Heavy Plant Leasing Pty Ltd (In Liquidation) v McConnell Dowell Constructors (Aust) Pty Ltd (No 2) [2022] NSWSC 1775

Supreme Court New South Wales

Medium Neutral Citation: Heavy Plant Leasing Pty Ltd (In Liquidation) v McConnell Dowell Constructors (Aust) Pty Ltd (No 2) [2022] NSWSC 1775 Hearing dates: 26, 27, 28, 29 September, 5, 6, 10, 11, 12, 17, 18, 19, 20, 27, 28, 31 October, 1 November 2022; further written submissions 24, 25, 28, 29, 30 November and 7 December 2022 Date of orders: 21 December 2022 Decision date: 21 December 2022 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Plaintiff's claim to be dismissed. Cross-claimant to be granted relief sought in its Amended Technology and Construction List Cross-Claim Statement in accordance with these reasons Catchwords: CONTRACTS – contract for civil works – proper construction – where subcontractor in breach of contract failed to pay secondary subcontractors – whether principal thereby entitled to withhold payment on basis that funds reasonably required to meet contingent loss or damage – where payments of payment claims by principal to subcontractor provisional and on account only – whether principal entitled to de-certify previously certified provisional payments – whether an implied term of the contract that principal act reasonably and in good faith – whether principal acted in breach of obligation to act in good faith in de-certifying previously certified provisional payments – whether principal under subcontract entitled to terminate subcontract – measure of damages recoverable – whether principal has established quantum of its loss BUILDING AND CONSTRUCTION – whether principal under subcontract entitled to terminate subcontract – measure of damages recoverable – whether principal has established quantum of its loss BUILDING AND CONSTRUCTION – where principal required to take over construction works – where principal incurred greater costs than subcontractor – principles to be applied when assessing damages claimed by a principal who completes work after the default of the subcontractor CORPORATIONS – insolvency – whether subcontractor became insolvent by reason of principal's conduct in breach of contract – whether subcontractor was insolvent at all times from October 2012 – unfair preferences claim – alternate claim brought in circumstances where non-payment of certified amounts not found to be in breach of contract – whether withholding of monies amounts to unfair preferences for the purposes of s 588FA of the Corporations Act 2001 (Cth) – whether conduct characterised as a retention or set-off Legislation Cited: Building and Construction Industry Payments Act 2004 (Qld) Building and Construction Industry Security of Payment Act 1999 (NSW) Building Industry Fairness (Security of Payment) Act 2017 (Qld) Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Queensland Building Services Authority Act 1991 (Qld) Subcontractors' Charges Act 1974 (Qld) Cases Cited: Australian Securities and Investments Commission v Plymin (No 1) [2003] VSC 123 Baulderstone Hornibrook Pty Ltd v Qantas Airways Ltd [2003] FCA 174 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 226; [1977] UKPCHCA 1 Clark v Boehm [2015] VCAT 1879 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 Dillion v Jack (1903) 23 NZLR 547 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Fulton v Dornwell (1885) 4 NZLR 207 Galileo Miranda Nominee Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 1157 Jingalong Pty Limited v Todd [2015] NSWCA 7 John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (1996) 8 VR 681 Kell & Rigby Holdings Pty Limited v Lindsay Bennelong Developments Pty Ltd [2010] NSWSC 777 Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184 McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd [2013] QSC 269 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Perini Corporation v Commonwealth of Australia [1969] 2 NSWR 530 Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 Ratcliffe v Evans [1892] 2 QB 524 Reardon Smith Line Ltd v Hansen-Tangen; Hansen-Tangen v Sanko Steamship Co [1976] 1 WLR 989; [1976] 3 All ER 570 Robinson v Harman (1848) 154 ER 363 Serong v Dependable Developments Pty Ltd [2009] VCAT 760 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21 Shomat Pty Ltd v Rubinstein (1995) 124 FLR 284 Tabcorp Holdings Limited v Bowen Investments Pty Limited (2009) 236 CLR 272; [2009] HCA 8 Taylor v Oakes, Roncoroni and Co (1922) 127 LT 267; [1922] All ER Rep Ext 866 Texts Cited: H Lloyd KC, I Hitching KC and M Curtis KC, Emden's Construction Law (Issue 217, 2022, LexisNexis United Kingdom) Halsbury's Law of England (5th ed), vol 6 (2018) Nicholas Dennys and Robert Clay, Hudson's Building and Engineering Contracts (14th ed, 2020, Sweet & Maxwell) P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) R Havelock, "The Availability of Liquidated Damages Following Determination of the Construction Contract" (2013) 29 Building and Construction Law Journal 385 T Kennedy-Grant and M Weatherall, Kennedy-Grant and Weatherall on Construction Law (2nd ed, 2017, LexisNexis New Zealand) The Laws of New Zealand (2022, LexisNexis New Zealand) Category: Principal judgment Parties: Heavy Plant Leasing Pty Ltd (In Liquidation) (Plaintiff/Cross-Defendant) McConnell Dowell Constructors (Aust) Pty Ltd (Defendant/Cross-Claimant) Representation: Counsel: M Dempsey SC with J Shepard, M E Sheldon and W Marshall (Plaintiff/Cross-Defendant) D Cook SC with T J Cogley, J A Wright, M Rose and A Flick (Defendant/Cross-Claimant)