The Act was assented to and commenced on 26 March 2001.
Does the Act apply to the contract?
6 The plaintiff submitted two arguments against the application of the Act to the July contract. First, the plaintiff contends that the second contract was merely a variation to the first contract, which predated the Act and so was not subject to its regime. The first contract contained provisions for such variation. I am not sure whether this argument was abandoned during the hearing, but if it was then this was done correctly. It is clear that the second contract was separate from the first. The separate tendering process is sufficient to establish this. The second contract was independent and not a variation of the first.
7 Secondly, the plaintiff argued that the Savings and Transitional Provisions in Schedule 2 of the Act operate to preclude the second subcontract from the operation of the Act. If this reading is correct, Hawkins could continue to enter into subcontracts on the Singleton Abattoir project and these would not be subject to the Act. The contention is that the construction of the Singleton Abattoir is "construction work" as defined in s5 of the Act and any sub-contracts Hawkins' entered into were for the provision of "related goods and services" as defined in s6. Further it was argued that if the contract for construction work was not subject to the Act, then none of the contracts for related goods could be subject. This could not be correct. The Act defines a "construction contract" as both a contract for construction work and a contract for the supply of related goods and services. The periodic payment regime the Act sets up applies to both. Whether the contract between Hawkins and Mac's was for construction work or for related goods and services, it was a construction contract to which the Act applied. To find otherwise would undermine the legislative intention and be contrary to the stated objects of the Act.
Has the Act been complied with?
8 Mr Gray contended that the payment claims served on the plaintiff by the defendant before the issuing of the Statutory Demand were ineffective because they did not comply with sections 13(2)(a) and(c) of the Act. The arguments were that they contained the incorrect contract number and abbreviated the name of the Act under which the claim was made, referring to it as the "Building Construction Ind Security of Payments Act 1999". As to the first, while the contract number may have been wrong in some cases, the claims did identify the work done. 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.
Was the statutory demand valid?
9 The statutory demand was signed by a Penelope Hunter who identified her capacity as "Solicitor for the Creditor." The demand was made under s459E of the Corporations Law, which provides, in sub-section (2)(f), that the Statutory Demand must be signed "by or on behalf of the creditor". It clearly purports to be signed on behalf of the creditor, but Ms Hunter is not a partner in the firm of solicitors retained by the defendant, Messrs Turnbull Hill Solicitors. The plaintiff contends that she cannot sign "on behalf of" the creditor. This issue was considered by Cohen J dealing with an identical provision in the then operative Companies (New South Wales) Code in Metropolitan Waste Disposal Authority v Willoughby Waste Disposals Pty Ltd (1987) 9 NSWLR 7 who said at p11:
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 the firm…is entitled to use its properly accredited employees in the exercise of the powers given by the client.
10 I take the phrase "properly accredited employees" merely to indicate that if a solicitor's signature is required then the person signing must be admitted and hold a practicing certificate. In general with changing company law legislation, decisions given on earlier acts should be followed when considering like provisions in later Acts. If there were no further legislative requirements, Ms Hunter's signature would be sufficient.
11 However, Mr Gray relied on the prescribed form of Statutory Demand, form 509H, which contains a note that states:
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.
12 This raises two issues: first, what is the legislative force of the notes; and secondly, whether the note has any bearing on the question here. Whatever the standing of the notes, they cannot override s459E(2)(f) of the Corporations Law. But leaving that aside the note does not have any bearing on this question. The reference to a partner signing on behalf of a partnership relates, I think, to situations where a partnership is the creditor. It does not limit the authority given by a creditor to its solicitors. The reference to persons who can sign for company creditors supports this view.
The amount of the claim.
13 The statutory demand was for $167,041.67. It is conceded by both sides that this amount should be adjusted because there is a genuine dispute as to part of the claim and the plaintiff also has an offsetting claim against the defendant. The defendant conceded amounts for both these claims, so I will adjust the claim to account for both these amounts under s459H.
14 The genuine dispute arises over two amounts: first, the plaintiff is entitled to retain five per cent of the initial contract price as security until the work is complete, and secondly, there are a few small figures, some of which the plaintiff claims already to have paid and one other that it claims is owed to the defendant by a third party. The former amount is $29,451.01 and the latter amounts total $1,851.01. Therefore the admitted amount under s459H(5) is $135,739.48.
15 The plaintiff's offsetting claim is based on defective work done by the defendant and it led evidence of the estimated amount it would cost to repair defective work done by the defendant. This amount was $33,775.92. The defendant conceded this amount. Therefore the substantiated amount of the claim under s459H(2) is $101,936.56. I intend to vary the amount of the demand to this figure under s459H(3).
16 Orders:
1. Dismiss the summons;