Rojo Building v Jillcris [2006] NSWSC 649

New South Wales Supreme Court

CITATION : Rojo Building v Jillcris [2006] NSWSC 649

HEARING DATE(S) : 22 June 2006

JUDGMENT DATE : 22 June 2006

JURISDICTION : Technology & Construction List

JUDGMENT OF : McDougall J at 1

EX TEMPORE JUDGMENT DATE : 06/22/2006

DECISION : See para [55] of judgment

CATCHWORDS : ESTOPPEL - where Court on hearing (including of application for summary judgment) found pleaded cause of action unsustainable, gave reasons and made orders - where plaintiff has not sought to amend summons to allege alternative cause of action - whether parties estopped from contending to the contrary of orders made - whether matter should be reopened pursuant to UCPR 36.16(1) or inherent power of Court

LEGISLATION CITED : Building & Construction Industry Security of Payment Act 1999

CASES CITED : United Australia Limited v Barclays Bank Limited [1941] AC 1

PARTIES : Rojo Building Pty Ltd (Plaintiff) Jillcris Pty Ltd (Defendant)

FILE NUMBER(S) : SC 55002/06

COUNSEL : J S Drummond (Plaintiff) M H Southwick (Defendant)

SOLICITORS : Hewitts Commercial Lawyers (Plaintiff) Surry Partners (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

