Southern Region Pty Ltd v Minister for Police & Emergency Services for and on behalf of the State of Victoria [2003] VSCA 105

6. In this appeal the appellant is the contractor and the respondent the principal under a building contract entered into on or about 28 November 1997 by which the appellant agreed to construct the new police and court complex at Ballarat for the contract sum of $17,866,000. The general conditions of the contract were relevantly contained in Australian Standard Form AS2124 (1992) and, so far as relevant, were unamended. The functions of the superintendent under the contract were performed, initially, by the Building Services Agency and thereafter by Sinclair Knight Mertz Pty Ltd.

9. During the construction period, which ran from December 1997 to May 2000, the appellant submitted progress claims from time to time in accordance with clause 42 of the general conditions. The superintendent issued progress certificates in respect of the work and the minister paid the appellant in accordance with those certificates. On or about 15 May 2000 the superintendent issued a certificate of practical completion. Pursuant to clause 37, the defects liability period therefore came to an end on 14 May 2001 and on 15 May 2001, acting under clause 42.7 of the general conditions, the appellant submitted its final payment claim, which it re-submitted in slightly amended form (to correct an obvious mistake) on 17 May 2001. In each case the sum claimed was $7,698,951. The superintendent did not respond to this claim within the time prescribed by clause 42.8,[1] maintaining instead, inter alia, that due to incompleteness of various components of the work, a final certificate could not be issued as yet. By reason of the failure of the superintendent to issue a final certificate, the appellant contended that it was entitled under clause 42.1 to payment of its final payment claim without deduction.

12. 4 On 27 June 2001 the appellant commenced this proceeding, claiming payment of the sum of $7,698,951 (or damages) with interest and costs. On 10 July 2001, the appellant, as plaintiff in the proceeding, made application for summary judgment. The respondent, as defendant, unsuccessfully sought a stay. On or about 20 July 2001, and thus after the filing of the summons for summary judgment, the superintendent purported to issue a final payment certificate as contemplated by clause 42.8. According to that certificate, the principal was not liable to pay the contractor the sum of $7,698,951 (as claimed by the appellant); instead the contractor was liable to pay to the principal the sum of $1,880,570.

15. The summons for final judgment came on for hearing in the Trial Division on 28 September 2001 and a decision was given in favour of the respondent on 26 October 2001. The facts are fully set out in the reasons for judgment then delivered and it is unnecessary to go into them in any detail. Suffice it to say that there were four issues identified by the judge:

1. Was the contractor entitled to submit a final payment claim on 15 or 17 May 2001 given that a separate defects liability period, which [if established] was established on 13 May 2001, had not expired?

2. Was the final payment claim in form ineffective?

3. Does the default procedure for payment under cl.42.1 apply to a final payment claim?

4. Is the liability of the principal under the default payment procedure affected by the subsequent issue of a final payment certificate?

22. On 26 October, the judge answered question 1 by holding that a separate defects liability period had not been established on 13 May 2001 as the principal had claimed, for the steps taken to establish it were too uncertain. The contractor's claim was therefore not premature.[2] Question 2, which was whether the final payment claim made by the contractor was in form ineffective, was, his Honour found, a triable issue. The answer to the question depended, in his view, upon whether the claim made had been "supported by evidence of the amount due to the Contractor and such information as the Superintendent may reasonably require" and that, it was held, needed further investigation. On the basis that that was a triable issue, it became "not necessary [to] express any view upon the third and fourth issues", and so the judge refrained from doing so.[3] His Honour concluded, "The application for summary judgment will be dismissed", and, in the circumstances, that was plainly tantamount to the granting of unconditional leave to defend: see and compare R.G. Carter Ltd. v. Clarke.[4]

25. But that was not the end of it; for when judgment was delivered on 28 September and before any formal order was pronounced, the parties joined in seeking to have the judge reconsider the matter in the light of what the judge called "a piece of evidence which uncontrovertibly shows that the Contractor's points of claim in the arbitration were sent to the Superintendent on 2 April 2001 by the solicitors for the Contractor"[5]. This, it was said by the appellant, went to amplify the "evidence" in support of the final payment claim made by the contractor and hence the need for reconsideration.[6] Accordingly, the summons for final judgment was further argued on 1 November 2001. On 23 November 2001 his Honour announced his decision, confirming the conclusion he had reached on 28 September.

