292 any association with work upon land. Is this however inconsistent with the majority judgment? In my opinion it is not. The decision in the Dowstress case was concerned with the exclusion from the definition of work in section 3 of, "The mere delivery of goods sold by a vendor under a contract for the sale, to, at or upon the land." 10 The judgment was based upon the facts that Dowstress was not engaged to perform work on the beams at the site. Its obligation was to deliver them to the site. The majority judgment was not concerned with a case of the present type 20 where there was under the subcontract an obligation to do work on the goods supplied by the applicant. It cannot be said of the present respondent that the subject of the head contract is the mere delivery of goods sold by a vendor under a contract for the sale of goods, to, at OY upon land. The 30 subject contract is not for the sale of goods. It is one for the performance of work upon goods supplied by the applicant. Accordingly, I refuse to order that the notices of claim of charge be cancelled on the ground that it is invalid. I can see no basis for making an order that the effect of the claim 40 be modified. I shall consider later in this judgment whether there is any basis for ordering that a claim, which I am satisfied is valid, be cancelled upon terms that the contractor pay money so into court to satisfy the subcontractor's claim, The applicant applies in addition for relief in alternative forms. one is that upon the plaintiff undertaking to pay and JUDGMENT 60 9 -- 9 of 14 -- 141292 paying the maount of money in respect of the lien claimed by the defendant into the Court, an injunction be granted until the trial of the action, or further earlier order restraining the defendant, its servants and agents, from dealing with or remaining in possession of or withholding possession from the plaintiff of the structural steel. The alternative is that 10 the plaintiff be at liberty to pay into Court pursuant to Order 58 Rule 9 the amount of money in respect of the lien claimed by the respondent/defendant and upon such payment in Court being made, the structural steel of the plaintiff/applicant shall be given up by the defendant to the 20 plaintiff. Order 58 Rule 9 provides that when an action is brought to recover specific property other than land and it is made to appear by affidavit or otherwise to the satisfaction of the 30 · Court or a Judge that the party from whom such recovery is sought does not dispute the title of the party seeking to recover the same but claims to retain the property by virtue of a lien or otherwise a security for any sum of money, the Court or a Judge may at any time order that the party claiming40 to recover the property be at liberty to pay into Court, to abide the event of the action, the amount of money in respect of which the lien or security is claimed and such further sum, if any, or interest and costs as the Court may direct and that upon such payment into Court being made, the property claimed so shall be given up to the p~rty claiming it, In this case a writ was issued on 8 December 1992 by which the plaintiff claims an order that it recover possession of certain JUDGMENT 60 10 -- 10 of 14 -- :t ,, ' ; 141292 goods, namely structural steel, from the defendant. There is no dispute as to the plaintiff's title to the structural steel but the defendant claims to retain the property by virtue of a lien. The amount in respect of which the lien is claimed is $154,611.90. The plaintiff has informed the Court that it is willing to pay into the Court the sum of $196,912.55 pending the outcome of the action. This amount covers further sums which may be claimed by the defendant. It is deposed on behalf of the plaintiff that the additional cost to it to refabricate the goods presently held by the defendant is approximately $150,000, but it could not be refabricated until about the end of January 1993. Moreover, 10 20 the progress of other work on site i~ being affected by the ~ inability of the plaintiff to complete the erection of the structural steel. Unless the plaintiff can obtain immediate possession of goods presently held by the defendant, the whole project may be substantially delayed. 40 This seems to me to provide good reason why I should make an order under Order 58 Rule 9. Accordingly, I order the plaintiff be at liberty to pay into Court pursuant to Order 58 Rule 9 the sum of $196,912.55 and upon such a payment into court being made, the structural steel of the plaintiff shall so be given up to the plaintiff. I do not consider it necessary to consider whether an ·injunction would or should be granted. It has been held that JUDGMENT 60 11 -- 11 of 14 -- -----------------·--------~------------ ' 141292 • _i•t.'>l:,.,~. where specific things necessary for conducting a particular 1 : l business are in the possession of persons who claim the lien upon them and threaten an immediate sale, a Court of Equity has jurisdiction to interfere by injunction and prevent irreparable injury to the debtor by giving him an opportunity of redeeming assets (see North v. Great Northern Railway Co. 10 (1860) 2 Gifford 64 at page 68). It has also been held that the Supreme Court in its equitable jurisdiction has jurisdiction in appropriate circumstances to make an order for the return of a specific chattel. In Doulton Potteries Ltd v Bronotte [1971] 1 New South Wales Law Reports 591, it was held20 that as there were no procedures at law in New South Wales whereby, if a defendant relies upon a lien, the Court may order the property to be given up to the plaintiff provided he paid into the Court, to abide the event of action, the sum claimed in respect of the lien, a plaintiff was justified in 30 seeking relief from a Court of Equity. There is however such a procedure in this State pursuant to Order 58 Rule 9. There is nothing to indicate that the de-fendant will not~ abide by the order I have made that the structural steel shall be given up to the plaintiff pursuant to my order. Accordingly, I order the plaintiff be at liberty to pay into Court pursuant to Order 58 Rule 9 the sum of $196,912.55 in respect of a lien claimed by the defendant and upon such 40 payment into Court being made, the structural steel of the so plaintiff shall be given up by the defendant to the plaintiff. The effect of this order is to substitute the money in Court for the structural steel as security for the defendant's JUDGMENT 60 12 -- 12 of 14 -- - . 141292 claim, (see Beneficial Finance Corporation Ltd v. Conway No 2, 1 [1971] Victorian Reports 594 at page 607). In Iny opinion its effect is also to secure to the subcontractor payment in accordance with the subcontract of all money payable or that is to become payable to him for work done by him under the subcontract. That is the object of the charge imposed by the 10 operation of the Act (see section 10(2)). Accordingly, as that object will be attained by payment into Court, I consider that I have jurisdiction under section 21(1) of the Act to order that the claim be cancelled and I order that it be cancelled upon payment into Court by the applicant of $196,912.55. I make no order as to costs in respect of the application os number 1260 of 1992. In respect to the notice of a motion in the action of 1833 of 1992, I order that the costs be the plaintiff's costs in the cause. 20 30 In relation to the point made by Mr Andrews that any order for40 costs should not include certain affidavits, that seems to me to be a matter to be left for the discretion of the Taxing Master who will tax the appropriate bills. In relation to the main order I have made, it seems to me, so first of all, +~at~on someof the· matters which were argued by the plaintiff which it has not been successful upon, in particular, a matter argued at considerable length as to whether or not the charge was invalid, I have held that the JUDGMENT 60 13 \ -- 13 of 14 -- 141292 ,, ........... :-.;; -~~~·-. charge was not invalid. I have held, however, that the charge 1 should be removed upon a particular condition; that is, that the plaintiff pay a certain amount of money into Court, whichas has been pointed out by Mr Andrews, is in excess of the amount of money which was the subject matter of a communication by the plaintiff's solicitors to the defendant's solicitors. In 1o the circumstances, it seems to me the appropriate order is the one which I have made and I will let it stand. 20 JUDGMENT 14 -- 14 of 14 --