Uni Pub Development Hampered by Payments Dispute

Uni Pub has faced a legal challenge relating to the development of its ground level expansion into the next door premises.

A plumber working on the development has made a claim under s15 of the Building and Construction Industry (Security of Payments) Act 2009 (ACT) (SOP) alleging unpaid work of ~$195k out a total contract for $686k which included additional variations not part of the original contract and disputed by Uni Pub. The case is here.

The Payment Claim

Mr Gelonese, the director of VG Enterprises was a plumber employed by Uni Pub to perform the work for the expansion of Uni Pub on the ground level into Tamar House, located next door.

VG filed a claim in the Magistrates Court in Feb 2015 for ~$72k. (Next listed Jan 2016.) On application from VG and seperate from the Magistrates Court action, on 24 July 2015 an adjudicator accepted an appointment to determine a claim of ~$195k outstanding under the SOP. This amount appeared to include the ~$72k previously claimed. Importantly, under s 15, a claim under the SOP must relate only to work performed within the last 12 months.

The SOP came into effect in 2009 as a stop-gap protection to ensure that contractors could claim funds owed to them without resorting to the courts and the associated expenses. The 12-month limit exists to make sure that the function of the act as a rapid resort does not unfairly prejudice defendants from having to respond quickly to aged claims.

The adjudicator awarded the amount despite claims from Uni Pub that none or little work was performed within the preceding 12 months.

Judicial Review

Uni Pub applied to the Supreme Court seeking a determination that the adjudication was invalid on the basis of the 12-month bar. The question of the 12-month bar rested on whether VG could show that any work was completed following the termination of the contract.

Associate Judge Mossop heard evidence including from the site manager, Uni Pub management, Mr Gelonese and a quantity surveyor who assessed the value of the work performed following the termination.

Included in the evidence were unverified timesheets from the plumber detailing thousands of dollars of work which the Court found could not be relied upon with any accuracy and appeared to be prepared by Mr Gelonese’s wife but it was not made clear what primary data she was drawing on.

Importantly, there was nothing signed including the original work contract, though this was not in contention, nor the supposed variation to the contract which brought about the additional amounts. Evidence that the contract was terminated orally in May 2014 was not objected to by the Defendant’s solicitors despite clearly being hearsay. It was the evidence of Uni Pub that no employees of the defendant attended the site after termination.

Uni Pub hired a quantity surveyor to assess the remaining work to allow them hire a new plumber for the remaining $86k worth of work. A second report by the surveyor concluded that approximately $3,500 of work was performed since the termination that could not be attributed to the new plumber.

Finding

The quantity surveyors evidence was key and appeared to corroborate that version of events given by Uni Pub. The assessment that there was $3,500 unaccounted for work also appears to mesh with the statements made by VG that his staff did attend the site and perform some work without coordinating with Uni Pub, though the $3,500 is well short of the claimed $195k.

Mossop AsJ found that little or no work was performed since the termination in May ’14 meaning that the claimed amounts of the arbitration were not performed within the last 12 months and therefore the arbitrator had no jurisdiction to make a decision.

This effectively kills the claim and although there is still the Magistrates Court claim on foot, I’m sure that Mossop AsJ’s reasons will be closely considered by the parties when determining the most effective course of action (i.e. dropping it, with an agreement as to costs).

In its reasons, the Court noted that the plumber was as generic as possible in giving his responses and could not point to any particular work, instead identifying “just general works” which is highly unusual for such a large claim. Most professions can usually point to some sort of concrete accomplishment in exchange for $195k, but I would be willing to accept that challenge.

Comment

There were a few quirks with this matter that seemed to paint the plumber as heaps a little dodgy. Included in the evidence from VG was part of a conversation he secretly recorded when he showed up at a Uni Pub manager’s house unannounced asking him to sign invoices and quizzing him about the remaining payments. One might assume that the tendering of only part of a conversation recorded without the knowledge of a person would usually imply editing, seeing as it is pretty difficult to selectively record without the subject noticing (though I’ve never tried, ok once, but it didn’t end well). Unlike NSW, the ACT has not explicitly created an offence for secretly recording a conversation and also it is unclear whether tendering as evidence would count and publication.
(See s 11, Surveillance Devices Act (NSW))

VG appeared pretty lucky to get off without a harsher finding. Mossop AsJ was linguistically lenient with his characterisation of the evidence of VG; generously “preferring” the evidence that “suggested” that the timesheets did not “accurately record the time”. sigh.

Court Rejects Late Inclusion of Statutory Defence

The Supreme Court considered, and duly rejected, a late application for pleading a statutory bar against the Nominal Defendant from seeking contribution in Jausnik v Nominal Defendant [2015] ACTSC 251.

The primary case was a high profile claim for compensation by an ACT Police Officer from the Nominal Defendant claiming psychological damage, who subsequently sought contribution from an individual police officer and NSW. The Plaintiff and the individual officer arrived on the scene of a motor vehicle accident following a NSW Police pursuit.

The first third party, being the individual officer, has sought to plead a bar under the NSW Police Act protecting individual members against personal liable:

Section 213 of the Police Act 1990 (NSW) (‘Police Act’) provides:

213  Protection from personal liability

A member of the NSW Police Force is not liable for any injury or damage caused by any act or omission of the member in the exercise by the member in good faith of a function conferred or imposed by or under this or any other Act or law (whether written or unwritten).

This bar wasn’t pleaded until late in the game (after pleadings closed and even settlement) so the Court naturally turned to the Court Procedures Rules and our old friend Aon Risk. Particular points that were drawn from Aon include;

  • First, generally speaking where a discretion is sought to be exercised in favour of one party and to the disadvantage of another, an explanation will be called for so as to permit the circumstances giving rise to the amendments to be weighed in the discretionary balance: [103]
  • Parties have a right to bring proceedings but have to make choices as to what claims are made and how they will be framed and prosecuted.  Limits will be placed on the ability to change the case they wish to run.  That is why in seeking the just resolution of the dispute, reference is made to the parties having sufficient opportunity to identify the issues they seek to agitate: [112].
  • The reference in the Rules to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore a just resolution to an application for leave to amend.  It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings upon the payment of costs.

Ultimately Associate Justice Mossop was reasonably scathing of the application to amend and include the statutory defence. Mossop AsJ noted that the application was “extremely late”, making the application was “wholly attributable to lack of thoroughness in the [first third party’s] camp” (read professional liability claim), the amendment would create a complete defence and the amendment would essentially require reopening the question of liability including lengthy adjournments [38].

Aon Risk is essential reading for anyone hoping to conduct commercial litigation or wishing to challenge the Fourth Horseman to a game of chess. Like playing Death in Chess, commercial litigation requires punters to not commence anything without being thoroughly aware and prepared, and to have planned at least 3 moves ahead at all times if not able to win in 6.