28. In the substantial reasons for judgment delivered on 23 November, the judge considered, first, whether the material to which attention had lately been drawn was "sufficient to satisfy the requirements of the first paragraph of cl.42.1 that the claim be `supported by evidence of the amount due to the Contractor'". His Honour found that it was not, or at least not wholly, and on that ground re-affirmed his earlier conclusion that there was a triable issue whether the contractor's payment claim of 17 May 2001 "failed to satisfy the requirements of the first paragraph of cl.42.1 and [was] therefore ineffective"[7]. Thus far, his Honour was plainly of the view that the respondent should have leave to defend.

31. Any present difficulty has come about because of what his Honour then added. In paragraphs [19] and [20] of the reasons of 23 November, his Honour said:

"This conclusion carries with it the consequence that there is a triable issue that the failure of the superintendent to issue a certificate within time cannot bring into play the provisions of the fourth paragraph of cl.42.1. Accordingly, the contractor's application for summary judgment must fail. Nevertheless, in case this conclusion should not stand, and in deference to the arguments put on behalf of the parties, I shall deal with two remaining issues in this application."

35. His Honour then proceeded to consider the third and fourth of the questions earlier identified. Question 3 was whether the default procedure for payment under clause 42.1 applied to a final payment claim and question 4, whether the liability of the principal under the default payment procedure was affected by the subsequent issue (albeit late) of a final payment certificate. Question 3 was answered yes, but so was question 4. In his Honour's view, on the proper construction of the general conditions, the default procedure did apply to the final payment claim and so he said (in paragraph [39]):

"The consequence of this is that on 14 June 2001 the Principal became obliged to pay to the Contractor the sum of $7,698,951 claimed."

But because the late issue of a final certificate also had effect, his Honour concluded (in paragraph [51]):

"It follows that on 3 August 2001, 14 days after the issue of the Final Certificate, the liability of the Principal to pay $7,698,951 which had arisen on 14 June 2001, 28 days after the receipt of the Final Payment Claim, was replaced by a liability in the Contractor to pay to the Principal the sum of $1,880,570."

"For this reason, too, the Contractor's claim for summary judgment must fail."

As authenticated, the formal order of the Court was that the application of the plaintiff for summary judgment brought by summons filed on 10 July 2001 be dismissed, with costs.

44. On 22 February 2002, the appellant sought and obtained leave to appeal from the order of dismissal made on 23 November 2001, leave which the respondent would have us now rescind. Had there been no reconsideration of the matter on 23 November, and had the order of dismissal been made in consequence of the reasons for judgment given on 26 October 2001, I have no doubt but that the appellant, as plaintiff in the proceeding, must have had no right of appeal. That is because of the longstanding provision which is now s.17A(6) of the Supreme Court Act 1986, a subsection which reads:

"An appeal does not lie to the Court of Appeal from an order giving unconditional leave to defend the proceeding."

As already stated, in the circumstances of this case his Honour's order that the application for final judgment be dismissed was tantamount to an order giving unconditional leave to defend - or so it was, if reference is made only to the reasons given on 26 October.

49. Nor, in my view, was that position altered when his Honour, on 23 November, re-affirmed his earlier conclusion that there was a triable issue whether the payment claim made on 17 May satisfied the requirements of the first paragraph of clause 42.1. If difficulty arises, it arises because of his Honour's proceeding then to consider questions 3 and 4, both of which were determined on his Honour's view of the proper construction of the contract - and while the first was determined in favour of the appellant, as plaintiff, the second was plainly determined against the appellant and in such terms as to amount, at least arguably, to a final conclusion on the point shutting out the appellant's claim against the respondent, once and for all.

