Walpole Pty Ltd v Rangeville Manor Pty Ltd [2000] VCAT 11

Walpole Pty Ltd v Rangeville Manor Pty Ltd [2000] VCAT 11 - VCAT 2000 case summary — Zoe

[19]

The issue raised by me with the parties as to jurisdiction relates to the second contract which is a contract for the construction of a 56 bedroom "aged-care facility." At the commencement of the hearing of this application before me I raised with the parties my concern that the contract for construction of the aged care facility, in reality relates to the construction of a "nursing home." A nursing home is excluded by s.3 of the Domestic Building Contracts Act 1995 from the definition of "home." If the facility is a nursing home the Tribunal has no jurisdiction to hear the part of the proceeding which relates to its construction. The parties advised me that the aged-care facility is not designed to be a nursing home and that the only requirement for entry as a resident is that the residents be above the age of 55 years. The parties advised me that there is no requirement for any person who is to be resident at the facility to be suffering from any disability and that the residents of the facility are free to come and go from the home as they wish. I requested that a plan of the facility be produced before reaching any decision about the matter of jurisdiction. After a short delay a plan of the aged-care facility was tendered by the respondents (Exhibit "1"). Somewhat unfortunately, taking into account the tenor of the issues of concern raised by me with the parties, the plan bore the title; '"The Willows" nursing home.' However, notwithstanding the title of the plan a consideration of the plan by me revealed that there are 56 bedrooms, each of which has its own en suite bathroom. The facility has a communal dining and lounge room. It has a chapel and a hairdressing facility as well as a private dining facility. There is no nurse's station nor is there any surgery or medical post. While provision is made for a drug room, and the doorways and corridors appear to be wider than usual and consistent with a facility which may have beds taken out of rooms, the facility does not otherwise bear many of the hallmarks of a nursing home. For example there is no mortuary. Butterworths Australian Legal Dictionary refers to the term 'nursing home' in the following terms:

[43]

It is not necessary to set out in full detail here the chronology of the disputes which arose between the parties near the conclusion of the work. The Contractor asserts that most progress payments paid under both contracts were substantially underpaid by the Proprietor and in most cases were paid late. It asserts that practical completion of the ACF contract took place on 29 November 1999 when tenants took possession of the site and commenced the delivery of furnishings. It asserts further that delays beyond the contracted completion dates took place partly because of inclement weather, but substantially because of the failure of the Proprietor to pay most progress claims either in full or on time. The Proprietor on the other hand asserts that progress payments as claimed were not paid in full because the Proprietor made payments directly to trade creditors of the Contractor and also paid for materials which were the contractual responsibility of the Contractor. (Barrington, by Exhibits WMB3 and WMB4 to his affidavit sworn 22 February 2000 set out summaries of the deductions made from progress payments but provided no receipts, invoices or other original documents in respect of such deductions.) The Proprietor asserts that it was apparent from July 1999 that the Contractor was not proceeding with the works with due diligence. The Proprietor asserts that it was because of this failure that a "final notice" was sent from the Proprietor to the Contractor pursuant to Clause 16 of both contracts providing 14 days in which the Contractor was to rectify defects in respect of both contracts. The Proprietor asserts that both contracts were lawfully terminated by notice dated 22 January 2000. The Proprietor claims that the Proprietor became entitled to have recourse to the Retention Fund pursuant to the provisions of Clause 16 of each contract upon such termination. In particular, the Proprietor asserts that between 22 January 2000 and 12 February 2000 the sum of $101,422 was paid by it to creditors of the Contractor and for the purchase of materials and services required to complete the works. The Proprietor asserts that as at 19 February 2000 the Contractor owed it a debt of $171,501.

