NovaWest Contracting v Tara Nominees

NOVAWEST CONTRACTING V TARA NOMINEES (1998) 5374 OF 98

Supreme Court of Victoria – 30 October 1998

FACTS

Novawest was the contractor appointed by Tara Nominees to conduct building work in Melbourne. The contract between the parties was an AS2124-1992 contract and an independent superintendent was appointed by Tara Nominees.

Novawest submitted progress claims to the superintendent and the superintendent determined that a progress payments should be made to Novawest. Tara Nominees refused to pay the progress payments and claimed that it had a claim for faulty work by Novawest.

Novawest sued for the debt owing under two progress payment certificates and obtained summary judgment against Tara Nominees. Tara Nominees made a claim for damages against Novawest and appealed the summary judgment decision.

ISSUES

Did the AS2124-1992 contract force Tara Nominees to pay the amounts due under the progress payment certificates issued by the superintendent despite the claims for faulty work.

FINDING

The contract provided that progress payment certificates issued by the superintendent had to be paid by the Principal immediately. If the Principal wanted to make a claim for faulty work it had to make a separate claim against the Contractor and could not deduct its alleged loss from the certified amount.

QUOTE

Gillard J said

“The parties have put in place a mechanism which protected their respective interests and required the defendant to pay the plaintiff on any certificate once issued but also enabled the defendant to protect its interest by pursuing a number of avenues to recover the liquidated damages. To permit the defendant in the court proceeding to raise a defence of set-off would be to defeat the common intention of the parties.” – paragraphs 127 and 128

IMPACT

The AS2124-1992 contract provides that the Principal must make progress payments as certified by the Superintendent.

If the Principal wishes to reduce or not pay the progress payments certified by the Superintendent then it will have to amend the AS2124-1992 contract. Otherwise it must make the progress payment and make a separate claim against the Contractor.