52. No doubt it was this last aspect which weighed with the Court when leave to appeal was given on 22 February 2002, but, in concluding as he did that the liability of the principal to pay $7,698,951 had been replaced by a liability in the contractor to pay to the principal $1,880,570, I am clear that his Honour went beyond what was open to him on the plaintiff's application. I hasten to add that I express no opinion on whether or not his Honour was correct in the construction he placed upon the terms of the contract: that is not presently in issue. What is in issue is his Honour's power, on a plaintiff's summons for final judgment, to reach a final conclusion on the construction of the contract, when that conclusion is adverse to the plaintiff.

55. It may be accepted that, whenever summary judgment is sought, it is open to the judge (when circumstances warrant) to reach a conclusion on a question of law, even one involving argument, if at the end of the day he regards the matter as plain. That will be appropriate if and only if the conclusion is in aid of the grant of summary judgment. When summary judgment is sought by a plaintiff, the question is whether justice dictates that the proceeding lead forthwith to judgment as sought and if, even after argument, the judge is satisfied that the plaintiff's claim must succeed, it will ordinarily be appropriate that summary judgment follow. But it is otherwise if the judge fails to reach that state of satisfaction. If, whether the argument is brief or long, the judge apprehends that there is, at least arguably, a weakness in the plaintiff's case which may mean that the plaintiff will not in the end succeed, the appropriate course is to allow the matter to go to trial on the basis that there is a triable issue of law or (as here) of fact, or both. An application by a plaintiff for summary judgment is not the occasion for determining, adversely to the plaintiff and finally, a question of law which has been debated. Such may be done when it is ordered that a preliminary issue be determined before trial; but that is a procedure quite different from a plaintiff's application for summary judgment. Compare also Rule 23.03, under which it is the defendant who may seek summary judgment.

58. In this case, question 4, the effect of the superintendent's final certificate which was late, was much debated below. If his Honour was satisfied, after argument, that the plaintiff's claim had to succeed, it might well have been appropriate for him to determine the issue; but that was not the case. After argument, his Honour was satisfied that the plaintiff had to fail, and in so expressing himself his Honour went beyond the bounds of what was permitted on the application for final judgment. Apprehending that the point which was argued was a difficulty in the way of the plaintiff's claim to payment of $7,698,951 (as his Honour plainly did), the judge ought, with respect, have granted leave to defend; as his Honour himself put it, in conclusion: "For this reason, too, the Contractor's claim for summary judgment must fail." Yet because the reasons for judgment, supporting that expression of opinion, appear to determine the matter once and for all, and finally, there is difficulty.

61. It is not altogether easy to decide what should be done on this application by the respondent which amounts in effect to an objection to competency despite the grant of leave and, I might add, an objection to competency taken late. First and foremost, it is important to emphasise that, at least in my view, this Court should express no opinion on whether the judge was right or wrong in the construction he placed on the general conditions of the contract when considering questions 3 and 4. What his Honour said was obiter dicta in view of his earlier finding of a triable issue. His Honour said as much, when at the conclusion of his reasons for judgment on 26 October 2001[8] he opined that his finding of a triable issue over the effectiveness of the final payment claim lodged on 17 May 2001 made it unnecessary to express any opinion on questions 3 and 4. And, when on 23 November 2001, his Honour confirmed the earlier finding of a triable issue, it followed (he said) as a necessary consequence "that the failure of the Superintendent to issue a certificate within time cannot bring into play the provisions of the fourth paragraph of cl.42.1"[9] - or in other words, the default procedure which was the subject of question 3. In concluding that the default procedure was called into operation, his Honour was plainly considering the matter upon the assumption - and the unstated premise - that the final payment claim submitted on 17 May 2001 was valid and effective, despite any failure, if such there was, to provide supporting evidence. And to the extent that the opinions expressed on questions 3 and 4 were obiter dicta, it is appropriate that we should refrain from expressing any view on their correctness or otherwise.