22 June 2006 Ex tempore (revised 23 June 2006)

55002/06 ROJO BUILDING PTY LTD v JILLCRIS PTY LTD JUDGMENT 1 HIS HONOUR: The plaintiff as builder and the defendant as proprietor were parties to a contract made on 24 January 2005 whereby, in substance, the plaintiff agreed to construct residential premises at Bulli for the defendant. The plaintiff claims, among other things, that the contract was a "construction contract" to which the provisions of the Building and Construction Industry Security of Payment Act 1999 (the Act) applied, and that the work carried out by it under the contract was "construction work" for the purposes of that Act. 2 The plaintiff claims to have served on the defendant a payment claim pursuant to s 13 of the Act. There is a dispute between the plaintiff and the defendant as to the date of service. Indeed, there is a dispute as to whether the plaintiff was entitled to avail itself of the mechanisms for recovery of progress payments laid down by the Act, but that can be put to one side for the moment. 3 The plaintiff claims that the defendant did not submit a payment schedule in response to its payment claim within the time limited by s 14(4) of the Act. Thus, on the plaintiff's case, it had available to it the options given by s 15(2). The first of those was to recover the unpaid portion of the claimed amount from the defendant as a debt due in a court of competent jurisdiction. The second was to make an adjudication application under s 17(1)(b) of the Act in relation to the payment claim. The plaintiff chose to proceed by way of the second option. It was therefore required to, and did, give the defendant notice of its intention to apply for adjudication, in accordance with s 17(2)(a) of the Act. 4 That notice was contained in a letter from the plaintiff's solicitors to the defendant dated 19 December 2005. It is the plaintiff's case - and the evidence supports this - that the letter was received by the defendant on 22 December 2005. On that basis, the defendant would have five business days thereafter to provide a payment schedule: s 17(2)(b). The defendant had provided a payment schedule on 20 December 2005. On the chronology that I have given, this could not have been in response to the plaintiff's notice under s 17(2)(a). However, after that notice had been received, but on 22 December 2005, the defendant's solicitors wrote to the plaintiff's solicitors and informed them in substance that the defendant had already provided (as, they said, it was entitled to do) a payment schedule. The question of the defendant's entitlement to do so rested not upon s 17(2)(b), but upon the defendant's contention as to the date upon which the payment claim had been served. 5 The following day, 23 December 2005, the plaintiff's solicitors notified the defendant's solicitors that the plaintiff did not propose to proceed along the adjudication path, and that therefore the defendant was not required to provide a payment schedule, as by then (even on the plaintiff's case) it had the opportunity to do: again because of s 17(2)(b). 6 The plaintiff commenced proceedings in this Court to recover the amount of the alleged payment claim: $251,537.07. I do not know why the proceedings were commenced in this Court rather than in what appears to be the appropriate court, having regard to the amount, namely the District Court of New South Wales. But that does not matter for present purposes. 7 With its summons, the plaintiff filed a notice of motion for summary judgment. Presumably, that notice of motion was filed in the belief that s 15(4)(b) of the Act precluded the defendant from bringing any cross-claim and from raising any defence in relation to matters under the construction contract. 8 Undaunted by s 15(4)(b), the defendant filed a defence. That defence raised a number of issues, including an issue as to the date of service and receipt of the payment claim (the significance of receipt, in the context of s 14(4)(b)(ii), is obscure). The defence also asserted that the defendant had contracted as trustee of a trust under which certain individuals were beneficiaries; that those beneficiaries intended to live in the premises that were the subject of the contract; and that accordingly the Act did not apply: s 7(2)(b). 9 When the matter came before the Court for directions on 17 February 2006, Bergin J made orders and gave directions, as agreed by the parties, relating to evidence and the like. Her Honour listed the matter for directions on 17 March 2006 and for hearing on 18 April 2006 for one day. 10 On 17 March, her Honour gave further directions, including the preparation of outlines of contentions of fact and law and issues for trial, so as to enable the hearing to proceed on 18 April 2006. 11 The matter came on before Einstein J on 18 April 2006. Clearly, having regard to the procedural history that I have narrated, the parties assumed that the matter was fixed for final hearing before his Honour on that day. Counsel for each party (Mr Drummond for the plaintiff and Mr Southwick for the defendant) have confirmed that understanding today. However, at least at some stage of the proceedings, Einstein J fixed upon the notice of motion for summary judgment. It is a little unclear as to how this came about. To the extent that it is legitimate to have regard to the transcript (rather than to his Honour's reasons for judgment) the transcript reveals that his Honour understood that the plaintiff was "moving for summary judgment on a summons ... filed on 20 January" (T 1.50): an impression or understanding confirmed by Mr Drummond (T 2.1). However, his Honour referred to the defence and to "a notice of motion of 20 January" (T 2.10): the latter being a reference to the notice of motion for summary judgment to which his Honour had already referred. 12 So far as the transcript shows, the matter proceeded in an orthodox fashion thereafter. The parties identified the evidence on which they relied. His Honour ruled on objections to that evidence. It does not appear from the transcript that either party sought to cross-examine the witnesses of the other. It does appear that, in the course of dealing with objections, his Honour in at least some cases rejected evidence of a hearsay nature (see, by way of example only, T 12.30 and following). 13 His Honour then heard submissions from Mr Drummond, who, as I have said, appeared for the plaintiff. In the course of those submissions, his Honour isolated what he perceived as being the crucial issue: namely, that the plaintiff, having chosen to proceed one way when it gave notice under s 17(2)(a), was now seeking to move in another way. Having heard from Mr Drummond, and apparently not needing to hear from Mr Southwick, his Honour gave reasons ex tempore. It will be necessary to return to the detail of those reasons. 14 Having given reasons, his Honour asked the parties to address on the fate of the plaintiff's claim. He said at T 27.30 that it did not seem to him "that the proceedings likely can stand in the light of my holding". He said at T 27.45 that "likely - I may be wrong, but perhaps the proceedings simply as they are pursued would have to be dismissed as well. It may well be the case that final relief is - your client, of course, isn't bound by this holding on this application - ". There was an interruption. His Honour then continued at T 28, saying that "arguably a new summons would have to be issued squarely dealing with the sorts of things which are dealt with when you talk about final relief. ... I don't know what sort of claims your client might wish to make at general law. They're not made in this pleading, are they?" 15 In the result, his Honour ordered that the notice of motion be dismissed, made orders for costs, and ordered "that in the absence of the plaintiff communicating ... that the plaintiff wishes to continue the proceedings and/or seeks leave to amend the existing summons, the summons be taken as dismissed as at 10 am on Thursday, 20 April 2006". (The order for dismissal of the notice of motion was made in substitution for an order that the summons be dismissed.) 16 Later that day, the transcript shows, Mr Drummond made an application to Einstein J to re-open the matter on the basis that the judgment given earlier that day had proceeded on the basis of a misapprehension of fact. It appears that the plaintiff was concerned that Einstein J had either decided, or proceeded on the assumption, that the defendant's payment schedule of 20 December 2005 was sent in response to the plaintiff's s 17(2)(a) notification sent on 19 December 2005. It is easy to see how his Honour might have come to that conclusion, because the defendant's evidence was that the plaintiff's notice was received "on or about 19 December 2005". 17 Mr Drummond put to his Honour that there was evidence that could have been led to show that, as I have said, the s 17(2)(a) notice was not received until 22 December 2005, so that the payment schedule could not have been sent in response to it. 18 There was debate about that and other matters. His Honour was physically given the material that would (so the plaintiff submitted) show that the s 17(2)(a) notice was not received until 22 December 2005. He did not mark it as an exhibit. 19 At this stage I interpose to note that the evidence led by the plaintiff today makes it clear that the documents seen by his Honour, but not marked as exhibits, did show that, as I have said now several times, the defendant received the s 17(2)(a) notice on 22 December 2005. 20 His Honour, however, concluded that it was not necessary to deal with the evidentiary dispute (Mr Southwick having submitted that the evidence should not be received because he had not had an opportunity to take instructions on it). His Honour then dealt with the application to re-open on a basis which, I think, assumed that the evidence would be as the plaintiff wished to show it was. In other words, his Honour dealt with the application on the assumption that the payment schedule was not responsive (in terms of time or otherwise) to the s 17(2)(a) notice. 21 At this stage, it is necessary to pay close attention to his Honour's reasons: both those given initially and those given on the application to re-open. Those reasons may be found at [2006]NSWSC 309. 22 In para [1] of the reasons, his Honour noted that what was before the Court was an application for summary judgment pursuant to the Act. However, his Honour said at para [2]: "The proceedings are able to be determined by a short point of statutory construction and principle". In other words, at least on the face of things, his Honour was dealing with the merits of the underlying point, although in the context of the summary judgment application brought by the plaintiff. 23 His Honour then set out the relevant facts, and referred to some of the provisions of the Act. He then stated his decision in paras [18] and [19] as follows: