Title of Court: Magistrates Court of Tasmania (Civil Division)
Citation: Chugg v Goodwin [2012] TASMC 38
Parties: CHUGG, Aaron Christopher (Claimant)
v
GOODWIN, Samuel James ( Defendant)
File No/s: M 2012/3417
Hearing Date: 21 November 2012
Decision of: Magistrate R W Pearce
Delivered on: 29 November 2012
No. of paragraphs: 27
Catchwords:
Procedure - Inferior courts - Tasmania - Local Courts - Practice - Procedure before trial – Summary Judgment
Building and Construction Industry Security of Payment Act 2009 Magistrates Court (Civil Division) Rules 1998, r115
Simons Parsons & Co v Barker [2004] TASSC 135 , A J & S Constructions Pty Ltd v Aussie Trading House (International) Pty Ltd [1999] TASSC 77 , Woods v Deputy Commissioner of Taxation [2011] TASSC 68 applied
Representation:
Counsel:
Claimant: J C Kitto
Defendant: S J N Brown
Soilictor::
Claimant: J C Kitto
Defendant: McGrath and Co
Reasons for Decision
Preliminary
1. The claimant, Mr Chugg, is a builder. He claims the sum of $21,443.70 he incurred for legal costs and interest on that sum which he says are payable pursuant to the terms of a written building contract entered into between him and the defendant, Mr Goodwin, on 29 March 2010. By that contract Mr Chugg agreed to build three residential units on land at 61 Faulkner Road, Ravenswood in Tasmania.
2. Mr Chugg makes application for summary judgment on the claim. Mr Goodwin also makes application for summary judgment or alternatively for a stay of the action. For the reasons which follow each application will be dismissed.
Background
3. The statement of claim alleges that a building contract was entered into between Mr Chugg and Mr Goodwin on 29 March 2010 and contained the following term:
“12 Suspension of works
Should the Owner fail to pay or cause to be paid any progress payments within three days of the same becoming due and payable, the Builder may…suspend the Works and at the same time give notice of such suspension in writing to the Owner. The Builder shall recommence the works within fourteen days of the progress payment being made…and the builder may charge against the cost of the works all expenses and losses attributable to such suspension (emphasis added by the claimant)”.
4. The claim pleads that on or about March 2011, in reliance of clause 12 of the contract, Mr Chugg suspended the building work and issued a stop work notice dated 11 March 2011 for non-payment of progress payments of $76,745.73.
5. The evidence in support of the application indicates that Mr Chugg subsequently referred the dispute concerning the progress payments for adjudication pursuant to the Building and Construction Industry Security of Payment Act 2009 which I will refer to as the BCISP Act . An adjudicator was appointed. The adjudicator made a determination in accordance with s26 of the BCISP Act on 17 January 2012. The adjudicator determined that Mr Goodwin pay a payment claim issued by Mr Chugg on 30 November 2011 in the sum of $94,553.23 together with interest from 7 December 2011 and an adjudication fee of $8,228.00.
6. Pursuant to s27 of the BCISP Act the adjudication was filed as a judgment in the Supreme Court on 18 January 2012. On 10 February 2012 Mr Goodwin paid the sum of $106,733.44, being the amount of the adjudication and associated interest and fees.
7. The claimant engaged Mr Kitto, a solicitor in Launceston, on 10 October 2011 who advised Mr Chugg about his dispute with Mr Goodwin and the adjudication and attended to filing the adjudicator’s determination in the Supreme Court. Tax invoices for professional services rendered between October 2011 and February 2012 are produced totalling, with disbursements, $21,443.70. The Magistrates Court claim was filed on 28 June 2012 and seeks recovery of that sum. The basis of the claim is that the sum is payable pursuant to clause 12 of the contract. The sum is claimed, in the alternative, as “damages for breach of contract for the defendant refusing to comply with the said Stop Work Notice”. No further facts are pleaded in support of that alleged “refusal”.
Summary judgment
8. R115(1) of the Magistrates Court (Civil Division) Rules 1998 provides that a party, at any stage of the proceedings, may apply to the Court for summary judgment. The applicant is to file an affidavit in support of an application under subrule (1), specifying –
“(a) the reason any other party, on any possible view of the facts or law, does not have a good action or defence on the merits; or
(b) the reason relief ought to be granted.”