64. If we are now agreed that the expressions of opinion below on questions 3 and 4 were at least inappropriate if not altogether unnecessary, any difficulty that might be caused to the appellant by the later reasons for judgment would seem to be removed. If, as I think, those questions were largely academic, the appellant does not face a conclusion, expressed finally in the proceeding, about the meaning and effect, or the proper construction, of the terms of the contract. The decision below should be taken, in my view, to be a decision only that there is an arguable case - or triable issue - on question 2 and, to the extent that they arose for consideration, on questions 3 and 4. There being a triable issue, it was appropriate that the application for final judgment be dismissed, in the sense which is tantamount to the granting of unconditional leave to defend. When so confined, the decision below can be seen to be no more and no less than a decision falling squarely within s.17A(6) of the Supreme Court Act, and hence there is no right of appeal and a grant of leave to appeal was simply not open.

67. This morning we were told by counsel for the appellant that when on 23 November 2001 the judge announced his decision and delivered reasons for judgment, there was some debate about the form of the order. Apparently when his Honour indicated, consistently with the reasons for judgment, that he would grant unconditional leave to defend, counsel for the defendant drew attention, in effect, to the statutory prescription on the right of appeal to be found in s.17A(6). Counsel for the plaintiff then sought a different order and hence, it was suggested to us, the order dismissing the application simpliciter. I am by no means clear that the judge himself saw any difference between the two: after all, his Honour himself had concluded his reasons for judgment on 26 October by stating that the plaintiff's application would be dismissed. Be that as it may, I do not consider that the altered formulation of the order makes any difference in substance: to dismiss a plaintiff's application for summary judgment is tantamount to granting the defendant unconditional leave to defend at least when the reasons given for the order are that there is an issue for trial. In this instance, the judge simply confirmed on 23 November his earlier decision that question 2 raised a triable issue: and therefore the fact that he then went on to add that, in any event, question 4 should be answered adversely to the plaintiff, did not convert the order so as to make it susceptible to appeal. One may guess that plaintiff's counsel was of opinion that, in having his Honour re-frame the order, s.17A(6) was being circumvented; but if that was the view taken, it was in my opinion error. Nor is it to the point that the plaintiff might have appealed without leave, had judgment been given there and then for the defendant: the plaintiff did not consent to that course, nor did the defendant invite it.

70. No doubt anxious to obtain, if he could, a ruling from this Court reversing the opinions expressed below, Mr Burnside submitted to us that, leave to appeal having been given, this Court could not rescind or revoke it, even if satisfied now that leave could not be given consistently with the statute. Only the High Court could reverse the earlier decision, he submitted: this Court could not do so, as the question was one of power, not discretion. In my opinion, the Court, having granted leave to appeal, has the power to rescind its order once satisfied that the order was made without jurisdiction: indeed I would regard it as an obligation. There can be nothing gained by leaving stand an earlier order once we are satisfied that there was no jurisdiction to make it; the earlier order cannot create a jurisdiction to entertain an appeal which is proscribed by statute. That was the submission of Mr Levin and I accept it.

73. Nor is Mr Burnside's argument advanced by considering what might have been done, but was not. For instance, let it be supposed that the judge had granted leave to defend, perhaps limited to question 2; that would not have been subject to appeal because of s.17A(6). But had the parties, in addition, then joined in obtaining from the judge his decision on, say, question 4 as if an order had been made for the determination of that question by way of preliminary issue, the plaintiff might have

had a right of appeal if leave was obtained. But such a grant of leave would plainly be discretionary and once granted such leave can be rescinded or revoked - and Mr Burnside accepted as much. Either way then, this Court has the power to rescind the leave earlier granted. It is, after all, the fact that the parties have been locked in an arbitration for some time now, a decision shortly expected, and that may well resolve finally such matters of payment as are in dispute.

