Posts

Peninsula Balmain v ABI Group Contractors

PENINSULA BALMAIN PTY LTD V ABIGROUP CONTRACTORS PTY LTD [2002] NSWCA 211

New South Wales Court of Appeal – 3 July 2002

FACTS

Abigroup and Peninsula entered into an AS2124 building contract. In September 1999, Abigroup sought payment of a progress claim. In October 1999, Peninsula cross-claimed for liquidated damages, following a notice given by Peninsula alleging a substantial breach of contract by Abigroup and requiring Abigroup to show cause why Peninsula should not exercise a contractual right to terminate.

Abigroup purported to terminate on 1 December 1999 and claimed that Peninsula had breached the Trade Practices Act (TPA) by failing to disclose that it had an agency agreement on all matters relating to the design and construction of the project with the Superintendent who was hired by Peninsula. Thereafter another contractor completed the works.

The Judge at first instance found that Peninsula had breached the TPA by failing to disclose the existence of the agency agreement between it and the Superintendent. Peninsula appealed to the Court of Appeal.

ISSUES

Did Peninsula contravene s52 of the TPA by failing to disclose to Abigroup the existence of an agency agreement pursuant to which the Superintendent was Peninsula’s agent in all matters relating to the design and construction of the project?

FINDING

The Primary Judge erred in his finding that failure by Peninsula to disclose the agency agreement was a breach of the TPA in that for the conduct to have been misleading or deceptive, it must have been such as to mislead or deceive in some non-trivial manner. Abigroup would have had to show some positive conduct on the part of Peninsula to convey that there was nothing inhibiting the Superintendent from acting honestly and impartially in its role. It was held that the agency agreement had no relevant impact on the Superintendent’s exercise of its role to be performed in an honest and impartial manner.

QUOTE

“…the superintendent is the owner’s agent in all matters only in a very loose sense, and that, when exercising certifying functions in respect of which the superintendent must act honestly and impartially, the superintendent is not acting as the owner’s agent, in the strict legal sense.

In my opinion, this is confirmed by the consideration that the issue of a certificate by the superintendent does not bind the owner to any extent beyond what is prescribed by the building contract itself, so that the owner can challenge such certificates. If the superintendent was acting as the owner’s agent in the strict sense, the issue of the certificate would be an act done by the owner through its agent, which the owner could not then challenge.”

IMPACT

This decision confirms that the superintendent appointed under an AS2124 contract is an agent of the Principal but not in every sense. When the superintendent is exercising certifying powers it is not acting as an agent of the Principal. If the agreement between the superintendent and Principal had purported to restrict the superintendent’s power to certify then such an agreement could be evidence of misleading or deceptive conduct or a breach of clause 23 of the AS2124 Contract.

ABIGroup Contractors v River Street Developments

ABIGROUP CONTRACTORS PTY LTD V RIVER STREET DEVELOPMENTS PTY LTD

[2006] VSC 425

Supreme Court of Victoria – 10 November 2005

FACTS

Abigroup Contractors Pty Ltd (“Abigroup”) entered into a construction contract with River St Developments Pty Ltd (“RSD”) under which Abigroup was to design and construct the Riviera Apartments at 69-73 River St, Richmond for the sum of $68,654,467. Abigroup faxed Progress Claim No 26 made under the Building and Construction Industry Security of Payment Act 2002 (VIC) (“the Act”) in the sum of $4,736,535.97 to the Quantity Surveyor, who was responsible for valuation under the Contract, and also faxed a copy to the Superintendent. The Quantity Surveyor responded by sending to Abigroup Payment Certificate No 26 which certified the amount of $154,185 as due for payment and showing how that amount was calculated.

Abigroup claimed that the Payment Schedule did not meet the requirements of section 15(3) of the Act that the payment schedule “indicate” RSD’s reasons for withholding payment, and commenced proceedings in the Supreme Court under sections 15(4) and 16(2)(a) of the Act to recover the amount of the $4,736,535.97 as a debt due to Abigroup.

ISSUES

Was Abigroup entitled to recover the amount of its payment claim as a debt due to it pursuant to section 16(2)(a) of the Act?

FINDING

The Court confirmed that the test for summary judgment is whether or not there is a “real question to be tried”. The Court found that RSD had raised several real questions to be tried, most significantly the question as to whether the claim, which was served on the Quantity Surveyor rather than RSD directly, was served in accordance with the Act and the question of whether RSD’s payment certificate was a payment schedule for the purposes of the Act.

QUOTE

Habersberger J stated [at 34] that:

Rule 22.06(1)(b) of the Supreme Court (General Civil Procedure) Rules 2005 provides that on the hearing of a summary judgment application the Court may give such judgment for the plaintiff against the defendant on the claim or part of the claim in question as is appropriate “unless the defendant satisfied the Court that in respect of that claim or part a question ought to be tried or that there ought to be some other reason to a trial of that claim or part”.

Habersberger J held [at 81] that:

Having carefully considered each of the issues discussed above, I have concluded that it is not possible to say that I am left in no doubt on the whole of the material that there are no real questions to be tried. In particular, I consider that each of the issues of “Service”, “The Payment Claim”, “No Payment Schedule” and “A Superseded Payment Claim” definitely raises a real question to be tried. In reaching that conclusion I have borne in mind Mr. Burnside’s exhortation not to overlook that any judgment, whether summary or not, is only provisional pending the final determination of the right of the parties. Nevertheless, this does not seem to me to be an appropriate case for summary judgment.

IMPACT

This case confirms the Victorian Supreme Court’s position that recovery of the claimed amount as a debt due pursuant to section 16(2)(a) of the Act is only possible where there is no real question to be tried.

This publication is intended to be a topical report on recent cases in the construction, development and engineering industries. This publication is not intended to be a substitute for professional advice, and no liability is accepted. This publication may be reproduced with full acknowledgement.

Jim Doyle

Tel.: 1800 888 783

jdoyle@doylesconstructionlawyers.com
www.doylesconstructionlawyers.com