9. Other than by providing that the affidavit in support of an application must specify the reason that the “other party on any possible view of the facts or law, does not have a good action or defence on the merits” the Rules do not indicate the matters the Court is to consider in determining whether to order summary judgment. Justice Blow reviewed the Magistrates Court provisions in Simon Parsons & Co v Barker [2004] TASSC 135. Some guidance also comes from the Supreme Court of Tasmania’s consideration of its own power to give summary judgment under the Supreme Court Rules 2000. I was referred by counsel for the claimant to the decision of Crawford J (as he then was) in A J & S Constructions Pty Ltd v Aussie Trading House (International) Pty Ltd [1999] TASSC 77. More recently the issue has been considered by Porter J in Woods v Deputy Commissioner of Taxation [2011] TASSC 68. The following principles relevant to this case emerge from the legislation and authorities, some of which amount to statements of the same principle in different ways:
(a) the power to order summary or final judgment is one that should be exercised with great care; Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118;
(b) the applicant must show that the other party, on any possible view of the facts or law, does not have a good action or defence on the merits. In other jurisdictions the test is variously expressed as meaning a clear case that the respondent cannot possibly be answer, Jones v Stone [1894] AC 122, or that there is no real question to be tried; Fancourt v Mercantile Credits Ltd said [1983] HCA 25; (1983) 154 CLR 87 at 99, Port v Alexopolous (No 2) [2011] TASSC 37 at [5];
(c) ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the usual way unless there is a high degree of certainty about the ultimate outcome; Martin v NRMA Insurance Ltd [2000] FCA 773 at [9]. The court retains a discretion to refuse summary judgment so that both parties will have the benefit of the full and fair trial to which in the normal course they are both entitled;
(d) although summary judgment may still be given if resolution of questions of law is involved, the existence of authority in strong support of a legal position does not necessarily lead to summary determination of an action. Existing authority may be overruled, qualified or further explained. The court has a discretion to determine questions of law in an application or decide that there should be a trial in the ordinary way. See also Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256. Even so, unmeritorious argument tending to delay and confuse should not discourage an order for summary judgment; Asche CJ in Civic & Civic Pty Ltd v Pioneer Concrete (NT) Pty Ltd [1991] NTSC 3; (1991) 103 FLR 196.
The claimant’s application
10. Mr Chugg’s claim is based on the assertion that the legal costs he incurred in prosecuting the adjudication under the BCISP Act are an expense or loss within the meaning of clause 12 of the building contract, that is that they are attributable to the suspension of works following non-payment of progress payments. I am far from persuaded that this contention is so clear that the defendant cannot possibly answer it. In his defence the defendant has denied or not admitted the relevant allegations. The claimant bears the onus of proving the facts necessary to establish his cause of action. According to its complete terms (not all of which are reproduced in the pleading) the clause seems to apply where, after a suspension caused by a delay in payment, a builder recommences work but seeks to recover expenses and losses attributable to the suspension. I do not express a concluded view but I reject without hesitation the proposition that there is no real question to be tried about the about the meaning and operation of the clause and whether it entitles recovery of the legal costs incurred in the later adjudication proceedings. The evidence does not indicate whether work was ever resumed after suspension of work. The meaning of “losses and expenses” when used in the contract and whether the costs are “attributable” to the suspension are all susceptible to argument and legal and factual issues arise for determination.
11. Similarly I do not accept the alternative argument that the case for recovery of the legal costs claimed as damages for breach of contract is so clear and unarguable as to deprive the defendant of the right to have those issues determined at a trial in the normal course. Factual and legal issues about breach, causation and remoteness clearly arise.
12. I was referred by counsel for the claimant to s8 and s9 of the BCISP Act by which Mr Chugg’s contractual and civil rights are said to be preserved. It is unnecessary for me to make any determination about the operation of those provisions because even if the claimant’s contentions are correct the I am persuaded that the issues I have already identified about Mr Chugg’s contractual claim should be determined at trial and do not entitle him to summary judgment.
13. The defence also pleads that the claimant is estopped from proceeding with the claim by operation of the judgment registered in the Supreme Court following the adjudication proceeding. I will deal with that argument in more detail when dealing with the defendant’s application for summary judgment. For reasons I will explain I am not satisfied that the claimant cannot answer that position at trial. However as an answer to the claimant’s application for summary judgment I am not satisfied that the defendant’s contention is so unsustainable that the defendant ought be deprived of the opportunity to argue the matter at trial.