77. For these reasons I would rescind the leave given on 22 February 2002, remitting the proceeding to the Trial Division for trial, and presumably that trial must now be before a different judge. Although entitled to respect, the opinions expressed in the reasons delivered on 23 November cannot be regarded as binding in the further trial of the proceeding. It is perhaps unfortunate that, after this lapse of time, the appellant now finds that he has no appeal on foot after all, but that conclusion is driven by the statute. In my opinion we have no choice in the matter. If, as seemed possible from what we were told this morning, the appellant in particular was keen to have questions 3 and 4 determined by the judge in the Trial Division because of their importance in other cases arising out of contracts similarly worded, it is unfortunate that the appellant did not plan more carefully the orders that would have to be obtained in order to construct a right of appeal in the event that it was unsuccessful in the answers obtained to questions 3 and 4. The possibility of our reconstructing the orders given below has now been taken up with counsel, but it seems clear from what we have been told that at least on one side there was no consent below to having the judge determine finally the answers to questions 3 and 4. Those questions were raised for consideration on the hypothesis that the answer to question 2 was resolved favourably to the plaintiff and then only as further possibilities of a triable issue.

81. There can be no doubt that this Court has the power to rescind a grant of leave to appeal previously given by it, particularly when there was no jurisdiction to

85. For the reasons given by Phillips, J.A., it seems to me - upon reflection - that that is what we should now do. The plaintiff/appellant's application to the learned trial judge was for summary judgment pursuant to O.22 of the Rules of Court. By its claim, the appellant sought judgment for a sum in excess of $7.5 million which the appellant alleged was owed to it by the respondent pursuant to a construction contract in standard form AS22124-1992. The defendant/respondent resisted the appellant's claim and, after a hearing, the trial judge concluded that there were triable issues as to fact and law relating to the validity of the appellant's claim for payment; and further found that there were issues relating to the proper construction of the contract which, in his Honour's view, not only raised triable issues but should be determined in favour of the respondent. Accordingly, his Honour said that "for this reason, too, the [appellant's] claim for summary judgment must fail".

"The plaintiff's application for summary judgment brought by summons ... is dismissed."

We have been informed that following delivery of his Honour's reasons, and no doubt because of the fullness of those reasons in relation to the construction of the contract, there was some discussion between counsel for the parties as to the form which his Honour's order should take lest it should impinge upon the contractor's capacity to apply for leave to appeal to this Court against his Honour's reasons in respect of the "contract construction" points. Accordingly, his Honour reserved to the contractor, "liberty to apply for leave to the Court of Appeal as it may be advised".

93. In fact the contractor did apply to this Court (comprising Chernov, J.A. and myself) in February of last year. It appears to have been accepted that the trial

judge's orders were interlocutory in nature; indeed it is readily apparent that they did not finally determine the rights of the parties in the litigation notwithstanding the forceful reasons given by his Honour in respect of the contract construction issues raised before him. This Court granted leave on the basis that the judge's order dismissing the application for summary judgment should not be taken as the equivalent, in the circumstances, of a grant of leave unconditionally to defend the action. Upon reflection, and after hearing counsel this morning, I regret to say that I do not believe that view was correct. It seems to me that, for the reasons which have been advanced by Phillips, J.A., we should now rescind the leave to appeal granted by the Court and remit the matter to the Trial Division for further hearing. The regret which I have expressed stems from the fact that the application by the respondent to rescind the leave previously granted, on the basis that the appeal is incompetent, has come so late in the day.

1. Leave to appeal granted by this Court on 22 February 2002 is rescinded.

2. Action remitted to the Trial Division for further hearing.

[1] Under clause 42.8 the superintendent is required to issue a final payment certificate within 14 days after the receipt of the final payment claim.

[2] See Reasons for Judgment, paras.[25] and [26].

[4] [1990] 1 W.L.R. 578 at 583 per Lord Donaldson M.R. In England, however, there has been no statutory prescription like our s.17A(6) since 1981.

[6] As it happens, the evidence in question is now challenged: for it is submitted by the respondent (the principal) that the points of claim were sent to the superintendent, not by the solicitors for the contractor, but by its own solicitors; but that does not matter for present purposes.

[10] Sanofi v. Parke Davis Pty Ltd (No.1) [1982] HCA 9; (1982) 149 C.L.R. 147 at 153; [1995] VICSC 219; [1996] 1 V.R. 457 at 460; Coles Myer Ltd v. Bowman [1995] VICSC 219; [1996] 1 V.R. 457 at 460.