Hawkins Construction (Australia) Pty Ltd v Mac's Industrial Pipework Pty Ltd

COUNSEL : Mr V Gray for the Appellant Mr R D Marshall for the Respondent SOLICITORS : Albert A Macri Partners Solicitors for the Appellant Turnbull Hill Lawyers for the Respondent CATCHWORDS : Contracts - whether Building & Construction Industry Security of Payment Act 1999 applied to contract entered into after commencement of the Act - whether payment claim satisfied requirement of the Act - Corporations - whether employed solicitor may sign a statutory demand on behalf of client LEGISLATION CITED : Building and Construction Industry Security of Payment Act 1999, s5, s7, s13, Schedule 2 Corporations Act 2001 (Cth), s459E Deputy Commissioner of Taxation of Victoria v Boxhall (1998) 83 ALR 175 CASES CITED: Hawkins Construction v Mac's Industrial Pipework [2001] NSWSC 815 Metropolitan Waste Disposal Authority v Willoughby Waste Disposals Pty Ltd (1987) 9 NSWLR 7 Re Reference Under s 11 of the Ombudsman Act (1979) 1 ALD 86 DECISION : Summons for leave to appeal dismissed with costs.

• 1 -IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40779/01

Handley JA Stein JA Davies AJA

Thursday, 7 May 2002 Hawkins Construction (Australia) Pty Limited (ACN 088 362 627) v Mac's Industrial Pipework Pty Limited (ACN 002 139 826) Judgment 1 Handley JA: I will ask Davies AJA to give the first judgment. 2 Davies AJA: The Court has heard counsel for the claimant on both the application for leave to appeal and on the appeal should leave be granted. 3 I do not propose to discuss all the issues which have been raised. The learned trial judge, Windeyer J, set out clearly in his reasons for decision the issues that were raised for determination and explained persuasively why those issues should be resolved in favour of the present opponent, who was the defendant below. 4 I see no error in his Honour's judgment or reasons for judgment, nor any need to repeat the reasons already expressed by his Honour as to why the submissions put on behalf of the claimant, who was the plaintiff below, should be dismissed. 5 I shall mention specifically only three of the issues which have been debated. 6 The first is whether the Building and Construction Industry Security of Payment Act 1999 ("the Act") applied to the contract between the opponent as contractor and the claimant as head contractor. 7 The claimant was the head contractor on the construction of the Singleton Abattoir. During the course of that construction, the claimant invited tenders from contractors to install the hot and cold water reticulation system on the site, which was part of the works covered by the head contract. The opponent was the successful tenderer and, accordingly, the claimant and the opponent entered into a contract in July 2000 for the installation by the opponent of the hot and cold water reticulation system. 8 Relevant provisions of the Act came into force on 26 March 2000. Section 7(1) of the Act provides: (1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies even if the contract is expressed to be governed by the law of a jurisdiction other than New South Wales.

Section 4 of the Act defines construction contract as: a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party.

Schedule 2 to the Act, which deals with savings and transitional provisions provides inter alia: 2. A provision of this Act does not apply to a construction entered into before the commencement of that provision. 9 The submission has been put on behalf of the claimant that the Act did not apply to the subject contract because the work contracted to be performed was already a part of the works specified in the head contract for the construction of the Singleton Abattoir and therefore, it was submitted, the subject work was part of the works required by a contract which, having been entered into before the commencement of the Act on 26 March 2000, was construction work to which the Act did not apply. 10 However, as Windeyer J explained, subs (7)(i) of the Act and Schedule 2 cl 2 speak not of "construction work", a term which is defined in s 5, but of "construction contracts". 11 In the present case, cl 2 of Schedule 2 did not operate as the construction contract was entered into after the commencement of the relevant provisions of the Act. 12 The second issue is that the statutory demand which was before his Honour was signed by Penelope Hunter as "Solicitor for the Creditor". Section 459E of the Corporations Act provides, in subs (2)(f), that the statutory demand must be signed "by or on behalf of the creditor". 13 Because of the inclusion of the words "on behalf of the creditor", the problem which was discussed by Brennan J in Re Reference Under s 11 of the Ombudsman Act (1979) 1 ALD 86 and by Lockhart, Burchett and Gummow JJ in Deputy Commissioner of Taxation of Victoria v Boxhall (1998) 83 ALR 175, as to whether a given act is one which a person or authority may authorise another to perform on his behalf, does not arise. The words "on his behalf" are the traditional terms used to describe the act of an agent. 14 As the statutory demand may be signed by an agent for the creditor, Miss Hunter was entitled to sign the statutory demand in her own name as agent for the creditor, which she did, describing herself as solicitor for the creditor. 15 The prescribed form of statutory demand, Form 509H, contains the following note: The form must be signed by the creditor or the creditor's solicitor. It may be signed on behalf of a partnership by a partner, and on behalf of a corporation by a director or by the secretary or an executive officer of that corporation.

