Cosmo Cranes & Rigging Pty Ltd v EQ Constructions Pty Ltd [2022] NSWDC 6

Andrew Hales | Jessica Nesbit  |  Tony Issa

Key takeouts

A court’s power to enter summary judgment will not be exercised lightly. Any party seeking an expedited determination of its case will need to demonstrate it has a reasonable prospect of successfully prosecuting its case against the other party.  A payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act) cannot be valid if it claims for work performed under two or more contracts.

Facts

In April 2018, Cosmo Cranes & Rigging Pty Ltd (subcontractor) agreed to supply crane hire and related services under hire arrangements with EQ Constructions Pty Ltd (builder).  At all times the subcontractor’s position in these proceedings was that 3 hire agreements had been entered into. The first of these was a subcontract under which a tower crane was supplied (hire agreement). The subcontractor argued this was varied in April 2021 for the supply of a ‘Maeda’ mobile crane.  Conversely, the subcontractor argued that a separate agreement had been entered into for the provision of the Maeda mobile crane (Maeda crane agreement). 

The subcontractor contended further that the hire agreement had been varied in June 2021 in connection with the supply of a brick cage.  In the alternative, the subcontractor argued that a separate agreement had been entered into for the provision of the brick cage (brick cage agreement).  At all times the builder denied the existence of any variation to the hire agreement but admitted these separate agreements. The parties agreed that each contract was a ‘construction contract’ for the purposes of the Act.

From April 2018 to April 2021, the subcontractor served a series of payment claims under the Act. These were paid in full.  In May and June 2021, the subcontractor served two payment claims for the amounts of $200,149 and $199,529 respectively and indicated that a component of the sums was for retention money held by the builder.  The builder did not pay these claims nor serve any payment schedule in relation to either payment claim. 

The subcontractor commenced proceedings to recover amounts owed under the payment claims relying on its rights under the Act. The subcontractor also argued, in the alternative, damages for breach of contract and restitution.  In respect of its statutory claim, the subcontractor applied for summary judgment. 

The builder resisted the subcontractor’s application on the basis that the payment claims were invalid as each was a claim for work performed under one or more contracts, namely the hire agreement, the Maeda crane agreement and the brick cage agreement.  Moreover, the builder submitted that it was at least reasonably arguable that when a claimant commences proceedings under section 15(2)(a)(i) of the Act (a debt sourced in statute), but adds common law claims in the same proceeding, it waives the right conferred under section 15(4)(b) of the Act to prevent the respondent from raising any defence in relation to matters arising under the construction contract.  It followed that the builder asserted that the subcontractor was itself in breach of contract, providing a platform for the defence of set-off.

To be successful in its application, the subcontractor needed to demonstrate a reasonable prospect of successfully prosecuting its case against the builder. The subcontractor argued that:

• the two disputed payment claims were made under a single hire agreement;
• there was no real doubt that the work which was the subject of the payment claims was pursuant to variations referable to that single hire agreement; and
• the builder was prevented from raising any argument that what occurred in April 2021 and June 2021 gave rise to more than one construction contract. Rather than as variations to the single hire agreement, on the basis that no payment schedule was served and, in failing to provide a payment schedule, was precluded from disputing that there were variations to a single construction contract under section 15(4)(b).

Decision

The court was not persuaded that it was not arguable for the builder to contend that there was more than one construction contract in relation to the work and services performed.  The court accepted that section 15(4)(b) limits the matters which a respondent may raise in opposition to a proceeding to recover a debt sourced in the Act. However, in order to obtain summary judgment, it was necessary for a claimant to establish that the respondent was liable to pay the debt.  Such debt would only arise where a valid payment claim had been issued under section 14(4)(a) of the Act. A payment claim cannot be valid if it claims for work performed under two or more contracts. 

The court held that the question of whether there was more than one construction contract was ultimately a question of fact.  The court’s view was that the subcontractor’s evidence was not conclusive of the issue.  This was particularly so given the subcontractor’s framing of the alternative separate agreement in its own statement of claim. 

The court also acknowledged that a point of construction in respect of section 15(4)(b) of the Act could arise.  The court considered it a novel argument that common law claims brought in conjunction with the subcontractor’s statutory claim constituted a waiver of rights under the Act.  Therefore, the court held that it would be inappropriate to preclude the builder from raising and developing this argument further. The court was particularly mindful of its need for caution before peremptorily terminating a proceeding involving novel points of law.

The court dismissed the subcontractor’s motion for summary judgment.