[47]

As a general principle a mandatory interlocutory injunction requires a high degree of assurance that the Applicant will succeed at trial. Data Force Pty Ltd & Ors v Brambles Holdings Ltd [1988] VicRp 73; [1988] VR 771 and T R Nominees Investments Pty Ltd v Multiplex Constructions Pty Ltd & Anor 12 BCL 219 (Supreme Court of Victoria, 11 December 1995, Byrne J.) Although there does appear to be a basis from which it may be said that many of the Contractor's difficulties were caused by the failure of the Proprietor to promptly and fully pay progress claims, it is not possible on the material present before me to conclude with a high degree of assurance that the Contractor will finally succeed in its claim against the Proprietor. However, Mr Laird of Counsel for the Contractor submits that the fact that retention monies were to be held on trust by the Proprietor is an issue of significance which distinguishes this application from the usual application for mandatory injunction. He submits that as the Proprietor is both trustee and a co-beneficiary with respect to the Retention Fund, it owes the Contractor a fiduciary duty to ensure that that position of trust is not abused for personal gain. An injunction may be granted to restrain an apprehended breach of fiduciary duty or the continuation of an existing breach (see Park v Dawson [1965] NSWR 298). The Contractor submits that the retention money should have been held in a separate trust account and because the Proprietor has failed to establish such a trust account it is in breach of its duties. It is clear that the Proprietor at no stage created any separate account to hold the retention monies on trust. In a letter dated 10 February 2000 addressed to the solicitors to the Contractor, the solicitors for the Proprietor stated that the retention monies were held in two bank accounts at the Ringwood branch of the ANZ bank. However it is clear that one of these accounts is a trading account and it is also clear that the retention money is (or was) mixed in with other money. Furthermore the sums of money then in both accounts bore no similarity to the sums which should have formed the retention fund under each contract. In KBH Construction Pty Ltd v Lidco Aluminium Products & Ors (1992) 7 BCL 183 Giles J considered a similar issue arising under a JCC form of contract. In the course of his judgment His Honour helpfully reviewed a number of other authorities relating to whether or not retention monies might be regarded as being held on trust and whether or not any obligation arose to hold such retention monies in a separate account or in a separate fund.

[52]

If I could be satisfied with a high degree of assurance that the Contractor will succeed in establishing that the contract was not validly terminated on 22 January 2000 and furthermore that practical completion of the works the subject of the ACF and ILU contracts was achieved prior to termination of the contracts, it appears to me that I would be entitled to order that the monies appropriated to the retention fund be placed in a separate fund and held on trust pending the hearing of this proceeding. I do not have a high degree of assurance that the contracts were unlawfully terminated on 22 January 2000. This is an issue which requires the hearing of all of the evidence and no doubt the evaluation of the credit of the two major principals in this case. However, it must be remembered that the only right of recourse to the trust fund if the contract was validly terminated relates to the right of the Proprietor to call in any other person or persons to complete the works and to pay such person or persons the costs of completion out of any monies which would otherwise be or become payable to the Contractor. It is apparent in the circumstances of this case that the monies which were deducted from the progress payments pursuant to the contracts were mixed in with other monies of the Proprietor and were paid out for a variety of purposes other than the specific payment of completion of the works. Accordingly, in my view, it is appropriate to look at such sums as may have become properly open to be deducted by the respondent from the retention fund in respect of each contract. In his affidavit sworn 22 February 2000, Barrington stated that purchases of materials and services required to complete the work, which was incomplete under both contracts at the date of termination, totals $98,206.35. Exhibit "WMB 13" to that affidavit set out a summary of total payments made by the Proprietor. That summary however provides no detail of the sums allegedly incurred in order to complete the works. The summary includes an estimate of $32,600 being "other costs" which were required to complete the works. However in terms of practical completion it is apparent that the ILU contract of 21 independent units was near to completion at the time of purported termination. Eleven certificates of occupancy were provided before 22 January 2000. The remaining ten occupancy certificates were issued on 24 January 2000 (ie. two days after the notice of termination was purportedly provided to the Contractor). The Proprietor has provided no specific details or documentary evidence of the nature of work requiring sums to be incurred by it in calling in any other person or persons to complete the works after the alleged default.

At a glance

Court

Decision date

Before

Source

Judgment (63 paragraphs)

Walpole Pty Ltd v Rangeville Manor Pty Ltd [2000] VCAT 11 (21 March 2000)

Parties

Legislation Cited (1)