The creditor's solicitor may be either a principal or an employed solicitor. It is sufficient that the solicitor has the authority of the creditor to make the demand on the creditor's behalf. 16 Although Miss Hunter was not a partner in the firm of solicitors retained by the opponent, Messrs Turnbull Hill, she was a solicitor and was entitled to sign the statutory demand if authorised to do so by the opponent. In Metropolitan Waste Disposal Authority v Willoughby Waste Disposals Pty Ltd (1987) 9 NSWLR 7 at 11, Cohen J said: In my opinion if a firm of solicitors... is given general authority to carry out the necessary steps for the winding up of a company, and if one of those steps involves the signing of a notice of demand then that firm... is entitled to use its properly accredited employees in the exercise of the powers given by the client. Further I am of the opinion that the employee, acting within the scope of his employment, could be said to be signing on behalf of the client. 17 If a solicitor signs a statutory demand on behalf of the creditor, then absent evidence tending to show that the solicitor was not so authorised, the Court will proceed on the footing that the solicitor was authorised as the solicitor claimed to be. The presumption omnia praesumuntur rite esse acta applies. 18 In the present case, there was no evidence that Miss Hunter was not so authorised. 19 The last issue on which I should make comment is that s 13 of the Act provides inter alia (2) A payment claim: (a) must identify the construction work (or related goods and services) to which the progress payment relates, and (b) must indicate the amount of the progress payment that the claimant claims to be due for the construction work done (or related goods and services supplied) to which the payment relates (the claimed amount) and (c) must relate that it is made under this Act.

Counsel for the claimant submitted (b) There is no provision in the SOP Act which provides for "substantial compliance" or for defective documents to be valid and effectual unless the defect causes or is likely to cause substantial injustice, etc. Therefore compliance with a mandatory requirement of the SOP Act must be strictly observed, there is no room for "minor" or "inessential" non-compliance. (This is expected because of the revolutionary changes in construction industry practice wrought by the SOP Act and the mandatory and inflexible temporal restrictions on the steps which each party is required to take under the Act.) 20 However, subs (2) of s 13 of the Act should not be approached in an unduly technical manner keeping in mind the considerations to which counsel pointed. The terms used by subs (2) of s 13 are well understood words of the English language. They should be given their normal and natural meaning. As the words are used in relation to events occurring in the construction industry, they should be applied in a common sense practical manner. 21 Windeyer J held that the requirements of subs (2) of s 13 were satisfied by the opponent's payment claims. I see no error in his Honour's conclusion. 22 In my opinion, the points raised on behalf of the claimant are not of sufficient merit to justify the grant of leave to appeal. I would refuse leave to appeal and order that the claimant pay the opponent's costs of the proceedings. 23 Handley JA: I agree. 24 Stein JA: I also agree with Davies AJA and with the orders which he proposes. 25 In my view, the application to the Court should be refused for the reasons given by the trial judge, Windeyer J. The application before the Court is lacking in merit and substance and displays, in my view, an unjustified technical approach to the law. 26 In particular, I endorse what his Honour said at paragraph 8 of his judgment concerning the argument about the incorrect naming of the relevant Act in the payment claims. His Honour said: The second argument was that because the payment claims abbreviated the name of the Act, they did not fulfil the statutory requirement to name the Act. This argument might have had some weight in 1800. In 2001, an argument based on the absence of the word "and" and the letters "ustry" has no merit. It should not have been put. 27 Handley JA: The order of the Court therefore is summons for leave to appeal dismissed with costs. -oOo-

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