The basis of the defendant’s applications
14. The defendant’s submissions, both in favour of summary judgment for the defendant or for a stay, are based on the underlying contention that to allow recovery of legal costs in this way undermines the legislative scheme created by the BCISP Act and permits continuation of a claim which ought to have been finally determined by the adjudication conducted under that Act.
15. The BCISP Act was enacted in 2009 and in the preamble is expressed to be an “ Act to provide for progress payments to be made in a timely fashion under building or construction contracts or contracts for the supply of goods and services relating to building or construction, for disputes in relation to such payments to be adjudicated in a timely and informal way ”. The object of the legislation, which has also been enacted in all other States and Territories, was helpfully reviewed by the Court of Appeal of the Northern Territory in K & J Burns Electrical Pty Ltd v GRD Group (NT) Pty Ltd & Ano r [2011] NTCA 1.
16. The BCISP Act provides that a person who has a right under s12 to a progress payment (as defined in s3) under a building and construction contract may, by s17, serve a payment claim on the person liable under the contract to make the payment. Disputed payments may be referred for adjudication under Part 5 which provides by s22 for appointment of an adjudicator. S24 deals with the adjudication proceedings. After receiving a submission in support of a claim and a response, the adjudicator may call for further comment or submissions and may also conduct a conference and invite interested parties. By s24 (5) a conference is to be “conducted informally and may not be attended by a legal representative of any party.” The adjudicator then determines the adjudication with reasons and the amount found payable under the determination must be paid within a limited time. The adjudication may be registered in a court as a judgment.
The defendant’s application for summary judgment
17. In determining the defendant’s application for summary judgment I apply the same principles referred to earlier in these reasons. I am not persuaded that on any view of the facts or law the claim, whether based on clause 12 of the contract or as a claim for damages for breach, will, with a high degree of certainty, fail. As I have already pointed out, the meaning and effect of clause 12 of the contract is susceptible to argument and legal and factual issues arise for determination. It should go to trial in the normal way.
The defendant’s application for a stay
18. R38 of the Magistrates Court (Civil Division) Rules provides that the Court, on the application of a party, may–
“(a) enter judgment in an action that the Court considers to be scandalous, frivolous, oppressive, vexatious or otherwise an abuse of process of the Court; or
(b) make an order staying until further order an action referred to in paragraph(a)…
19. The defendant’s application for a stay is based on what is referred to as an Anshun estoppel, a reference to Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. A “cause of action estoppel” or “res judicata” will prevent a further action or claim when the same claim has already been determined in an earlier proceeding; see Anshun , supra at 597 where Gibbs CJ, Mason and Aickin JJ observed that:
“The rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding.”
20. Dixon J explained in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 532 that res judicata applies where “the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence”. However the prior cause of action must be identical to the subsequent cause of action: Jeans v Bruce [2004] NSWSC 539 at [304].
21. In this case the claimant’s right to recover legal costs or damages under the contract was not determined in the adjudication. The BCISP Act makes no provision for an award of legal costs on the determination of an adjudication. The claimant’s remedy in the adjudication was limited to recovery of the progress payments. Further, there is nothing in the terms of the legislation which prevents separate pursuit of other rights. To the contrary, I have already referred to s8 and s9 of the BCISP Act which preserve the other contractual and civil rights of a claimant. The causes of action are not the same. No cause of action estoppel arises.
22 . Anshun is also authority for the related proposition that a proceeding may be stayed as an abuse of process where a claim pursued in a second proceeding is “so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it” in those proceedings: Anshun , supra at 602. The defendant’s submission in this case goes further. He contends that to allow recovery of legal costs in manner sought by the claimant defeats the purpose of the BCISP Act by which a builder has the means of quickly and informally recovering progress payments in circumstances where legal representation is not permitted. He submits that, having elected to resort to adjudication, that court proceedings to recover legal costs of that adjudication should not be permitted and amounts to an abuse of process.
23. I do not accept the defendant’s submission. The purpose of the BCISP Act is to enable quick recovery of progress payments found to be properly payable, not to exclude a builder from other remedies.
24. The court should be slow to summarily determine actions. I do not regard the claim as an abuse of process and the application that it be stayed refused.
Orders
25. The claimant’s application for summary judgment on the claim dated 20 July 2012 is dismissed. Because prior to the hearing of the application the defence was amended to delete the counterclaim it is unnecessary to deal with the application for judgment on the counterclaim.
26. The defendant’s application dated 21 September 2012 for summary judgment or alternatively for a stay of the action is dismissed;
27. I will hear the parties as to any further or consequential orders.